2023. >> you just bought that back, right? >> i did. >> when was that? >> last week. >> all right. speaking of new highs, about 20 points or so away on the s&p. see what we can do over the final stretch on "closing bell." we'll see you again then. dr. siegel joining us. "the exchange" begins right now. ♪ ♪ thank you, scott. welcome to "the exchange." i'm kelly evans. here's what's ahead. don't count out a january rate cut. one in january? that's according to our guest. he is here to tell us what needs to happen and what happens to the rally. and a trillion dollars in commercial real estate loans set to mature by the end of next year. it will create pain and opportunity, and we'll check back in with one private credit player with a front row seat. and berkshire's bet on byd is paying off, as the chi nnese

automaker is set to overtake tesla as the number one ev maker. before that, let's start with the markets. i still green on our screens, dom. >> there is, but very modest. and even the red is very modest. the s&p 500 currently hits at 4774. it's pretty much unchanged. i mean, up, down, just by a few points. overall, very tight trading range today. at the highs of the session, the s&p was up just six points, and down five points at the lows. so it's been, again, very modest, very calm right now to close out the year. the dow industrials, 37,000, just about flat on the decision for the nasdaq, 15,076. one place we are seeing more activity on a relative basis is in the interest rate complex. specifically when it comes to

the ten-year treasury yield, a little below 3.82%. at the lows of the session so far today, just a hair above 3.81%. it's important, because the surpearltives take us back to the summer. in this case here, going back to roughly july. again, the lowest rates we have seen here since july. it has an effect on a lot of parts of the market, mortgage rates and everything else. and even more so activity on a relative basis has been the action in cryptocurrencies. bitcoin specifically, up 2%. remember, at these cycle high, he was almost at $45,000. marathon digital is up on the day 11%. microstrategy up 8%. coinbase up 7%. and robin hood markets up 4%, as well. that's part of that crypto ecosystem, and, again, to put this in context, these are massive moves. check out on a year-to-date basis. bitcoin is up 150%, 160% you can

see there. but microstrategies, up 360% in that same span, and marathon digital, a bitcoin miner, up about 776%. by the way, kelly, microstrategy and marathon digital, two of the most highly shorted stocks in the market right now. so as we talk about some of the drivers there, cope an eye on those. by the way, if you want more, go to cnbc.com. we have a layout on just how much bitcoin has been driving the action in the stock market. back over to you. >> those players a key part of the melt-up we are seeing. stocks broadly are on track for a ninth straight week of gains, with the s&p trying for a record close since january of 2022. my next guest see rate cuts coming for all the wrong reasons. welcome to both of you. good to see you. joe, i'll just start with you.

you know, what gives you the conviction to stay on the glass half empty side of things these days? >> hi, kelly, nice to see you. two factors. number one, the yield curve, it's still deeply inverted basely by a record. so that's one factor. related to that is the leading economic indicators, which are now down 20 months in a row, about 8% year on year. those two variables have always been very predictive of recession. >> so joe, what about those who sort of say listen, yield curve inversion, post pandemic, it's different kind of cycle. we've been throughing a manufacturing recession and a housing downturn, but we are going to get through this whi economy experiencing a down business cycle. >> that is possible, but if that happens, the yield curve is so inve inverted, the fed has to cut 100 basis points.

even though yields have come down, you will continue to see banks tightening lending standards. so credit availability will not be present if that curve remains inverted. so if the fed cuts aggressively, maybe we get the soft landing. but the market is saying we're going to have a bumpier landing. >> it's so interesting, too. it would argue for massive fed action here. instead, everyone is talking about them taking a victory lap. the five-year auction top of the hour, the results are in for that. we have seen bond yields continuing to sink towards those session lows. steve liesman is following it for us. steve, tell us what the action was, how did it go down? >> i mean, i think it's a decent auction. we'll wait to rick comes back next week to put a grade on it. i have the dealers at 14%, below last time, the 11/27 auction, which was 16.8%. the directs at 15%. 15.4%, below last time.

