get your biotech exposure. >> abvie, this is a good one in the health care space. >> verizon 7% yield 8 times earnings >> arch capital. buy the bounce >> that does it for us i'll see you on "closing bell" pk eastern time. "the exchange" starts right now. ♪ ♪ >> scott, thank you very much. i'm tyler mathisen in for kelly evans. here's what's ahead this hour. the consumer just won't quit the latest retail sales coming in stronger than expected. investors not too happy about it, however. so could jamie dimon be right, if rates remain higher for longer we'll discuss that one plus, chinese cars are flooding the west, but are they a real threat to u.s. automakers we'll speak to the analyst who covers it all and some of what he says may surprise you earnston young larging a

deal barometer, and they're sharing the results with us this hour we begin with the markets and dom chu is covering it for us >> tyler, we're in the red with the underperformance this that kind of tech heavier nasdaq trade. the dow up one quarter of 1%, equating to 100 points on the downside the s&p 500 is at 4733, off about 2/3 of 1%, or 32 points to the downside the nasdaq stands at 14,809, just about 135 points to the downside, or down one full percent. one place to keep an eye on, the stronger than expected retail sales data out this morning. what that's gone and done is pushed interest rates higher people selling off government bonds on the u.s. treasury side, pushing yields to 4.09%. we were close to just around 4.12% at the session highs so far today. what this does do is put us at the highest yield levels for the ten-year going back to roughly december 13th.

it's not, again, near the 5% mark that we saw at the cycle highs so far, but this move higher off the lows has a lot of investors paying some attention. where that's playing out a lot more is in valuation specifically with regard to growth oriented and technology stocks if you take a look at the biggest stocks in the nasdaq composite and the s&p 500 for weighting, it's that mega cap technology trade microsoft down, apple down, and north of 1% losses for nvidia, alphabet, amazon as well so keep an eye on those moves in big technology interest rates a part of that story. we'll see if that continues. it's a rocky start to the year in 2024. >> dom, thank you very much. let's start with the consumer and the latest retail sales numbers. up 0.6% in december. the fed may be in, well, no rush to lower interest rates, something jpmorgan chase's ceo jamie dimon touched on earlier

today, especially the implications for commercial real estate >> if we have a soft landing, which is possible, and rates don't go higher, which is possible, it would be a small problem. if we have a hard landing and rates don't go higher, it will be a bigger problem. >> because if it goes up -- >> interest rates are like -- anything which has cash flow is worth less >> all right our next guess agrees that this is probably as good as it gets for the economy, and while the odds have steadily improved, he still sees a 25% chance of a recession next year -- or this year, excuse me. let's explore why with mark zandi, chief exist at rudy's, along with cnbc's steve liesman. welcome to both of you mark, if the economy's performance is about as good as it gets, why do you say that recession risks are still elevated at 25%? down from the 50% you thought was likely last year, didn't

happen but why do you think recession risks are still elevated in an economy that is performing well? >> i don't think that we can feel entirely comfortable about the economic outlook until the fed starts lowering interest rates. they're close. they're gearing up for it. they're forecasting three rate cuts this year, a quarter point each time. so we're almost there, but until that happens, you know, it's hard to declare the coast is clear here with rates this high, the yoeld curve is inverted as it is, that puts a lot of pressure on the banking system so things can go off the rails so, you know, i'm feeling pretty good about the economy all the trend lines look really good the risks to recession are starting to fade i think there's some upside risks potentially for the economy, as well until the fed starts cutting rates, i don't think that we can declare victory. >> what would an upside risk be? what would it look like? >> what we got in 2023 it looks like gdp growth in '23 is going to come in at 2.5%,

which is very good, above most estimates of the economy's potential. that happened because we got a lot of growth in the labor force and labor productivity growth was very strong. that could continue into 2024, and if it does, then we have more room to run we can get more growth without having any pickup in inflation that's an upside scenario. >> steve, what do you make of what mark has said here? elevated risk of a recession at about 25%, i guess normal is something in the 15% rate. what do you say? >> well, i've been reporting to our fed survey, tyler, that the recession risks were as high as 60% last year, and now in the december survey we did, they went down to 41% so if mark tells me 25%, i'll take that as a victory, and a really good sign i understand why there's something of an elevated chance. you want to go back to normal, which is about 15%

