got our eye on it. >> stephanie, housing was your contrarian play of the year. >> yes. >> dr horton here, which you don't own either. >> i don't yet. it's trading at 11 times earnings, and spring selling season is here. that will be very positive for the stock. >> "yet" the operative word. see you on "closing bell." "the exchange" is now. ♪ ♪ welcome to "the exchange," everybody. i am brian sullivan in for kelly. here's what is ahead. a slightly hotter inflation print may be pushing fed rate cuts further down the line. the markets pricing in a 50-50 chance in june, but wall street largely shrugging it off. the s&p and nasdaq set to snap a two-day losing streak. boeing down again, after "the new york times" reports it failed 33 out of 89 product audits. and its february deliveries

trailed airbus. what is next for boeing and boeing's investors? today, equal payday. the date in a new year, a woman has to work what a man did the previous year. we'll speak with the ceo of a company working to make compensation more transparent and get the payroll name that one analyst says is undervalued. we begin with the market action with dom chu. >> i'm going to give you the shake it off numbers. right now, we're talking decent-sized gains across the board. it's groween across the screen d by the nasdaq, up 150 points for the composite index. 16,168 the last trade there. you have the s&p 500 benefitting from that big-tech trade, up 34 handles. 5152 for the s&p 500. and the dow industrials, the laggard of the session so far, the blue chip index only up one quarter of 1%, 38,833, worth about 113 points. no records yet, but we're close,

so we'll keep an eye on that. the other thing to watch out for is what's happening to big technology in that trade. as brian pointed out, we did get a slightly, by some measures, hotter than expected inflation print with the cpi today. we're shrugging it off, because interest rates are higher across the board. bonds on the government side on the offer. but nvidia is up 4.5%. meta platform is up 2.5%. amazon up 2%, microsoft up 2%. there seems to be at least a feeling that things were less badder, the inflation story isn't enough to derail that large-cap tech trade. but the notable laggard is apple, down 0.1 of 1%. 12%. better than expected earnings, and everybody is excited about the growth they're seeing with regard to oracle's cloud business. a lot of that commentary coming

out about the growth prospects there, up 12%. a big move higher. back over to you. >> dominic chu, thank you very much. so let's begin with this morning's cpi number. steve liesman is here, diving in with all the details on the inflation print. >> hey, brian, thanks. about the best you can say is that the inflation data is not getting much worse, but it's not getting a whole lot better. the february cpi stalled at rates that showed little progress with the fed's battle against inflation. the numbers in line with expectations. headline year over year, up a tick from 3.1. the core, not quite a tenth hotter, rounding up to 0.4. but it did fall year over year because of hotter numbers. where was and where wasn't inflation? food was flat lined at zero, good news for americans. but urge up 2.2% with higher gas

prices. new vehicles down a tick. used cars reversing their trend, and up 0.5, and owners equivalent rent, up 0.4%. we've been waiting for that real estate measure to decline, it did finally here. cpi, running at 15% probability of a rate cut. j june, not much change there. the markets still see the rate cuts in june. but next week, the fed officials, who they still project three cuts this year? the february inflation data may still have effects on those one time beginning of the year price hikes. so could cool off if that's the case, but it won't make the fed have any more confident cutting rates. the cnbc retail monitor powered by real credit card data we get, a rebound in consumer spending in february helped a bit by the leap year.

retail sales up 1.1% compared to the 0.2% decline in january. takeout, go to the core retail measure which also removes restaurants. that was up 1% takeout, up 6.7% year over year versus 3.2% in january. the data, you still had gains when that data was removed. the consumer strength continues to roll, meaning lower inflation may ultimately require a slower economy. >> wow. and we talked about the fedex pecktations there, steve. the data matters more so how it may impact the fed. could you just dive in -- i know it's a point of contention -- to the real role of housing? there's a big debate about some people will argue that almost all of it is housing related. what's the real take? >> well, i think housing is

