>> okay. mr. weiss? >> i'm going with taiwan semi. look, it's way underperformed the smh and i don't think that's the case like it. >> jason snipe >> axp, and i like this one. >> joe t.? >> marathon petroleum, up 33% year to date more to come. >> all righty. i'll see you at closing bell at 3:00 "the exchange" begins right now. thank you very much, scott welcome to "the exchange." i'm kelly evans. here's what's ahead, goldman sachs said rate cuts are coming, i lot them and fast federal fed officials are trying to push that back a little bit and david zervos ss while they have a victory lap, jay powell should tread carefully plus the mart guest says don't let this rally make you chase it, but if you're looking to get in there are two areas that are still cheap and one of them is controversial and that's why he likes it he joins us ahead to make his

case >> few predicted, carter worth is here with two trades he's fading now let's start with the latest on thesmarkets and dom chu has the numbers and we're comi off a win streak. >> we'll keep it going at least for the time bei what we're seeing rate n is a stock market that's tilting toward t session highs we're up only half a percent and it currently sits at 4744 and change 4818 was the rord dintraday hi and 45% with the s&p 500. the dow drills up 37,321 the last tradeay and t nasdaq composite pacinghe advance marginally, up about one-half of 1%, 14,902 for the nasdaq composite there. is the merger monday news we got speculation at's going on r

about who would potentially take over this company and it's nippon steel and ty'll p $55 per share in cash toake it over it currently trading at $50. higher for this partular stock and remember, lot of mger speculation going alof theay back to thisummer and who ended up taking over and wah those shares, still 5% below the takeout price or at isappening with u.s. steel and of course, there a huge move market tied toiophar of the know that many parts of this industry are binarrelated nature and structure headlines today.e in the it's down 38%. at one pointt lost more than half its value and structure therapeutics for an obity and diabetes drug in the same category as wegovy and o zemchl

irk and wegovy from the efficacy stdpoint ande that marginal amount of these that huge cline downt's poweng theyame out with posive trial results and the mark was expecting so much more andt gives you the idea of the kind of anticipation or optimism that goes into timism until a least dietes-related weight loss drugs and i'll send tngs back over to you thank you very much, dom income chu. >> wall stre is going in on the fed give on the with john calling for five rate cuts and two more in 2025 he sees consecutive cu with the march, may and june plting for a little to of 100 basis points in cuts and that's about where the market is. cleveland fed president loretta masters is pushing back on that today saying markets have gotten

a bit ahead of thepss and just this morning chicago fed president goolsbee told our steve liesman the fed is ready to hike again if inflation is not under control. >> as long as we're being data dependent and we're getting external shocks that drive inflation back up or make us feel like the economy is overheating, i would be prepared to take that into accot and keep adjusting the policy. so our job as central bankers is to be paranoid about everything. to be on the lookout for what could go wrong >> let's bring in cnbc senior economics rerter steve liesman, welcome to you both dave, let me kick things off ask then bring steve into this and talk about why ts is a moment when we could be off to the races with rate cuts and sitive market pect eggs and all of our worries are behind us. >> i don't think all of our woies are behind us. i lake what austin said today.

they should be always on the lookout for things that will go wrong, but it'nice to have them in a position, kelly, where they can react to the economy going into a darker place. when inflation's high anthey have to fight inflation they sort of leavthe unemployment and e growth besides -- on the side a little bit because they're fighting that fire and that's where we've been for two years and i think what jay told you on wedsday last week was that they're sort of pursuing again that ilation and growth and the reaction function and the objective funk oction of the fed that they're back to normal and i think that changes a lot of the look for risk assets as we go into next year >> listen, they've been vindicated by a lot that's taken place this year. where would you say your concern in what direction does it lie for 2024 >> i think part of -- part of, like, we didn't know svb was going to happen in march

okay something hits us and the fed, i think, reacted interestingly than that, they used the balance sheet and not rates to handle that if it's a problem in commercial real estate or something like that, but i think the right tool is now more available to them in the event that something like that does happen or something in geopolitics with taiwan and china. there are so many you can list off. the things we just don't know and it's supply shocks that hit us and whether it's zero covid in china and there are lots of things tt can hit and it's nice to have the fed back on our side. >> coming through coviand a lot ofhe things ey've ne and tried that they'll do more in the way of special lending facilities and things like that going forward than necessarily cutting rates to respond to a shock? >> we learneded this with the ecb and the tpi program to help the peripheral bonds and the uk, and the bank of england did it last october that went into a tailspin they used funding facilities and