but tyler, i want to lay out what i've been thinking about here, which is, i think the fed can cut three times here beginning in may, which is not what the market is after, but it gives it a little more time. can do it three times, may and then july, and july i like because it's just before the silly season when it comes to the elections. and it's not a factor there. and then again in november, because that november meeting happens two days after the election and then it has an option that if it needs to or wants to, to do a fourth one in december. that's my latest thinking, tyler, that the fed can pencil in three and there's been some precedent here for powell liking to do things every other meeting one of the things that's interesting to me is the fed's concern about a resurgence of inflation. what i call its fear of the twin peaks. you see that when you look back at early 1970s

you can see the two peaks there when it comes to inflation then you see we got the one peak now, and you know that between those two peaks in the '70s, the fed cut interest rates that's why i think the fed is going to be careful here, and more careful than the market is projecting >> we're going to take a quick pause here i'm going to ask you both to stand by, as we go out to rick santelli who is tracking the action in 20-year bonds. rick >> we just had an auction, a reopening of 20s to the tune of 13 billion the auction just buttoned up the grade, d as in dog this was not a pretty auction. i'll hit the highlights. if you look at the bid to cover, 2.53 it equals march, but you have to go back to october to find a lower number, and indirect bidders and dealers are at the worst levels since november of '21. indirect bidders, those are,

well, some of the most important bidders. they were definitely not showing up for this auction. dealers ended up taking 17.3%, their ten option average is 11%. so worst since november of '21 the chart going back to the second week, it will be a five-week high yield close, and as you look at the intraday and the two-day, what is notable is we are trading above yesterday's high yields. d as in dog. tyler, back to you >> thank you, rick gentlemen, stick around. we're going to go to diana with the latest housing market data >> tyler, you were talking about consumers and two sets of data show consumers are getting back into the housing market thanks to the drop in rates applications to buy a home jumped 9% last week, compared with the previous week,

according to the mortgage bankers association. they have been rising steadily for the past few weeks mortgage rates last topped out around 8% in october, and are now back in the 6% range, although they did make a move higher this week and today now the 6.88%, the highest since december 13th. in addition, we saw a big beat on home builders sentiment in january. it jumped 7.4% the street was looking for a two-point gape anything below 50 is still negative, but it's ten points higher in the last two months and is at the highest level since september. builders say it's all about lower rates. and of the index, buyer traffic rose five points to 29 fewer builders are cutting home prices 31% in january, down from 36% in the previous two months.

that is the lowest share since last august. tomorrow, we'll get a read on how all this new confidence is playing into housing starts and building permits tileer >> so these more spritely numbers, i guess have to do with where rates were in october, how they have receded a little bit, and that seems to be enough to have changed this sort of mindset among buyers and sellers. they're not as high as they were, but not as low as they have been for the past decade, but enough to get them feeling better about buying, selling, and building >> we all know that home buying is a very emotional process. it's not just about being able to afford it, but it's feeling that you should be able to afford it. and that 8% handle had buyers out, and each 7% was too high. on this 6% range, we're twice as high as we were in the first two years of the pandemic. we had more than a dozen record lows this that rate. but buyers, we know there's a

lot of pent up demand outthere and not a lot of homes for sale. but still people coming back to the market thinking that the 6% range is perhaps now doable. again, some people are now qualifying for loans that they didn't in the 7% range but we still have to talk affordability. home prices are still rising and very overheated. it remains to be seen how much of those applications and how much of that interest translates into tales >> di, thank you very much now back to steve and mark let's talk economy mark, my question for you, and i don't mean to be an apologist at all for the administration here. but you say that the economy, in your view, is about as good as it gets. but it sure doesn't seem to feel that way to the american public, who "blame the biden administration for whatever economic woes are that they sense. why do you think that the administration has not been able to tell a positive message about

the economy and point out that the one thing that i suppose has taken place on biden's watch that is really not good, which is inflation, had really less to do with his policies and more to do with monetary policy over which he had no control, and fiscal policy which put large slugs of stimulus into the system, most especially in 2020 when he was not in office, and then again in 2021 when he was >> yeah. you know, tyler, i think americans still feel the sting of the high inflation that we were suffering a year or two ago. i mean, prices were -- many things are much higher today than back a couple three years ago. particularly for staples things that people have to buy >> eggs and milk and detergent it's all outrageously higher it seems to me than it was two years ago. >> any person i talk to, they

