blackstone report. i think cg is too cheap. >> all right, thank you. and farmer jim last but not least >> thank you i'm with anastasia on the chips. qualcomm qualcomm's my favorite >> oh, okay. we will see what intel has to say. >> i look forward to it. >> one of two big earnings reports after the bell i'll see you then. "the exchange" is now after. thank you very much, scott hi, everybody. i'm kelly evans and here's what's ahead today from wall street to washington, chevron's massive stock buyback is the big talker today. you just saw the shares popping. investors love it, the white house, not so much we have the story, the controversy, and the trade ahead. remember, they're also about to report earnings. plus, at first glance, today's econn data suggests that the economy is doing just fine don't be fooled. we'll look at why the fed isn't likely to slow down yet and how you can position in the meantime and housing, one area that is

seeing a clear showdown, but if you're in the market and hoping for a better deal, one of our guests says don't get your hopes up this is the show that crushes dreams it's all ahead, we begin today's markets and dom chu has the numbers. >> for every buyer there's a seller and for every buyer, there's a seller, kelly. this is the way things work out. anyway, there are more buyers than sellers to be a little tongue in cheek about this today, because we are green across the board the dough industrials up about 45 points. 33,790, now solidly above 4,000. 4,034 for the s&p 500, up 18 handles, just about one-half of 1% to give you an idea like i often do with the trading range for context, at the highs of the session, up 36 points. at the lows of the session, down 3. tilting towards tupper end of that trading range today the nasdaq composite, the outperformer, 100 points to the upside, 11,414 one of the themes developing today is what's happening with airlines a bunch of them, a whole slate of them came out this morning and reported earnings results. kind of a mixedpicture, generally speaking, though, the

united airlines one is being received more positively beats for the top and bottom line, helped along by higher airfares, travel demand. that sort of thing southwest was impacted by winter storms jetblue, alaska airlines, all amongst those in focus right now. southwest is the biggest decliner, one of them in that transportation index keep an eye on those by the way, i know we'll have a lot more on this airlines story coming up later on ben minucci will be on with us later. and tesla shares are up almost 10% on the day i've put up the one-year chart, because we've still lost about half our value over the course of the last year in tesla stock. but this little move higher, it seems modest in the context of the last year. still, though, kelly, that's a 53% move higher off the lows that we saw earlier nomonth. a lot of money being added back to tesla shareholders.

better than expected revenues. keep an eye on tesla >> a huge rebound off the lows dom, thanks. >> off to chevron rallying today after the company announced a massive $75 billion stock buyback and raised its dividend ahead of earnings tomorrow the shares are up about 4% still, but the white house is not happy with the move. for more, let's bring in cnbc senior white house correspondent kayla tausche and james pethokoukis with the american enterprise institute and a cnbc contributor. welcome, guys. kayla, what's the latest >> kelly, this is low-hanging fruit for an administration that for the better part of two years has been slamming these oil majors, saying that they need to be reinvesting their capitol in increasing production and if not that or in addition to that, lowering prices for consumers at the pump in the wake of this announcement, a white house official putting out this statement on the $75 billion buyback saying for a company that claimed not too long ago that it was working hard to

increase oil production, handing out $75 billion to executives and wealthy shareholders sure is an odd way to show it. the white house goes on to essentially say that chevron has decreased production from 2021 to 2022. but i spoke to some industry sources earlier today about this, kelly, and they say that the picture behind the scenes is a little bit more complicated. that chevron has increased production, more than the industry peer, and also that it's suffering some of the same issues that the rest of the economy is, namely difficulty in finding qualified workers and difficulty getting the parts it needs to build new rigs. all of that is sort of confounding the situation and making it more difficult, in addition to just the rhetoric generally about fossil fuels over the next several decades, to really plunk down more of that capitol mike santoli earlier today noted that it's not an either/or for chevron. it's not that they either do a buyback or expand their capitol investment in the rest of their

business, if they have enough money at this point to be doing both and i asked the white house, kelly, how they felt about the fact that chevron being such a widely held stock is in the portfolios of any white house employee that owns the dow jones industrial average or the s&p 500, and they said, that really doesn't change the thesis here >> i'm so glad you -- kayla, stick around, because jimmy, here's what i think. let's all stop arguing about this and make everybody a shareholder. let's just recycle the dollars back pension plans -- this is the irony. all of the pension plans and the types of people who could benefit from our own dollars flowing into these companies are divesting from them because of esg reasons. why not just say, no, no, no, you're all making the wrong move we should all hold these stocks so we all benefit from the repatriation of our own dollars, for instance, through oil prices, gasoline prices, all the rest of it >> i love it universal basic shareholder. >> right >> fantastic >> i wish the white house had done the level of analysis that kayla did, because she was spot-on target look, what do we want over the