targeted toward the zone that was going into the red rather than giving the entire economy rate cuts, and i think that's where we're headed with the fed backstop more when it's very specific to a sector or an area. if it's the overall economy and the unemployment rates shooting up to 4.5% and thing are getting messy quickly. course, you' right and we looked at these tools and in some cases we barely had to choose them. so do you then think that we need or however many rate ts next year based on inflation or everything that's been happening. >> theell side loves headlines and they love to see their name in lights and one of my coetitors who you had up on the screen beforehand, they were calling immediately for three or four rate cuts very quickly and we stayed after svb ansaid it's a very specific thing and it's not re cut territory and it's specific to a couple of banks that don't know how to

manage their mortgages it will come and go, but the market always swings and the sell side loves the forest more. >> i was surprised to see goldma one othe first out of been mucmore reserved.jan has if anything, his headline has been i don't think there's going to be a downturn he's followed the fed more than led them so that one in particular stuck out to me, huh -- >> they were pretty quick, if i remember, on svb, too. they were very quick on that >> look, i've been in this business for 30 years. i've watched the sell side and part of the research and part of the trading side what i learned in watching my competitors on the sell side is people love the name in lights with the big number like five or six or seven and they forget about it and move back the other way. so i thought all of the presidents that you've had on and governors that you've had on and who have spoken afterwards, presented a very, i think, cogent, more reasonable

assessment of what 2024 is. >> interesting let me bring ste in on that note because i'm hearing a bit of caution from zervos here that we should be off to the races on the fed rate cut projections and maybe we won't get as much as the markets think rate now >> david's smart enough to listen than know enough to listen to them, i think that's what we know rate now. the fed has a problem and the fed is trying to find out -- in my opinion, anyway, message and the story, i think, is this. the fed has had two phases of policy in the last three years and both have been extremely clear and deafinitive the first one was in the pandemic when the fed had to bring rates to zero and there was no question it was at zero and going to stay at zero and the fed pivoted sharply, and there was no question and an absolute discipline on the committee about what it is the fed had to do and how long it had to do it we are now at a different place.

a third message has to be found. it hasn't quite found the right message and that, i think, is going to lead to some volatility and pushback, and i know fed officials have been surprised by the market reaction and yet it's a little unclear how they could have and should have done it differently. you remember as a policy, the actual statement, kelly, really contained just one word difference that was the only change in policy by the fed to talk about any -- but that's exactly my point. dots are not policy. the dots are an artifact of 19 different forecasts that happened as a result now there are some guys, there's one person with the dot that agrees with the market everybody else on the committee, at least in their dots disagrees with the market being below 4% on the year and the fed fund

rate one is they have to find the right message to come to some kind of agreement on how quick this is going and there's another issue and i wonder if jefs zervos wants to talk about this. there's a lot of money in the system when the fed pivots there's all this money thatcan now slosh back in and that is a problem of residual problem, i think, of qe, and it maybe suggests that if they really want to control policy and the rate structure and keep financial conditions -- keep them tighter that it's really a function over timof bringing thabalance shee down >> right >> dave? >> we talked a lot about that this year, kelly and with steve, as well. we still have an $8 trillion balance sheet. it's big and almost a $9 trillion at the ecb and a $6 trillion balance sheet at the boj and the bank of england and a lot of stuff that sits -- assets that sit on the central bank balance sheets that have

seen losses and absorbed losses and a lot of reserves that have been put into the system high-powered money that as steve was putting out act as a liquidity charge to the system i do think that's been a lot of the reason why the rate hikes haven't had as much punch as they've had before and we had that with clients the whole year and it's why we've not been following the market and many of our competitors who were forecasting rate cuts mainly by now -- actually by september if we were sitting here exactly a year ago, i think a lot of the folks that you put up on the screen would have had two rate cuts priced in for this year and in fact, they hiked four times. i ink it's fun to talk about big numbers and where it's all going to go in terms of rate cuts for the year, but i really think -- i thought all of the speakers that came on after jay powell on wednesday and talked to the market -- i think they sent a pretty simple message they're not in a rush.