definitely a part of it, and that the data is not necessarily picking up where we believe to be the declining rents out in the economy, and the data the government collects tends to lag. at the same time, there is this concern that once the fed begins to lower rates, you could have a reacceleration in housing costs and prices. what we need, brian, what the fed can't do as far as i know, the fed and jay powell do not have hard hats and cranes and a construction company to build houses. there is a housing shortage in this country, so we may be stuck with persistently high housing inflation, and that may be something that is outside of the realm of monetary policy, unless what you hope is if they do lower rates, it spurs construction and trying to solve this supply/demand issue that we have. again, it's unclear if the fed really wants to be motivated by that. i do think there is some scope for those hard hats and cranes, brian, for the fed to solve the housing problem. >> the state bird of nashville,

the crane. steve liesman, thank you very much. it's not a state, but you get my point. no matter what the fed does at the next meeting, which is next week, one of our next guests says "the alchemy of low rates is over." while broad spending is strong rngs there are plenty signs of potential slowdowns. how should you be positioned now based on the data? joining us is the head of investments at thornburg investment management. thanks to both of you here. jeff, first to you. does what steve just told you about that cpi change your expectations for your clients about what the fed does with rates? >> if anything, it strengthens our expectations. what we have seen coming into this is a surprisingly resilient consumer in the face of higher inflation. the alchemy of low interest rates is over. >> you said that. >> i said it. >> i quoted you back to you.

you can't quote you back to me back to you. >> that consumer is struggling. when you peel back the onion, to keep the spending going, they have to borrow. that low-end consumer, we're seeing borrowing and defaults increase. as we project forward, the fed continues to have an inflation problem. super core services is still more than double what it was coming precovid. and that means the fed suspect going to be likely to lower interest rates, and that consumer will struggle. the economy does have to slow to see inflation come down and a renormalization. >> not just credit cards, buy now, pay later is being used to buy groceries. maddie, all we talked about is inflation since covid. but the fed has a dual mandate, to maximize employment, as well. we're seeing a little bit of a slowdown in the job market. layoffs ticked up a little bit, not a lot.

what are you watching most closely? >> well, we're certainly watching the -- both the inflation and the employment picture. one of the things that we notice about this cycle is the strength of the consumer right now. so it's a little bit different than what we just heard. we look at the consumer balance sheet as quite strong. so as inflation tends to moderate over time, our expectation is that yield curve will start to tip up, which is why we have added duration to our portfolios. again, driven by normalization by the fed in the short end of the yield curve, as well as some of the supply/demand dynamics we expect to see in the long end of the yield curve. so the consumer is quite strong here is our expectation. >> stick around, we're not done with you. but we go now to chicago and rick santelli, ten-year votes up for auction. the professor tracking and grading the action. >> you know, this is an

important auction. it's a reopening. 39 million tens. the original auction for the first primary issuance was one month ago. that's important. so what did the yield come out at on 39 billion reopened ten-years? 4.166. the problem was, it's three quarters of a basis point higher than the one issue market. higher yield, lower price the government is selling. that was the biggest markdown on this for a c minus. could have been a d plus if it was a primary auction. there's usually a less aggressive bidding process for the reopenings, and there are always two. next month we gel another one. the metrics were all basically in line with ten auction average. we did see that the dealers took down a little over 17%, 15%, the ten auction average. i find it very interesting that we see yields continuing to climb here. remember, the short end is going to give you a glimpse of what

cpi means, and the rest of the curve in the long end is really starting to focus more on debt, deficits, and issuance. this wasn't a particularly good auction, but i will draw your attention to the fact that with today's inflation data and thursday ppi and retail sales, investors might have been taken the slow and easy route, sully. back to you. >> rick, 17% going to dealers. it's not huge, above the average, two percentage points. but when i see the prabercentag going to dealers, it raises an eyebrow. >> absolutely. like country and buffet, if the food is good, there's not a lot left in the buffet. in this instance, there's some food left on the table. >> jeff, what is your reaction to the auction? are you worrying a little bit? there appears to still be a good appetite for american debt, even