long-term, right we're supposed to be long-term thinkers we want these companies to invest over the long-term, both in fossil fuels, but perhaps new energy sources perhaps geothermal and in an industry that's very cyclical, boom, bust, when times are better, you have to let them keep profits, do with profits what they will when times are pad. and to assume, i don't know, a white house's press secretary knows better how to ensure the long-term performance of an oil company, it's pretty much a stretch. >> well, okay, but we know that -- okay, okay, jimmy, make the case i know you can play devil's advocate better than anybody what is the genuine case for saying, this buyback is too big and you, chevron, ought to be investing more to bring down oil prices, gasoline prices for everybody. i mean, can you make that case >> i would find it very difficult to make that case.

companies invest for the long run, where they can get a good return what you're saying is, like, that shouldn't matter. whether or not they can get a good return or it would be better to put that money back to shareholders, which would get recirculated in the economy, they say, that's the wrong decision, when, boy, you know what if you look over the long-term, companies that buyback shares are outperformers. that is ust, i think, one of many like interesting facts that suggest you have to rely on companies knowing how their own business runs, and they know what to do for the long-term, for the health of that company and for the shareholders by the way, the owners of the company. >> is there anything, kayla, that might actually come down the pike here, to you know, swe we've seen various proposals to tax buybacks, things like that is this just kind of using the plea pulpit, or could there be something more to it >> it is the bully pulpit and it's been used for the last several months these kpekts have come to the white house and had private conversations with white house officials. and the messaging from the white

house publicly has remained consistent and there is also a 1% tax on buybacks in place. and there was this idea at the end of last year that that tax was going to cause a lot of this activity to be backloaded to the end of last year that's why you saw a lot of spacs liquidating, because the repurchasing of that activity was categorized as a buyback, per se and there was an idea that maybe there would be a chill on buybacks from that 1% tax that's going into place but chevron is a company that has enough money that 1% is a drop in the bucket for this particular transaction and so unless it gets higher than that, really, really large companies, blue chip companies like this are not really going to feel the pimnch from that, kelly. >> i didn't even realize so jimmy, final question, then why not take -- looking at this as a devil's advocate point of view, why not take the buyback tax to 10%, if 1% isn't even being mentioned? >> if you think buybacks are somehow a sign that companies

don't know how to run their business, that money will go into the either or get sat on. and that it's bad business, and you know, maybe bad ethics, then, yes. if you're in washington, you should be pushing for a much higher sort of surtax, excise tax on these buybacks to prevent them that would be the logical move i hope they don't make that move, but that would be what you would want to do >> yeah, you force everyone to pay dividends and raise the tax money that way collect it one way or the other. thank you all for now. we really appreciate delving into this. kayla tausche, james pethokoukis. and that buyback news isn't the only reason we're talking buybacks today they said that's where they're going to address this issue with the white ouse and that brings us to earnings exchange we've got the action, the story, the trade, not just on chevron today, but also intel and visa chevron shares just 3% from their all-time highs we have steve dpgrasso is our

trader it's great to see both of you. pippa, kick things off man, this is -- this is going to make people work a little bit harder to get ready for this earnings report tomorrow >> yeah, people are going to be tuning into that call for sure, for more guidance, as you said, on the buyback, the potential pace of that, what could cause them to increase or slow that buyback, so a lot of questions probably on the call for that. but there's a lot of other things to watch, too and of course, chevron is the first of the major to report q4 results. so they really will set the tone for the quarter. and while analysts are still expecting a good quarter, it's not going to be as good as q2 or q3, given that slide in oil and gas prices that we saw in the back half of the year. capital spending also a key focus, back in december, chevron did say that they would spend about $17 billion in 2023. that was the high end of its $15 to $17 billion guidance. but of course, we have to look beyond that headline number and see to the extent that that is new production versus just inflationary costs and of course, the other side of

