U.S.-Iran Peace Talks, Memory Melt, and a Fed Hike? 3/26/26

Summary

The Exchange (CNBC) – March 26, 2026

Episode Summary: U.S.-Iran Peace Talks, Memory Melt, and a Fed Hike?

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Episode Overview

This episode of The Exchange, hosted by Dominic Chew (in for Kelly Evans), delivers in-depth coverage and analysis of the day's biggest business stories, with a heavy focus on the escalating U.S.-Iran conflict and its fallout on financial markets, oil prices, and Federal Reserve policy. The episode also explores volatility in semiconductor and memory stocks following major AI innovations, the arrival of crypto-backed mortgages, and developments in U.S. manufacturing and travel stocks.

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Key Segments and Discussion Points

1. U.S.-Iran Peace Talks and Market Fallout

[00:40–09:45]

State of Diplomacy, Oil, and Market Reactions

• Host (Dominic Chew) outlines that stocks are under pressure as U.S.-Iran relations worsen, yields rise, and oil prices soar (U.S. crude: $94/barrel, Brent: $108), fueling volatility.
• Eamon Javors reports from Washington on President Trump’s cabinet meeting:
  • The President believes oil could have spiked higher and stocks could have suffered more, hinting at economic “running room” for sustaining the war short term.
  • Reveals details on a "present" from Iran: Iran allowed 10 oil tankers (initially eight, then two more) to pass as a show of control over the Strait of Hormuz. These were Pakistani-flagged ships, with unclear buyers and financial arrangements.
  • An Iranian official dismissed U.S. proposals as unserious and unfair.

“They said, to show you the fact that we're real and solid and we're there, we're going to let you have eight boats of oil… That was three days ago.”
— President Trump (as recounted by Eamon Javors) [02:35]

Negotiation Dynamics—Timelines and Deadlines

• President Trump extends his deadline for bombing Iranian power plants by five days, meaning potential escalation could occur after the coming Friday.

“He always reserves the right to extend the deadlines, and he often does.”
— Eamon Javors [04:17]

Market Psychology: Who Do Investors Believe?

• Tobin Marcus (Wolf Research) argues that market optimism—previous relief rallies on Trump’s comments—is fading; both sides are posturing and “someone’s lying.”
• Scenarios: No breakthrough expected; Trump can tell a “de-escalatory story” by extending talks, continue air strikes, or escalate further (with new military assets arriving).
• Both U.S. and Iranian leadership seem prepared for economic and political pain before yielding in negotiations.

“He is not, we're not at the strike price of the Trump put… it's not at the level that's going to force him into abandoning a policy he otherwise thinks is strategically important.”
— Tobin Marcus [08:48]

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2. Bond Markets, the Fed, and Inflation Risks

[09:45–15:32]

Reading the Bond Market Amid Geopolitical Tension

• Komal Sri Kumar (Sri Kumar Global Strategies) challenges prevailing market assumptions:
  • Markets incorrectly believe Iran will capitulate quickly, as in Venezuela.
  • The Iranian regime is driven by deeper ideological and religious motives; high oil prices could persist, even risking global recession.
  • Treasuries are no longer the clear safe haven—gold prices have soared, underscoring inflation fears and loss of dollar dominance.

“Iran is not Venezuela. Venezuela was an easy finish... On the Iranian side, it is more ideology, it is more religion that comes in.”
— Komal Sri Kumar [10:26]

“Gold has become the big safe haven... That’s the making of stagflation. Where do you take the lesson from? Look at the 1970s.”
— Komal Sri Kumar [12:20]

Policy Prescription: Will the Fed Hike Rates?

• Sri Kumar calls for a 0.25% rate hike at the next Fed meeting for “credibility,” even if not immediately impactful, as inflation is on the rise.

“Passing is not enough. You need it to hike in order to show that the Fed is on top of the inflation situation.”
— Komal Sri Kumar [14:53]

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3. AI “Memory Melt” and Semiconductor Stock Turmoil

[17:38–23:17]

Google’s AI Breakthrough Causes Sector Shakeout

• Google claims its new AI model can reduce memory needs sixfold, pressuring memory stocks (Micron, Sandisk, Western Digital, Seagate).
• Joseph Moore (Morgan Stanley), Semi Analyst:
  • Despite the correction, memory stocks’ earnings have outpaced even massive share rallies; Micron trades at less than 4x forward earnings.
  • AI buildout is largely constrained by memory; as long as that demand persists, sector fundamentals will stay strong.
  • Fears over Google’s innovation are overblown: improvements are part of continuous progress in AI, and memory content remains critical.

“This is viewed as a multi-year crisis where there’s not enough memory to support the investment that everybody wants to make…”
— Joseph Moore [19:57]

Stock Picks

• Top picks: Micron and Sandisk for deep value, with cash flow potential even at modest multiples. Still bullish on Nvidia as a leader.

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4. Crypto-Backed Mortgages Hit the Mainstream

[26:52–29:40]

Product Launch, How It Works & Implications

• Diana Olek explains: Better Home & Finance (with Coinbase) offers a mortgage compliant with Fannie Mae—borrowers can use crypto as collateral for down payments, via a second loan.
• Crypto is pledged, not sold, allowing the borrower to benefit from any appreciation.
• Downside: Two loans make it costlier, but approved under Fannie Mae increases access.

“We have now finally created the infrastructure rails to enable any tokenized asset in America to be able to be pledged to help someone afford to buy a home...”
— Vishal Garg, CEO (Better Home & Finance) [27:45]

Impact on Homebuyers

• Designed for first-time buyers with crypto wealth but little liquidity, offering a new avenue for affordability without triggering taxes or selling potential winners.

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5. Market Update and U.S. Manufacturing News

[25:12–42:46]

Broad Market Check

• Down day across indices: Dow down 430+, S&P below 6500, Nasdaq off nearly 2% (memory/tech drags).
• Gold prices tumble to worst month since 2008.
• Clear Secure, Brown Forman (lunchtime alcohol M&A rumor), and new crypto mortgage news.

