tv The Exchange CNBC April 13, 2022 1:00pm-2:01pm EDT
goods need to be shipped and rail is the way to ship them >> joe t >> pent up travel demand you buy marriott >> a lot of call buying to the up side, vodafone. >> thanks, everybody i'll see you in "over time". "the exchange is now". >> welcome to "the exchange" here's what's ahead. more than half of americans now think we're heading into recession. and if history is any guide, they'll be proven right. but that history doesn't cover inflation spikes like the one we're living through now so we have stock picks for whatever kind of market you want to bet on. growth, value, and/or defensive. one area that's clearly facing challenges, of course, is the housing market we'll talk to the ceo of rocket about how his company can make money in this rising rate environment. plus our trader today is
pretty worried about earnings season so we're turning three buys and a bail on its head we're going to get three bails and just one buy instead we look forward to that later on let's start with a check on the markets with the dow up 223 points the s&p up 37. the nasdaq up 237. that horrible ppi report this morning up 11% year on year. not phasing this market too much it's still focussed on yesterday's softer core cpi reading in hopes inflation has peaked naz zach is up 1.8%. and is semis leading nvidia previously down 20% in a week up 3% today. apparel names seeing excitement like gap, pvh, lululemon and american eagle all jumping 5% to almost 10% gap is on pace for the best day since october of 20 20 on heavy volume it's up 9.8% the stay at home and reopening trades are working today you have zoom and peloton up 5%
to 7 % so are the travel names. casinos, airlines, the dining names, marriott up 7%. between restale, restaurants and travel, investors seem to be betting the consumer is bullish. the average american actually is bearish as they've only ever been when we're headed into recession. steve liesman has the details. >> yeah. unfortunately the survey finds americans harboring some of the most down beat views on the economy since the recovery from the great financial crisis and some of these attitudes are in line with those we've only seen during recessions this is according to the latest cnbc all america economic survey the survey finds 47% believe the economy is poor. the highest is 2012. 17 % say it's excellent, good. and 26% say the economy will get better again, the lowest since 2016 that is not unfortunately the worst part of it
56% say there will be a recession in the next year you can see it's a level follow the red line across and look at the shaded area. we don't ever get to a level that high unless we're actually in a recession you have to go back to '08 to find a higher number right now the pessimism, extends to people's views of their own personal financial situation sometimes we don't see it. we do this time. 22% say they're getting ahead. 13% say they're slipping behind. 53% are staying put. this is the number that's worrisome more than one out of ten believe their financial situation is falling backwards between the war in ukraine and soaring inflation, plenty of reason to be pessimistic 84 % say they're economizing to make ends meet i have never before bet against the american people, but i hope they're wrong. >> it's not like we know what they would have said in the early 19 80s. >> right
>> any time they've felt like this in the past we've been in a recession. time and again people have horrible views on inflation, they're blaming the president among other factors for it, the ukraine war, you name it, but that they're not necessarily acting as if that downturn is self-evident >> there are mental and fiscal reasons for this people still have $$2 trillion of savings to go to. it's not that we've hit the numbers one time, and i think we need to report it, but they need to be sustained. it is possible for people to be depressed and wind up wandering the malls. it's possible. i don't know that this happens, but sometimes you do have big hits to sentiment and people end up still continuing to shop. >> we need a term. i know people are saying inflation recession, but for the idea that we might see that growth, that nominal gdp growth, might see earnings that are fine, and consumers continue to be furious about what's happening. and i don't know what to call
that it might not be -- maybe it is going to be a real gdp recession. >> i would like to name it after my late father, marvin, because he was a guy that would drive 20 miles to save two cents on gasoline there is a strange phenomenon. remember, 3.6% unemployment. we had 7% growth in the fourth quarter. we've been coming back one of the tightest labor markets of all-time, and people are depressed. you have 7% of spending or call it 20 if you want to include food, food and gas, governing 90% of how we feel >> it's going to spread now. that's what i find interesting it spreads throughout services people see the costs of what they're paying for swim lessons or you name it once labor is the common factor, then everything moves higher >> that's right. it pushes up a broad range of things we saw the ppi effect, knock on effects from the ukraine war we have a new lockdown in china. we've had reports about all kinds of problems in the
agriculture. let's hope it's a couple months worth of this and we start to see a little daylight on this and that's before the consumer really changes his or her mind about how they're going to spend. >> what do you call it a marvin recession? >> i was putting something nice. but i just think of my late father, when it's like dad, you spent $3 to save two cents, but that's the way the markets feel. >> the marvin mind set >> yes let's go to rick santelli watching the bond markets which have reacted well to yesterday's report just got the results of a 30-year auction after the ten-year yesterday went poorly rick, how did it go? >> it seems like the only thing lately that makes yields go up even for a small period of time are crummy auctions and this one qualifies again. d plus better than yesterday's ten-year, but not much let's go through it.
