a allscripts, mdrx >> pete? >> it's near its highs, paypal it's trading 89. i think this thing is going higher >> keep your eye on stocks as well going for four days in a row that does it for us. thanks for watching. "the exchange" with kelly begins now. welcome to "the exchange." i'm kelly evans. the rally from the christmas eve lows continues fueled today by fed speak and oil. we'll get you the latest a cracked foundation home bltder lennar can't give guidance because of uncertainty in the housing market. we'll talk to the chairman and buzzkill a hang over for constellation brands the stock at a 52-week low first a check of the markets with dom chu >> two days, two voting februarys of the fomc making more dovish comments about the markets. that's perhaps extending those gains. the dow up by almost 1%.

we were up about 196 points at the high for the dow industrials. the s&p, 2593 the last trade there and the nasdaq pacing the gains up over 1% up by 77 points. speaking of those lows on christmas eve, the high yield, junk bond market seeing some real signs of life, but can it be sustained that's a big deal. from september down to the lows, we lost about 8% in this particular etf the ishares ticker hyg it tracks junk bonds up about 5% since those lows that junk bond market one to watch as well. and one of the big stock movers of the day is no longer in the s&p 500 but chesapeake energy is trying to become more of an oil oriented company as opposed to just natural gas those shares surging by 13%. you can see here one of the best performers in the russell 1 thousand after we see these moves to the down side they have laid down production levels that have matched or beat

analyst estimates for their oil production that's one stock to watch, kelly. back to you. >> dom, thank you. as the rally continues, earnings have started to roll in investors have one issue on their minds. where is the guidance? bob pisani has more. >> it's all about 2019 and the important thing right now is, even as the markets are starting to recover, the numbers have started to come down for 2019 and that's a good thing. how far is the question. back on early october, we were expecting 10% earnings growth in the s&p 500. that's for 2019. today, december 19th, down 7.9% and today, look, 6.8 you see a steady decline a little more than you normally get. slower global growth, fed concerns, tariffs. that's made the market volatile. look just at the guidance we've been getting here today. a lot of bad news is priced into the market skyworks is lower. lennar said we're not going to

give you 2019 guidance if this would have happened six months ago, the stock would have been down big time a lot of bad news priced in a lot of these stocks. constellation still a big surprise guidance was poor. their wine and spirits sales was a miss but the bottom line is basically a lot of bad news already priced in for 2019. what side are you on if you think 0% earnings growth, you'll think the market will still go down. 5% or 6% where a lot of people have 3,000 as an s&p target with 5% earnings growth >> bob, thank you. let's get over to rick santelli with the latest for the ten-year auction in treasury bonds. how does it look >> this is a great auction, kelly. i gave it a b-plus for straight-up demand at 1:00 eastern let's go through it. second reopening adding to an issue for the second time. originally auctioned in november so these ten-year notes yielded 2.728. that's lower than the one issue was trading right at

1:00 eastern lower yield, higher price. that's a big positive on pricing. 2.51 so basically 2.5 times more bids than securities. that's exactly average 56.9 on indirects. a little bit below average the week since june of '18 but here's a whopper 20.8 on directs. that's the best since may of '15. we give this a b-plus. tomorrow, of course, we'll finish up with 30-year bonds for $78 billion in supply. kelly? >> thank you, rick mr. santelli, thank you so much. bond yields rebounded. how about stocks all three major averages on pace for their eighth positive day out of the last ten. every s&p sector in the green today. more than 230 stocks in the s&p 500 are up more than 10% from the christmas eve lows and about two dozen of them are up more than 20% twitter, amazon and netflix are all leading the way. even chipotle and general

electric are leading the mark. guy adami and dominic chu, welcome to you both. also craig callahan, founder and president of icon investors. >> i'm going to kick it back to you and say congratulations on -- i don't want to touch anything >> fingerprints are -- >> the chairs look great >> the bounce we've seen since christmas eve has been incredible now we're coming up to levels where we're seeing a 50% retracement of the all-time high, 2940 the low we made on christmas eve and now here we are now. a lot of people think we'll retest those lows. i'm one of those people. i think people got a little ahead of themselves. >> you think we're going back down >> there's a very good chance. a lot of people think we put in a low, had the v-shape bottom and everything is great. that may be the case i think we've run out of steam here and at some point over the next couple of weeks, we'll have a retest >> craig callahan, you feel differently. at the lows youle to le ttold s

like a bottom now. >> it's called a volatility event. similar to 1990, '98, 2010 and 2011 and in all cases the market drops sharply about 17% to gents% over 9 to 12 weeks and rebounds just as quickly we'd expect to get back to those highs we saw in september late march, early april >> guy thinks we're going back to the lows. dom, what's -- >> i have to be the minority report here, i have to be the bad guy in this situation? >> maybe you can help play detective. today was oil and fed speak. why are those important? >> we're talking about markets in a v-stage, v-shape recovery from those lows. often times these moves don't happen in straight lines but they're treated with a good amount of skepticisskepticism when oil prices fall by 44% from