say i pay more for stuff it's tea, ramen noodles. everyone's got their ramen noodles. it's just going to take time for people to feel better as their incomes continue to improve. the job market is great. we're getting a lot of wage growth, plenty of open positions. so that's all good inflation is moderating. so with each passing month, i think the sting is going to be less painful and i do think over the course of the coming year, people will feel meaningfully better i think that will have bearing on the election. until people feel better about the economy and buy into what i've been saying what i'm saying about the economy, the election is going to turn on that >> in other words, they're going to get more comfortable with where prices are, they're going to see some of the other more sides to the economy steve, how do you react to that? there was fiscal stimulus, there was monetary stimulus that contributed. certainly to the growth of

inflation in the 2021-'22-'23 period but there is rising wages. a lot of states, a lot of municipalities raised wages by fiat and said you've got to hit a minimum wage of x dollars an hour companies did that, but they didn't stop and eat those costs. they past those costs on go to a starbucks. it costs a lot more than it did three, four years ago to get a coffee i should be in such pain, these are not essential items. but the same thing was going on there. higher wages were pushing through the system, and those wages were resulting in part in higher prices. >> yeah, that's the way it works. it is important the way you tell that story, tyler, whether you meant to or not. but in the story you told, it was prices driving wages, not wages driving prices so there wasn't necessarily a

wage price spiral from an economics point of view, which was important. but you're right, and by the way, that sequence is also significant for how people feel in that you're always a little behind in that context your wages may go up to meet those higher prices, but they're going to be behind we are just now, tyler, in the period where wage gains have been positive on inflation adjusted basis i was just looking -- you mentioned milk you know, the price index remains quite a bit above where it was we are not going back to those prices before the pandemic >> no. >> and in part, the reason for that is well, if you reduce the prices, you're also going to end up reducing the wages. that's politically unpalpable, as well. so the story here is that over time, people will get used to a new price level, and over time, their wages and their productivity should rise to come pen sate for that.

that means that some people are still lagging behind whether or not that has an impact on the election eventually, and i like the way you told the story in that it was both administrations that provided the stimulus. but you know, the old "the buck stops here," i guess the buck inflates here in the case of biden. he was the one in charge he added to the fiscal stimulus and he is taking the blame >> just quickly on that last point. there's a long list of reasons why inflation got out of control. i don't think i would put the fiscal policy at the top of the list it may not even be on the list what really drove the inflation was the pandemic, the supply chain disruptions, and the russian war. and monetary policy played a bit of a role. we can all agree that the fed was slow in raising rates in response to the rising inflation. but fiscal policy, not at this point in time. i just don't see it. >> that's interesting, because i think that there's a lot in the

stew there >> i disagree. >> i don't know. i don't know where you put a percentage of effect or influence on fiscal policy but i didn't mention the war in ukraine, number one. and i didn't mention the other thing there, which you did mention, i can't remember what it was, what did you just say? >> the pandemic. >> the pandemic and the supply chain. that certainly contributed to rising costs steve, final thought, quickly tie it up. >> just quickly, mark and i probably should have this debate offline. i'm sure he has some good data but my sense is that there was an overstimulation i don't know that it was the wrong policy at the time in that what we were afraid of again during the pandemic. we didn't know all the risks that were out there, and maybe overstimulating was the right risk management call but if people didn't have so much money in their pockets, the supply chain problems would not have been as severe as they were so i had called for at the time

a more attenuated stimulus package. i think that would have been more helpful i also think the fed should have responded to that fiscal package and started cutting and easing back on quantitative easing sooner, and we might not have had the inflation outcome. >> interesting discussion. thank you very much. mark, steve, appreciate it let's talk about more on fiscal policy. the next guest says that should be the top investor concern. and not the timing of rate cuts. for more, let's bring in jamie cox. jamie, let's pick up where we left off how contributory do you believe fiscal policy was to the inflation that the country experienced over the past two, three years? >> i think it was critical if you rewind the clock back to the financial crisis in 2008, you had monetary policy wide open the fiscal policy sort of petered out. we had the defense sequester and fiscal policy that was absent.