this is the last of 100 billion in coupon supply in the form of 20 billion, 29-year ten-month bonds. we'll call it 30-year bonds. the yield, 2 .815. even with the one issue market trading at 2.180, all the metrics were close to ten auction average. you could argue the direct bidders was stronger 18.9 versus 18%. and the dealers took a little bit less it priced sloppy so there's where the d plus comes in you know what's fascinating? we have a holiday weekend europe has a four-day weekend. tomorrow is the ecb meeting and the market isn't at all pleased with the way they've been acting there's a lot more hawkishness starting to creep in just like with our central bank and our markets. and all that's creating a bit of avoidance. even though yields have been going down the last couple days, don't be fooled. inflation is hot and the auctions, well, they're not going very well as of late
kelly, back to you >> all right rick, thank you. so if americans are bearish, the fed is hawkish, and inflation is soaring, what's the best strategy for your investments? our next guest says you don't have to pick just one. he has picks for playing growth, value, or for being defensive right now. joining me is kevin walsh, the president and cio of hennion and walsh asset management do you favor one of these? >> it's been a volatile start of the new year the first 68 trading days of 2022, 19 of them have involved a daily move of 1.5% or more for the s&p 500. that's nearly 30% of the time. so for those investors who are now looking to get their portfolios back in shape after a very difficult first quarter where the s&p lost 4 .6 %, we might suggest a barbell approach, incorporating some value oriented investments on one side of the barbell, growth
oriented investments peaking up the most on the other side of the barbell, and then some defensive positioning in the middle providing for dividend income and downside protection i'll tell you what these days of short term bouts of volatility aren't behind us yet. >> you want each of these three in the portfolio growth, what comes to mind why should people have exposure there right now? >> growth has been the most beaten up thus far in 20 22. we saw a bounceback in march it gave investors hope i picked three stocks from three different smart uti strategies for growth, black rock beat their earnings for q 1 by about 7% as they report this morning and also have a yield of about 2 .4 % for the value side of that barbell approach, how about the fed's supplier of lockheed martin trading at a multiple of 14 .4
with a dividend yield of 2.3 in the middle, the chocolate maker hershey from the consumer staple you don't have to be all in for value. for both, or defensive perhaps you want to adjust those allocations based upon your own risk tolerance or assessment objectives some combination of the threes should prove well for investors over the balance of 2022 >> what about the reopening trade? does it make sense to you that one would keep working? where does that fall or is it in us own category >> i think parts of the reopening trade might fall in the growth category. if you look at the e-commerce names beaten up thus far, a lot of people thought those were historically the stay at home trade. but keep in mind the paradigm has shifted. americans are now shopping more online than ever even after the pandemic so some of those names, those
growth oriented names in that area may be worthy of consideration just as much as the technology sector. the revolutionary providers of technology recognizing over the past four rate hike cycles information technology on average has provided the best total returns across those rate hike cycles. maybe now is the time to start getting back in technology >> sure. what about financials as we've seen jpmorgan notably under performing the market today. a place where people have wanted to go in the value sector and yet, one that has struggled with flattening yield curves and the like what do you do with that one >> i still believe that the smaller cap region nool banks are benefit from a raising right environment, certainly with the spread businesses. some of the big money center banks are getting beat up in 2022 and may not perform as well as those regional banks. but remember, for the growth side of my barbell approach i suggested earlier, i chose a company from the financial sector that isn't necessarily
involved in traditional banking. but black rock which has a diversified asset business management >> do you think or care whether inflation has peaked in other words, because it matter if we've seen the most extreme readings or the fact that we continue to get this much higher than targeted pressure >> something suggests to me that there's more inflation ahead consider that ppi this morning came in at 11.2. cpi yesterday at 8.5%. since ppi is a forward looking indicator, perhaps producers pass on the differential to consumers in the months hoahead. i believe inflation will remain elevated, but with that staid, there are opportunities for investors in an inflationary environment. recognizing the fed is going to do their best >> barbell with a meaty handle
in the mid dle. thank you for your time. >> thank you bitcoin is above 40,000. how much damage was done with the break below 40 plus our trader has a long list of bails ahead of the busiest part of earnings season. the names and the rationale plus one buy that will benefit from these inflationary times "the exchange" is back after this your record label is taking off. but so is your sound engineer. you need to hire.
