>> transdign, should go well. >> goldman sacks looking very attractive to me. >> really? >> uh-huh. >> liz young? >> financials, for the same reasons i mentioned. plus some m&a activity. >> joe distracted me. paypal. it's green. what's not to love? >> good stuff. "the exchange" is now. ♪ ♪ thank you, scott. welcome to "the exchange." happy new year. i'm kelly evans. here's what's ahead. rising rates are pressuring stocks again and putting that historic win streak in jeopardy. the ten-year yield back above 4% this morning. why is crypto shrugging it off today? rising tensions in the red sea pushing oil prices higher

overnight. are we on the brink of a multifront war in the middle east? atlantic council's ceo fred kemp weighs in. and barclay is downgrading apple to sell. we'll tell you why. but let's start with the market action with dom chu. >> happy new year, kelly. decidedly more negative in some parts of the market. but the real downside are the leaders from 2023. specifically the nasdaq composite, which was the outperformer. the composite index at 14,770, down 240 points, 1.6% to the downside there. so tech, com services the laggards. the s&p 500, down about 25 points, one half of 1%. those technology stocks weigh there, as well. it's generally a little bit less severe here for the s&p 500. by the way, we're right in the middle of the trading rake so far today. the dow up about one quarter of

1%. 37,755. the key mover in the s&p 500 today has been one of the biggest underperformers over the course of the past year. we're talking about biotechnology firm moderna, known for their covid vaccines. up 14% today, making it by factor of almost three the best performing stock in the s&p 500 after analysts put another price target upgrade, saying covid vaccine sales are showing more visibility down the line and more products coming out will help the bottom line. so shares up 14%. remember, on a one-year basis, still down about 37%. and then the interest rates that kelly mentioned, it's important to show you some context on where we have been and where we are right now. the ten-year yield at 3.95%. we briefly ticked above 4% at some point, but remember, the cycle high is up here, 5%. we've been on a decent down

trend since. so even with this move, though, it's still a rates driven story for 2024. just like it was in 2023. we'll see if the fed and when it cuts, becomes a huger issue down the line. back over to you. >> dom, thank you very much. stocks are sitting on huge gains on expectations of deep rate cuts, but the fed may not be as aggressive as investors think. joining me now is a chief economist. welcome to both of you. >> thanks, kelly. >> i don't want to jump too far ahead here, but i know you're a big fan of bitcoin and crypto and some of those asset classes. this is definitely the day to talk about it. before that, though, explain why you don't think the fact that the ten-year went back above 4% today has -- why is that happening at the same time that crypto is taking off or are these just january 1 positioning quirks? >> i think most of what's happening today has to do with a lack of volume coming into the new year and just -- i think

people are going to breakaway from the correlation they have had in the past with crypto and rates, and i think in general, after we have had two years of just major surprises in rates, i think people are trying to maybe get a little too over their skis in terms of rates being connected back to assets. >> i don't know how we thought about it. i guess we thought low rates, negative real rates are a positive for bitcoin and the reverse is true. but you see a different relationship forming from here on out? >> yeah, i think this is the year, and i have written about this, that people start to think of bitcoin differently. partly as just an investment asset that's being embraced by younger people and not so much by people my age. that's changing drastically. i think we've seen the numbers. so there's a

a is it your expectation that the cpi, if you will, that it backs up a little bit in the months to come?

>> i think there's a real possibility that we see upward movement in terms of inflation data. nothing dramatic, maybe a couple of tenths. nothing worrisome. the disinflationary tail winds are still with us. we have an environment which is moderating, wage growth is moderating, margin profits compressing. let's not forget the fed is still maintaining a hawkish and quite aggressive monetary policy stance and has not yet started to cut rates. yes, we are seeing some of that expected easing in long-term rates as we were just discussing. but that has yet to materialize. so we're still in a disinflationary environment. it's going to be bumpy on the way down, and the fed is going to mechanically react to the easing of inflation, and not essentially recommit to rate cuts until we are sustainably on that path to 2% inflation. >> it sounds like you're saying