and the reason is the indirects letty strong bidders here. 70% versus 65% at the last auction. and that is above, by the way, that is above the auction average, which was 67%. bid to cover, 250 above the last auction at 2.46. a little bit below the six auction average of 2.52. so i think it's good auction. i'm not seeing any action in the treasury, kelly, here that makes me think it's the bad auction. the high bid was 3.80, and the treasury -- it was trading at 3.81. we'll let smarter people like joe tell me if this was a bad auction, a, c, or d action. but the way the market is behaving, it looks like thl something like $58 billion in a not too shabby way. >> rick better watch out, steve. i think you're doing a great job with these. >> no, no, no.

rick can have that job. he knows what is good and bad. i'm going to give this a b minus, because the bid to cover was below the six auction average, but still not too shabby. again, this is $3 billion higher than the last auction. so the government keeps pacing this paper, and people keep paying relatively low yields. the last time we did a five-year auction, they sold them at 4.41. so do the math at 3.80. that's 61 basis points lower than the last time we were at this. so i don't know, seems pretty good to me. >> i think our deficit problems are solved with that. steve, stay with us, if you will. paul christopher, i think the verdict from just looking at the ten-year, which our audience 2340e knows what that chart is showing. that's a clear verdict that the market is more and more at peace with the way that the treasury supply is being taken down, i think. >> yes, absolutely. great to see you again, kelly.

it's a remarkable decline in the ten-year yield and in longer term yields across the board. but bought at the cost of what to the treasury? if you're going to sell a whole lot more short term paper, bills at higher rates, and then you have more spending coming on line next year, how are you going to continue to finance that much of your debt at these, you know, short paper sorts of percentages? i think you're going to have to move more into those longer dated treasuries. at that point, those bid-to-covers will increase again and you'll see yields rise with questions for the stock market. >> paul, we mentioned this off the stop. are you more cautious about markets in the economy? >> yes. we're kind of seeing things the way joe is, in that the one thing that for sure we see coming and going into 2024 is a slowing economy. and the leading pointing that way, and we're particularly focused on the consumer. oh, wow, great holiday sales.

what do you got left in the tank, consumers? what sort of savings do you have? what sort of room is left on the credit cards. are you really going to go into your home with home equity? >> i don't know if 3.1% year on year is really that great. steve, isn't that basically the inflation rate? >> yeah, pretty much right there. it depends on how you measure it. if you want to look at a three-month or six-month annualized rates. but that is the year over year rate. >> so sales are up 3.1%, less than the initial estimate. again, maybe that's a couple ticks over where the inflation rate is, so in real terms, we probably grew sales less than 1% from a year ago. steve, go ahead. >> i want to comment on that real quickly, kelly. we did do record tsa flying. i wouldn't give a verdict on the consumer until i saw the service side of this thing. people got a lot of stuff.

>> that includes restaurants, doesn't it? >> includes restaurants and the retail number. i don't know if the master card number does. but in any event, if you want to just look at the retail side of things, it's one piece of the puzzle. it's the service side of things, where i think there was a lot of spending this holiday season. >> what would you say to that, paul, to those obvious signs that there's still momentum to the goldman case next year that we will see continued labor market gains, falling inflation, real spending power take us through year end without a worse downturn? and even to the leading indicators you mentioned, i'm getting upset at them, because it's been 15 months for some of these, like the isms and the leis. at some point, they're going to have to turn a corner, aren't they? >> let's talk about services for a second. the problem, the real issue we have is that the more you pump money into services, the more you're going to have hiring, and

the more you'll have wage gains. the more you have wage gains, the more you'll have that services component of the cpi and the pce go up. how can the fed then cut rates? if the economy is that strong, they can't really do that. if the economy weakens, and they cut rates, then are consumers coming back with resilience and spend more on services? if so, you'll get wages back up at 4%, and inflationary figures, too. the only benefit inflation has come from is in goods coming out of china. that's not a statement how strong the u.s. economy is. so wage gains and fed cuts don't go together. >> joe, can you jump in on this, as well? >> sure. most of the consumer excess is in goods spending. it's about 8% above its precovid trend. i'm expecting the goods spending will come back to trend, because one, rates are high, credit is less available.