this is not an sep forecast that was a recession risk it was a fine-tuning exercise that said we don't have to be as hawkish because we kind of won the battle in my piece on friday i called them victory cuts. they're not cuts because you're losing something you' cutting because you've battle. ome close to winning the >> my final, final, just to put a point on it question so the fed speakerses have come in an tried to push back a little bit to the expectation to a lot of deep cuts and it's your message th, you know, you think we might get fewer than expected next year beusthe balance sheet is absorbing a lot of this all of these reasons that we talked about, things are holding up better than expected and you would listen more and the markets are shrugging them off and still pricing in the cut >> they like to go and run and people loves to fuel that d the sell side loves to trade ask

i and it's all part ofhe game and one of our partners at jefferies wrote a piece, whether they cut in rch or june it's really not that relevant for long-term equity and cdit investors that are ithis game for two, three, four, five, ten-year horizons and whether they start earlier or late, the reality is they are winning. there will be some victory cuts. maybe there will be one, maybe there will be three, maybe tre will be five, but they're not in a major panic mode and i don't think they're getting there any time soon. i think we should sit back and look at this as good news on the ttle this has been a pretty difficult battle for two-plus years. a year ago in the summer or a year and a half ago we had 9% inflation and jay powell was ing compared to arthur burns and you had everguest on here that was telling you why we were going back to the 1970s and here we sit with a 3.7% unemployment rate and a 3% inflation rate, going to two i think there's a celebration and there's a victory.

i know he doesn't want to declare victory, but really what that message was on wednesday was we can cut next year more than we thought because we have been -- >> for a good reason. >> for a good reason, and we have been on our way to what we see is a victory steve, 15 seconds. final thought? >> yeah, real quick. go ahead and bet against the fed if you like, but you have to do so with your own view on inflation that is different from the fed's. i'm not saying the fed is right here, but you need to take the fed at their word that with inflation as they forecast it, this is what they, on average, plan to do with rates. if you want to bet against the fed and bet on a more dovish fed do it with a dovish view on inflation and not the same view. you have to come to the table with added vue if you're going to take that bet. >> gentlemen, ank you. steve liesman and david zervos, we very much appreciate it

today. my next guest says everybody is giving too much credit to the fed for the rally because markets have been resetting since november here is the from professor from the university and david just threw his hands up in disgust. you have to give the fed some credit what do you think is going on here >> no, i give fed the credit for hanging in there, that said, and think about the fed funds rate at the start of the year the ten-year t-bond rate was 3.88% and today it's 3.95% with all of the noise and -- and talk about the fed through the course of the year, the ten-year bond rate is effectively back to where it was in the start of the year i think if you look at when the market started to shift, i think it was the start of november when you start to see the mood shift and expectations get reset by what the next deal will bring. that, to me, was the bigger

change than the fed actually coming in and confirming what the markets had decided a week ago. >> let me dial that back and say was the expectation range than we thought that at heart is root in wh the fed is -- has done and now can do in 2024, i.e., ease policy. >> the fed is doing what it's supposed to do is act as a follower and look like it's leading the market when, in fact, it's following the market. i think with additional inflation coming down and the big story this year was the recession that never happened and the cession that experts told us was absolutely certain to happen, and i think in a sense the relief that people h that that did not happen was as mu a driver of what the rket is doing now than anything the fed might be doing factthey're follers aen, in cler way to caure a lot of the dynawe wchlayingut

daily. ta tus, aswath valuatio the mark at these levels and expectations for 2024. what are we now looking at >> the scary thing for me in markets going into the next year is now good news has to be good news last year inflation came in at 4% and that was good news. this year inflation comes in at a 3% plus, that will be go news >> last year the economy not ing into a deep recession was good news. this year the economy slowing down will be bad news. in a sense, markets have to be fighting that expectations game much more strongly this year which means that, you ow, we'll be watching earnings mbers again far more than we did last year becae that will be an indicatothat the economy is staying strong. >> although as i recl your basic sense om looking through things is that you think the s&p can return another 8% or 9% this