you're still on board with this idea that rates are going lower and they're going to do cuts, maybe just not in march. why do you think they might not do as many cuts as expected this year? >> the biggest thing that people have missed the last couple of years as a story that continues to be one is the labor shortage. wages remain higher that be where you want them to be if you believe inflation will head back to 2%. so no matter where you look on the wage side, and we just had the nifb come out and they're raising compensation levels just back up to the highs of the last two years. that has a good correlation between the median -- the fed median wage component, and i just think that wages are going to remain sticky. at the same time, we just added $40 trillion of household net worth over the last four years. last year in familiar, people underestimated that. they kept talking about savings coming down. the reality is, we have household net worth that's

exploded. over the next four years, one of the big things people have to acknowledge, most of the household net worth in the country is owned by people, baby boomers and higher in terms of age. about 65% of the household net worth, we're starting to have the wealth transfer that people expected and talked about. that's going to keep a bid into the service side in my opinion. so we talk about inflation coming down. the core services is still higher than where the fed would want it. i think that's where the surprises is going to be at the core service side is going to remain on the higher side because of household net worth being so strong and wages being strong. >> i also find it noteworthy that goldman sachs are still out there as the most dovish this year, ex-ppecting these fed rat cuts, and maybe it's a mechanical thing. even if inflation comes down, the fed should be easing just to make sure they're not tightening implicitly. >> and i think goldman responded recently to the commentary that

came out of the most recent fed meeting. well, that can change, too. so i think that this year is going to be very different than the years past. we have been in this momentum thing of first rate hikes, then gradually people are looking for the recession. that's gotten pushed out. i think now for this year, the surprise will be, we have a lot of easing built into the market with stocks at all-time highs, house prices at all-time highs and wages growing. so i think the surprise coming into this where the sentiment is almost the opposite from where it started last year is inflation might surprise more on the high side this year. >> the spoiled sport. leave it there. gentlemen, thank you. let's pivot now to the middle east. oil was up nearly 3% earlier on news that iran dispatched a warship to the red sea after the u.s. navy destroyed three boats of houthi rebels, killing ten rebels. marsk will pause all passage

through the red sea, and an explosion killed a deputy head of hamas in gaza. let's bring in fred camp, a cnbc contributor. i guess this is the larger concern, we talk about a multifaceted middle east war, or series of conflicts. >> yes. happy new year, kelly. people have been worried about an expanding war. what this is also confronting, u.s. officials, biden administration officials with, they are not going to be able to avoid the fact that iran is behind almost everything in one way or the other. there is no october 7th hamas attack without the support of iran. there are no attacks on shipping in the red sea in support of the houthis without iranian weapons and backing. you talked about the threat in lebanon. that doesn't happen without the proxy hezbollah in lebanon. so the real question is how do you get to iran over time? because without getting to iran, you're not going to solve all the rest of these problems. i think that's the really tricky

thing that people are looking at. of course, there's short-term and long-term. >> what is the biden administration's strategy here as it relates to iran? and the escalation of tensions now, what does that tell you might be going on behind the scenes? >> yeah, i've been talking to people in the white house over the last couple of weeks. they've laid out quite a complex agenda for the entire year. it's a pretty complex year with wars in the middle east in your and tensions with china. what they want is for things not to escalate, and to put the situation in such a place where they might be able to start normalizing relations again between israel and saudi arabia. now, that may not seem directly linked to iran, but the long-term play with iran is if you can have israel modernizing arab states expanding the area of prosperity, modernization, it makes the iranian corruption,

the slow growth, the little that they're providing their people, it makes that stand out even longer. but that's the long game. the short game has to be how do you counter the houthis and iran now? >> did we have any further normalizations between israel and arab countries after -- or during this administration so far? >> no, what you have done is kept them alive. so the abraham accords countries have kept this all alive. but the administration had moved things forward to the extent that one thought that a saudi/israeli normalization might have been possible in the first half of this year. that has been put on ice. but they haven't given up on it. what they need is israel to reach some sort of an agreement with the palestinians over time that at least gives a path to the state so that they can return to a normalization path. i think overall, they think that's the only way that one returns to a path that counters iran, supports israel, and