we associated ourselves on durable goods. we can only buy so many appliances, furniture, home renovation, et cetera. the service numbers have been strong, they're back at their precovid trend. the other point i want to make is, consumer spending can be really strong until it's not. it's a great proxy of where the economy is right now. it tells us nothing about where the economy is going, and all you have to do is go back and look at the deep recession of 2008-2009. spending was booming until the economy went off a cliff. >> steve, your auction results are helping the whole market right now. the dow is up about 132 points, so near session highs. >> thank you for not making me interject on that. i wanted to make sure people saw what happened here. i think it's so interesting that the stock market was waiting for the light to change on the bond market, whether it would change or not. we have been following this now. i don't know how long, kelly,

several months, now, where these auctions have been a catalyst for gains in the stock market. but it's interesting that that has been something that the market wanted an all-clear from, to see how the government would -- you know, somebody made a joke. it's like that joke of yogi berra, nobody goes there, because it's too crowded. we can't sell -- the debt came in at 3.80. there's just so much that nobody is apparently buying it. but the big story here, i'm just wondering what's going on is that indirect, which is the foreign bidders coming in at 70%, 5 percentage points higher than the last five-year note. i'm wondering if the foreign buyers are getting a taste for the longer end? what we did note, kelly, i don't know if you remember several months ago we were reporting this. every bond manager we had was short duration.

and when they came on this show and said they were going higher in duration, they were all going higher in duration to a point that was below the average of the index of duration that they were following. so nobody was at duration, even the bulls when it came to the bond market. so it is interesting to think who are the buyers here? of course, you have, you know, some guys in the insurance business and the pension business. maybe hedge funds, but also these foreign buyers who were also across the board short duration, now maybe trying to scramble and catch these yields before they don't have them to catch anymore. >> joe, what would you add to that? >> look, it wasn't that long ago people were saying how there was too much debt and rates were going up higher, which didn't make sense. short-term funding, paul is right. the last year we have had 80% of all net marketable supply occur in the sector.

supply creates its on demand, we're seeing that in the market. when the fed pivots and cuts, it's the five-year sector that leads the market lower. as we get more supply out and the fed cuts, the yield curve will steepen. that will be a good sign. the problem is, the fed hasn't cut yet, and i believe the market has a lot of good news priced in. i mean the equity market when i say good news. >> paul christopher, last word. >> absolutely. that expectation of five rate cuts and starting in january? or even march? that's just too soon. we're still tied up with that services, wages inflation dynamic. it's going to take longer and the fed won't be able to cut as much as the market thinks next year. let's see. i think there will be some volatility in the first months of the year. >> would you agree if the fed did cut deeply you would feel better about prospects for the

economy? >> only if we get to a bottom in the economy, and we don't think we're there yet. you can't cut right now with the economy as resilient as it is. so it will take time for this to happen. by the time that bottoming happens, it might be the middle of next year. not much time to cut rates really unless you have a recession. >> steve? >> yeah, i was with joe and paul on this. i thought the market was being reckless, but then goldman came out, and you see their forecast. i quoted it this morning, kelly. we had it yesterday a little bit, that they are calling for cuts beginning in march. and then successive cuts beginning in march. i have a hard time thinking that economists over at goldman sachs can be quite as reckless as the market can be sometimes. >> they have gone from being on the conservative side of things to a swash buckling, you know, dovish way or something. thank you to my guests. the effect of these falling