that is, are they still feeling the pinch from things like labor and equipment shortages? and so are there any updates on that but no doubt, kelly, the buyback is front and center and so there will be probably questions on that >> it's amazing, as we're showing that chart over the past year, the company has well outperformed the price of a barrel of oil. steve, what would you do with that >> so it's very hard when you just hear that report, when you talk at or around record profits and record volumes and record everything it's hard to repeat that, kelly. so what would i do with it i would be a seller of the equity space i think this is the year where last year, equities outperformed the underlying commodity i think this year, the underlying commodity will outperform the equity side and we also, i heard your conversation before i got on this is still a political debate but we do have divided government so i think if you have divided government and it's going to be

less of a headwind going forward, you might have the opportunity for the stock price to sort of move sideways i don't think it goes much higher from here, but that buyback debate is really interesting. 75 billion equates to 22% of the company. that can't help but stabilize the stock price. so buybacks, as jimmy said, buybacks stabilize and have a net effect of moving the stock price higher, but ultimately, you start to think about what could they do better with that money so it makes you think, maybe the growth aspect of a value company is probably over >> fair enough and a 40% gain over the year, as we show it let's stay right there and move into intel they're also out after the bell today. their shares, opposite story of chevron, literally mirror image. among their turnaround efforts, there are things to watch. continued efforts in p clrks

enterprise demand, where's that going? steve, you're more bullish on some of the other seminames -- i mean, in this -- this has to be intel -- intel is a show-me story to the marketplace for the time being what do they need to show to get people more excited? >> yeah, the problem is, when you look at the broad base of semiconductors, it reminds me of a children's book. see semis run, see semis fall, see semis try to get up. it's been a supply/demand issue. and intel is always the wounded gazelle at the watering hole when it comes to the semiconductor space. analysts after analysts will tell you that the company is not run very well, the company not taking advantage of a lot of different aspects. now, remember, they design and they manufacture, so this chips bill that we're seeing probably in theory should be a tailwind when it happens, if it happens, how deep it happens, whatever,

there's too many questions on that level but if you're going to pick a chip stock, you want to pick nvidia or amd. because intel continues to give up share in data space to amd data centers, to amd, and nvidia is poster child for everything unique, sexy, and everything you think about a cutting edge growth stock >> intel needs to come out tonight and say, we're going to power chat gpt and that will get people excited let's move on to visa now, talk about the due opoly that prevaid for much of the 2010s. and it's got its mojo back lately reporting with shares of 8% this year, consumers keep spending for now, some fx headwinds kate story we turn to for the story -- did i say "kate story." kate rooney we turn to for the story. >> we got mastercard this morning, that tends to be a bellwether for visa.

guidance was the thing to watch for mastercard and will be key for visa later today revenue guidance was pretty conservative it was a bit below what the street was looking for and then those comments on the consumer i caught up with the cfo of mastercard, who emphasized what he called the remarkably resilient consumer right now in the face of inflation. talked about strength in asia, especially with china reopening and that's also something to watch with visa. he says the services economy has been pretty strong, but did say that consumers are getting a little bit more selective. they're looking at some of the wholesale stores and have seen sort of a shift in consumer behavior they're really watching the labor market closely, though and these companies, visa, mastercard, all of the credit card companies really tend to tell us a lot about the broader economies. that's something to watch on the earnings call later. and then fx headwinds. that's also helped the credit card companies here, at least in guidance for q1. so we do expect to get something similar for visa, but watch the guidance, especially on the earnings call.

any commentary around the economy is also really key to watch here >> absolutely. and steve, you know, they've done a good job fending off a lot of the defi impulse of the last couple of years that said, i still notice retailers breaking out their fee and their surcharges more than ever and i never used to get any kind of bill that would break down, here's what you pay and here's what the surcharge is, and now it feels commonplace >> yeah, and, you know, kelly, if you widen up the lens where you look at these payment companies at, you saw that the new technology companies, the s sofies of the world and the affirms and these different nuances, you call them fintech, they're all fintech, basically, but they're really fintech companies. they sort of stole the attention a while back and then it flipped again and your visa and your mastercard and american express started to outperform so the sofis and the affirms are

definitely way underwater now. do they recapture that is there a bigger beta play there? maybe. when you look at a visa, kate did a great job at sort of just scoping this out payment, volumes, cross-border, year ago quarter, payment volume were up 20%. cross-border was up 40%. so -- but if you look at the chart, visa's stock was in a downtrend since july of 2021 it only broke out of that downtrend in december. so it's still in a prove me state for the stock. and these stocks usually just go up and to the right. there's never any second-guessing in these names but if i had to look at it now, further performance, i think you're okay here it was a final trade of mine a couple of weeks ago. i don't know how they're going to be greeted with the earnings report now, but kate hit it on the head it's a barometer to the overall economy and that's the lens that