with $34 trillion in debt. >> i think what this brings up is, you talked about the fed dual mandate. they have three mandates. that third one is moderate long-term interest rates, which plays into the story here. if i were to grade, as we think about three balance sheets, the c c government balance sheet today is a d and getting worse. when you flip to the corporate balance sheet, companies have net interest margins that they expanded and they're making more on the money market side, but they're deteriorating. and then the consumer, it is challenging. i think what we see is in the face of higher interest rates, the economy does have to slow over time. so it has me still concerned. >> maddie, i'm a data guy. i look at the data and the markets and i see the s&p up very nicely over the last couple of years. debt has gone up. deficits have dwgone up and rat have gone up. stocks, all they have done for the most part, is go up. should we be surprised be i

that? the market is saying it doesn't seem to fair. >> from our perspective, debt is sustainable as long as borrowing rates stay significantly below the nominal growth rate. so far, that is going to be the case from our perspective in the long-term. even though in the face of debt to gdp ratio in the u.s. going up to 180%, we still believe that there is a sustainability to that. the other point that we should keep in mind as investors is the amount of fiscal stimulus that will be working through the corporate environment. about $1.4 trillion in areas like artificial intelligence, in semiconductor creation, in electric vehicle transmission and infrastructure. these are significant supporters of economic growth. so despite the fact that we are seeing government debt increase, there's a reason for that, and

the corporate environment and the overall economy. >> back to you. is that where capital group is putting its own money, its client's money, in the sectors you just talked about? >> in some of those areas, certainly. an area we're seeing a lot of innovation and excitement around is health care. if we think about all the developments we've seen in gene therapy, in immunizations, in the ability to manage risks of obesity. these are all things that are important for us as ant there a strong, global companies trading at significant discounts, internationally to their u.s. peers. so we like the international area in those markets, as well. so we don't think investors should overlook international developed markets and merging markets. >> many of which have j

outperformed, even the magnificent seven led s&p 500. more on the fixed income side. jeff, where are you finding the best opportunities right now? >> it's always about a balance of preservation of capital and safety. the core pillars of what exed income is meant to be. much like maddie, we're adding duration to portfolios. when and if where we believe we're heading into that probably gently hard landing, eventually we'll get there. >> gently hard landing. it's like jumbo shrimp, an oxy moron. >> in the face of higher debt, we know we're heading there, it's just a question of when. we want to-- adding duration iso way to do that. >> jeff, maddie, great discussion. thank you. we are just getting started on "the exchange." on deck, boeing's blues, dragging down the airlines, one

in a big way. the ceo sending a note to employees moments ago. we'll bring it to you and look at the details, and what it might mean for your spring and summer travel. bitcoin, just a little off its highs. just below 70-k. is this the moment coinbase investors have been waiting for? that's next. at pgim, finding opportunity in fixed income today, helps secure tomorrow. our time-tested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. pgim investments. shaping tomorrow today.

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welcome back. boeing shares are getting hit hard again. "the new york times" reports that the faa found dozens of production issues with the 737 max line. the stock is now down 30% to start the year, on pace for its worst quarter since the beginning of the pandemic. remember, coming into this year, boeing was on no fewer than six top picks of wall street firms' lists. wow. phil lebeau is here with more on where we stand with boeing right now. >> brian, you made the reference to the internal memo that was just sent out by stan deal, the head of boeing commercial airplanes, sending it to the staff in washington. we're not going to go into all the details. some of it is fairy wonky. one thing they reference in here, they said they will do an additional internal audit of their processes, and that's because the faa audit, and we

have confirmed these numbers, these are what the faa auditors found over a six-week check of the production systems. 89 checks were done. 33 times they found failures in how the process was followed or not followed by the workers there in washington. there were 9 7 instances of noncompliance. boeing says in response to this report coming out regarding these failured -- >> if you look at shares of boeing, there are three investigations going on right now. you've got the doj, you've got the faa. it has not finished its investigation right now, as well as the ntsb, which is still putting together its final report in terms of the alaska airlines door plug blowout.