rates are that mortgage rates are back to the lowest level since may, and home prices are jumping, as a result. let's get the latest from diane. where are we now? >> rates peaked in october and began to slide in october and plummet in december. today, the average rate on the 30-year fixed came in at 6.61%, according to mortgage news daily, a new low for the cycle that is really super close to where it was at the start of this year. and what a year it's been for rate volatility. now, the home builders held very strong despite that volatility. check out the home construction etf. it rose fed lysteadily through year. it did take a hit in october, but now up close to 70%. big builder names have been benefiting, not just from the drop in rates but from the extremely low supply of existing homes for sale. they were also able to help customers by buying down those high mortgage rates a few months ago. they didn't really lower prices

much, but made the all-important monthly payment more affordable by buying down the rate. we did see a boost in single family housing starts in november, up 18% month to month as rates came off the highs and builder sentiment bounced back, although it's still in negative territory. i will be interested to see where it starts the year. >> day by day, we're seeing rates, if this -- imagine if we were see thing downward velocity in rates during the middle of the spring season. >> right. that would be incredible. we are in the dead zone for the housing market. people say buy in december, you won't have competition, but there's nothing for sale and nobody buys in december. i'm interested to see if that spring market pulls forward. we have seen that happen before. when rates come down, people say there's a little coming on the market in late january. maybe the spring season comes forward and the rush begins. >> we bought in august, because we didn't know any better. i think it worked out well.

>> i think i told you something about that. if i remember correctly. >> great advice. diana, thank you very much. appreciate it. coming up, survive until 2025. that's next year's motto for commercial real estate, according to my next guest. with the industry potentially facing a trillion dollar crisis, which parts are most at risk? we'll get one view, next. goodbye, tesla, hello, byd. they are reportedly set to surpass tesla in sales, but as they expand in europe, they're still stuck in wait and see mode here in the u.s. and here's a look at the markets. much more bullish tone that we saw at the top of the hour, after that strong auction result for five years we were discussing. the dow up 110 points. the s&p is positive by seven, the nasdaq is up 30. "the exchange" is back after this.

i'm a little anxious, i'm a little excited. i'm gonna be emotional, she's gonna be emotional, but it's gonna be so worth it. i love that i can give back to one of our customers. i hope you enjoy these amazing gifts. oh my goodness. oh, you guys. i know you like wrestling, so we got you some vip tickets. you have made an impact. so have you. for you guys to be out here doing something like this, it restores a lot of faith in humanity. welcome back to "the exchange." our next guest has had a front row seat to pain and opportunity in commercial real estate. with a trillion dollars of loans maturing next year, he sees the model being survived until 2025. joining me now is my guest. ron, good to check in with you. are these busy days, quiet days? what sit like right now?

>> thank you, kelly. end of year is usually more quiet, although we are seeing a lot of loans that needs to get done before year end. at least '24 may be a challenge for borrowers on commercial real estate office, and also residential with family loans coming due that were done in prior years. >> we were talking to someone recently, i know you're in the new york city area, and they were bearish on new york real estate because of some tax problems, just difficulty in incentivizing investment. is that part of what's going on? >> of course, it is true. new york is challenging on a regulatory environment. we're on the contrary quite bullish on new york residential, mainly because of the significant lack of supply. because of these constraints, regulatory post covid, high

financing costing, high cost of land and labor and material, there's just an immense shortage of new supply in new york. so i think residential is set to do quite well and will probably hold prices in '24. not so much for commercial office properties, especially b-class, and not so much for multifamily homes in other regions where oversupply has been built over the last few years. >> our guest yesterday talked about there's florida condos more in the luxury space where we are seeing some supply glut. we heard caution from our reit analyst about the sun belt real estate market where things were overbuilt. >> we see that, as well. we recognize that, as well. we're seeing concessions rise, meaning landlords are giving more free rent to tenants in order to keep the prices of the apartments. so definitely, nashville is one city. we recognize oversupply being

built. some parts of atlanta and florida, as well. but the most important point for '24, where you had all these loans given three, four years ago, you know, at 60%, 70% loan-to-value, and now they're going to need to refinance but the cost of borrowing has doubled. and then the coverage won't hold up, meaning it will be very hard for the banks to give those loans to see their loans for the payoff. which means more equity will need to be injected by borrowers, and some will not be able to do it. so you see a high amount of delinquencies and default. >> where would you step up into the market and provide capital? >> we think the typical standard bridge loans, up to three years, to meet our criteria. recently, and surprisingly, it's been much higher caliber