Apple’s U.S. Manufacturing Push

• Mackenzie Segalos reports on Apple’s $400M investment to expand parts manufacturing in the U.S., with partners like Bosch and TDK, but final assembly remains mostly overseas.

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6. Partial Government Shutdown Looms

[31:47–33:15]

• Emily Wilkins reports from Capitol Hill:
  • Senate GOP offers a "last and final" DHS funding proposal to Democrats, standoff remains.
  • House Democrats under pressure as votes approach; possible government shutdown threatens key services.

“If Democrats cared about TSA officers, if they cared about Coast Guard employees... they would be getting serious about closing a deal.”
— Sen. John Thune [32:22]

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7. Fed Hike Odds and Consumer Resilience

[33:41–40:47]

Rate Futures and Inflation Outlook

• Steve Liesman: Odds of a Fed rate hike as soon as October jump to 42%. Markets are sensitive to war news and inflation shocks.
• OECD forecasts U.S. inflation at 4.2% for the year; stickier than other analysts expect.

Consumer Impact Amid Spiking Energy Prices

• David Tinsley (Bank of America): Despite rising gas prices, discretionary consumer spending (especially among Gen Z and millennials) is holding up, thanks partly to slowed rent growth and tax refunds. But headwinds could build if energy price spikes are sustained.

“These younger generations... have at least one club in their bag... rental payment growth is slowing for them below their wage growth...”
— David Tinsley [37:01]

• Liesman and Tinsley agree the crucial factors are duration and consumer expectations—short run pain can be smoothed out, but persistent shocks will erode spending.

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8. Travel and Tech Stock Strategies Amid Volatility

[43:43–47:07]

Airlines & Cruises

• Jeff Kilberg (KKM Financial): Volatile travel sector, but sees Delta as best-in-breed, calls for options strategies (call spreads) on American Airlines, less conviction in beaten-down cruise stocks.

“I want to use call options… because of the cost of capital, the less cost of capital.”
— Jeff Kilberg [45:06]

Tech Picks

• Favors Palantir amid ugly charts, sees opportunity if broader market rebounds despite current pressure.

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Notable Quotes

• “Someone’s lying about what’s going on here and the markets seem to be assuming that it’s the Iranians.”
  — Dominic Chew [05:14]

• “The dollar is not the major safe haven. Gold has become the big safe haven... That’s the making of stagflation.”
  — Komal Sri Kumar [12:20]

• “This is viewed as a multi year crisis where there’s not enough memory to support the investment that everybody wants to make...”
  — Joseph Moore [19:57]

• “We have now finally created the infrastructure rails to enable any tokenized asset in America to be pledged to help someone afford to buy a home.”
  — Vishal Garg [27:45]

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Timestamps of Key Segments

• U.S.-Iran Peace Talks & Markets: 00:40–09:45
• Bond Market & Fed Hike Debate: 09:45–15:32
• AI/Memory Stocks & Analyst Views: 17:38–23:17
• Crypto-Backed Mortgages: 26:52–29:40
• Market Update/Apple Manufacturing: 25:12–42:46
• Partial Government Shutdown: 31:47–33:15
• Fed Rate Hike Debate & Consumer Impact: 33:41–40:47
• Travel/Tech Trade Strategies: 43:43–47:07

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Concluding Note

This Exchange episode presents a snapshot of a world where geopolitics, technology, and financial strategy collide in real time. Uncertainty dominates: from the fate of Iran-U.S. negotiations and their market impact, to the Fed's policy dilemma, to new financial innovations like crypto mortgages and the persistent shifts in global manufacturing and travel. The discussion features actionable insights for investors, memorable analyst commentary, and real-world implications for consumers and markets alike.

Transcript

[Kelly Cavagnaro]

Hi, I'm Kelly Cavagnaro, Managing director, head of North America Institutional Distribution at Janice Henderson Investors. We believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy, your valued assets and our valuable insights, your mission and our vision working in harmony to seek the right investment opportunities. Janice Henderson Investors investing in a brighter future together.

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[Dominic Chew]

Learn [e-mail] Sapphire Reserve cards issued by JP Morgan Chase bank and a member FDIC subject to credit approval. All right. Thank you very much, Scott. Welcome to the Exchange. I'm Dominic Chew in for Kelly Evans today. Stocks are under pressure this hour as Iran and the US do not seem to be any closer to finding any comm ground. Yields are still elevated the 10 years back up to the 4.4% level right now. It swung by 14 basis points from its low to its high just so far this week alone. Oil prices rising once again with U.S. benchmark prices at $94 a barrel. Brent, the international benchmark back at $108 per barrel. And we are watching the memory trade. Google unveiling new technology designed to reduce the memory needed for those big large language models for AI SanDisk, Western Digital M Front and Seagate all sharply lower on the day, as you can see there. But we will begin with the latest developments on Iran as the president just wrapped up a cabinet meeting. Eamon Javors is in Washington, D.C. with the headlines, Amen, Dom.

[Eamon Javors]

That's right. The president said in the Cabinet meeting today that he thought that the price of oil could have gone even higher during the Iran war and that the stock market could have been more badly impact than it impacted than it's been. It gives a signal, I think, that the president sees a little bit of running room economically to continue with the war, at least in the short term. The president also revealed what it was he was talking about earlier this week. Remember, he had hinted that the Iranian side had given what he called a present to the US Side at some point in the negotiations of this war. He said that the president was economically very valuable, but he didn't say what it was earlier this week. Today he said it was essentially a proof of authority test. The US Was trying to determine whether or not the Iranians that they were negotiating with were in fact in control of the Strait of Hormuz. And they asked them to demonstrate that. Here's how he explained it.

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They said, to show you the fact that we're real and solid and we're there, we're going to let you have eight boats of oil. Eight boats, eight big boats of oil. This was two days ago. And they'll sail up tomorrow. That was three days ago.