year >> i think so, that would be my expectation going into the 8% or 9%, but i had 8%, 9% expectations and 22% or 8% to 9% the year before. >> are you just writing the same number year after year >> it's going to be pretty close. your expectation number should not change that much because if it did we would not be where we are in the market and it would be up today. so the reality is the expectations and the market should not be a widely variable number so when i say market strategists swing all over the place my reaction is you guys make up enough stuff the truth is markets, the expectations are pretty stab wh the market tually delivers will be all over the place. >> and you -- when we were talking to david a moment ago he saw the risk more to the hawkish side the fed has to push, and i'll ease less than we expectt oro

would you say your concerns overheating in that direction or do you run in the direction that you're hearing more towards an economic slowdown? >> no. i think inflation will be ahead itself in deciding that inflation has conquered and the flab has said they prefer prefer inflation. snot question is whether they will continue to drift down or about 3% less. >> aswath, as always, we appreciate your time thank you for checking in with us >> aswath with nyu >> our next guest is warning investors not to change this market rally and does see two specific areas that are undervalued. he'll tell us what they are and how to play them plus the two trades that technician carter worth is stating including one that has

sh shocked the moon lately and the dow hanging on to a 16-point gain that briefly turned negative earlier and the s&p a more decisive gain and the longest win streak since 2019 after the dow hit a record intraday high. we're back after this. ♪ ♪ >> this is "the exchange" on cnbc all right, sheila, are you throwing dress like a dad party, a birthday brunch, or a vow renewal for your dogs? yes! the right drinksdeliver. drly.

welcome back to "the exchange." three major indices notched their seventh straight week of gain, but my next guest says don't let the rally make you chase it especially into those areas that are already overvalued rather, he sees opportunity in two specific trades and one of them is a surprise and i think i can guess. for more i am joined by chris grisanti, thank you for coming in as well today before we dive into that, do you want to talk about this idea of victory cuts and whether we can sound the all-clear now as is widely expected for markets and the fed. >> david used this phrase that i think is a terrific phrase, victory cuts that we'll finally be able to cut i just don't ever in my 30 years in the market ever remember victory cut. the fed raises, if things stay good like they are now, why cut? and then they cut sooner or later because they need to cut so i don't ever remember a victory cut and i don't think we'll get one this time which is

why i think that the pundits are looking for early cuts in '24. they're either right because something bad's happened or i think more likely they're wrong because the economy stays strong and the fed keeps rates because they can >> so there's a saying that you typically want to sell the last hike. >> right and that has not worked this time we've had a couple of other cycles where the rally 20, 25% with the bear market and the people are throwing out the bearishness. >> yeah. for the moment, kelly and that's when i would urge investors to be cautious, once you start throwing out the bear thesis the better way to invest is both are in your head at the me time and be cautious and wary that t fed doesn't want to repeat the mistakes of the '70s and will keep rates longer if unemployment stays benign. >> one of my favorite trics and thfear and grieve index.

>>bsolutely. >> we're on a seven-week win treick and it all looks like clear sailing and there's some reversion. let's talk about a cup of the areas in particular and are wildly different one of them is perhaps more rprising is liium which s had a tough year and has gone against the idea that oh, yeah, buy that for the energy transition and you'll be fine. >> for folks who don't know, we've had an undermining stock for 15 years and what's going on here is we think folks have gotten way over pessimistic. evs are the future they may not be the future in the first half of '24, but they're coming in building out charging stations, et cetera lithium demand will increase as we get to the end of this decade and the smaller companies will go bankrupt now because lithium prices are so low and this is akin to buying oil stocks in the pandemic and remember oil was negative and folks didn't want them you didn't want to show them in

your portfolio so we think this is a great value play >> owe albemarle which is one of thmost high-profile names and is that e way that you would play this? >> they're the largestroducer in the world and you could argue it's hard to tell with some the chinese companies, but they will be around at the next up cycle. when that's going to be? i'm not smart enough to tell, but i think thinking the stock is down 65% from the highs of 18 months ago and that's about as far as it's fallen in its 30-year history and it's done that three times and this is the third time and we think it's good entry price. >> didn't reale it's -year-d company and the other area you like and when contversia of yo callss think the health care mit be more coroversl an nobody wants to hear about this trade now. so what do you see >> so health care was left behind as we a know in '23 when we d a poll internally