will be seen through one last thing, mastercard gives it a little bit of a better entry into its earnings report, because mastercard's comments took the legs out of the market. >> fair enough and mastercard has outperformed we'll leave it there kate, before we go, can you give us a quick comment -- it was very striking to read reports this morning that stripe is still planning to go public. they insist, if we don't go public this year, we'll give you guys some way to cash in your equity this is a real barometer for the market >> big-time, kelly and it's great news for employees that have been maybe at the company while it's been private, they've been expecting an poppy. this is one of the names that has been seen as that late-stage company to go public it was valued at one point at $95 billion. a source close to the matter telling me that the cofounders this morning told employees that they're either taking the company public within a year or do some sort of secondary offering and let employees sell

shares and get liquidity that's a big theme in silicon valley, if you're early at one of these companies, it can be a huge playoff, but it's frustrating in the meantime and a hard way to retain people who might want that liquidity and say, wait a minute, i thought this was an ipo coming also good news for the ipo market that's been pretty sluggish and talk about a barometer, if stripe goes out and has a successful public offering, that could mean a lot. >> and weirdly for the retail public who is closed out of a lot of these great ipos a couple of years ago by the time they could get their hand on them in the open market, they had doubled here might be a chance to dump a high-performi ing asset into the market, so the fact that it might not go over that well could be a good thing in the long run if the rest of the public want to get in on it. kate rooney, thank you back to the bond market now. we just had seven years go up for auction. let's get out to rick santelli at the cbo >> we had 42 billion 2s, solid

"a." 45 billion 5s yesterday, solid "a." today we complete 120d billion in treasury coupon supplies with 35 billion 7s. agave it an "a" plus i haven't seen a trifecta in a long time. the yield, 3.517%. well below the when of issued masht. and if you look at metrics, we had one that was a little light on the direct bidders, just like yesterday. but when you look at the dealer amount, once again, only 6.1%, less than half of the ten auction average. historically, dealers have never taken less, which meant investors took the most, just solid, solid, solid. and listen, i like to keep it simple, kelly and just like i said yesterday, follow the money, the money for three auctions isn't listening so much to the fed, but listening to the auctions and putting their money to work and buying treasuries. >> they're telling us the

slowdown story thank you. speaking of which, we got a slew of economic data this morning. did it help the bulls' case for a soft landing, or are the bears champing at the bit? we will debate that. but first, the ceo of alaska airlines will join us to break down that quarter, tell us how they're handling the surge in demand after record revenue. very different story from southwest here we've got that next. and as we head to break, let's get a quick check on the markets. the dow, the s&p 500, the nasdaq all in positive territory. the nasdaq leading the way today. small-cap russell sitting the one out. there's the ten-year, black below 350 after that strong action "the exchange" is back after this another busy day? of course, you're a cio in 2023. but you're ready. because you've got the next generation in global secure networking from comcast business, with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud.

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welcome back to "the exchange." shares of alaska air fractionally lower after missing estimates on the top and bottom lines today. but compare that with rival southwest, down 4.5% after their results. still, alaska's stock is up 18% to start the year. it's on pace for its best month in nearly two years. the question really is do they have enough capacity to keep up with demand. let's ask the ceo, ben miniccuci ands here along with our very own phil lebeau. phil, kick things off. >> ben, thanks for joining us today. kelly talked about the fourth quarter and the slight miss on

the top and bottom line. i'm curious, you have so much exposure on the west coast, especially with california, they've been hit so hard by the storms over the last several months how much did that impact what you turned in for the fourth quarter? >> well, good morning, phil and kelly from seattle yeah, that had definitely an impact, phil but when i look at the fourth quarter overall and how we closed out 2022, it really was a solid year we had the best pre-tax margin in the industry at 7.6%. we had one of the best operations, despite some of those storms in california and the pacific northwest in the industry we're near the top in terms of completion rate and on-time performance. and i couldn't be more proud of the people of alaska in fact, they'll all be getting a 10.5% bonus or six weeks of pay, because of the outstanding performance in 2022. >> which i believe is your largest profit sharing, if you will, with your employees. employee bonus program on the west coast, california