max production capped at 38 per month. also take a look at spirit aerosystems. they were also audited by the faa. "the new york times" said they had seven failures out of 13 production checks. bowing is considering buying spirit, bringing that production in house in hopes that it can correct the problems that begin at spirit and often lead to issues down the road when it comes to final production in rem renton, washington. >> we've seen a little bit of it, but it feels like, phil, we're going to get more to a point where the finger pointing between the two is only going to accelerate. >> yeah, i'm not sure. we might already be there, brian, in terms of the finger pointing between the two. look, there's nobody sitting here saying, it's not me, it's your fault. i think there is a joint recognition of the issues that

are happening both at spirit, as well as in renton. when we talked to dave calhoun, he's not shied from saying, you know what? it is what it is, and we have to fix it. we haven't had a chance to talk to pat shanahan, who is the ceo at spirit aerosystems in wichita, conditions. but i'm sure he would say we have our letter customers down, and the primary customer is boeing. >> this problem is starting to apparently, based on the markets, hitting some of the airline's bottom lines or the markets think it could. is tz market is selling off, and let's look at southwest in terms of max deliveries. this should not have come as a surprise to anybody, because they talk, and we talked to bob jordan in the past, that they were going to have to adjust the number of maxes. remember, it's an all 737 fleet that they have. 46 deliveries this year is the new guidance, down from what was originally expected of 79

deliveries this year. they do not expect to get any max 7s in 2024. the plane hasn't even been certified, so you're looking at a 25 or 26 beginning for those max 7 deliveries. when you take a look at shares of southwest, keep in mind that they're also reassisting their full-year guidance. that may be the additional pressure on the downside here. they've got to cut capacity, that's the bottom line. you have an all-737 fleet. you factored in how many you thought you were going to receive. that's not happening. we're getting other guidance from other airlines. american saying its q1 loss will be near the lower end of guidance. and delta expects the q1 earnings to be near the high end, which they expect to earn between 25 and 50 cents a share. >> delta, i'm almost exclusively on united because i live in new jersey. i know you fly delta more than i do. they have a lot of airbuses, though, right?

delta's fleet is a little more diversified. >> they have boeing and airbus, but they don't have maxes. >> yeah, they don't have maxes. >> i think they get the first maxes, which will be the max 10s. that's an order that they have. but they have even said '27 is when they think they are going to get them, that's the guess at this point. that may change of time. it's not a huge part of what the fleet will be in the future. it will be significant, but at this point, it's so far down the road that any delay is not impacting delta at this point. >> phil with the big story, thank you very much. coming up, will it be a hammer or arm? with the end of the semiconductor's lockup might be. and kcnbc.com is tracking te big names who are dumping their stock, and there are some big names on that list. go to cnbc.com/pro for the full story.

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good day, everyone. welcome back to "the exchange." i'm tyler mathisen with your news update. the united states is preparing a military aid package for ukraine, according to reuters. it could be valued up to $400 million, with an announcement expected later today. it is the first movement in months since additional funding was blocked in congress and it comes as the financial times reports the european union is close to reaching a deal for more than $5 billion in military aid. lawyers for former jeffrey enstain associate gillain maxwell are arguing that she was protected by a nonprosecution agreement between epstein and prosecutors. after weeks of testing, the irs has finally launched its e-filing system for taxpayers in a dozen states. a direct file is a free online tool. people have very simple w2 claims and claim a standard deduction may be eligible to use

it this year. brian, back to you. >> tyler mathisen, thank you. on deck, today is equal payday. that is the date that symbolizes how far in the year women must work to earn what their male peers work. on average, women work 83.6 cents on the dollar last year, and the gap is larger for women of color. up next, what companies can do to help close that gap.

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welcome back to "the exchange." today is equal payday. that means a woman would have to work until today to earn what her male counterpart did last year. according to new data from cnbc and survey monkey, compensation is not improving. julia boarston has those findings. >> ourwomen at work report finds a female workforce that is frustrated with fewer raises and less career advancement. the survey sampled nearly 10,000 women found 39% of women secured pay raises this year, down from 44% who got raises the prior year. and 17% of women say their

salaries are lower than a year ago, more than the 15% of respondents who reported may declines last year. now, we are also seeing women frustrated with their lack of progress. 18% of women said their career experienced a setback that's nearly as many who said their career has advanced. many women are looking for a change. 22% say they are thinking about quitting after 9% did quit last year. a key reason why is work/life balance. among half the women saying it's due to increased workload. parents and women of color are concerned about career penalties that might come from pursuing flexible work. it's worth noting that desire for flexibility is not due to any lack of ambition. 88% of women say they're either very or somewhat ambitious. and brian, you can find more from the results of our survey on cnbc.com.