[Eamon Javors]

So the President there saying eight boats of oil were initially released by the Iranian side. Then later in a subsequent negotiation, two boats were allowed through the strait for a total of 10. He said they were Pakistani flagged ships. No indication of where that oil went, who the purchaser ultimately was of that oil, or what happened to the financing for it. But the president seeming to indicate there, Dom, that he felt that this was a good test, that the Iranians he was talking to were, were in fact the ones in control of the Strait of Hormuz. Meanwhile, we did see a response from the Iranian side. Speaking to Reuters earlier today, an Iranian official suggesting that US Proposals to end the war are in effect not serious and not fair to the Iranian side. So both sides sort of rejecting out of hand the ideas coming from the other. And we'll see where the negotiations go from here.

[Dominic Chew]

Amen. Can you, can you give us a little bit more clarity just to kind of set the reset things, if you will, on the state of play? The president often puts timelines associated with some of these kind of, you know, they're almost like ultimatums. Right? You know, 48 hours, this, five days there. We know right now that Trump said negotiators are, they better get serious soon before it's too late. Those are his words. So when do things have to get seriously done? And soon, before we see any possible new escalation from the Trump administration with regard to military activity in Iran.

[Eamon Javors]

Well, Dom, that's the beauty of the President's negotiating style. He always reserves the right to extend the deadlines and he often does. So is there a final deadline? Not necessarily clear. But what he said on Monday was he was extending the deadline for bombing of Iranian power infrastructure, civilian power infrastructure, for five days. That would put it roundabout close of business on Friday for the President to decide whether or not the Iranians have been effective enough in the negotiations for his determination on whether or not to move forward with those power plant strikes. So I would watch the weekend as a possible escalation zone here. I don't think the President will do that during the course of the week. You never know. The president reserves all the rights to use the military whenever he wants, but it looks like the President is engaged in this negotiation behind the scenes, at least for now. And we'll watch over the weekend whether he feels he needs to escalate or not.

[Dominic Chew]

All right, Eamon Javors with the latest out of Washington, D.C. and the Cabinet meeting for President Trump. Thank you very much. Our next guest says someone's lying about what's going on here and the markets seem to be assuming that it's the Iranians. For more on that angle, let's bring in Tobin Marcus, the head of policy and politics over at Wolf Research. Tobin, you just heard Amen's report here with regard to what the Cabinet meeting yielded and just what might happen in the next 48 to 72 hours for possible military action. What exactly are the markets getting right or wrong in this case in your mind?

[Tobin Marcus]

Thanks for having me. So I think we look a little more reasonably priced after today's trading where we have equities down again, oil up, yields up. Now, those are moves in line with the pessimism that we've been expressing about this negotiation process all week. I think the, you know, the relief rally that we saw on the president's declarations coming into the week before the start of trading on Monday that these talks have begun and then his various characterizations of the status of negotiations. You know, generally we saw markets taking heart from the president's comments and not seeming all that perturbed by the, you know, rejections of the President's 15 point offer by the Iranians, by their kind of tamping down characterizations of what talks were happening. So, you know, it seemed like President Trump's efforts to talk the markets into a better place were working today. It seems a little bit like that's wearing off.

[Dominic Chew]

Okay, if that's the case, then let's kind of take us through what you think the scenarios could look like, given what we currently know. We do know right now that the administration is seeking the upper hand in negotiations, just like the Iranians appear to be trying to seek the upper hand in negotiations. That's what the rhetoric is all about, that, no, we haven't done this. We don't believe that these negotiations aren't happening. But given what you know right now, what's the most likely scenario that you are advising your clients of about the way that things play out over the course of the next few days?

[Tobin Marcus]

I think the negotiations themselves are not going to deliver a breakthrough. So I don't think that we're going to have anything that resembles a deal or even really a concrete step forward by the end of the current articulated deadline at the end of the week that is going to present the president with some options to, you know, essentially continue telling a de escalatory story. You know, as Eamon said, he can always extend those time for negotiations based on his characterization of progress being made behind the scenes, regardless of what is actually happening, which remains a little opaque between him and the Iranians. He can just stay the course, continue the air campaign, continue the bombing that's going on to try and degrade Iranian conventional military capabilities. Or he could double down in line with these many reports that we've had in recent weeks about the military options being planned. Axios this morning talking about this quote, unquote, final blow being the most recent and one of the most alarming forms of that reporting coming out and in line with the new military presence that's arriving with the Marine Expeditionary Unit attached to the USS Tripoli getting into theater late this week.

[Dominic Chew]

So I was going to say, Tobin, just on that, because you brought it up there, the Marine Expeditionary Unit, the meu, that's kind of moving into position out there. That is a signal again that there's an escalation on our side that is not being met with some popular approval here in the United States, just like the Iranian Revolutionary Guard Corps is probably facing some of its own pressure from its own citizenry out there. What exactly do you think the pain threshold is at this point for both sides, both for us here in the US and for those in Iran.

[Tobin Marcus]

Yeah, my sense is that the leadership on both sides is prepared to weather significant pain and significant backlash. I mean, Amen referenced President Trump's comments at the Cabinet meeting earlier today, which he's made before, that he expected an even worse reaction in markets he was prepared to tolerate higher oil price, has tolerate a deeper equity market sell off. And our view has always been that he is not, we're not at the strike price of the Trump put like he doesn't, he's not, I'm sure not loving what he's seeing in markets, but it's not at the level that's going to force him into abandoning a policy he otherwise think is is strategically important. And from the Iranian side too, they've obviously absorbed a lot of punishment in terms of U.S. airstrikes, but nothing that seems to me like they're close to the point of cracking. So I think that they're both going to be soldiering through. And I think the pain needs to build up more on both sides before we have a chance of the reserve prices on negotiations from each Side meeting.

[Dominic Chew]

Of course, the question now is how long it takes to reach that pain threshold for either side. Tobin Marcus at Wolf Research, thank you very much. We appreciate it.

[Tobin Marcus]

Pleasure as always.