so you had monetary policy that didn't really contribute much of anything to inflation for a number of years. then you fast forward to the pandemic, and you had this double barreled approach where you had both monetary policy wide open and fiscal stimulus wide open. i mean, you're basically raiding money from both sides. so the fiscal piece of this was one of the biggest factors it wasn't just one, it wasn't just the c.a.r.e.s. act, it went through infrastructure it seems to keep on going. including in that is also the tax cuts that came along with the tax cuts and drawbacks before the pandemic. so you had a lot of fiscal stimulus i think that's probably the largest contributor to the equation because monetary policy is a little bit laggy fiscal policy is very quick. so i think that is, to me, one of the biggest pieces. >> you can even throw into that fiscal stew, the 2017 tax cuts that took effect in 2018, and they rippled through the economy, as you know, at a lag

maybe it's not the lag that monetary policy has, but nonetheless, it does take a while. i would argue that the fiscal stimulus that was put into the economy in 2020 and to a lesser degree in 2021, was to -- was insurance to ward off potentially an existential risk to millions of jobs and the economy's ongoing strength as a whole. you talk about a fiscal cliff red reduction and how to avoid it. why is that an ominous prospect? >> there are a lot of parts of the tax cut and job act that sunset in this year. it's not as bad as the bush tax cuts where everything just reset. but there are critical pieces of this legislation which i bet on the hill that a lot of lawmakers are very focused on. there was been some bipartisan, you know, workings here all of a sudden which is positive news on some of the less onerous pieces

like extending the child tax credit or expanding it these are very stimulative payments those are direct payments to people and allowing depreciation so that's important. but there are -- there is a much larger piece of this, which is section 199-a, which is the 20% tax free reduction, critical for small businesses like plumbers and electricians there is some movement on that, but that's going to be a bigger problem, because if you take away some of that reduction and increase taxes on small businesses at the same time they pay higher interest rates, that will hit the service side of the economy hard so that's something we need to get fixed quickly. if we put everything back into the ordinary tax rates for many of them, it will change the job outlook. you reduced their profitability and the ability for them to hire or keep current staff at certain levels so that's really important i'm hoping that it will work

itself out i do see some movement on the democrat's side. the democrats seem very, very interested in get thing done so hopefully, we may get some of the bigger pieces. we have the salt deduction that is really a problem for the northeast, particularly for lawmakers in the northeast trying to get re-elected so i'm not sure how that will work but i think we have a decent chance of getting it done. if it doesn't, and we continue to have these, you know, even this week, we have a cr, another government shutdown potential. we're just going to be rolling through these all year long. that is way more important monetary policy, because the fed told us they're going to lower rates a couple times this year, they're not going to raise them any further. that's a good operating environment for investors. so that's why fiscal policy is way more important now >> jamie, thank you very much. we'll see you soon appreciate it. coming up, bank of america

is crowning the king in streaming. saying netflix has won the so-called streaming wars game, set, match and between password crackdowns and advertising opportunities, this might just be the beginning of a media monarch plus, china just past japan to become the world's largest auto exporter. are they a serious threat to american automakers? we will look at whether the west should be worried, when "the exchange" returns after this trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the award-winning trading platforms. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. tailor the platforms to your unique needs with nearly endless customization. and track market trends with up-to-the-minute

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♪ ♪ peacock made its move in the streaming wars over the weekend with the exclusive rights to the chiefs, dolphins taylor swift game but the next guest says that netflix is the clear winner

here she's got a buy on the stock, just upped the price target to 585, a 20% upside from current levels joining us now, jessica ehrlich. nice to see you geagain. >> thank you for having me >> glad you could be with me game, set, match i can't quarrel with your conclusion here. if i were cutting the cord and i said okay, now what do i do? my number one default choice would be netflix easy. >> it's not even a question. netflix is what the -- it has something for everybody. it cuts across every demographic. and there are significant growth drivers, including their engagement is so strong. >> their engagement is strong. how is the crackdown on password sharing going? i'm asking for a friend here

>> well, you know, it's interesting. they've had really growth since they started cracking down on the password sharing but it feels like there's a long way to go. they've set several quarters most people that we speak to haven't been touched yet, so it feels like there's still a fairly decent runway for password sharing crackdown there's also a runway -- think about how many broad band homes there are in the world and how many connected tvs there are there's a very long runway for subscriber growth, and they have the content. >> a couple of years ago, there was, as i'm recalling, you can correct me on this if i'm incorrect, there was a concern that netflix was spending so much on new content generation some of which has paid off beautifully, but it's a hit or miss business. but now, its top ten list has been dominated by third party