builds upon normalization in the region. >> do you think that the sanctions on iran previously were effective in curbing their activity throughout the region? if so, should we expect a return to that? >> i don't think that talks with iran did much at all for iran's regional misbehavior. we just heard from the head of the international atomic agency in december that iran has tripled its near weapons grade uranium. it's been days of creating a bomb. so not only are they creating this havoc in the middle east with this war, they've become more dangerous globally and growing closer to china and to russia, supporting russia's war in skrukraine. so all of this is linked together and the biden administration is starting to connect the dots among all these seemingly disparate issues. >> does that all come back to heavy, heavy sanctions on iran?

wouldn't that be the obvious next move todo what was done in the past to more or less try to bankrupt the regime? >> i think it's holding iran to account for what its proxies are doing, and that has to mean new sanctions not just on the proxies but on iran. it has to be reimposing some of the previous sanctions. it probably means support again for domestic opposition. it means keeping the internet alive so people at home understand what's going on. but what it really takes is a sustained effort with our friends and allies around the world of the sort we haven't undertaken with iran. >> interesting. fred, thank you very much for joining us on the heels of these developments. appreciate your time today. >> thank you, kelly. coming up, bitcoin beginning the year by topping ha45,000 afr surging more than 150% in 2023. could we see a repeat this year? that's next with a bold new call on crypto miners and metals.

and will financials catch up this year or could we face another crises we saw last spring? we'll weigh in on what 2024 might have in store. and here's a dwlansglance at th markets. the s&p is down half a percent, and the nasdaq is down 1.6%. we'll explain what's going on with some of those tech names shortly. ten-year yield back down to 3.94%. "the exchange" is back after this.

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welcome back to "the exchange." 2023 was the first positive year in three for gold. prices are sitting near their record highs set in early december. my next guest says the street can continue, but he likes the minors here, as well. carter worth is the ceo of worth charting. carter, i would expect someone like you to be poo-pooing the miners trade. i'm surprised you're into it. >> you know, sometimes there's something so out of favor, so underowned, that it's right to, i think, take the road less traveled. miners are perennial underperformers. it's interesting, since the

lauve launch of the philadelphia stock exchange gold and silver index in 199, gold miners are basically unchanged. obviously a tough business. >> this is my point. it sounds like it's a bad business that only fools would want to get involved with. >> you dig a deep hole, guys get trapped in the hole. a lot of bad stuff. but the point is, the spread right now with gold itself is pretty extreme. so we have gold we think is going a lot higher from our point of view. so at some point, again, you're talking about a fairly small asset class. all stocks in the philadelphia mining index add up to about $29d -- $296 billion. if you see here on the screen, on a ten-year basis, gold miners

and gold boyian are even. so the situation, i think, is not only the miners having lagged general equity market to a substantial point, but they have lagged the underlying metal. so at some point you do get these sort of pops that are catchup trades. i think that's what we are looking at as an opportunity here in 2024. >> having laid it out that way, i can't imagine this is anything. do you have a price target in mind for getting out of this trade? it sounds like this is one of those three, six, nine-month opportunities and nothing you would be interested in for the long, long run. >> ight. hard to know, but any long-run thing, you have to start with three months, six months and stick with it if it's working. but gdx is the vehicle to use, the most liquid of all sort of mining etfs. this is an interesting chart. not because i made it, but because it tells a story.

this is a ratio chart. gold miners divided by the market, spy. and so what we know is the relative performance is poor, but we keep holding this level for about almost ten years. i think that the word "developmental" is appropriate. this is curative healing. the arrow speaks for itself. of course, that's a judgment of mine but that's what i'm thinking. >> so being bullish on miners, does that take into a fact that gold itself has to also do pretty well this year? >> yes. but also let's say gold just hangs where it is. gold is at all-time highs. while it's not always in direct relationship or inverse relationship, they do make their money, right, from gold bouillon.