we want to take a look at shares of synopsis, sharply lower from their highs on the session they're turning negative there have been reports it's been probed on allegations its past technology to chinese firms including huawei the stock already down 14% this year now down by three quarters of a percent on the day meantime, even as inflation has surged over the past year, bitcoin down about 40% it's back above $40,000 today after breaking below the level earlier this week. it's listen behaving more like a tech stock than a gold substitute these days. this year the correlation with the nasdaq 100 and stock prices zwrrlly as increased leaving
investors to worry is bitcoin trading like any other risk asset in let's bring in a general partner at block tower mike, if bitcoin is another tech stock, what's so special about it >> well, it trades as a tech stock. it's achieving its position in a terminal state of value. a store value asset. i look at oil and gnat gas collapsing off highs emerging -- you have atheorem and bitcoin own. even if you hold it in the risk part of your portfolio, many do, you have to be pleased with the relative outperformance relative to risk assets more broadly. if i put my investor hat on, there's a massive bitcoin conference in miami, 30,000 people, tickets sold, hundreds of thousands of people down here large corporations, regulators
near-term, it seems range bound. you want to own the wings. we're not sure -- it's taking direction from the mechacro mar. we're squarely in growth mode. medium to long term, it's a great area to accumulate, but in the near-term, it's choppy >> i was going to say that this is if we look at bit koichb as a liquidity proxy, it's going to be facing a tough slog liquidity is also going to further recede in the coming i don't know at least 12 months. does it matter how much of that is quote, unquote, priced in does it simply become a head wind because there's less liquidity to support the prices? >> listen, we're seeing deleveraging across the board. liquidity is exiting system. we're seeing that across risk assets i talk to traditional al loc allocators where we don't see any
meaningful degradation is in the demand for digital assets. we still continue to see an onslaught of dollars trying to come into the space. while the risk asset allocation may be coming in, there's incremental demand to initiate or reup positions in digital assets i they that's more a function of things happening pe low the bitcoin surface. things like real world lending, an interesting term. in crypto, bridging the gap between crypto finance and traditional finance, there's an emerging subset of protocols companies like maple, $250 million of loans a month and a profitable protocol. i don't think -- most of the new entrants to the nasdaq aren't profitable companies and here we are profitable protocols disrupting things like the lending market >> let's talk prices you say it was 43,000 when we fell below it that triggered liquidations what are the important levels to
watch? how much damage was done by the drop below 43% >> there's technical analysis. you can draw lines on charts reality is 40,000 is a pivotal level. we regained the level. we think we really are indifferent to price direction because i think understanding that you want to own the tails similarly in risk markets. generally right now i think the market is sending on the end of its chair trying to figure out does ppi matter? what matters from a market impact standpoint? because the reality is most of this inflation narrative that's actually culminating in numbers was happening last year. things like crypto currency, growth assets, the pretraded inflation data, and now we're in a new environment where people are trying to understand what the rate hike cycle looks like and is that completely off from the predictions of the market generally, because that should be effectively priced in i think we're trying to understand what the cycle looks like the impact on markets and
liquidity and so on. >> but gut reaction, where are we going next if we go back below 40,000 where would the kind of logical stopping place be? >> we've seen pretty significant support at 38. it depends on your timeframe if you're looking super short frame, 38 seems like a support for the market near-term price predictions, i think we're in this coiled spring predicament in broader markets and we're going to blow out one way or another in risk assets and so the levels of 38 or 42 on the up side, they may not hold so we may blow through the numbers and then you see basically shorts getting liquidated on the up side and those exacerbate the movements so i think whatever direction we head in, it's probably a more volatile movement than you've seen before. owning volatility, again, in a delta hedge manner might make more sense now also looking at what's happening