content which can't cost as much as original content generation how does this play into their current profitability picture, and into their future profits? >> excellent point you know, the underlying drivers in the media and entertainment sector are all really positive for netflix. viewers continue to move from linear to streaming, so that's a positive they do dominate -- they're own content for television viewing is doing very well but if you look at the third party acquisitions they have in film in particular, it's amazing. their engagement is really strong, and they dominate the streaming charts so the trend for years, a lot of the studios, the traditional studios pulled back content and only kept it in their own place, wouldn't sell to anyone else warner brothers discovery has way too much to put on max

universal is selling movies, sony is selling movies so the ability to get third party content, it's lower cost, but it's quicker to get on the schedule and its known content. so it's like a win-win for the studios because they are selling contempt, but clearly a win for netflix because they are getting the content at lower prices. >> by the way, i was watching netflix. weirdest movie, ethan hawke and julia roberts. i have no idea what the name was, but it had the weirdest ending one of the numbers that i was drawn to is forecast for profitability and gross margin, increasing from 2023 to 2024 and again into 2025. how are they doing that? >> this is just the beginning. they are the only profitable streaming service, but they have

the leverage that will kick in, because they are scale they're almost 250 million subscribers, probably over when they report next week. but the drivers are, the password sharing crackdown and continued growth in shows worldwide. but they have advertising video on demand, and given the change in pricing, where i don't want to say pushing, but if you're worried about budgets and spending too much money, it's a great offer. you get four to five minutes of advertising, targeted, so it's interesting to you in premium content. so the advertising platform is just us beginning. this is a tree to five-year growth driver. they surprised the market with a price increase last quarter, and we'll see what the turn is, but maybe not that high. and then there's bundling, which is really interesting, because what was start -- what we're starting to see are things like verizon offering netflix and max together for $10 with

advertising. that's a bargain for consumers, but it's great for netflix and warner brothers discovery, because it decreases marketing, and increases the customer lifetime value so there's just a lot to like here >> jessica, always great to see you. what was the name of that movie again? "leave the world behind" was the movie. look it up jessica, nice to have you back >> thank you so much >> you're welcome. coming up, ey unveiling its first deal barometer, looking at the sate of m&a in 2024. how the fed could end up and the entire deal making environment ahead. but first, boeing's ceo dave calhoun in kansas speaking to the ceo of spirit arrow systems which built that max 9 fuselage that had the door plug pop out what he's telling them and boeing'sext nsteps. "the exchange" is back in two minutes. your workplace benefits and retirement savings.

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welcome back to "the exchange." here is your cnbc news update. colon cancer is now the deadliest cancer for men under 50 the second deadliest after breast cancer for women under 50 that's according to a new study there the american cancer society. rates have been rising for 20 years, though unclear why. it's become more common in younger people some experts believe increasing obesity rates and unhealthy diets could be factors the world health organization is working with zimbabwe to help as el nino is

threatening the food crisis. it has put 2.7 million, almost 20% of the population at risk for hunger, because of poor harvests from drought. discount grocery retailer aldi announced plastic bags are out at its 2300 stores the company says the decision was made to help reduce costs and preventing almost 9 million pounds of plastic from entering circulation. aldi will have reusable bags available for purchase >> thank you very much, julia. coming up, china surpassing japan as the world's largest auto exporter, worrying some in the west and elsewhere we'll look at how real the threat is and who is most at risk, next hot dogs, i invest in a fund that advances innovations like robotics. fresh, warm hot dogs, straight out of my torso! one for you, one for you. oh, you're a messy one. cool, right? so cool. anyone can become an agent of innovation with invesco qqq,

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welcome back to "the exchange," everybody an influx of chinese cars is terrifying the west. that's a headline from the economist last week. this as china has been crowned the new king of the global auto market, overtaking japan as the top exporter in the world and not by a small difference, either the country shipped more than 5 million units overseas in 2023, while japan is expected to lag

behind that number by almost a million. the chinese ev maker byd has overtaken tesla as the top ev sell they are the world. my next guest says china is well positioned to keep growing market share for more, let's bring in johnson wong, head of china industrials, based in hong kong jonathan, welcome. good to see you. where is china dominating in selling exported vehicles? >> if you -- thank you, by the way. if you take a look at the market overall for china, overall passenger market continues to grow it's growing 5% last year to a record high in terms of auto sales. when you look at that, out of that 30 million cars sold, 5 million of them were exports the main export markets that