their peaks in october and then rally back 23% over the course of just the past couple of weeks, that's something to watch. same with treasury yields. if you are looking for skepticism, rick just laid it out. it doesn't signal a risk on type environment right now but to your point, oil prices maybe were positioned for this big bounce back because of how hard they've been sold off. also look at the treasury market between st. louis fed president bullard and the boston fed today, two voting members of the fomc who are echoing concerns about whether or not this market can keep going >> i wonder if -- if we have bostic saying we'll be patient and bullard saying we're bordering on having gone too far. and that all, to you, doesn't add up to, the fed is going to be more accommodative?

>> is the fed put back in place? the double whammy of bullishness with this fed dovishness and a china deal that you're still rallying on today. obviously those 24 great catalysts for the market going higher but speak and action are two entirely different things. melissa lee mentioned this the other day. jerome powell was speaking from a prepared sheet reading from a script as if he wanted the market to know a certain set of facts but i do believe if you go back and see what he said a month or so ago, he's going to do what he thinks is right. what he thinks is right is continuing to whittle down the balance sheet. >> you think it's hawkish? >> and to continue to move rates to reasonable levels that we should be, if, in fact, this is the greatest economy in the history of the public. not my words the president's over the last few months >> you think the volatility event is over. yesterday we spoke with maumd al

arian. the fact the fed is coming out of the market ending quantitative easing means they're not assuming volatility. why do you think this is all behind us? >> pretty classic. our research shows high volatility is followed by higher than average returns and high volatility is also followed by the below average volatility i think the volatility is behind us >> last february these incredible volatility events and a blow-up in some of those volatility products. then we got better and climbed to the highs in october. and then another volatility event. for how long is it going to be smoother sailing, so to speak? >> we compute value and we see the market as about 10% below our estimate of fair value its best predictive abilities are out a year to a year and a half i would expect 10% to 15% upward

move in the market >> is there anywhere in particular you'd want to be exposed to here? >> we think it's a resumption of the same theme for the last 9 1/2ing year years consumer discretionary and financial technology >> we see that coming off the bottom so many people told us be positioned defensively for 2019 but it's been a lot of fang and those parts of the market. what is it up, 20% so far this year >> just this year in six trading days and it's up massive, double that amount, almost double that amount just since the christmas eve lows so if you're talking about risk gauges, it's not that netflix is the ultimate bellwether but it's indicative of this appetite coming back into the marketplace. >> guys, thank you all dom, thank you there's a lot more ahead on "the exchange. >> coming up -- the feds' doves

are out in force trying to instill confidence into the market will the fed be the driving force that keeps this new year rally going? former nec director larry lindsey joins us plus, lennar reporting and telling the street it can't give guidance we'll ask the chairman why and dig into the state of housing. and the bezos breakup. no, not amazon he's getting divorced. the money, the intrigue, and more this is "thexcng ocn ehae"n bc i am a family man.

i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast.

we're working to make things simple, easy and awesome. it's day 19 of the government shutdown with still no end in sight after president trump's address to the nation last night fitch is now warning of a possible cut to america's aaa debt rating if the shutdown continues to march 1 that's the date the u.s. is also expected to hit the debt ceiling. the white house is estimating the shutdown sheds 0.1% off the gdp every two weeks. the next guest says the economy is being strangled, not by the government shutdown. he says it's being strangled by the fed. let's bring in larry lindsey currently president and ceo of the lindsey group. guy adami is still with me larry, welcome to you. >> great to be here.

thanks for having me >> you said you didn't think the fed should raise rates in december they went ahead and did it anyway now a lot of commentary where they seem to be saying we're going to be flexible about the balance sheet. we'll make sure we don't go too far, too fast. what do you think is the right thing for them to do here? >> well, the fed's mandate is inflation and unemployment i.e., things get too weak and they should probably be cutting rates and there what they have to focus on is the unemploymenteraunemploy menment rate they have raise rates when it's a threat they're not supposed to raise rates just because the economy is growing too fast and they're not supposed to raise rates because too many people are working. they're supposed to raise rates if inflation is going up and inflation is below their 2% target, and it is falling. and any technician will tell you if you break support and you are still dropping, what's going to happen next? it's going to continue to drop