[Dominic Chew]

All right, stocks are lower as investors digest all these latest headlines on Iran. And with oil prices rising yet again, we have higher yields. Also adding to the pressure in the markets. We've seen some wild swings with the 10 year yield moving around 14 basis points from the low to the high just so far this week. And the bond market is where our next guest is looking for clues on where we actually go from here. So joining me now for that case is Komal Sri Kumar, president of Sri Kumar Global Strategies. Sri, great to see you here. You heard Tobin's report, you heard Amen's report here. What exactly are the markets in your mind getting right or not correct about what's going on with Iran vis a vis our US Presence there?

[Komal Sri Kumar]

First of all, thank you very much for having me, Dom. And in terms of listening to the President, I saw the press conference and then Amen. And then more recently, Tobin, my reaction would be the market is assuming that what the President says is what they are going to run with. This is going to be a short war that the Iranians are caving in. My reaction to that and this is the reason why I've been looking for the 10 year yield to keep going up and I think it will go up even further. The reason for expecting, Dom, is that Iran is not Venezuela. Venezuela was an easy finish. They were based on economic incentives in Venezuela and then the President was able to take advantage of that. On the Iranian side, it is more ideology, it is more religion that comes in. And whether the oil price is high or low and keeps increasing to the extent of putting the global economy into recession would not matter as much to the Iranian regime. And that is where I think there is a serious error being made by the markets in terms of believing that there is a taco trade at play and therefore they can push up equity prices and remain pretty sanguine about the whole situation.

[Dominic Chew]

Sri, what exactly then is the bond market actually saying? Because in times of geopolitical stress, in times of war, there has maybe the conventional wisdom has been that people fly to Treasuries in that safety trade. But right now we have a possible inflationary threat on the could be or could be not transient oil prices front, which could then lead to a global slowdown which would then make Treasuries more attractive. I'm wondering why you think that Treasuries are behaving the way that they are given all of these seemingly contradictory forces on action with the price.

[Komal Sri Kumar]

All great questions, Dom. In order to get an answer, I look back not at the recent past where there have been crises and the money rushes into dollars. But keep in mind that despite the recent back off, gold price has gone up from $2,600 or so at the beginning of 2025 to doubling by the beginning of 2026. So the first lesson, the dollar is not the major safe haven. Gold has become the big safe haven as along with other precious metals. Second, what are the markets afraid of if inflation picks up? And I believe they will, the CPI inflation rate, 2.4% in the February count, is going to be over 3% in the March number, which will come out April 10 and will head higher. The reason why I look at the bond market rather than the equity market is that bond markets, they only can depend on yield. They can only depend on inflation adjusted yield. And it is not as important to them looking at the management or corporate earnings. So it is very unifocal area in the bond area and that's why it gives you a better forecast. And the 10 year and 1030 year treasuries are very concerned. And I think the term premium is going to rise. We found out yesterday that the mortgage rate went over 6.3%. It is up sharply from one month ago, it's headed higher and all of those are negative for economic growth and pushing up inflation. In other words, that's the making of stagflation. Where do you take the lesson from? Look at the 1970s. That is what happened. The dollar was not the safe haven. As John Connally, the Treasury secretary, said in 1971, the dollar may be our currency, but it is your problem telling the European countries to take care of it. So in other words, we are reaching a similar situation unless there is a correction very soon on either side taking place. And I don't see the Iranian side giving up anytime soon.

[Dominic Chew]

Don all right, Sri, we've only got a few moments left here. Can we put a cap on this by maybe addressing what you think all of this means? The confluence of everything you've just spoken to with regard to what we do with interest rates here in America over the course of the next six to nine months.

[Komal Sri Kumar]

I think what the Fed should do next month is to hike interest rate by a quarter point. Yes, I meant it increase it by 1/4 point for its own credibility. That's very important. It will not make or break the economy, but it shows that that the Fed is very much in control and they realize that inflation is on the way up. So that would be for a quick answer. That's where it would be. Passing is not enough. You need it to hike in order to show that the Fed is on top of the inflation situation.

[Dominic Chew]

All right. Komal Sri Kumar with Sri Kumar Global Strategies with his view on rates. Thank you very much. We appreciate it, sir.

[Komal Sri Kumar]

Thank you, Don.

[Dominic Chew]

All right. Coming up on the show, memory stocks are under pressure after Google unveiled its new AI models. But Morgan Stanley is standing by the group, seeing strong multi year earnings power ahead. The analyst behind that call joins us next. Plus, rate hikes are back on the table as three just mentioned for the Fed. We'll break down the latest probabilities and what they mean for the Fed's fight against inflationary threats. The exchange is back after this break. This is the exchange on CNBC with

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[Dominic Chew]

Back to the Exchange. Memory stocks are under pressure again after Google unveiled a new AI model. One the company says could reduce AI memory requirements by as much as six times. That's raising fresh concerns over the durability of the memory trade. Sending names like Micron, Sandisk, Western Digital and Seagate sharply lower as you can see there today. But even with the declines that we're seeing right now, those same stocks are still up massively, and I mean massively on a year to date basis. Our next guest says this recent sell off is a healthy reset and another opportunity to buy the dip in two names in particular for memory. Joining me now for the case is Joseph Moore, Senior Semiconductor Analyst over at Morgan Stanley. Joe, thank you very much for being here with us right now. I mean, these are triple digit returns over the course of the last 12 months for many of these and some of them just inside the last six months alone. What exactly makes you think that this dip is one that's just a revaluation and worth buying? Yeah.

[Joseph Moore]

Thank you. So it's been an amazing fundamental situation with significant increases in memory and those stock price moves that you've seen, as impressive as they are, the earnings improvements have been significantly higher. And we're now seeing Micron, for example, at less than four times our forward earnings number. So it really comes down to the sustainability of this really good pricing. And my view is there's lots of things you can worry about during a cycle. You don't trade at four times forward earnings for no reason at all. But the reality is that the AI build out is largely constrained by memory. And so to the extent that it is the binding constraint, as long as AI spending remains this strong, I see fundamentals remaining in this kind of very strong territory. And some of the stuff that you talked about with, with Google yesterday I think is getting a little bit overblown. This is a very good market with shortages that are intensifying.