the impression that r firm had was the best performinsector, i tend to agree with them and it's not just that it was left behind and it's because the stocks are really cheap. if you have stocks and i'll tell you name pfizer, bristol-myers and johnson & johnson. while they're selling cheaply they have huge cash flows and the growth isn't great, but with those huge cash flows you can do stuff and you can buother companies anyou can crease your didend and buy ba stock. all of is would have been true when was widely se as a fe place to hide and then they've been terrible. >> that's true about lithium, too. so you pick your times and go in slowly if pfizer is wn 4 rcent. regiering a lot of fears other than a couple of thoseharma companies there were calls today on thermofisher and teva >> the danahers and the

thermofishers of the world and they wouldn't have done as poorly as the pharma side and also, you're getting income now especially that they're updoing with 6% yield and the verizon-like yields and rock bottom valuations and chris, thanks so much for joining us. chris grisanti with mai. >> breaking up is hard and expensive to do. it's costing adobe to break with the cloud-based design tool. the company blaming hurdles in europe what's ahead now adobe sh uesp 2% we're back in a moment ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently.

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not ♪ ♪ welcome back to the exchange the nasdaq is leading the way up 0.7, and the s&p is up half a percent as dom mentioned and 48.18 was in the intraday high the dow touching before calming down somewhat. vf corp shares are down 7% and this one after a cyber incident they disclosed that impacted fulfillment center operations and the company had a big share price reaction to the cyber issues and vf corp down 7% and southwest is reaching a settlement with the d.o.t. to pay $140 million for last year's holiday meltdown if you were effective and they canceled 16,000 flights during the last ten days of 2022 and have promised nothing like that will happen this year and shares today down a quarter percent on that news.

let's get over to tyler matheson for a cnbc news update tyler? >> a hamas official in beirut said they aropen to qatari initiatives on hostage exchange that would pause the war temporarily. as to when an exchange might happen moments ago national security adviser moments ago john kirby is at another point when another hostage deal is imminent people remain under flood alerts as a power will storm brings heavy rain and thunderstorms to the mid atlantic and the northeast nearly half a million homes across new england, new york, new jersey are also without power. it has been raining hard and the iconic blue mailboxes of the postal service are going high tech. the agency is installing 12,000 high-security boxes to thwart mail theft according to the agency, incidences account for

significant portion of theft around the country citing security concerns the postal service declines to say what upgrades have been made try to figure them out >> always feel better handing over the letters just to be safe tyler, thank you see you soon tyler matheson. coming up, this group of stocks have shot to the moon according to carter worth, tweet me if you can guess them he's got the names and narratives before his call let's do show & tell, and tell the story and we're talking costco hitting another all-time high and the best week in 18 months after beating out earnings and the stock's seven week win streak and here's what the outgoing ceo just told "squawk on the street" about how to stay competitive. >> our signature which has been a great brand for us is also a way of creating deflation in the marketplace and lower prices and

also it makes it a nice item for the suppliers also to have to compete against. so that's always worked for us our own private label and that's part of the trick in terms of having great prices and great sales. so now, do you have a driver's license? oh. what did you get us? [ chuckling ] with the click of a pen, you can a new volkswagen at the sign, then drive event. sign today a you're off in a new volkswagen during the sign, then drive event.

welcome back to "the exchange." one of the biggest discussion points in the market right now is whether to chase or fade the home builder trade we've got better data showing builder confidence rising for the first time in four months and the 2024 outlook also improved and names like d.r. holton, lennar, pulte group and toll taking a pause today. the itb was the mystery chart and we heard a number of bullish sell side saying the companies are still cheap and attractive on historical basis and nigh next guest says now is the time to take profits. joining me is carter worth good to see you. welcome. why the builders why do they jump out to you? >> it's just at this point the sheer angle of the lines, right? for someone who spends a lifetime looking at charts, someone can say so what? they can go higher, but to my

eye we have something that's unsustainable. the two areas of the market that have moved the most and they're rate sensitive and with this good news coming out on the fundamental side, the stocks are all down and that's because a great deal has been priced in already. we might have some charts we can look at and i would point out the following. two things the homebuilders as a group, since the absolute low, the financial crisis and march 6, 2009, have almost tripled the performance of the s&p and the s&p line with amazon and google. homebuilders have paced the qqq which is the champions of all time, and so it's long-term access, but on a more immediate basis and you will see that on the here and now chart that the group is up 40+ percent in a period when the market is up 15. so it's a beta trade, and we know that it has done what it might be expected to do in