fuel costs are a big part of this and those are down substantially for the miners. >> and on bitcoin, you're full of surprises today. maybe i should be paying more close attention, but with some of the cautious discussions we've had about stocks, you're bull herb on bitcoin. is this a new development? >> i don't spend a lot of time on bitcoin, but the chart, it's okay. it's not so extended -- let me put into context. if you were to -- and we can all agree that the low for the equity market on this intermediate was october 27th, and we have had this huge rally into year end and now here we are now. home builders are up 45% since the october 27th low. regional banks are up 45%. bitcoin is up only 50%. so for something that's high beta like this, yes, it's moved a lot, but since the october low

on the three-month basis, it's not that much. >> i was just looking at it over the weekend. it feels like real rates reversed then in late october. i was looking at the ten-year tips yield. i don't know, maybe the whole world hangs on what direction that goes next. maybe that keeps going down, i don't know what happen it is it rebounds a little bit. >> right. so much is tied up, so much of the activity in the sort of back half of the year was related to rates. but, again, relationships like this are not always inverse. for instance, with rates bumping up here, and the dollar bumping up, has gold hanging in. these relationships are in tact until they're not. >> and same with bitcoin. all of that is the case this morning. here it is off to the races. we'll leave it to the chart master. carter, thanks for joining us today. >> happy new year. coming up, a rare downgrade to underweight for the world's most valuable company. why one analyst sees as much as

17% downside in apple shares, with the stock having its worst day since august. a rivan shares plunging. we'll tell you what's behind the y at and what led am lists to sath year end search happened in the first place. i know what it's like to perform through pain. if you're like me, one of the millions suffering from pain caused by migraine, nurtec odt may help. it's the only medication that can treat a migraine when it strikes and prevent migraine attacks.

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at the lows we were down almost 200, so that's quite a turn around. the s&p is still half a percent, the nasdaq down 1.5%. and big tech is underperformer the broader marker. it's not just apple down 3.6%,

we'll talk more about that in a bit. we have meta and microsoft in the red, as well. and semiconductors having their worst day since october. all of them with amd and intel the worst performers. intel is down 4%. amd 5.5%. even nvidia giving up 3% today. tesla's numbers for the year are in, and the company managed to beat expectations on dloodlooif deliveries. shares of rivian are plunging 10% after fourth quarter deliveries fell from the prior period. let's get out to phil to break it down for us. phil, some consequential developments here. >> they are consequential, kelly, but given the tact that you saw the run-up we did with rivian as well as the other ev makers in the last six weeks, i'm not surprised we see a selloff. let's start with tesla. these were better than expected numbers for the fourth quarter.

the company producing 495,000 vehicles in the fourth quarter, delivering basically 484,000 vehicles, a little over that. the full-year deliveries by the way, coming in better than the company's guidance that they set at 1.8 million vehicles. for the year, they had an increase of 38% compared to all of 2022. we'll get more sense of what happened in terms of the all-important profit margin for these vehicle deliveries. that will come on january 24th. basically three weeks from today after the bell. that's when we'll get the fourth quarter results from tesla. we'll hear from elon musk at that time. now shifting gears to rivian. for rivian, the numbers in terms of production, much better than expected. the company eye guidance was to produce 54,000, they produced more than 57,000. the street was expecting 14,000. as you take a look at the increase in deliveries year of

year over year, you might say look, this is steady. why are people selling the stock the way they are today? part of it is because you'll see lumpier results from rivian in the second and third quarters, we'll get the full-year results, as well as their guidance for 2024 deliveries. that will be coming up february 21st. kelly, keep in mind with the change in the ev tax incentives from the federal government, not all vehicles that did qualify in '23 now qualify in '24. some do, but not all of them. and as a result, the concern on the street is, how much of the demand was pulled forward, and how many people might be saying, you know what? i'm going to hold off on buying an ev, until i think that credit will be, you know, put back on for a particular vehicle once they have the battery sourcing down. that's going to make it interesting to see what we get in terms of results in the first quarter. >> i'm looking through it.