in the private side of the markets. i think those two areas on the venture and hedge fund area are intermingling. >> mike, thank you, we appreciate it. >> thank you still ahead, the rising rates are also putting pressure on mortgage lenders. this chart says it all as the 30-year fixed mortgage rate has risen, shares of rocket companies have gone the other way. the ceo joins us live with more on the fallout ahead first china is battling the most severe covid outbreak since early 2020 triggering intense lockdowns, shortages. we'll bring you the latest "the exchange" is back after this offer low prices every day, without sacrificing quality. by delivering fresh groceries you feel great about serving. providing prescriptions as low as $4, to keep your family healthy. always being here to help you save money
hi, erveg. welcome to "the exchange." here's what's happening at this hour the treasury secretary janet yellen is calling on countries not to undermine sanctions against russia or risk facing consequences on their own. she called on china to use its special relationship with -- in ukraine. i dropped my microphone. what a rookie mistake, but we'll get it solved here i'm going to do this yellen said china's standing in the world would suffer if it fails to act schools remain closed as a wildfire continues to burn in drought stricken southern new mexico at least 150 structures have been destroyed the fire has spread to more than 4100 acres wind gusts of up to 90 miles per hour have fanned the flames. tonight, russia claiming new gains in the besieged city of mariupol while two scandinavian countries, finland and sweden consider joining nato.
and in berlin, a gran damsel brating a big birthday the oldest known gorilla turns 65 today zoo keepers gave her a cake made of cooked rice, vegetables, berries, and cottage cheese. fatu has become something of a legend gorillas in the wild don't make it often past their 40s. that's amazing, kelly. this is going to be a mic drop, ladies and gentlemen, right here >> always done with such style and skill. i love it. tyler, thank you very much i'll see you soon. the biden administration extending the mask mandate for airplanes and transit for 15 more days. the current order was set to expire this monday, but will now remain in place through may third despite airlines asking the white house to drop the requirement along with other covid restrictions as travel demand gets back to normal and all this comes as china
battles its most severe outbreak of covid since early 2020. now going so far as to designate lockdown violations as crimes. >> reporter: shanghai police warned residents today that they are criminally responsible if they, for example, leave their house and live in a high risk area if they refuse a covid test, or if they post what the authorities deem to be fake information or videos about the covid lockdowns. now, these marsh guidance comes as state media quote the president xi as saying the zero covid approach is the best plan for shanghai and as he reiterated again that there would be no relaxation of covid controls for china despite shanghai's strict lockdowns, the daily covid infections there hit another all-time high, and the lockdowns continue to weigh on the economy, a trade data for march
showed a surprise drop in imports. this is the first decline since august of 2020 >> wow, and that economic impact, you have to wonder how that affects their ability to carry on with zero covid at the same time. you wonder are they in the same predicament the u.s. would have been in march of 2020 where if this very contagious strain suddenly spreads throughout china, it will overrun the hospital and health care system. >> right and so right now based on the comments that we're hearing from the leadership, especially president xi, that the leadership is prioritizing the covid fight which to them means these lockdowns over the economic costs although he has mentioned before that he wanted to make sure that the economic cost would be min minimal. what we are seeing, though, also, is a little bit of a tweaking to some of the quarantine protocols local media have been reporting that the -- china is going to now look at shortening some of