borrowers. maybe four, five years ago, we were seeing family offices, private equity firms, insurance company managers that needed more time, they need a bridge until threat get a new permanent place. that's what we are providing. >> why aren't the banks providing it, and for what kind of projects do they need this liquidity? >> the banks, even in '23, they have been on the sidelines, ever since silicon valley crashed, signature bank, first republic. we're seeing banks stop completely or limit in a significant way their exposure to real estate and lending in general. focusing on their own current books, solving issues in their current loans. so we've been filling the gap that banks have left in '23. that's going to be the trend for '24, as well. >> and so whether it's a private equity firm or insurance company or you name it, when they're coming to you for capital, what kinds of projects are they

looking to finance, and what is the hope that rates keep falling by the next time they might have a loan coming due? >> it's not just the rates falling, it's the entire macro economic setting that will be better. they're coming to us -- we find mostly residential properties, b that's been i would say about 2/3 of our loan growth. we've been also very active on the health care sector. we haven't done an office loan in the last three years. that's probably going to remain for us the same situation. one caveat is office-to-residential conversion loans that we are looking at, and a market in '24. >> ron, thank you for joining us. appreciate your time today. >> thank you. still to come, some stock

valuations have gotten out of hand during the s&p's eight-week winning streak. up next, where you can still find some value in this market. as we head to break, here's a look at some of the companies hitting new 52-week highs today. "the exchange" is back after this. in the u.s. we see millions of cyber threats each year. that rate is increasing as more and more businesses move to the cloud. - so, the question is... - cyber attack! as cyber criminals expand their toolkit, we must expand as well. we need to rethink... next level moments, need the next level network. [speaker continues in the background] the network with 24/7 built-in security. chip? at&t business.

♪ opportunity is using data to create a competitive advantage. ♪ it's raising capital to help companies change the world. ♪ opportunity is making the dream of home ownership a reality. ♪ ...and driving the world forward to a greener energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. at ice, we connect people to opportunity. oh no, a rash. maybe it'll go away. awww, how am i going to find a doctor i'll actually like? is that a qr code? dr. stafford makes you feel at ease.

thanks rash! you've got more options than you know. book now. there is a lot of information out there. hamas is a terrorist group oppressing the palestinian people. hamas refused a continued ceasefire, a continued pause in fighting and more aid from israelis in exchange for just freeing more hostages. instead, hamas resumed attacks. not to protect the palestinian people or obtain peace, only to destroy israel. we must stand against hamas and stand with palestinians and israelis for basic human rights. welcome back to "the exchange." is the market overvalued after this eight-week surge? it could be nine now. dom chu has a closer look. >> it's interesting because it's all relative, right, kelly? over the last five years, the s&p 500 has traded on average

about 19.5 times forward earnings, the expectation. where are we right now? just about 19 to 19.5 times forward expectations for earnings. so if you want to use that to say just about right, some would say on a five-year basis, we're on average for ward valuations. that begs the question, are there certain parts of the market that have a premium or discount valuation? let's take a look at the premiums first. growth oriented sectors are those kind of connotations top the list of premiums. technology, trades at 26.5 times forward earnings expectations. consumer discretionary, 26 times forward earnings expectations. and industrials, just about 20 times forward earnings expectations there. the discounts on the other side, value oriented, more defensive sectors. utilities, 15.5 times, fin financials, 14.5 times, and energy 11 times. as for which sector could be a

key focus going into the 2024 season, we asked some experts. one of the names that comes to mind is muhammad, who says from his stand point, tech will remain the most intriguing sector. >> just to give you an idea of how spectacular it was for technology, kelly, take a look at the relative performance of the spdr etf that tracks technology versus the broader s&p 500. xld, 55% upside. the market, 25%. that's a lot of outperformance. we'll see if it continues, kell. >> dom, thanks. dom chu. to tyler mathisen now for a cnbc news update. >> great to be back, kelly. thank you very much. the israeli defense force said today the country's air force conducted a "raid" on lebanese territory. according to the statement,