and really most of the west coast, has lagged the rest of the country as it came out of the pandemic in terms of returning to travel. and it's still a little bit behind the rest of the country do you see that gap closing? >> i hope so, phil i think that's why our results are quite remarkable even with the west coast not being where the rest of the country is, we're really -- our revenues have really outperformed our unit revenue performance was extremely strong and our total revenues, again, the most in our history. so we believe we have a lot of upside going forward in 2023 we're still guiding to a strong 2023 performance, but we do see upside, especially in the business recovery. as you know, we're more exposed on the west coast with tech companies and the recent layoffs and the pullback and business travel but these are the biggest companies in the world and we believe they'll get back to business travel and that we'll see that in our results later in the year. >> you modified your order book for the 737 max, increasing it

how quickly do you believe you can start to bring these in to your fleet i know you're already doing it right now, but how quickly does that cadence ramp up >> well, we've got 40 maxes today, as of today so we're really happy with the airplane as you know, boeing is only about five miles down the road here we have a great partnership. 37 more maxes are coming to the alaska fleet in 2023 and, you know, we're in close contact with boeing, in terms of the delivery cadence and part of our growth, we'll grow 8 to 10% next year. so we've created some buffer in c case there's supply chain issues with boeing. we're quite confident that we'll get the majority of those maxes to achieve this 8 to 10% growth that we have planned for 2023. >> ben, speaking of boeing, i put dave calhoun on the spot yesterday and i said, how do you feel about the possibility of faa being privatized should it be privatized? because there are so many problems in terms of funding and implementation of funding for what they need to do

do you think the faa should be privatized >> well, phil, i saw you put him on the spot yesterday, so, well, look i mean, the question and the answer is, i'm not sure if privatization is the right answer or not. the key issue here is that there is more funding that is required for the faa. in terms of modernizing the air space, in terms of getting staffing where it needs to be in terms of air traffic controllers, that's what we need we need the funding to be there so our air space could be the best that it can be. and us as airlines, we can run the most reliable operations >> and it's not there right now. is that what you're saying whether or not it gets through privatization, it's just not where it needs to be right now, correct? >> no, i think there's a lot of improvements in technology that could be done in modernizing the air space. and i think that requires funding and you know, we've talked about staffing before in terms of air rtraffic controllers. there's a lot that still needs to be done and can be done to

make sure that it's modernized and ready to take advantage of all of the growth that's going to happen here in the years to come >> ben mimicucci, thank you very much for joining us today from the alaska airlines headquarters in seattle, washington kelly, i'll send it back to you. >> i was going to ask ben if he would like to run this privatized faa phil, i think you're on to something here ben, would you do it who would do it? >> you know, i'm really happy here in seattle, kelly, but thank you. >> i would take that football and run with it all the way down the field. we really appreciate it to both of you phil lebeau and ben minucci of alaska airlines. coming up, a big impact on all of us, but also pfizer, moderna, and across biotech the headlines and what it means for their bottom lines as we head to prbreak, take a lk at the dow heat map. ibm the biggest ggd telaarafr their results. "the exchange" is back after

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and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. welcome back to "the exchange," everybody quick check on markets we see the nasdaq outperforming with about a 1% gain twice that of the s&p and the dow for its part contributing about 86 points. we're not showing the small caps, but we want to focus on that for a moment, because we've talked about the outperformance so far this year 7% for the russell already, compared with just 5% for the s&p 500. you might be thinking, hey, great time to jump into small caps but listen to this, from deutsche bank, they're out with a note today talking about the percentage of companies in the russell 2,000 with negative earnings actually, if their negative earnings, do we call them earnings at all? during the 1990s, this number

was about as low as 15%. it's been steadily rising over time we now have a staggering 40% or so of companies in the russell 2000s that are reporting negative earnings. you can see here, it seems to rise with recessions every time, but never really resets all the way back down if the trend continues, we'll be at 50% by the end of this decade regardless, something to keep in mind if you're thinking about jumping into one of those etfs over at deutsche bank, i think i said let's get to tyler mathisen now for a cnbc news update tyler? >> kelly, i give you an "a" for telestrait telestrator. here's what's happening. the palestinian authority says it's cutting securitize with israel to protest an israeli raid in the west bank that killed nine. the move raises fears that violence will escalate and attacks by militant groups may not be prevented u.s. state department says that ending security coordination is not the right decision nasa to honor astronauts who lost their lives in the course