the quarantines for eight cities as a pilot program, shortening the quarantine from 14 days to 10 days. this is going to last for about a month, and the purpose of it is to try to manage the shortage of quarantine beds and the overall costs. so not really a whole scale change at all of zero covid, but a tweaking around the margins. >> even as residents get more and more desperate j is that situation easing we keep hearing about shortages on ashelves and people screaming and trapped in their apartments. it sounds grim is it as bad as it's being portrayed? >> it's pretty bad in shanghai another city, people have been hoarding a lot of food, but say that -- for the most part, they've been able to get a steady food supply but in shanghai, the situation is really dire, and i think one
example of that is that the shanghai official tv station had made a big show about how they were going to have a variety program to celebrate how much progress they've been able to make to contain the outbreak, but that program and the fact that they were going to hold it came under such criticism from the public that eventually the organizers had to cancel the event. so you could just see that people are really, really angry about the way the shanghai authorities and that the overarching policy of zero covid has affected their daily lives >> absolutely. fascinating, perhaps still more political fallout ahead. eunice, thank you so much. still ahead, three names my next guest says are in the middle of an earnings destruction setup. you're looking at a chart of one of them already down 40% this year the other names she's shorting and one stock she is buying because of higher commodity prices it's three bails and one buy
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jumping on -- said to be studying a bid for the company this is a $38 billion market cap. the shares up 1.3% on these reports. trading just under $45 a share, but continuing to move higher as investors digest the possibility and likelihood of what would be a major takeout in the retail space. again, walgreens boots up about 2% 45 a share possible takeout by bonnie's reliance, the ibd yab group. recession fears and surging inflation are already taking their toll this earnings season. we're flipping the script and offering up three names to bail on as our traders see signs of earnings destruction and one name that could be worth a look joining me is the director of options at simpler trading welcome back, danielle three bails and a buy. that's not a great sign. let's start with the first one which is paypal. we spent a lot of time on this stock. it's been a battle ground. the value investors are itching here but the shares continue to
struggle they're lower today on news that walmart is poaching the cfo for the same position. competition across fin tech. you're bailing >> yes that's correct you know, kelly, this earnings season is going to be absolutely critical for the health of the overall market, and we really started to see this last quarter. when you look at paypal in particular, you now have three quarters in a row where this stock has tanked on earnings and each time it's getting progressively worse. i know people are trying to come in and buy the dip on this, but this stock is in a down trend, and i just don't see any way that it can possibly rally prior to the report given the reaction to the last three reports. so i'm short this stock. i do think it's a bail if you're a long-term buyer here i'm trying to trade it to new 2022 lows. >> so say that again we're around 100 a share right now and you're looking at where is the exit target >> i'm looking at about 85, 90
>> wow okay all right. putting her money where her mouth is paypal gets a short in danielle's book today. let's move to caravan in a, down more than 50%. it's been a huge, amazing super hot auto market but in the middle of a reset. you mentioned look, it's not profitable that's a big red flag. what else is a red flag for you here >> so with this setup in particular, i'm looking at any stock that rallied exponentially throughout 2022 and 2021, and especially the stocks that just really couldn't measure up because they're just not making money. when you look at caravan in a, that fits the bill we've seen a major fall. i think also they have a lot of head winds you have used car prices that are going through the roof it's difficult to get a new car, so why would anybody sell their car if they can't buy a new one? you have those issues.