fighter jets targeted military sites that israel says belonged to hezbollah. the idf says three enemy aircraft were seen crossing over the border and claims that rocket shells were launched from lebanon towards israel. fighting on israel's northern border with lebanon has been escalati escalating. special counsel jack smith filed a motion to block president trump from making political arguments and referring to the conspiracy theorys during his trial. smith is also asking the court to prohibit trump from telling the jury that others are to blame for the january 6th attack on the capitol. and people with food allergies may get relief from a new treatment. data from a clinical trial found that add less ens giving the trug solair has reduced hives and allergic attacks in clinical trials. that would be help for millions of families.

>> tyler, thank you. welcome back. coming up, tesla shares have more than doubled this year, but the company is about to be overtaken in global sales by chinese ev maker byd. we'll look at whether it's a speed bump for elon musk or a turning point in the ev race. stay with us.

(sfx: stone wheel crafting) ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪

welcome back to "the exchange." tesla shares are higher today on reports it's preparing to launch a revamped version of the model y from its shanghai plant. and tesla is expected to report

record deliverdeliveries. but it may not be enough to keep tesla on top, as byd is reportedly on track to surpass tesla any day now as the global ev sales leader. joining me now with what that means for elon musk is my next guest. george, great to see you again. welcome. >> thanks for having me on. happy holidays. >> i would love for you to tell us what you think about byd. do you think they're more innovative, more disruptive, are they the new toyota of the 1980s, and how big a deal is this potential crown they're about to take? >> it's a great question, and like people say, history doesn't repeat but it rhymes. so we talked a lot about being tesla being the new apple. when the smartphone industry first started, apple had 100% market share because they were the first one to market with a true smartphone. same thing for tesla. as the market matures and the ev pie grows, asian competition came into the smartphone market,

same thing is happening in the ev market. eventually, tesla will likely be overtaken from a unit perspective. but what's most important, and we think tesla will win over time, is the profit share battle. apple doesn't have the most market share or smartphones, but it overwhelms the market in terms of profit share. that will be most important for tesla. >> you have a buy rating on tesla, $267 price target. is tesla making cars more profitably than byd does? and do you expect that to continue? >> what tesla has to do, this year was the tale of tesla cutting prices, impacting their gross margins. we think there was an intent to that, and that over time, they expect to sell a lot of full self-driving software to people who already own their vehicles. that's a big key to the story. because right now, their profit margins have suffered. but we think that's what the long-term plan in place to sell

software, the same way apple sells services. so it's through fsd software and the vertical integration that will result in higher than average gross margin and profit value. >> if tesla's infrastructure in manufacturing is leading edge, why have i read detailed profiles about how byd's is better? >> look, byd has some competitive advantages. they have a base that's purely in china. tesla operates in the united states, in europe. but tesla's putting things together from a manufacturing perspective that are way beyond what other companies have done. they're building these molds in their vehicles for the model y, that essentially breaks down a vehicle into only a few parts versus hundreds or even thousands before that. they're way ahead of the curve and their competition in learning how to manufacture efficiently, at scale, and innovating in places that other

companies are just trying to catch up. >> will they be hamstrung by the limited number of models that they offer? >> great question. ultimately, right now this year, they will be in an around 1.8 billion, about the same as byd. we expect that to grow a lot in the future. we'll see what they say in 2024 on the earnings call. we expect this company to be in the tens of millions of units over time. look, when tesla had an analyst day in march, they talked about removing some things from their production line like rare earths, in order to make sure that they can scale up to this tens of millions of units. that's the ultimate goal here. when they are able to sell additional software, we think that will create a huge improvement. >> finally, do you ever think we'll get to a point in which a u.s. administration would allow basically or make more competitive chinese ev imports? you might say why would they do that? they might do that if they want