rivian might qualify, you know, the suv and the truck for some incentives. a lot of teslas still do. am i correct that the cyber truck does not qualify, why is that? >> well, i think mainly it's the sourcing on the battery cells and a few other things. they expect those things to change over the course of the year. and that's how it's going to be not just with tesla but all of the ev companies. there's uncertainty how quickly they can make sure the sourcing is in place for all of their vehicles, and that will take some time. >> and tesla is losing some qualifications for the long-range models. >> long-range model three. >> is that also sourcing? >> that's a sourcing issue. kelly, all of these are sourcing issues. all of these -- bat ramtery components, what percentage are manufactured in america or countries where we have trade agreements. we're seeing the government saying we want you to break away from the supply chain being

reliant on china. and while a lot of companies have made moves, tesla has made moves to do that, you can't break the entire supply chain overnight, and it's taking some time. that's what we're going to see in the first half of this year. >> they might recall foy at this point this year or in the near future? >> yep. absolutely. we'll see that with all of the automakers where you will see an announcement, we now qualify. >> $7500 is a biggy for all of them. phil, thank you very much. let's get to tyler mathisen now for the cnbc news update. >> thank you very much. a hamas official told nbc news that a senior leader was killed today in a drone strike outside of beirut, lebanon. lebanese state media reported that the israeli military was responsible for the attack, targeting a hamas office, killing six and injuring others. the idf has not yet commented on the strike as is often their practice. police reported an armed man broke into the building housing the colorado supreme court and

opened fire before vesurrenderi to authorities. the building suffered significant damage. authorities don't believe the incident is linked to previous threats made to the state's supreme court justices. the president of harvard university is resigning. this comes six months and two days into her presidency, marking the shortest tenure in the university's history. this follows allegations of plagiarism and her december testimony before congress, which raised doubts about her ability to respond to anti-semitism in the campus area of harvard. >> wow. >> kelly, back to you. >> tyler mathisen, i'll see you shortly. coming up, don't hold your breath until fed rate cuts until after june according to my next guest, and the challenges that could force smaller banks into m janldz a.

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welcome back to "the exchange." the yield on the ten-year briefly above 4% today, a big jump from being under 3.8% just last week. that said, the banks are a relative bright spot. the index up about a percent.

and the big banks start reporting next week, all out with earnings on friday. what do we expect? good to have you here. welcome. >> thank you, kelly. >> it seems as though the big guys for the most part are holding in there, but what about the smaller banks? >> well, there are some smaller banks that are having difficulties, and i think that will continue. the reason is, they used to have quite a few depositors that were over $250,000 uninsured, and they felt comfortable, the customers felt comfortable with that. that's not the case anymore. no one wants to put more than $250,000 in their small bank particularly. they're also suffer tring from fact that their securities portfolio is under water because of the increase in interest rates. so they may have to raise more capital in order to offset these

issues. >> uh-huh. >> quite frankly, some may have to sell their bank as a result of this. >> and sell their bank, that -- we have been waiting for a lot more of this activity over the past year, and i've been struck at the discussions we've had about real estate. they keep referencing the fact that the small banks have disappeared from the scene. you just wonder what that means in terms of their earnings power. >> well, it's going to affect them. i think the smaller banks area, you do have commercial real estate issues. but in general, these are -- the loans are to local companies who have not suffered as a result of stay at homeworking. so i think we may not see the same level of commercial real estate issues that larger banks where people are working more at home. >> yeah.

i want to ask you about the big callout. i don't know if you saw it this morning, but shares of citi group could triple. listen, i don't know if you want to comment about citi directly, but i'm going to ask you to. what do you make about a call like that? >> that's a little more than i would expect. but i do think that not only citi but all big banks are in good position. and have very good dividend yields, and i think you have -- i think the biggest risk that the big banks have is that the fed causes them to need much more capital than they need. i don't think the big banks need anymore capital than they already have relative to their risk. and so we'll see how all this plays out. but that's, i think, the

greatest risk is not the business risk as such. it's the regulatory risk. and i think it's very unfortunate, because i think what's happening is that the fed is trying to hide the fact that they did not see the risk that almost everybody else saw in the spring from silicon valley bank and signature and so on, and they're trying to blame that issue on not having enough capital. when in fact, it was a mistake by the regulators, a huge mistake that they didn't do their job right. >> i've heard other people say that. i've heard exactly the same critique from a few others as well, who have been banking executives for a long time, and they are a little frustrated that's what is going on. i don't mean to misspeak, mike mayo said he thought the shares could double, not triple, but it's a huge increase in this environment. dick, just to step back for a second, is this the outcome that you think is good for the