china is really focused on is on europe and southeast asian markets. if we look at the 5 million units, about 1 million units were sold to the southeast -- about 1 million units were sold to russia. 400,000 were sold to mexico. 200,000 sold to belgium. we're talking about passenger vehicles you talk about evs, belgium, thailand and uk, these are the top three countries for evs in terms of exports >> that's very interesting it's not as though, for example, mexico does not have a domestic automobile -- they're making american vehicles, but they have a large presence in manufacturing. so it's not just countries that do not have vehicle manufacturing. russia has some vehicle manufacturing, who can speak to the quality of those vehicles? but this is in europe and also in the west in mexico. not in the u.s

why haven't chinese companies come into the u.s., have they been blocked in doing so >> if you look at the export tariffs that the u.s. is imposing on china, it's 27.5% export tariff to sell cars to the u.s. so it's not exactly the friendliest country to sell cars to in the u.s. and obviously, we're all -- the geopolitical element also behind the scenes so china actually exports to the u.s., about 80,000 vehicles to the u.s. last year but in particular, byd, they have a huge bus factory in the u.s. so a lot of the electric buses -- >> interesting >> -- that you see on the road are made by byd. >> i did not know that at all. that's one of the things i love about this job, i learn something every day. thank you for that let's talk a little bit about the chinese domestic market. po

produced -- i think you said 30 million units, is that right, over the past year, of which about 5 million were exported? that leaves 25 million or whereabouts to be consumed in china. are those vehicles favored in china because they are low price, number one, because they are -- you're perceived as buying from the home team, number two, and/or because the chinese government subsidizes the purchase of domestically purchased vehicles in a major way? >> right i think a lot of the growth that we're seeing in china comes from that side. if you look at the penetration rate in china, it's 44%. we're talking about a similar rate in the u.s., which is at about 7%, talking about 20% in europe in terms of ev pen traegs but the difference between china

and the person countries is the profitability of the nev cars are now much better. if i just quote you one example, if you take a look at the byd, that is one of the best selling hybrid vehicles. you compare that to a toyota corolla. the initial purchase cost is already more than 100,000 rnb cheaper. then you take into account the cost of ownership after five, ten years, you're saving 100,000 rnb. if you're a taxi driver, you're saving more than 200,000 driving an ev versus the other cars. so that is why we're seeing the increased penetration rate so we're seeing brands that are coming into china previously, now exiting china because they're losing market share.

we have brands like mitsubishi these brands are will exit china in the near term >> jonathan, thank you very much for being with us today. we appreciate it >> thank you coming up, boeing's ceo addressing employees boeing used to own the aerosystems. shares higher on that news, two-point gain for boeing. we'll have the latest on this ongoing saga, next

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when you partner with barclays, every change leads to a bold possibility. you have the vision. we have the insights, financial solutions and global perspectives to help you make it real. barclays corporate and investment bank powering possible. welcome back to "the exchange," everybody boeing shares up about a percent now, following news that the faa has completed its inspection of select 737 max 9 planes. also happening today, boeing's ceo dave calhoun addressing spirit aerosystem employees at a town hall. let's get to phil lebeau for more >> tyler, that town hall meeting has just wrapped up. dave calhoun, along with pat shanahan, ceo of spirit

aerosystems, addressing employees there in wichita, kansas this similar to what we saw from boeing's town hall last week the idea here is to say to the workers there, we've got to do better you cannot have these kind of quality escapes that lead to this kind of a situation by the way, spirit aero, the quality controls there have been in question for some time over the last couple of years this is not the first issue that has popped up. with regard to this issue, when it comes to the 737 max 9, as you mentioned, 40 inspections of grounded max 9s have been completed. the cdata is being analyzed by the faa. when we see these planes return to service, when the faa gives instructions in terms of this is what you need to check for remains to be seen two airlines are eager to get these planes back in the air, united and alaska. for united, its 79 max 9 planes are grounded look at the selloff here since

this incident, really in the last week, as -- we don't know how long they'll be grounded here then with alaska, it's a bigger part of the alaska percentage of the fleet, even though it's 65 planes, not 79 as you have with united quickly take a look at shares of boeing remember, the q4 results will be in two weeks and that's when we expect that boeing will give its 2024 and long-range guidance. though tyler, we have seen this before with boeing if they're in the midst of an issue like this, they will say we're pulling guidance we're not going to give guidance until we have greater clarity. we'll see if that happens in two weeks. >> phil lebeau, thank you very much coming up, earnston young just launched its deal barometer, and this, they say, is the sector to watch for m&a this year. a tv exclusive, a look at what else -- and we'll look at atwh