[Dominic Chew]

What do you think is behind those jitters though? Is it because we've seen such massive momentum in these names that there is a fear that things may have gotten too far too fast ahead of themselves and that this is one of those situations where new technology could be one of those game changers? Do you see any kind of a shift because of what we heard from the likes of Alphabet and Google? Or do you think that that chip constraint aspect of things is going to provide that bid for quarters and if not years to come?

[Joseph Moore]

Well, that's certainly the fear. And I think when you see, you know, Micron guided to an 81% gross margin, I've done this over 30 years. I've not seen a company guide to a margin that high before. So there always are going to be sustainability questions around that. But talking to people in the industry, this is viewed as a multi year crisis where there's not enough memory to support the investment that everybody wants to make, which is in turn supported by very strong token usage. If you look at, you know, can a new technology come along? There are efficiencies every day. This is a remarkable pace of innovation in the AI space. And this kind of very specific issue that Google's talking about, this kind of optimization of the key value cash is for sure a big priority and it's happening every day all over the place. But it's not discontinuous. It's something that's part of the ecosystem. And actually that memory resides in the chip itself, in the high bandwidth memory in the chip most often, or in the unified memory for the rack. What that means is we're not using it to reduce the memory content, we're using it to do more and more complicated models within these, the context of these racks. So there shouldn't be any impact from the memory industry really at all. Is it disconcerting to see these major innovations happening all the time? Well, a little bit. You know, Jensen's talked about a million X performance improvement per decade in this kind of AI space. You don't get there without a lot of improvements along the way. But as it improves, we see AI able to do more and more. And there's as much as Wall street is kind of anxious about it, the sense is that there is a shortage of compute that will last and that that shortage in turn is caused by a shortage of memory that will last.

[Dominic Chew]

All right, Joe, because I, because I mentioned it in the intro to you, you do have a couple of picks that you think are going to be better positioned right now for that wave that's coming. Take us through those two picks and why?

[Joseph Moore]

Yeah, well, Micron, Sanskrit, the two memory stocks I cover, very strong for both, very different backdrop. You know, Micron at the center of everything. In AI, you see high bandwidth memory as kind of a central driver. I feel like in a way that gets too much airtime. Micron is very strong in areas like, you know, the low power DM that goes into the racks. It's all AI, all the time. You know, four times earnings. People want to play this kind of improvement in general purpose compute through, through the microprocessor companies. I'd much rather play it through a company at this valuation. So we like Micron a lot. Sandisk was a Little bit different. You know, NAND, the stock is up, I think 12x from the lows and we haven't seen capital spending increase at all. So the strength in DRAM is drawing capital away from nand. You know a lot of the companies have the same clean room space and so there's a little bit of a, you know, demand is very good for, for, for NAND as well. Maybe not quite what we're seeing in dram, but the supply is actually dwindling a little bit. So you know, both stocks trading at single digit multiples and you know, the reason they traded those multiples is because it's not infinitely sustainable. But when you trade at that kind of multiple you can have really game changing kind of incoming cash flows and things like that to really, you know, put these companies in a strong position for the next decade. So very positive on both names. You know, I think Nvidia is our top pick but I think that leads the way out. But the memory stocks were our topic before and we certainly very positive.

[Dominic Chew]

All right, SanDisk and Micron along with Nvidia. Top picks there for Joseph Moore. Joe, thank you very much. We'll see you soon, sir.

[Joseph Moore]

Great, thank you.

[Dominic Chew]

All right, coming up on the show, crypto backed mortgages are about to hit the market. Crypto backed mortgages, will it be enough to move the needle for home buyers? We're going to hear from one of the CEOs behind the effort on that tokenization if you will. Next. And before we head to break, check out shares of applovin down 9% on weaker E commerce commerce shopping trends. According to an industry check from Cleveland Research. Applovin has not seen enough new customer momentum to offset the churn seen in the first quarter. AppLovin shares down 9%. The exchange is back in two.

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[Dominic Chew]

best price welcome back to the Exchange. Let's get you a market check because right now you are seeing some notable moves to the downside. In fact we are currently just about at session lows with the Dow industrials down about 430 points, almost a 1% decline. The S&P 500 sits right above the 6500 mark, down 84 points, 1 1/4% declines there. And the tech heavier Nasdaq, maybe due in part to that memory trade we just talked about there among just semiconductors in general is down about 378points. It's almost a 2% decline for that tech heavier Nasdaq composite. So keep an eye on markets as we drift towards these session lows. Gold is on pace for its fourth four week losing streak in more than three years and its worst month going back to 2008. COMEX gold prices are currently down nearly 4% right now to $4,377. So keep an eye on gold and then from stocks. Clear Secure is trying for a fourth straight day worth of gains amid this tape as air travel woes continue to across the country. Downloads of the clear app topped 289,000 this month, more than triple from a year ago. That's according to data from Sensor Tower. Clear Secure is up maybe down 1/2 a percent right now, but on a year to date basis up 54%. And then check out Brown Forman shares. They're surging right now on report that per not Ricard is saying said to weigh a potential deal for the spirits maker. Brown Forman shares are having their best day ever at this point up about 17% right now. So that Bloomberg report driving a lot of the action there in spirits and alcohol while mortgage rates are continuing to rise alongside with yields. This is Fannie Mae prepares to accept crypto backed mortgages. Diana Olek has the details on what crypto backed Mortgages are. Diana.

[Diana Olek]

That's right, Dom. It's not the first crypto backed mortgage, but it is the first to comply with Fannie Mae requirements for purchase. Better Home and Finance together with Coinbase are offering a new mortgage that would allow home buyers to use their crypto assets as collateral. It falls under Fannie Mae guidelines so it can be bought and securitized by Fannie like any other conforming mortgage. All right, how does it work? It's a little tricky. The borrower takes out a regular mortgage with BETTER and then a second loan backed by either Bitcoin or US dollar Coin and held in a Coinbase account. The second loan would fund the down payment on the first loan. That way the borrower doesn't have to sell their crypto. Both loans are held by Better and the crypto assets once pledged, cannot be traded even if the value of the crypto falls. Nothing changes on the loans as long as the borrower keeps making the monthly payments.