of their duties at cape canaveral. the day of remembrance ceremony included the reading of the names of 25 fallen astronauts. it comes just days before the 20th anniversary of the space shuttle "columbia" disaster. and yet another use for artificial intelligence. buzzfeed will use the creator of chat gpt to generate content for its websites among the reported uses, personalizing stories and writing quizzes that are tailored to each reader. a buzzfeed spokesperson says the company remains focused on journalism written by, kelly, actual humans. >> tyler, this went from us joking about it to weeks ago to now being the case >> it's the real thing >> it's shocking >> i mean, didn't we do an introthat was written by chat gpt. >> it was kind of a joke -- >> and it was pretty good! >> it was, it was great! i'll see you soon, hopefully >> yeah, hopefully still ahead, today's

economic data may look good at first glance, but don't be fooled we'll break it down and look at one trade my next guest says is a good bet regardless of how things shake out that's next. atbyheayote th, t w actually, the team did e sounds] ♪upbeat music♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪ ♪(lovely day)♪ a bank that knows your business grows your business. bmo.

welcome back recession? what recession a bunch of strong economic data out today, but it might prove that good news is bad news when it comes to the fed's next move. steve liesman here with the rundown and the implications for

next week, steve >> yeah, kelly, today's economic data which had hints of some brewing economic weakness in it furthers this debate about how much the fed should raise rates. should it be doing so at all should it pause? it's unlikely to affect the fed's immediate plans to hike 25 basis points next week, that's pretty well agreed let's dig inside the data. real gdp up 2.9% consumer spending, a little bit weaker than expected, up 2.1 business spending hanging in there at up 1.4. inside of that, equipment spending declined 3.7% a big chunk of the gains came from trade and inventory contributions to gdp, which combined to be up 2% inflation, the gdp price index was lower, 3.5%. this number was 9% a couple of quarters ago and then maybe the key number, this real final sales up 0.8 many economists think that the real final sales number takes out trade and inventory, gives a truer picture of the strength of the economy. and that picture is not very

pretty mickey levie over at berenberg capital writes, the underlying details of the gdp report were more negative than the 2.9% annualized growth suggests and point to slowing aggregate demand we had a strong durable goods number, all of that or a chunk of that came from aircraft, from boeing take out the aircraft component, up -- down 0.1 kt, business investment down 0.2. but jobless claims kurls hanging in there good numbers up 186,000, with most economists predicting weak numbers ahead. it is hard to remember a time when the data on the surface looked so good, but the forecast for the economy was so uniformly and confidently bad. we'll get a better look at just how the economy was in the final month of the year with tomorrow's income and spending data for december. that comes free of charge with the fed's preferred inflation

cater. so kelly, december is the rubber match between a strong october for the consumer and a weak november >> very, very well said. break out the popcorn for this one, with i think. steve, thank you for now our steve liesman. despite the stronger data that steve mentioned, our next guest still expects a mild recession late this year, but says it's not going to be the kind of recession that investors are used to. we're not used to any of them, andy, we don't want them joining me now is andy capron, so first of all, i'm going to try not to get hung up on the mild recession chorus out there. i don't know where that came from or where it's formed, but why is that your view here >> the reason it's my view is, i think we're in the kind of economy that we used to experience in the 1970s, not just because of inflation. one of the things that we got used to decades ago was a boom and bust cycle, because the economy was driven by physical stuff. and physical stuff has supply chain issues, it has constraints on how much you can actually produce, and as a result, you have wild swings not just in

prices, but also in economic activity i think bwhat we're experiencin today is that down swing back towards more of a bust a bust is perhaps not the best word for what i see coming, which is a lull in activity, perhaps a drawn out, but not very deep recession. and that's so far away from what we're used to as american investors, having lived through '08 and '099, having lived through the covid pandemic, we haven't seen a recession like this in a long time. >> i guess the only reason why i don't understand the argument for a mild recession, andy, is because the yield curves seem to be telling us we're going into a deep and severe one. >> sure, so the yield curve is of course telling us something one of thethings that it's telling us is that the short-term rates are anchored by what the fed is expected today so, the reason it's signaling what it's signaling is the fed is being very aggressive and very serious about fighting inflation, having been behind the ball for much of 2021. so, this is -- don't interpret too much into the yield curve. interpret more into the