consumers to hasten the ev revolution, which appears to be stalling out and get cheaper priced evs. they might do it if china says your automakers can only sell here if we can sell there. >> look, that's a really great question again. i personally find it very hard to believe that we'll see an infiltration of chinese evs in the marketplace. there are other companies that are interesting. that's rivan, they're big fans of that stock. and there are other companies making hay. there's a company from vietnam, that's very interesting and could take the place only sof of these chinese evs coming to u.s. shores. >> george, we appreciate you. knowing all this, still making the case for tesla. good to see you. >> thank you. coming up, shares of apple are now eking out a gain after being allowed to continue selling the apple watch for now.

but they're about 2.5% below the 52-week high. and another key design executive is leaving the tech giant. that's next. ameritrade is now part of schwab. bringing you an elevated experience, tailor-made for trader minds. go deeper with thinkorswim: our award-wining trading platforms. unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. and sharpen your skills with an immersive online education crafted just for traders. all so you can trade brilliantly.

welcome back. is apple losing its shine among the rise of ai? an executive now joining a project led by sam altman. steve, what do we know? >> yeah, not much beyond that. openai is working on some kind of secret hardware ai thing. we knew johnny ive was involved via his company that he started after he left apple. bloomberg reporting yesterday, the recently departed iphone

designer, he's joining the project. on the apple side of things, this is interesting, because you have the hottest company in silicon valley, tapping apple's designer to make some kind of new ai product. but the changes and departures also have been happening in the design team at apple since ive left in 2019. his company was contracted by apple for some design work. that's over, now they're free to work on other competitors. the design team is being run by coo jeff williams. he has a great operation, but it's more of an operator role. and that says a lot about the state of apple now. it's a very mature market for phones and watches and computers. i've took part in developing all those things, including the vision pro, which is expected to launch early next year. but nothing brand new really on the horizon that will meet that famous apple design moejo.

so really interesting what's happening in silicon valley, with this hot startup, taking apple's playbook to build the next wave. >> speaking of openai, we've got some big news on that front. "the new york times" filing a lawsuit against them and microsoft. implications? >> implications are crazy. really interesting evidence they're showing. "the times" alleging the same story, these chat bots scraping articles from "the new york times," using it without compensation. and "the times" put a bunch of examples in this lawsuit. here is a good example, a story about yellow cats. all that red text is copied text verbatim, chatgbt effectively plagiarizing "new york times" articles, which it couldn't have done unless it was trained. this is -- this phenomenon in ai

call ed memorization, that a lo of people think may or may not exist, but we have a good example of it happening right here. we have not heard anything from openai and microsoft since this news broke, but the allegations are really tough. this is not going to be the last of it. >> already, investors are saying we'll take a company like a meta or a google, a youtube where that content, they don't have to worry about the output being copyright infringement versus a valuation which we're talking about this week, with openai and an tropic. >> we have that report last week in the new york times that apple is taking the opposite approach. whatever ai theme they're working on, "the new york times" says they're talking to the media companies, offering to pay them in advance for training their models on that copyrighted material. whereas microsoft and others who just -- microsoft, openai and others have done the opposite, kind of asking forgiveness, not permission, reminds me of the

youtube and napster days. you could go on youtube and find full episodes of tv shows and so forth. google had to work through that and solve those copy right issues. you can see something similar emerging here. it is very clear that these chat bots are trained on a lot of the new york times had a sitdown as early as april, with openai and microsoft saying, how can we work this out and make this work together? it didn't really work out. >> imagine if it could be a big revenue source. steve kovach. coming up, consumer staples are one of the worst performing sectors this year. bank of america told us they are seeing signs of recovery. shares of gold up 5% in the paston, d alts mthananys tell

us what 2024 will bring, next. (clock ringing) go. and go and go and go. (tense music) but what if you. (tense music) stop! you work hard. it's time for a bank that'll work hard for you. everbank performance savings is built to put your money to work with some of the highest rates in the country. going, that's what got you where you want to be. we're the partners for your next move. everbank. advantage, you.