but also if you look at the technicals and you look at the way it's reacted to earnings, yes, last quarter it did trade higher by 7% after earnings, but it's just been down and down ever since i think we have more downside ahead. and i think that if this breaks the lows right here, we're going to see a nice flush. >> and it's just around 106. similar price to paypal. and i have a similar question for caravana and way fair. huge exposure to higher rates and the housing market, wayfair, would those still be candidates for shorts, and i know that's what you're saying they are, but after the moves we've seen, there's probably a lot of people wondering at some point we start looking for the value play here. why don't you think we're there yet for wayfair? >> i just don't think we're there primarily because of the technical pattern. yes, you are going to start seeing buyers come in on some of these beaten down stocks at some point, but i'm just not seeing
buyers we're continuing in a down trend. if you look at the way investors have reacted to earnings, i think that's really critical people like to look at eps, but i think you also need to look at the way that the stock traded after an earnings report if you look at wayfair in general, you see last quarter a gap down 16.9% on earnings the quarter before that 7% on earnings that is showing that investors are not happy about what they have to say. and this company also losing money, and they haven't been doing well in the current inflationary environment you know, you have problems with the supply chain and i don't think that people are rushing out to buy new furniture given the fact that their grocery bill is exploding. i think we can see lower prices in wayfair, and i'm looking for a break of 100 and a trade down to about 90. >> does it mitigate your bearishness, the fact that bedbath, it might have been
positive on the session when they had terrible -- the comps were down 20 % and yet, the stock kind of hanging in >> bed bath and beyond is an interesting take this one has a lot of high/short interest what will happen with that stock in particular is if there's news that's not great but not terrible, you see a little of a short covering so this is actually one that i will keep on my list for any potential type of good news because sometimes you can get a quick pop higher on a short squeeze. as far as the actual news is concerned in the possible good news in wayfair, with any of these setups that are on my earnings destruction list, that definitely happens sometimes where the earnings report is actually a little more positive than i anticipate. because of the overall down trend and because of the overall trend in earnings as well, if that does occur, what i love to do, actually, is i like to enter the trade post earnings and short it for a continuedmove
lower in the next couple weeks >> all right so that brings us to your final call it's the only buy. it's caterpillar pretty straightforward story you think they'd benefit from rising commodity prices. how bullish are you? >> you know, i like caterpillar here i don't think that we're going to see any type of massive explosion in the stock it's a nice slow and steady winner it's been consolidating for a while. but the reason why i like it is because it's a large cap stock in this overall market environment, it's really volatile it's best to stick with companies that have a long history that are leaders in their field. and with caterpillar, they have an energy segment and also the mining segment, and due to rising commodity prices that i believe are continuing to go higher, i think their construction segment might have a little bit of issues, i think the other two segments are going to help it continue rise and retest previous highs and potentially go onto new highs
here in the next few months. >> these are key levers to have given everything we've been saying for the construction and housing head winds danielle turning three buys and a bail on its head we'll bring you back as earnings season progresses and see how it's going thank you for your time today. coming up, whack a mole. how the tripoint homes ceo described trying to gauge the 'lusing market wel tell you what has him most concerned next we're back in two. hybrid work is here. it's there. it's everywhere. but for someone to be able to work from here, there has to be someone here making sure everything is safe. secure. consistent. so log in from here. or here. assured that someone is here ready to fix anything. anytime. anywhere.
time for show and tell where we show you a chart and tell the story. and today it's shares of tripoint homes on pace to snap a three-week losing streak up about 3% as higher costs hit the housing market juggling the factors is like playing whack a mole here's what he told "squawk on the street" earlier. >> i've never seen so many variables from my 30 plus years
affecting our economy. yet the fiscal stimulus that kind of fuelled this fire. there's over $5 trillion floated into the economy and now the fed is put to a point where they want to put out this fire. and they're going to raise rates and that doesn't even take into account what's going on in ukraine. so all these variables have had a significant impact in housing. >> and to his point, the fed's march rate hike already having a big impact on the market mortgage rates sitting just around 5% after hitting 5.25 earlier this week. there hz live. 4.99 we'll get the latest figures and a another view the country's biggest loan originator in a moment first, not even the exotic cars are safe. hyper inflation is hitting the hyper cars we'll tell you how much you have to pay up for atth lovely one pictured right there stay with us
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>> lamborghini yesterday launching a new v-10 super car 240$,000 it's likely going to sell out by tomorrow other models are now taking a year or more for delivery. to get their cars sooner, buyers are paying five or six figures above the already crazy sticker price. for their suv dealers now charging an extra 100,000 over the 225,000 sticker price to move up the waiting list rolls royce suv will cost an extra $85,000 over the $350,000 sticker. mcclaren getting an extra $50,000 for the cars some porsche dealers charging $50,000 just to place a regular order for a new 9-11 turbo s they say demand has
fundamentally shifted with the demand in young wealth >> we have a shift into much younger customers. so we see that by the year 2025, we will have 70% of our customers which will be younger than 40. what we see also is that around the world there are more and more people which are able to buy a car like ours. so there are just more of them >> and there are even reports of dealers placing phantom orders and selling them to customers at higher prices when they finally do get the car with these prices both for pre-owned and existing cars, a lot of games being played by dealers and even some buyers >> why not charge whatever you can charge right? if the consumer is indifferent i've seen market prices even more big f-150 trucks, some of the higher end models. >> the bronco is 20 grand. it's crazy for cars. the a pre-owned used lamborghini
is selling at 150% of the new sticker price. we haven't reached the ceiling yet for the cars >> you don't think that wealth tide has turned yet? >> not yet they said in march it only accelerated. we're not there yet. >> robert, thank you >> rates are on the rise. not hurting demand for lamborghinis we'll talk to the ceofo rocket companies about that next. what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq
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weaker outlook due to rising costs for materials and specifically gas how's said the expected business activity indicator decreased significantly. as did expectations of project and new projects pros report three months before they begin working and have to be selective. then there's the driving factor and gas prices finding a contractor team to drive to a project is expected to be more difficult for homeowners. >> what's the latest on mortgage originations >> not looking good on that. rising rates hit demand hard the average rate increased to 1.35% for loans with 20% down.