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after dismal 2023. ey's personable deal barometer shows m&a activity will rise about 12% this year returning to pre-pandemic levels. according to the dater, deals started to pick up the last quarter and that momentum may well persist. joining us is mitch berlin, vice chair of strategy and transactions at ey america. debbie with us. a 12% overall expansion in deal activity is what your baseline forecast is. there are different kinds of deals, pe deals that became so famous over the past couple of decades and more strategic deals, which we began to see an energy, pharma, and so forth. how does that splint go? it's 12% overall what is one going to be more dominant in terms of growth than the other? >> they are pretty close. we would expect a 12% increase in corporate and 13% increase in private equity. not too far away. >> where to the extent you are able to look ahead would you expect the deals of the

strategic sort, the strategic dominations meant to be sort of more prevalent? >> the sectors that are more prevalent are the ones where the multiples have gone down because the cost of capital is still high, so you can't have high cost of capital in high multiples and expect activity. >> not tech but not the big tech, necessarily? >> we are seeing a pickup. tech is behind but there is still the most dominant player from a sector perspective. we would expect a small pickup in tech. were expecting a pickup in life- sciences and energy which we have seen a lot of energy deals the next quarter. >> the granddaddy's of them all, chevron have been active, exxon doing their deal in the permian area. let's talk about cost of capital. how critical is it that interest rates, borrowing costs remain where they are or fall

in order for your forecast of 12, 13% growth to come true? >> our baseline scenario assumes the cost of capital will come down a point and a half, if it doesn't, we are looking at less of a growth of m&a. the multiples aren't coming down that significantly, so the cost of capital has to come down to see our re-emergence of m&a pics macbeth combinations you see are in bio and life sciences, maybe an energy. how about the pe area? would attract the same? expect the pe firms, blackstone's, kkr , carlisle's to be active in that same area or in other lines? >> a lot of tech there is a lot of activity in tech and healthcare as well. >> were in tech are you seeing? the big tended to get bigger in these circumstances. >> a lot around ai, trying to get an earlier in ai. >> a i would be the area to look at. who will be the active buyers? let's talk about tech most

specifically. will it be the big whales in the business, the meta-number alphabets, amazons, microsoft or whom? >> i think it will be the big ones. they still have a robust m&a pipeline whether they are acting on it right now doesn't necessarily indicate that the pipeline is in there. there is an active pipeline that they will act upon when the environment is right. >> the big guys will be the acquirers virtually anybody could be the acquiree. i assume, i don't know this to be the case, i assume if you're looking at life-sciences, you are looking not only at large pharma that may be having a pipeline dearth, trouble so they are buying drugs but it could be other companies as well, couldn't it? >> the are looking to build the art patent cliffs coming. a lot of it is buying new r&d, but it can also be looking into meditech and other areas. >> the meditech area could be.

is there a sleeper sector here that you haven't mentioned where there might be a fair amount? we mentioned energy and life sciences, are there other? you said tech. are there others that could be out there as well? >> i don't think there are sleepers, but if you look at the secondary level of heavy m&a activity, a lot of consumer products . we have seen some retail deals in the past year around brands, we would expect is a continuation of that. >> mitch, thank you very much. congratulations on the survey. is at the exchange? let's look at some markets, shall we? let's do that. the dow industrial off about 187 point. a rocky start to the year so far. the other major barometer is also modestly lower today as we get off on a sort of back foot for 2024. that will do for the exchange. the latest read on the economy with the beige book out

in just a couple of minutes. will talk to antitrust lawyers. maybe i should've asked mitch about that block merger between jetblue and spirit airlines. i will join dom to on the other side of this quick break. be right back. ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪

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hi mom. at vanguard you're more than just an investor, you're an owner. helping you prepare for today's longer retirement. that's the value of ownership. welcome to power lunch. alongside dominic chu, i'm tyler. coming up, the fed releasing the beige book. a read on the strength of the economy, getting forecast from districts around the country. this morning we have a stronger- than-expected retail sales report. >> that is sending stocks lower today. fears the fed won't be quick to cut interest rates and the broader economy remains strong. here's where the markets stand right now. you can see the s&p 500 about one full percent, the dow down one full percent. casing the losses down one of a