response to the drop in yields, but at some point a great deal, if not all of the intermediate potential is priced in and that's my judgment. >> for what it's worth, my next guest chris grisanti has also exited the rest of his homebuilder trade and at the same time we have value players like bill snead could have a huge tailwind behind them and the valuations aren't that expensive yet and a lot of this might trade under ten times earnings i know you're want a valuation guy, per se, but you look at some and go, okay, maybe there's still value there. >> i think that's all about what one's timeframe is if one is looking a very long cycle it's almost always right to hold on to real estate and to land and what have you, but here and now, just deciding whether is this a place to have capital, at least full size versus reduced capital or hedge capital, my thinking is it's not a place to be as long as one

might have been or has been only by virtue of how much has been price priced in already. >> and let's pivot from those to the regional banks and maybe it's too strongly and a lot of people saying rates are normalizing and the economy is holding in there and it's time to take a look at this beleaguered area of the market. >> yeah. this is a particularly impaired area of the market when we've had a run on the banks and about six or eight months ago or the regional banks, too, in response to the drop in yield, 5% to under four on the ten-year our regional banks have surged and this is a chart of the kre, the spdr regional bank etf which has about 90 names in it before the drop in yields if we look at the next slide you'll see here what's happened since and we have popped all of the way back to the level from which the collapse started, and

that is the definition of a rally to a difficult level which is to say there's overhead supply and a lot of dead bodies above of people who are interested sellers and who have lost a lot of money and are interested in recouping those losses again, it's all about what your timeframe is, but in one month it's up 20% and the s&p is up 4-5. it's too hot and it's often right to take the road less traveled >> i remember talking this time a year ago, and both were expressing concern about the market and it went totally the other way. what do we draw from that? whatoes that tell us the s&p broadly speaking >>eah. i think it's all about again your timeframe to think about on the october low, just october 27th, the dow was down for the year the oldest aggregate of all. the last six, seven weeks have saved it and it's put a lot of edge on the s&p, but it's always that way

it's just a day or two or a week or intermediate period from being good or quite bad and just think october 27th the dow was down on the year was that a good year no it's ricochet. it will be less sanguine when 2024 comes on. >> carter worth, thank you as always appreciate you joining us. we have breaking news on nikola founder trevor milton. what can you tell us >> trevor milton has been sentenced to four years in prison for his role in fraud the ceo.d at nikola when he was two counts of wire fraud, one count of securities fraud. the prosecutors were looking for 11 years in prison the defense attorneys were arguing that trevor milton should be given probagtion t care for his wife who has been ill. the judge ultimately decided trevor milton, former founder

and ceo of nikola will be ending the next four years, at least that's the sentence, four years in prison for fraud. phil, is this a surprising sentence because -- to see someone going and now having to spend tells you about the seriousness of what they said took place here >> wl, these were serious crimes i mean, if you were an investor and you bought into what trevor milton was selling when he was the ceo in theummer of 2020, you could make an argument and say hey, look, this cost me a lot of financial harm and what the judge ultimately had to decide was did that harm that was caused by trevor milton making the claims that he made, the wire fraud claims as well as the securities fraud, was that worth a decade in prison or was it worth much less, and ultimatelye decided ur years was the appropriate term also keep in mind that in arbitration two months ago, trevor multion was determined that he uld have to pay $165

million back to nikola and just for one more thing keep in mind, kelly. he still owns 52 million shares of nikola. we are waiting to get details from the courtroom in terms of what he will have to give up financiay in the sentence of years pretty big news. ouphil lebeau. a flurry of deals from steel to software and adobe calling off e deal with fig ma that was a noinsed in september and we have the details and others that could face similar challenges next the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner

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adobe rminating its $20 billion merger with the design let's head out peter with deirdre bosaor today's tech check. >> the deal was scrapped with regulators and they had eliminated competition and removing figma's threat, and a lot has been talked about and the landscape and it looks different and there's been a massive ai platform shift which adobe has met so far and been a

part of shares up 50% and sinc the deal with figma was announced and meanwhile it has continued to develop abe express and it does a lot of what figma was supposed to do with the company and adobe will be okay and it can do an expanded buyback as a constellion prize. >> we know less about its last months. this is a silicon valley software design darling and the price tag that adobe was willing to pay for it led to no shortage of sticker shock and $20 billion and that was double figma's valuatn at the time and 50 times the annual recurring revenue and figma wa regulatory scrutiny and the break-up fee could be seen as the equivalent of a funding round allowing it to go as a figma put it earlier today and