a year ago just around 3.25% refinance demand fell for the week and 62% lower than a same week ago interesting note, a big jump in applications for adjustable rate mortgages with a lower rate and made up over 7% of applications, highest level since summer of 2019 and the mortgage bankers association is lowering the forecast to 2.58 trillion, a drop from last year and down from 2.61 trillion forecast not great for the bachkers. >> no. thank you. the surge in mortgage rates is pressuring lenders.
shares of rocket down 30 paterson since the start of the year rocket company ceo jay farner joins me it's great to have you. >> thank you. >> it's not your fault what do you do i have heard leaning on the servicing side is something companies do now. >> we have 2.6 million clients to service on a monthly basis. we throw out monthly cash flow and important to keep in mind we are off record highs from a market perspective but looking at $2.5 trillion of mortgages done this year back to 2018, 2019, that's where we were. seeing what happens come out there's opportunity to continue to deliver great service and as we think about cash out and
heard you talk about the home improvement changing but there's equity locked up in people's homes and lenders help activate that pay off rising debt. lots of opportunity but you have to approach it differently. >> what do you anticipate from the fed balance sheet if they have to sell mortgage backed securities what role will rocket play in that >> we still see a very strong fanny, freddy and fha market and where the loans go or the type of conforming loans we do and so if the fed isn't buying it could affect interest rates but thinking about it, payments are up $150 from where we were at the stat of the year after taxes $100 a month but
still competitive compared to other ways to borrow money a mortgage still makes sense right now. >> sure. there are things that are different in this cycle. there was a bubble psychologically driven then we saw a crash. this time we try to slow a market to avoid the same thing from developing but there's still people who want to buy a house and want that inventory. i'm trying to foresee what thi housing market is going to look like a year from now what do you expect >> that's a great question and an important one thinking about homeowners i think they recognize that home values are at or close to what we might consider a peak for a while. if you think about selling this summer is a great time to do that
a client makes application and approve the loan before they find a home is a record level in january. more verified clients than ever before telling me that they want to be viewed as cash buyers. inventory is tight but i think we will see more come online and we'll going to have $2.5 trillion of mortgages done it is not a market like 2007, 2008 because the quality of the mortgage product is very good. as a servicer people are making the payments and the mortgages done are high quality an feel great about the credit risk. >> i hope people not taking out a.r a.r.m.s. >> maybe some jumbo or larger loans people do adjustable
we see the 30-year fixed as the preferred product. >> all right great to see you today thank you for your perspective. >> you bet >> breaking news from wnbc reporting the suspect in the new york subway shooting is arrested and in custody he left 29 injured, 10 people shot yesterday morning we'll get the latest on the suspect reportedly in custody. that does it for "the exchange." "power lunch" picks things up right now. ♪ amazing police work there to bring that individual into custody so quickly welcome to "power lunch. here's what's ahead on a busy afternoon. jpmorgan's rocky quarter profit down