country? maybe it is, maybe to have five or six or whatever the number is mega banks that nobody has to question the security of their money, and that's the whole game. but whatever people intended 15 years ago, here we are. >> well, you do need large banks. large banks are international this their business, or many of them are, as their customers are. so you can't provide the loans that these companies need and the places they need them without being large. that's just the facts. let's just take canada for example. canada basically has seven large banks that, i don't know what percentage is, but 90% of the entire country for similar reasons. so, you know, i don't see any reason -- i don't see any

negatives to large banks other than they don't behave appropriately. >> i think it's ironic as well, some of them have been good stewards of capital. jpmorgan comes to mind. but others like citi have not. but it's ironic that they have almost become utility like, cap upsides, cap downsides. i don't know if you call them value traps, but many others are. >> i think a lot of people thought they were value traps. i was not one of them. i've been thinking that they've been undervalued for a long period of time. their pe ratios are 40% lower than the industry, or the market. and yet their yields, dividend yields are 200%, 300% higher than the market. so i think they've been undervalued. i don't think it's a trap. some of them had work to do to

be better, and it took perhaps longer than someone expected. but self-of them, you know, we can talk about jpmorgan and others, have done very, very well. and they're still, in my opinion, undervalued. >> interesting. >> i think there's still room to run. >> quick final comment in that regard then, for those at home who, you know, they would love to be in the right ones. what would your advice be on that front? >> well, you know, i have my own favorites, but i really think that all -- even the large regional banks are in good shape. they have the capital, they are -- excuse me. they're not at risk. you can have a particular bank that may mean more capital. but the industry itself doesn't.

and i think the market has been wrong until about the last two months that they were somehow not going to grow and not do well. that happens. you can understand some of the reasons for that, but it's been a mistake. those of us have been investing in it saw that opportunity, and you're seeing it now in the marketplace. >> as you say, still more opportunity, given where -- >> yes. >> dick, thank you for joining us. >> okay. thanks, kelly. >> we'll hear from banks starting next week. coming up, it's not just i phone sales slowing at apple, they downgraded the shares to underweight and see as much as 20% downside. apple's 3% drop today avg shin3% off the nasdaq nasdaq. that's next on "the exchange." that advances innovations like robotics.

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a rare downgrade of apple today, with the shares down nearly 4% now. barclays is concerned about iphone demand. steve is here to dig into that report. it's kind of ruined the whole market. >> yeah, that's right. it's down nearly 4%. even when this report first came out, it was down 1.8%. it's the same themes we have been talking about for a several months around apple as they struggle to return to topline growth. iphone demand just not there, especially in the most important markets. they point to china especially. new competition from huawei, all those reports about government agencies blocking iphone. and on the services side, which is supposed to be this shining beacon that can help them return to growth, barclays is reporting negative head winds,including the doj case against google. what does google have to do with apple? google pays apple billions every year to be that default search

engine. that is at risk. regulations in europe, another risk point. so they point to all of this as downside. >> do they give the granularity around how much the iphone is selling in china, or is this -- most of the things we have been talking about should have been priced into the shares. it's been going on for months. what is the newest information here? >> another thing they talked about, it's not just about the unit sales but which units. the pro versions are more expensive. this report is also saying people are trading down to the cheaper models, the regular iphone 15 models. it's not just going out there and buying a phone, but which phone are you buying and the more expensive ones don't have enough juice. and worse than that, or more troubling in this report is the iphone 16, which isn't even out yet, we're due for a big upgrade cycle, but barclays says this

could be another lackluster year. >> i remember the incentives were so much bigger than i expected. maybe it tells you -- remind me the name of the headset again. >> vision pro. >> $3500. less about phone demand versus, you know -- >> we weren't switching. that was the thing. >> that's how -- but they want you to stay. they don't want you to switch to the other guy. every commercial, get a free phone, trade in your old one. that's all part of the game. >> you're right. still interesting to see the market's reaction to this. >> and it's taking everyone down with them. >> only the fourth analyst on the street with a sell rating. >> down to 160. trading at 185. >> if it goes to that level, we could see micro soft surpass in market cap.