>> julia will be hosting the inaugural cnbc change maker summit on april 18th. you want to go? sign upfor it by scanning the qr code on your screen. can salary transparency close the gender pay gap? the next guest is looking to pull back on the curtain of compensation. joining us now is nolan church, ceo of fair comp. thanks for coming on the program. if i was going to push back at all, i'm not pushing back on the idea of equal compensation, but i would make sure that the job title, the job requirements, and the job experience were equal when we're comparing these things. is that a fair thing to say? >> brian, thanks for having me. that's entirely fair to say, but i don't think it's that hard to do. especially with software and technology that we have today. figuring out your level and how

you compare to your peers shouldn't be challenging. the problem is, that employers don't want to share that data with employees. >> yeah. and i think that's -- listen, we would all love to know what our colleagues are making. that's what you're helping them do. but your data is not like this guy over here makes this. are you sort of compiling it, i'm guessing in a more broad framework so people know, i'm at the company, i've done the same jothe samein your industry? say you're at tech, you have seven years of experience. generally, this is roughly the band that you can expect. priva that your peers can't see you from anyone else, we want to be

able to show you how you stack versus your peers with the same level and same level of experience. >> and these are industries where i'm assuming that performance -- for example, sales. obviously, if you're in sales and you sell twice as much as somebody else, the person who is not selling a lot should not expect the same compensation. these have to be industries where, i'm guessing, just more direct salaries, probably with some bonus, et cetera? >> i think that's exactly right. sales, it's pretty obvious why if you're making more as it relates to cash compensation. equity compensation can be entirely different. that's something we want to provide, as well. but engineering or design or product are fair areas to look at, which is this is what my level is, this is what -- how many years of experience i have. and then over time, we will add in vectors such as performance

in a way that you can anonmize that you can't compare who the peer is. but you should be able to tell what your company pays for your job, and you should also be able to tell what the industry pays. we had all these pay transparency laws two years ago, and they have no teeth. companies are posting ranges that have somewhere between these laws ultimatel out in court to see how much teeth they have, which i think is not a whole lot. i think that thi. that data is shared amongst all of their industry peers,

including their competitors. the way we think about this problem is to invert that. so employees can share their data with their industry peers and their colleagues in an anonymous way to have access to the data coming to the table to help them better negotiate. >> well said. nolan church, ceo of fair comp, thank you for coming on cnbc. thank you. >> thanks for having me. sticking with worker pay in a different way, mizuho raising its pricing on adp, seeing positive signs. it says the stock is undervalued, trading at a pe rati about that more with an lest at mizuho. dan, good to see you again the companies based in new jersey. it's like -- i think adp is a misunderstood company.

they do a lot more than just write checks, correct? >> we agree with that. it's $100 billion company -- >> that big? >> it's huge. i was shocked, too. you wouldn't think you would see that in new jersey. i thought the best thing in new jersey was cnbc. but they're undervalued because like five years ago, there was an activist that went after them and they fixed the business since then and improved the organic growth. they fixed the small part of the business and thousand they fixed the high end, and they're regaining the share they were losing to -- >> paychex. >> even more than that. there's these cloud-based disrupters. now they are regaining the share, closing the organic growth cap. >> how are they doing that? because these other companies, i would imagine they're newer, maybe hungrier? >> they are hungry, but adp took

its time, fixed the cloud business. now they're going with the new solution, and i'm seeing that all over tech, where the incumbent initially loses share, fixes the business, comes back winning. and it's exactly the same pattern we're seeing with adp. >> switching gears to coin. you might have heard bitcoin has been in the news. >> the first time i'm hearing at this. >> coinbase, it had some issues. they had some tech issues in the last couple of days. what's the view on coinbase and how do they fall into the crypto ecosystem, now that etfs are out? >> coinbase has been high liquor lated with bitcoin. >> coin case has been highly correlated with bitcoin. if you go back to 2018 square, it used to bely