all right, tandy, what's it gonna be, the drink made from whatever was laying around, or the one made with your drizzly haul? drizly! stock up today, sip well, tomorrow. drizly.

amid all the recession talk, 2023 was supposed to been the year of the safety play, but both healthcare and stables are the worst performing sectors in the market, and the center of food source stocks got hit hard. smuckers, hormel, campbell soup, all down more than 20% as product demand dwindled, thanks in part to a lack of pricing power, as companies try to offset inflation. my next guest was getting constructive on some of these names when he joined us this month. peter, it's good to see you again. we were talking about incrementally going from more negative to seeing some glimmers. are the glimmers growing stronger? >> yes, thanks kelly, and happy new year. look, i think what we are starting to see in some of the data is a continuation of what we spoke about last month. moving from that negative position to slightly more positive, although, we are not out of the woods yet, but

encouraging signs we saw in some of the data around thanksgiving. we are still waiting on the christmas data to come out, which will be here in another week or so, and really, what we are seeing out of the consumer at this point is a little bit of improvement, probably still not there yet. they are delaying that purchase, particularly, around holidays, really, right up until the week before holiday events are occurring. >> not wanting to plan too much ahead, waiting until the last minute, that kind of thing. it's interesting what you said about it being incrementally more positive. why do you think that is? >> i think that as the price increases, and we talked about 30% pricing that has gone in to a lot of these packaged food companies over the last three years. that is starting to sunset or anniversary in full. they are getting a little more promotional cadence around some of those holiday activities. as you turn the page to 2024, you will see a lot more merchandising activities, whether that is endcap

displays, better deals, more merchandising efforts on behalf of the food companies. we could start to see these volumes start to get back to flat, and even potentially positive. >> what are we talking about in terms of the price pressures you are seeing? and, the stocks that you cover. when you think we will hit a bottom there? >> i think from a price contribution standpoint, we are, basically, there. the last round of price increasing that a lot of these companies took was in 2022. you have largely laughed a lot of that, maybe a little bit here or there on certain products, but we are getting close to a point where that contribution from price is really going to go to zero, and again, as you lap some of these headwinds, think about things like the increased snap benefits that were in place at this time last year. as you start to lap those, they become tailwinds into the spring of 2024. that's when you can really start to see a more material pick up. >> would you stick with the

names you mentioned last time? craft? would you stick with those names? >> yeah i think that mccormick is particularly interesting. it has lagged more than kraft. another interesting one that sticks out, and we are neutral rated, but it's been a big debate stock, which is kellanova. it goes back to that theme about more merchandising we would expect in the first quarter of 2024. >> peter, thanks. we appreciate your time today. >> peter gallo. the dow is up 80 points, a little off the session high as we saw after the bond auction at the top of the hour. that does it for the exchange. up next on power lunch, we will pick it up with taylor morrison. one analyst says the gains are already in the stocks. they will tell us why. tyler is back and getting ready.

i will join him on the other side of this break. (adventurous music) ♪ ♪ ♪ be ready for any market with a liquid etf. get in and out with dia. when you think of investment risk, do you consider climate risk? changing weather patterns are impacting the way we live and the value of businesses large and small. this can mean disruption to supply chains, changing demand for products and shifting regulation.

what does this mean for your business, your clients, and your investments? ice offers data and markets that can provide critical insight. manage your climate risk with ice.

it afternoon, everyone. welcome to power lunch. alongside kelly evans, i'm tyler mathisen. a huge lawsuit that could have huge implications for the future of ai. the new york times is suing microsoft and openai, claiming its chat bots were trained using the new york times' copyrighted articles. even though the gains are small, record highs are being taken out, seemingly, every day. the number to watch on the s&p is 4818. that is the high set two years ago. we are about 30 points below that level as the index is just turning negative and giving up some of the gains we saw in the past hour. although, stocks are generally rallying as a bond yields continue to fall. a hair bel