and that's why i was very concerned about the move in december, and i think they have to be more than just cautious. >> what about the lag effects. average wages are rising and really good in the last payrolls report the overall inflation report will be headed up over 3%. it's just a matter of time and if they back off now, that could get out of control >> well, no, when i pay somebody more, i pay them for two things. first because they are more productive they are putting more out the door for every hour they work. and secondly, i can raise rates because prices are going up. let's just do the math wages went up 3, too productivity went up 1.5, which means i can pay people 1.7% more -- excuse me 1.7% more and break even in fact, inflation is above 1.7

which means i'm making money on them wages right now are actually putting a deflationary pressure on the overall economy because what we produce, they're not getting compensated. >> my question to you would be, if we come to a place in our history where the fed can never raise rates or whittle down their balance sheet. we've become too accustomed to zero interest rates where any time they try to move forward, the market is going to react the market reacts and we have these conversations. would we be having the same conversation if the market didn't go down 20% in a month and a half >> well, i would be saying the same thing because you shouldn't raise rates just to slow the economy or just to throw people out of work. i think what they have to focus on is inflation. obviously, the mark else makes it even more critical decision by the way, i'm all for

normalizing. i thought that normalizing the balance sheet makes a lot of sense. i think that the chairman was right the first time when he said we're a long way from neutral. this is back in october. i think neutral is like 3, 3.25. trouble is, if you send the economy into disinflation before that, you'll never get to normalization. >> i'm surprised you still think it's that high i wasn't sure if the lower inflation rate meant it would be lower. does that mean they just have to raise rates once every year? how much time do they have >> remember, this is long run. and the 3 to 3.25 is based on having 2% inflation. well we're not going to have 2% inflation. we're going to have less than 2% inflation this year. probably just 1.5, maybe lower, which means they are never going to get to what they thought of

as long-run normalization. they have infectively sabotaged their own efforts. i can just add one more thing. just think back a few years, like two or three. do you remember all the hand wringing at the fed because inflation was just 1.5 or 1.7 and it wasn't 2? and, my gosh, we can't tighten unless we get to 2 well, they're below 2. they were below 2 in december and they still raised. so i don't understand why there was this shift in attitudes between what they had just a few years ago and what they have now. >> this is interesting because a lot of people say the fed shouldn't be pushed around by the market jay powell shouldn't let a 20% sell-off tell him what to do the markets are responding to the fact they think he's making a policy mistake so in that sense, should he be listening? >> my pushback to larry is, is the policy mistake the one the fed is making now or the one

made over the last ten years, and is this fed just trying to clean up the mess? that's the conversation? and we could probably talk about this for an hour i don't think, and i've never thought it's the fed job to make the nasdaq and new york stock exchange or dow jones industrial average go higher. unfortunately, though, that's sort of what's happened, be it wrong or be it right >> you're absolutely correct and, yes, there was a need for emergency measures in '08, '09 and maybe in 2010. and that was qe1 but, remember, qe2 and qe3 were all about driving up asset prices that's what the fed said driving up the nasdaq and the s&p in order to boost the economy. we were out of crisis. they just wanted to push more. and i disagreed with that. but if you're going to unwind from that, you have created a bit of a bubble. you don't want to end that with a crash. so i think they had to be sensitive to the pace at which

they were hiking and that's again why the december hike was wrong. >> larry, when you -- >> guy if you just went -- sorry. >> quickly i'll let you finish your thought. >> sure. if you go back to what the market, the futures market was saying before the december hike, they said we believe you we think you're going to hike in december but if you do, you're never going to have another hike there was less than a hike priced in for 2019 and cuts priced in for 2020 what kind of signal does that send that's certainly telling the fed we think you're going to hike but we think it's a mistake. >> when you think it's clear for them to hike again, you better come tell us for now, we'll leave it with larry lindsey. the minutes coming out at 2:00 p.m larry lindsey joining us guy, we'll see you in a bit. shares of constellation

bra brand. plus, the darling of wall street in 2017 but in the past three months, amd has taken quite a hit. what's got wall street so worried, and do they have it right? we'll speak with the ceo in an exclusive inteiestig ahead.ht "the exchange" is back in two. hang on. radar that senses things the human eye can't. busted. and the ability to make a thousand decisions before you even make one. was all this, really necessary? what do you think? ♪ you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated.