correlated. eventually, that correlation will break. but fundamentally, the reason we don't like coinbase, and this is important, high volumes bring in sort of the whales, like your tie. >> el fephants on your tie, whas on mine. >> those whales don't pay as much of a fee. so you'll get compression, plus, it only cost about 40% of the etfs. so all these good things happening with crypto, they're not benefitting fully from it. >> so you are saying that there will be a day that bitcoin goes up and coinbase does not? >> it happened in the past, it will happen again. >> okay. is there a name that's in the crypto space that you do like? >> i love robinhood. the reason for that -- >> it's a crypto play? >> to an extent. it's only like 10%, 15%. crypto adjacent.

robinhood stock is doing well, but not as well as coinbase. they're expanding into europe and getting deeper into equi equities. they're winning shares from charles schwab. they're so bullish on the european expansion. maybe they'll get into asia. i think the real way to play it is to be a type of balanced kind of portfolio. >> so the robinhood play is ultimately international? >> international and more balanced because they have equities, you can trade the etfs, era. it's not just a monolithic play like bitcoin. >> likes hood, dislikes coin. i like you and your tie. >> i like your tie. >> swipe out the world'slargest land mammal with the largest mammal. i'm not talking about myself. shares of arm holdings more than doubling. the lockup period is ending,

enabling insiders to sell. is that a bullish or bearish sign? that's coming up with deidre bosa. let's check it out. says here it gets plenty of light. and this must be the ocean view? of aruba? huh. this listing is misleading. well, when at&t says we give businesses get our best deal, on the iphone 15 pro made with titanium. we mean it. amazing. all my agents want it. says here...“inviting pool”. come on over! too inviting. only at&t gives businesses our best deals on any iphone. get iphone 15 pro on us. (♪♪) the future is not just going to happen. you have to make it. and if you want a successful business, all it takes is an idea, and now becomes the future. a future where you grew a dream into a reality. it's waiting for you. mere minutes away. the future is nothing but power and it's all yours.

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welcome back. the lockup period for chip manufacturer arm holdings expiring today. that is the six-month period which insiders are restricted from selling to prevent volatility. deidre bosa joinings us. what should be we be watching as the lockup expires? >> arm is down 15% in the month just leading up to this expiration. because it gives insiders a chance to sell. now, i talked earlier about softbank, which has the biggest stake. so they are the biggest wild card. let's talk about the other investors and why they could potentially have reason to sell. for them, it could be a question of rotation. oh do you lock in arm's gains? this is a stock that has more

than doubled, do you take those gains and put them two other semis? these are the picks and shovels of the ai era, so do you look elsewhere? arm's forward price-to-earnings ratio, consider this, it is more than triple that of nvidia's. that is a massive premium. brian, as you know, investors can't get enough of nvidia. there is an etf that gives investors two times the daily return of nvidia, and it has just gone parabolic. ticker mvdl has grown to nearly triple this year, up another 10% today. it's a lot of risk to take on, but a lot of upside, as well, if nvidia is going one way, which as we know it has been for some time now. but arm's insiders, some of the biggest stake holders that couldn't sell until today, they may be more strategic, thus they may have more reason to hold on for the longer run.

what we have learned over the past few months, brian, at least what arm is presenting is that nvidia and arm go hand in hand. you need arm's cpus to complement nvidia gpus and data centers. >> one might say they're connected at the hip, or the elbow. >> or the arm. >> go back to the first point, softbank, they own like 90%? >> 90%. >> so they are -- if they decide to dump a ton of it because they made a ton of money, that could be a negative event. so it sounds like it comes down to what the folks at softbank will do. >> there would be a lot more shares to buy,so it's not likely to do that. however, if you look at what they have done with the previous golden jewel of the japanese conglomerate, that would be

alibaba, there could be reason to leave he may draw down on that arm stake. alibaba, he held hundreds of billions worth of that stock. he drew on that softbank buybacks as collateral to help fund the vision fund two. and he has said that he wants to go on the offensive with ai. so that arm stake is worth a heck of a lot more than it did over the last ten years, over the time that softbank has held it. so it is certain ly plausible that he could draw on some of that. >> when will we know, what is the timeline here? >> today, i believe, the lockout of the shares come up, so they can be traded today. and the run-up -- again, i don't think if you have a large stake holder, they're not going to sell a huge chunk. >> if they do, they should fire their trader. >> exactly. >> trader, not traitor. >> maybe the next quarter. they're often asked about this.