it's been with the ai plug-ins at the intersections of design and ai more broadly, though, kelly, there is this frustration here in the valley over the failure of this deal one investor i spoke to called the process, long, opaque and byzantine and with the ipo market still uncertain >> i'm surprised. i wonder if there was something in that meeting with the doj a couple days ago they thought there was no path forward. after some of the wins the company had in court, this felt like it was important enough to adobe they would stick with it. >> it makes what microsoft was able to do with activision blizzard. that makes it more astounding. when you think about a big tech company looking at a software company or any company and thinking about the scrutiny they have to go through, this perhaps puts a chill on that.

>> thank you. coming up. adobe may be calling off that merging but masonite is leaving its doors and windows open for a deal announcing they will acquire pgt innovations for $3 billion. masonite shares down 16% on the news pe eaagch t hitting an all- time high. we will speak with the masonite ceo next [ "i'll be seeing you" by the five satins ] the mercedes-benz holiday love celebration is here. come in now for the exceptional offers you're bound to love, now, through january 2nd.

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welcome back. masonite will acquire sort of florida-basepgt innovation for $3 billion in cash and stock sending pgt shares to record high while masonite is down 17%. is the second deal this year agreeing to acquire fleetwood aluminum products earlier. here to talk about iis the masonite ceo howard heckes. al quily, do the investors think you are overpaying? that's a big sherry action. >> i think it can be typical and als like this. transformative deals with the acquire may trade do in the early days and the target trades up a bit and we see that today. this is a marathon a not a sprint. we are so excited about the transfortive nature of this deal and are looking forward to continuing to talk to our

shared holders in the near term as we work toward the close so they can understand the werful rationale and a significant upside of bringing these companies gether. >> does this put you in the windowusiness with the first time and wise the consolidation so important right now in your industry? >> this enables masonite to provide differentiated products very much aligned with our strategy and to meet heowner needs for every opening around the home. masonite, a nearly 100ear-old company, has been providing door solutions and interior and entry door solutions and pgt is a fantastic mpany that offers impact windows, iding glass doors, garage doors and patio enclosures. now you thk abt manite prodts to solve meowne needs r every opening around the ho? >> this time of year it makes me think of the chimney. you can't forg that opening. very important once a year. >> it is.

my granddaughters are looking forward to that day coming up next week. >> i bet she is. let me ask you nor --ore broadly speaking. we talked about how this pandemic. truggled post- this doesn't feel like it would be the last acquisition that you do. >> right. we are committed to our strategy. we have talked about doors that do more pickets about being th most consistent and reliable supplier in the space. solving life and living problems with dierent products and winning the point of-sale down gentle marketing. pgt is so complement three tour business because the products are complementary two hours. the channels are not typical but we sell through big-box retail and whosale and they threw independent dealers and direct to consumer. there is a lot of fantastic overlaps here. we are commitd to our strategy to delivering solutions to homeowners and we think pgt is a natural fit for

us in order to do that? >> i'm curious if you can rule out antitrust. lest people think this is toesotericr mething for the ftc oroj. i think they got iold with a specum bras was ing yea sell andt any case they were sued to stop that for door locks. could you potentially run into some regulatory hurdles here? >> listen. we believe our products and or channels a very complementary and there are almost no erlaps between what we do. we have terrific advisers in this deal and we expect to close in mid-2024. >> take you for joining us to talk about it today. >> thank you. >> howard heckes masonite ceo. that does it for the exchange. next we talk about the lab grown diamond craze a while back and i one major retailer is jumping in. we have those detail was. tyler

is back in getting ready. i will join him on the other side of this break

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good day, everyone and welcome to "power lunch" . alongside kelly evans. i'm tyler mathisen. the market started the week with some gain following seven straight weeks up from the major averages. we talk with one market watcher about the big thing to watch for in 2024. and we are watching oil prices closely today. up 3% as tensions heat up in the red sea. bp will stop sending its tankers there. more on the fallout from that coming up. u.s. steel is being sold to a japanese steelmaker for nearly $15 billion. he was still at its highest level since 2011. the stock had been at the dow industrials for 90 years now being sold