underlying data, which is slowing down, but not collapsing >> well, i should really just get to the point here and say, what do you do with the stock market in the meantime everyone is going, why would i want to own equities in this kind of environment? what should you own and when should you own it? >> sure, so kelly, you had a really good chart up a couple of minutes ago on small-cap stocks, and the percentage of those companies that don't even make profits. that have results, but not profitable ones. the mirror image of that are dividend-paying companies. so dividends are a symptom, in my opinion, of something even bigger, which is, prudent financial management an executive team that thinks about the economic cycle and thinks, how do i make sure that i can pay my dividend and hike it over the course of the next two to three years has more financial discipline they don't overhire in the booms. they manage prudently through the bottoms, and manage a much tighter financial ship, that positions them really well for this kind of an environment that i expect >> all right andy, thank you pb it's good to speak with you now

we appreciate it andy kapryin joining me now. you think the safety trade would be the place to be over the past year, it's been true since the 2020 low, consumer staples have climbed 50%, but according to my next guest, those gains are creating a bubble and it's presenting one of the greatest short opportunities on wall street. let's bring in jeff beerman, chief market technician at three owe trade. welcome, jeff. >> thank you very much, kelly. nice to be here. >> no mincing words. go at 'em. tell people why they shouldn't be anywhere near them? >> well, first off, let's establish why the consumer staples hit an all-time high in the fourth quarter it was the old wall street sector rotation playbook, which meant, if we're going into a recession, let's get out of the risk-on stocks, let's go into the risk-off stocks. and so what managers did was, they said, well, with all of that uncertainty, let's go for the dividends, let's go for the clothes. they rotated into the cokes, the

pepsis, the procter & gambles, without a thought at all of the valuation. so as they ran up and the years started to unfold, managers were piling at tax loss harvesting losers into these stocks to window dress cut to the chase, here comes january. no need to own these stocks anymore, because, why? now investors are trying to signal that the recession is either never going to occur or the recession is already behind us, because they're rolling back into growth stocks and what happens i saw the opportunity for stocks trading two, three, four, five times their historical enormous at all-time highs. took advantage and started building short trades around it and it's paid off quite well but i don't even think it's close to being over. >> i loved the way that you put this, that either it's too late or it's not going to happen so you're in the wrong position for those, jeff, were saying, i take your point, but, what if if another 6 to 12 months, i want to think about this segment -- tell me how long you think -- because you're shorting it, and

for what period of time or until what mile markers can you be in that trade >> i'm not going to describe it or pinpoint it by time, that's a fool's game. so for instance, coco-cola, just demographically rose to 3 to 5% annual earnings may grow at 8%. stock trades at a 24 multiple. let me put that in perspective, kelly. you could buy meta, facebook, it would be half the cost and twice the upside so what i'm telling you is, you don't price these quote/unquote safety stocks just because they're defensive. you price them according to their normal valuation growth going backwards in history so coke should trade around maybe 8 to 12, procter & gamble, the whole lot. yet most of them trade at or above 20 times earnings. soy went after coke, campbell soup, general mills. i just picked them all off they've dropped about 20% and my thinking is, well, if there's a

new rotation, a lot of managers are going to say, well, if tech goes down, we'll go back to safety that's a bad move. because what's going to happen is you're rolling out of one bubble, back into that same bubble again, thinking that it's a bargain because it's down 15 to 20% so i call it bottom fishing, not bargain hunting. >> jeff, thank you very much we appreciate your time. we'll continue the chat soon, i hope >> thanks, thanks for having me. >> jeff beerman. a big trade taking place there you can see it with the orange line lifting off. with the fda holding a meeting today about what covid vaccines will look like in the future, could the gap start to narrow? wl inyothlast, next (vo) if you've had thyroid eye disease for years and the pain in your eyes burns like a red-hot chili pepper, or...your inflamed eyes are so watery they need windshield wipers, it's not too late for another treatment option