[Crypto Mortgage CEO]

We have now finally created the infrastructure Rails to enable any tokenized asset in America to be able to be pledged to help someone afford to buy a home. So it starts with Bitcoin, starts with usdc, but going forward it can be Apple stock or Amazon stock or any publicly traded mutual fund, bond fund, something that you might hold in your ira. You're going to be able to pledge that to buy a home.

[Diana Olek]

Now the downside is you are paying on two loans, which makes it a little bit more expensive. But Garg says since you're not selling the crypto, you're still benefiting from its appreciation if it does appreciate, which offsets the higher cost. Other companies like Milo make crypto backed mortgages, but without the Fannie backing. So their interest rate would be higher. If you want more details on this, I know it's complicated. It's all up on CNBC.com right?

[Dominic Chew]

So Diana, can you tell us, given how many years you've covered real estate and you've done it in such an in depth manner, does it signal anything to folks out there about what the risk tolerance or aversion type factor is with regard to borrowing for homes? Given the current dynamic of maybe not even be able to find a home at a price that you can afford, how exactly does this help or hurt the overall narrative on housing?

[Diana Olek]

Well, it's all about affordability, right? And Fannie Mae under the FHFA guidelines in this administration has been leaning much more into crypto and crypto backed assets. So it's just providing another way for homeowners, home buyers to get into the market. Maybe they don't have the money for a down payment. We know that's rising. We know the cost of homeownership is high. But if they have these crypto backed assets and they can make the monthly payments, then they can use their crypto without selling it in order to get that mortgage. So it does provide another way into the market for a lot of perhaps first time homebuyers who have crypto but don't have cash and really don't want to sell the crypto because of taxes and because of the loss of future appreciation.

[Dominic Chew]

We do know that this administration is a little bit more leaning into that crypto trade. So, Diana, thank you very much for that. We appreciate it. And speaking of crypto, you don't want to miss an exclusive interview with Strategy co founder and executive chairman Michael Saylor next hour right here on Power Lunch. That's coming up at 2pm Eastern Time. Now let's send it over to Angelica Peebles for a CNBC news update. Good afternoon, Angelica.

[Angelica Peebles]

Hey, Dom. A US Judge on Thursday questioned the Justice Department's rationale for blocking former President Nicolas Maduro from using Venezuelan funds to pay for his legal defense, but would not dismiss the case because of it. Maduro and his wife argue that the inability to rely on Venezuelan public funds is interfering with the right to choose their own lawyer under the Sixth Amendment. President Trump said in his Cabinet meeting earlier today that he wants Attorney General Pam Bondi to bring additional charges against Maduro. The LaGuardia Runway where a plane collided with a fire truck has been reopened. The port authority said the tarmac were two pilots died Sunday night. Resumed operations around 10am this morning. And on the eve of MLB opening day, the Dodgers unveiled a partnership with Uniqlo that gives field naming rights to the Japanese clothing retailer. A sign will display the name Uniqlo Field at Dodger Stadium. This is the first major sports partnership for Uniqlo in the US and it's the first time Dodger Field has had a corporate sponsor. Dom, back over to you.

[Dominic Chew]

All right, Uniqlo, Japanese clothing company Shoi Ohtani, Japanese baseball star and in L A and maybe it's a match made in Dodger heaven. Thank you very much, Angelica, for that. We appreciate it. Well, coming up on the show, to hold or to hike, that's the high stakes question facing the Fed as Treasury yields hit their highest level since last summer. So how will the central bank react to the threat of higher inflation? We'll take that debate on coming up next.

[Joseph Moore]

All Right.

[Dominic Chew]

As you can see, markets are right above session lows right now. We are getting though developments on the partial government shutdown. Emily Wilkins is on Capitol Hill, as you can see with that story. Is it a story? Emily? Do we have a breakthrough?

[Emily Wilkins]

DOM we don't necessarily have a breakthrough yet, but Republicans and Democrats did speak. And with the White House throughout the night trying to find a path forward, we understand from Senate Majority Leader John Thune that Democrats now have what he's calling the last and final offer from Republicans. He didn't give a lot of details about what is in this bill, but of course, it comes as lawmakers have less than 48 hours before they're supposed to leave town for two weeks. And of course, there are already a lot of concerns about TSA funding. Listen to what John Thune said on the Senate floor just moments ago.

[John Thune]

If Democrats cared about TSA officers, if they cared about Coast Guard employees, if they cared about the vital work of the Department of Homeland Security, then they would be getting serious about closing a deal, not ceaselessly offering up the same unchanging list of demands like a broken record or a particularly nightmarish version of Groundhog Day.

[Emily Wilkins]

Now, we'll have to see exactly how Democrats are responding to this offer and if there's a chance that seven of them might peel off and vote with Republicans on getting the DHS reopened. Meanwhile, the House is very shortly going to start taking their own votes on funding the dhs. Last time they did it, we saw four Democrats vote for them. That was a couple of weeks ago. Will be very interesting to see if more Democrats are now feeling the pressure and vote with Republicans this time, Dom.

[Dominic Chew]

All right, Emily, last and final, just as we enter the recess potentially for Congress and of course, spring break travel season as well. Thank you very much for that. Keep an eye on that for us as well. Odds of a Fed hike are jumping today as energy prices climbing and the timeline for the Iran war remains murky at best. Our Steve Liesman joins us now with the latest market expectations on rates as we head into this, I guess, critical season. Steve.