>> i just checked before we came on air, 2.75 trillion for microsoft. 2.8 or so for apple. we could see a flip-flop soon. >> that would be a big way to kick off the year. steve kovach. coming up, today's moves are threatening to make gains in the last five trading days of 2023. and don't believe the recent melt-up. the number one fed signal he's watching, and it's not the dodds. he joins us next.

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did we peak your interest? you can get two unlimited lines for just $30 each a month. there are no term contracts or line activation fees. and you can bring your own device. oh, and all on the most reliable 5g mobile network nationwide. wireless that works for you. it's not just possible, it's happening. welcome back to "the exchange." stocks closed out to a win streak. wolf research chris doesn't believe in the melt-up. he laid out numerous warning signs in his latest note. topping the watch list is what he calls a huge and underappreciated catalyst, fed liquidity he expects to decline. next up, performance chasing for 2023 top stocks, royal caribbean, uber. he flags all major equity markets still look overbought in the near term and finally the lack of fear.

the vix well below its average currently just over 13 and nine-month futures at lows. joining me to discuss is chris. good to see you. you know, we're all on one side of the boat here. you're saying don't go over there. it's going to tip over there. >> yeah. hi, kelly, happy new year. thank you for having me on. we had a very epic melt-up into year end and kind of told investors at that point in the time to play the seasonal trade. we enter the new year, the market is overbought on many signals whether you look at relative strength or other technical indicators. investors overowned technology stocks as a sector. and some of the key variables that drove stocks higher in '23, namely fed liquidity, to us, don't seem to be present, in fact, maybe going in the other direction in 2024. so, we're not believers in the

sustainability of the rally. and actually today's performance in sectors and themes and styles i think is being much more indicative of, at least, what we're going to see in the first half of this year. >> and you think the key -- you know, your number one here is fed liquidity. some have pointed out, dan greenhouse and others, it's ironic. they did all those rate hikes, did all that qt and the market did what it did last year. >> yeah. so, the fed balance chief quantitative tightening has been falling on the asset side. what happened is a lot of money market funds parked money at the fed. it gets wonky parking money at the fed overnight. but they did that. and then they started to pull their money out of the fed overnight facility to invest in t bills and longer duration fixed income securities and the effect of that actually adds liquidity to the system. so there's an old saying you kind of follow the money. well, following the money in 2023, you know, led to higher stock prices because liquidity measured by bank reserves at the

fed increased $450 billion. that to us is unsustainable in 2024 because of some of those very forces that helped liquidity are going to go in the other direction. >> would you say that's the most important thing to watch then, those weekly levels, that kind of thing? >> by far. when reverse repo levels get to a level that no one knows what the magical number or thing will be, reach a more precarious level, it's lower than today the running normalizes 830 billion today. but when they get below 500 billion or 400 billion, there could be some tightness in the system. and, i guess in a worse case scenario, if you will, if that's a word for it, the fed might have to end quantitative tightening in the second half of the year, which could actually be weirdly bullish signal for the markets because the balance sheet won't be shrinking at that point in the time. >> 1,000%. i appreciate how you laid out this is the heart of and many things could follow everything from the vix and so forth if we

see a reversal there. top of the dash board, chris. thank you for your time today. appreciate it. >> thank you for having me. >> chris senyek. the market gives up the gains. that does it for "the exchange". companies with regem changes ard big risks in an election ye. tyler is back. i'll join him on the other side of this break.

happy new year and welcome to "power lunch." alongside kelly evans, i'm tyler ma this is. coming up, seeing red. we're watching oil prices after iran dispatched a warship to the red sea. this is the latest sign that tension in the region will not be easing any time soon. >> we'll see what that means for oil prices this year. plus, it's not only the first trading day of the year, it's also the first day on the job for a number of corporate ce