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welcome back the fda meeting today to hash out the future of covid vaccines meg terrell has been monitoring that discussion and is here with the key takeaways so far, meg. >> hey, kelly. well, the fda group of advisers is discussing a proposal by the agency, essentially to try to simplify the future of covid vaccines to annual updates in a similar system to what we have to the flu right now

so essentially, they would make recommendations in june about which strain is likely to be circulating in the fall, and then get those vaccines ready for production and a vaccination campaign to start in september now, the vote they're actually going to be taking this afternoon is specifically about whether the primary series, so for people who haven't had havey covid vaccines yet, whether those should match the bivalent boosters there are currently there are multiple formulations on the market and that can be confusing. there will be talk about what makes sense in terms of how to vaccinate people going forward this morning we heard presentations from the fda, the cdc, and three of the vaccine manufacturers -- pfizer, whose partner is biontech, moderna, and novavax. we didn't hear from j&j, that company not a big player in the covid vaccine game at this point anymore. it's interesting they're talking about this because only 15% of the population has currently had one of the bivalent boosters, the most recent one available for

covid. so not a lot of people getting these. but they are discussing what it looks like going forward >> and the implications for pfizer and moderna both. anyone else, as investors are thinking through this? >> pfizer and moderna predominantly, novavax to a lesser extent. it was interesting, you showed that charlotte of divergence, because i think that's all about what these companies have going beyond covid moderna had that great cancer vaccine data >> exactly, and still something hopeful on the rsv front as well meg tirrell keeping us posted. new home sales in december are falling about 27% from the previous year. if you're planning on looking for bargens in housing this spring, but real estate ceo says you might be in for a surprise she'll join us next. your dedicated fidelity advisor can help you open those doors. for you, mama. through personalized money management that can evolve with new chapters.

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to housing prices have fallen about 30% my next guest says it could be still lumpy for a while and buyers looking for sales this spring could be in for a rude awacen you're supposed to say you're going to get the deal of a lifetime why isn't that going to be the case >> because i think we're in for choppy waters. i think that inventory remains the real issue today we're stretched in so many

places like palm beach, connecticut, and i think it's going to take a little bit of time people keep looking at 2021 and comparing it, and remember, 2021 was the best year ever in real estate and so now things are starting to, you know, regulate, come back down, be normal we have interest rates that have gone up. you have inflation you have inventory that's stretched in certain places. so i think that is a little bit challenging. we're in a different environment than we were having said that, having said that, though, the home-buying process and home-selling process continues in bear and bull markets. prices go up, prices go down, interest rates go up, go down. so that's going to continue who no matter what because the market is there to serve you >> it's interesting, and i totally agree with what you're saying we're all kind of, yeah, if we did a deal no there's very little inventory. there are actually -- there still to me seems there's a ton

of pent-up demand. these properties are going quickly, a lot of them at lower price points, but still, the high-end ones maybe a little less so. why is there still so much pent-up demand for housing where is all the money coming in with mortgage rates at 6%, 7%? >> during the pandemic, there was so much money forwarded to the economy, a tsunami of money. interest rates had been low for 14 years so that demand has been there. and people have been chasing it. and the pandemic created this sort of whirlwind of people who wanted to buy new homes, and that's still there, and that's still real i was with an agent last night from palm beach, and she said she is the busiest that she's ever been. a lot of people are going to these other places, looking for homes, and i think that's just been unchanged the challenge, again, is inventory. in new york city, for example, we have good inventory so it's good place to look you can get good value in certain places but people remain committed to the home-buying process.

there's still a lot of optimism out there. i think people just feel like it's a great investment. we see millennials now being the biggest part of the buying market segment >> absolutely. >> they're in and committed. that matters, because many the past they weren't really into it as much. now you're seeing millennials say, okay, this is an investment in my future, it creates intergenerational wealth it means everything. so people believe in the home-buying process now more than ever. >> is it going to take another price drop, a rate drop? you know, what's going to kind of unlock what seems like a frozen market? >> you know, i mean, i don't know if rates -- rates i don't think are coming down. i think -- they're the lowest since cement, so that's good, but i don't think you're going to see 2% and 3% again i don't think it's possible because we need to have some fat because of inflation we have to keep bringing those rates up so i think it's going to take a little bit of time as you know, it can't be like 2001 all the time. it will have to work its way

out, and sellers are going to have to recapitulate, bring prices down so that buyers feel they have more room to negotiate and get a deal done. we are seeing deals get done it's still a good market it's decent in many places it's just not what it was. i think it's hard for people to live with that and they want it all to be caviar and champagne all the time >> we want it to be, like, oh, excess inventory, you scored something luxury for a song. we're still not seeing that. thank you for your time today. >> thanks so much. we heard from the ceo of alaska air on earnings this hour, but next on "power lunch," we'll tell you where to put your money to work in the travel se sector speak of which, let's see if tyler is ready for this action