[Steve Liesman]

Yeah, Dom. Today at least, futures markets are getting more serious about the possibility of a rate hike from the Fed in the face of higher inflation forecasts. As that probability rises, the chance of a rate cut becomes ever more a lost grail for the markets. There's now a 42% probability of a hike as soon as October, by the way, and that's double yesterday. Futures show 57% probability of no change in the funds rate just a 1.6. We can't really even show it to you on that graph. Probability of a rate cut the probabilities have been highly volatile, turning with every tweet from the president. Chicago Fed President Austan Goolsbee said in a CNBC interview last week that a rate hike could be on the table to address higher inflation. And because the job market market doesn't look all that weak, still the bar is likely high for a hike. Economists at bank of America writing quote potential Fed hikes priced by markets likely necessitate some unanchoring of long run inflation expectations. But there is a range of outcomes where the shock is sustained but moderate, such as the Fed would turn hawkish because it's more worried about inflation. Long run inflation expectations, they have remained relatively anchored, but inflation forecasts, they're rising. The OECD boosting its inflation outlook this morning for the US to 4.2%, up 1 percentage points for this year, but settling back down next year to 1.6%. Dom, OECD is a little above what I'm seeing from the rest of the street, but then again, they don't see it falling that much in 2027 either.

[Dominic Chew]

All right, a lot of inflation expectations are on the rise these days. Steve, please stay there for us. Right now we're going to dive deeper into the impact impact of those higher energy costs on the consumer because our next guest says rent pressures are easing and that should offset the surge in prices at the pump for Gen Z and millennials in particular. So joining me now speaking of the aforementioned B of A is David Tinsley, senior economist at bank of America's Institute. Thank you very much for being here with us. David, let's go through some of the aspects that Steve just broke down for us. Just how much of an inflationary problem are we going to see with the war or are you like everyone else just waiting to see how long the war lasts?

[David Tinsley]

Well, when we looked our card data through to the middle of our credit and debit card data fruits in the middle of March, what we saw was no surprise. Gasoline spending up double digit percentage

[Dominic Chew]

follow

[David Tinsley]

through from high prices of course. But the good news in our data really was that the consumers discretionary spending was holding up quite nicely. So you know, right now, and it is terrifically early days, of course consumer spending is holding up. I mean, yeah, exactly as you say, really it's about duration and demand and size of this energy shock going forward. But for now, I mean I think the consumer picture is, is relatively robust still.

[Dominic Chew]

Now David, what exactly is behind that robustness in spending. Given all of the headwinds from a sentiment standpoint, from a. From a fuel price standpoint and everything else, why exactly are we as consumers still relatively strong with regard to our spending back patterns?

[David Tinsley]

Yeah, well, I mean, there's lots of, there's lots of tailwinds. Of course, one is tax refunds. You know, they may be a little short of the growth that people were expecting, but they're still up like 10% or so on a year ago. So that's a tailwind for the consumer. In our report, we were pulling apart the generational differences between spending. And one of the really interesting things we noted was that Gen Z and millennial spending, which was the laggard really post pandemic for a long period of time, had from about the middle of last year begun to accelerate. And, you know, we kind of scratched our head on that because wage growth is decent, robust for these generations, but not necessarily accelerating too. But one of the things we can see in our data is that the rent payment growth has fallen to virtually zero for these cohorts. For most of the cohorts, in fact. But of course, these are the generations. These are generations rent, if you like, 50% of millennials, 60, 70% of Gen Z. So we think, you know, what's happening is these younger generations, they've got the headwinds from gasoline, et cetera, but they've also got at least one, one club in their bag, if you like, which is rental payment growth is slowing for them below their wage growth, and that is providing some offset for now, I think.

[Dominic Chew]

All right, Steve, I'd like to bring you in here. Does, does David's analysis there kind of reconcile with what you're seeing? Because it feels as though, at least anecdotally, that there are these headwinds and the consumers maybe are being affected by what's happening. I spoke to a gas station owner who basically said that he's seen less people fill up, and the people who come there have $10 instead of the 20. And they just say, give me whatever I can for 10 bucks.

[Steve Liesman]

Yeah. So I don't think David would disagree with any of what I'm saying, which is just a little bit critical of the analysis, which is the first thing is you want to be a little careful about making long term projections from what could be short term adjustments. And this breaks on both sides. The first thing is we know, Dom, that people like to live the way they live, and so they will make adjustments like, like, for example, using their savings to smooth over what they believe to be temporary shocks in their lifestyle. So what will happen is as this thing drags on over time, people will adjust things like how much they drive. And there could be some initial, as you point out, Dom, adjustments to, to driving, maybe some carpooling, stuff like that. So that'll smooth it over. The other thing I'm just a little bit skeptical about is kind of a timing mismatch match. You get rent relief maybe once a year, maybe once every two years. You get the bill for high oil prices kind of immediately. So that is something. David is absolutely right. It is true both in the aggregate indices and it's true in people's pockets as well. But you will have this drag from oil prices immediate. And the relief on rent is something that happens over a longer period of time. So I just want to be a little bit careful about saying that we're necessarily out of the woods yet on the impact on consumers. There could be more to come and it will be critical to see not only how long it lasts, but how long people perceive it will last.

[Dominic Chew]

All right, David, last word to you. We just got a few moments here.

[David Tinsley]

Exactly right. I mean, I think he's going to be critical going forward. Right now the consumer is in a reasonable position, but obviously the longer this lasts, the more the headwinds will blow and so, and the more discretionary spending will get sacked. So I think very much, you know, it's, watch this space. Keep monitoring the situation, really.

[Dominic Chew]

All right, David Tinsley at Bank of America Institute, thank you very much. And of course, our own Steve Liesman. We appreciate it. Both now coming up with the show. Shares of Apple higher after the company announced new supply chain partners. We're going to dig into the company's latest efforts to bring more of its manufacturing back here to American shores. That story coming up next. Details are out today on Apple's plans to expand U.S. manufacturing capacity. Mackenzie Segalos has more on Today's Tech Check. MacKenzie.