>> if you're going to dump a ton of stock, do it over a number of days to not tip people off to what you're doing. deidre bosa, good stuff. thank you. >> thanks. coming up, municipal bond funds posting the third strike week of inflows last week. that's right. muni bond funds. mu-ni bond fubds. we'll tell you where the buying opportunities may be in muni icndun. stk around. at pgim, finding opportunity in fixed income today, helps secure tomorrow. our time-tested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. pgim investments. shaping tomorrow today.

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welcome back to "the exchange." rick santelli live with a special guest. matt fabian from municipal market analytics. you heard sully, there's some opportunity potentially in the muni space and matt is the guy to talk to. matt, welcome. >> hey, rick. thanks. >> listen, there's a tale of two muni markets right now. and it's all about banks and the

types of institutions that used to be big players in certain parts of the muni curve don't seem to be playing and that may afford some tons. tell us about that. >> no, that's totally right. so the individuals, right, demand for muni bonds has been dominated through the fourth quarter, through the first part of this year by individuals, households buying directly through family offices or separately managed accounts are buying bonds just like they used to. things are scarce. they know they can get 3%, 3.5% equivalent of like 6, 7% with minimal default risk. the rest of the market, the banks -- banks have backed away. banks got hurt, right? they -- when the fed started to -- >> rising interest rates, yes. >> rising interest rates. >> so with the banks backing out of that space, what should investors be looking at? and normally banks look at a

lesser quality. what about the quality we're looking at with respect to whether it's investment grade or not? >> no, no, for sure. so typically individuals want, you know, 10-year bonds or so. think about going out just a little bit further. and instead of going for your aa or aaa rated bonds, think of getting a little lower on the credit curve as well. as long as you're staying in high grade traditionally safe sectors, your default risk will be really low. >> i like that. traditionally safe sectors. so we're mostly talking about gos, utility revenue bonds. what types of areas are you looking at very specifically and quantify how many defaults we've had in some of those spaces that you like. >> i mean, we had very few. so, heading into the pandemic, right, we expected that there would be lots more trouble, right? all the headlines, all the news, work from home, commercial real

estate, all these things, but it hasn't happened. we had in the past four years since 2021, five or six muni bond defaults in these sort of sectors, go bonds, safe sector ewe till tis, things like that out of the universe of about 25,000. so 5 or 6 out of 25,000 defaulted. that's not many. >> no. and it sounds like opportunities. now, what type of returns are we talking about? and this is the last question, how does potentially the fed timeline of interest rate cuts affect that, your final thoughts, matt. >> well, this is the thing. once the fed starts to cut rates, i'm assuming more of the institutional money will come back in. so that could really tighten up the market and remove the opportunity that's there right now ahead of it. and again, you're looking at maybe three or 3.5% tax free, which is like 6, 6.5% after taxable equivalent, a corporate bond, you would have to buy to give you 6, 7% with minimal

default risk. >> real quickly, matt, i'm going to stretch this out and get one more question. are there any states or areas of the country that you would prefer and any you might want to avoid, final thought. >> sure. i like texas. i like ohio. i like new york. even california has some opportunities. avoid -- consider avoiding missouri, alabama and absolutely the virgin islands. >> excellent. matt fabian, it's always interesting to talk to you. managing director of mma. please join me again in the future. sully, back to you. >> thanks, rick. all right, rick and matt, thapg very much by the way, before we go here on "the exchange." carl icahn dropped his threat to challenge ill lumina's board of directors. shares down 4% on the news. cnbc reached out to illumina. that does it for us here. i'll see you tonight on "last

call." "power lunch" up next.

♪ good afternoon, everyone. welcome to "power lunch." alongside courtney reagan, i'm tyler mathis so glad you could join us. rally resuming especially for tech stocks after this morning's cpi report in line with expectations with cpi out of the way for at least for now can anything sto