[Mackenzie Segalos]

Hey, Dom. So Apple is expanding its American manufacturing program, bringing in four new partners, Bosch, Cirrus Logic, TDK and Cunity Electronics. And they're going to manufacture components on US soil for Apple products sold worldwide. It's $400 million in new investment through 2030. Now, this is about parts, not finished products. The chips, sensors and glass, those are increasingly made here. But final assembly of iPhones, Macs, AirPods, Apple Watches, that is still happening overseas. China has historically been the primary hub, but Apple's been significantly diversifying with India now assembling a substantial share of iPhones and Vietnam handling much of the rest including Macs. Now as for what these new partners will actually be making, TDK is manufacturing sensors in the US for the first time in including tech used for iPhone camera stabilization. Bosch is producing chips for features like activity tracking at TSMC facility in Washington state. And Cirrus Logic is working with Global Foundries in New York on semiconductors that power face id. And this all builds on a playbook that CEO Tim Cook initially rolled out during Trump's first term and supercharged last August with a revised $600 billion four year pledge to move more of the upstream supply chain to the US and since then, Apple's sourced more than 20 billion American made chips and this year alone is on track to buy over 100 million chips from TSMC. Arizona Fab, Dom.

[Dominic Chew]

All right, Mackenzie Scotts of the latest there Mac, thank you very much for that. Coming up on the show, shares of both Norwegian Cruise and Carnival Cruise lines down about 20% among the worst discretionary performers during the month of March. But our trader is finding opportunities in that travel sector. The names he's looking at coming up. Welcome back to the Exchange. Airlines struggling amid the partial government shutdown and of course the Iran war. United shares lower by 18%, American down by more than 30% while Delta is the relative outperformer, down roughly 4% on a year to date basis. Our next guest says one of these names looks attractive here, but he'd rather use options to gain exposure rather than buying the stocks outright. So for more on that, let's bring in Jeff Kilberg, CEO and founder of KKM Financial. He's also a CNBC contributor. Jeff, the travel trade has been volatile. So what exactly stands out in terms of a value proposition at this point?

[Jeff Kilberg]

Well, Dom, it's volatile and it's staying volatile as we're seeing equity markets red across my boards. But we own Delta owner personally. But Also in our essential 40 ETF, we see Delta as best in breed and it's been a workhorse. 23, 24, 25, three consecutive years of moving higher. Yes, it's down a little bit. But in comparison to American Airlines, which has just been down absolutely decimated, down 30%. So if you look at American Airlines, I think there's an opportunity. But you have to define your risk here. I see a bounce coming in American Airlines, but I don't know if it's off $10 off of $9. But that's why I want to use call options to obviously identify what my risk is or my cost is.

[Dominic Chew]

All right, so call options. Call options outright or are you spreading them? How exactly do you play that strategy wise?

[Jeff Kilberg]

It'd be a call spread. So I want to buy the Levin straight going out about a month. And this is all obviously correlated to the global macro equity market. If the S and P gets off the matter at 6500, you're going to see all sectors and subsectors move higher. But. But an $11, $14 call spread allows you to participate in the $3 move. But you have to be considerate of what your expiration is, what your strike is. Because as you know, Dom, the longer you go out on an expiration, owning a call, the more expensive it is.

[Dominic Chew]

Have you seen some of that relative value that makes you feel as though calls are the right way to go as opposed to buying the stock outright? Or is it just about really defining risk on a time elapsed basis?

[Jeff Kilberg]

Well, it's use of capital, right? You can get exposure without putting the actual capital stock. So we use options all the time because of the cost of capital, the less cost of capital. Typically, Dom, if I had such great confidence in the name, I would sell a put at the money and buy an upside call and finance it and do it for free. But I don't have the confidence that the downside in American Airlines is over. That's why we own Delta outright as a stock. No options in that position. Dom, we own Delta outright.

[Dominic Chew]

How about some of those cruise line operators? They've seen a lot of volatility as well. Do we think the cruise lines represent a decent value at this point as well?

[Jeff Kilberg]

Oh, Dom, I don't know. I mean, how much more can they go down? So we stay away from that subsector of travel. I think if you're looking for a broad swath exposure to travel, look at jets j ets, you have some exposure in there. About 48 different names in this ETF. It's down about 9, 10% year to date. So if you're looking just to dive in, Delta is actually the largest holding in that etf. I think jets is a way, if you have confidence that we're going to see see a resume of a rally here, which I am. I'm cautiously optimistic. I just don't know how much optimism I have in the travel sector specifically.

[Dominic Chew]

All right. And because we are seeing these moves to session lows right now in the broader markets, the place that's taking it the hardest right now is in that tech heavier NASDAQ trade. Are there any tech stocks right now that you think are attractive on a relative value basis given what we've seen on downside moves?

[Jeff Kilberg]

Well, I really like Palantir. We put Palantir into our Mango Growth ETF ticker symbol. Gary put it in mid February on that 135 level, but I think broader SWAT. President Trump said that he didn't think that the stock market was down that much, that greenlighted all the algorithms to go and test last Friday's low. So right now we're about 20 handles away from testing that low. All the while, we haven't really seen oil move that much higher. Oil's at $95.

[Dominic Chew]

Right.

[Jeff Kilberg]

So if the president is listening, he's at the back of the envelope here. Every five, $6, we're moving higher.

[Dominic Chew]

Sure.

[Jeff Kilberg]

Right now we are seeing the s and P500 go down 100 points. So Palantir is a name I want to own despite the fact we're that it looks a little ugly on the chart today.

[Dominic Chew]

All right, Jeff Kilberg, KKM Financial, thank you very much. That does it for us here. Thanks for watching the exchange. Power Lunch is coming up right after this break.

[Dr. Guy Winch]

Men are struggling with their mental health at some of the highest rates we've ever seen, but most aren't getting the support they need, and that needs to change. I'm Dr. Guy Winch, your host for season three of the Visibility Gap, presented by Cigna Healthcare. This season, we're focusing on men's mental health, bringing together real stories and expert insight to explore the pressures men face every day and why opening up can feel so difficult. Join us for the new season wherever you stream your podcasts.