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right now after seeing a big drop despite today's rally it's still down 20% this month. micron also seeing a nice pop. the stock getting an upgrade to outperform they've seen a slew of upgrades lately airlines taking flight today, southwest, jetblue, hawaii and american are all popping. to sue herera for a cnbc news update >> here's what's happening at this hour. at a white house anti-human trafficking ceremony, president trump urging congress to pass legislation with funding to secure the southern border with mexico >> we might work a deal, and if we don't, i may go that route. i have the absolute right to do national emergency if i want >> what's your threshold >> if i can't make a deal with people that are unreasonable >> the kremlin says russia and the world anti-doping agency have reached an agreement on the handover of lab data that is a requirement for the russian doping lab to keep its

acreditation they are in moscow to retrieve the lab data and data compiled by an economic research publication, americans over the age of 55 made up about half of all job gains last year. more than 1.4 million jobs were assumed by employees that were 55 years old and older that's the news update this hour kelly, back to you >> sue herera there. about a half an hour until "power lunch." i'm joined by melissa lee. seeing more impacts especially in the ipo pipeline. >> a lot of people are saying january is going to be a dry month when it comes to ipos. what i'm worried about is beyond ipos because, okay, they'll raise money in february or march. no big deal. i'm worried about things like pyramid schemes, insider trading. other sort of fraudulent schemes in the market where the s.e.c. will not be at the switch watching these and policing them 285 employees are still on the job out of 4400.

only for emergency enforcement actions. those things, fraud, insider trading, it does not fall under the pursue of emergency enforcement actions. >> with the ipo pipeline you can say once they get back up to work we'll be delayed a little but still go some things like fraud, they don't have the resources to cover all of that. you lose a month or more definitely fall through the cracks >> they didn't have the resources to begin with. remember jay clayton testified in front of congress saying personnel is his number one problem. the s.e.c. has been chronically understaff and then to come back on the job and have this backlog of cases and litigation that's been deferred in the courts, that's a lot of work to catch up on >> that's a great point. we'll be talking about this more next hour. also viacom's ceo. we'll see you soon here's what's coming up on "the exchange. >> ahead -- the state of housing with the chairman of lennar.

amd's ceo on the stock's recent downturn and why crude has comeurng sgi back this year and if it will last.

welcome back it's time for rapid fire here with their takes are morgan brennan and guy adami and scott wapner shares of constellation brands falling after the company gave weak guidance for this year and is pushing into the cannabis market but wrote down the growth >> doesn't seem like a big deal but maybe their business has been declining for the last couple of years and the reason they got into cannabis is because they had that vision and visibility and did this hail mary 15 times forward earnings, they say it's cheap i say valuation probably has to come down. these are declining businesses they know it >> that's it it's over? >> i'm not saying -- >> hail mary wow. strong words >> throwing a hail mary? >> it just comes natural >> it was a little bit of a hail mary >> is cannabis worth it?

>> yes, i believe it will be not over the next couple of months but next 5 to 10 years. this will be a great investment. just not going to pay dividends right away >> here's what's so fascinating. there's a social scientist aspect in to this. you have folks switching to cannabis from wine and beer because it's lower calories. i know it's a trend happening but one word, munchies >> i'm not even going to go there because i don't pretend to know anything about this >> frito-lay >> the pair trade. can it be big enough to offset the declining core business? it has to be huge, and they have to have differentiated products if they're going to own this like they did with wine and spirits. >> over time it will prove to pay dividends. the trajectory is going to be lower, if the tape rolls over this stock will go down faster >> oil is on a tear to start the year that includes today.

up for the eighth straight session. up 14% what's changed in the last few weeks, if anything today it's up another couple bucks. last night people said back above 50, 51, now 52 >> the u.s./china trade talks, a dollar that's weakening, all this focus on economic growth, not just here in the u.s. but globally the saudi output cuts. all of it is coming together such a drastic drop that perhaps it's not surprising. >> overdone to the down side and if you look around the market, why is it the bellwether because it's about demand? >> the biggest fears have abated a bit. oil gets a bid back above 52. everybody is feeling better about the overall market maybe we don't think we're going into this cataclysmic economic morass for a long time or even a recession as soon as some people thought. >> is this the recession trade is off has it been taken off? you don't get a 20% bounce like that without something seriously having changed in the last

couple of weeks. >> i don't know how many were counting on a recession in '19 people started to pull in their recession forecast as everybody got a little uptight and scared about what the economy was really doing reality, though? economic growth doesn't suggest that we're going to be in a recession. >> the shocking thing is a 44% drop from the peak not so much the rebound from the lows >> you look at crude and other industrial commodities, aluminum, copper, other names that have moved similarly. the biggest thing to watch will be china and just how much you have economic growth weakening there given the fact they are big consumers and producers of -- not crude, but -- >> it all feels like it comes back to, if they're growing -- >> which is what we saw happen 2014 into early 2016 when we saw the commodity complex collapse >> and then found their feet >> if the saudis cut supply, that's positive for oil. we had this long debate. supply/demand issue or economic concern issue? and maybe you are getting some

of that. >> with oil it's all three opec plus would not rule out further action supply helping, too. then let's talk about the ipo woes some companies are facing also could be true for m&a deals delayed while the government remains shut down because regulatory agencies like the s.e.c. are down staffers they are lacking resources to give people the go-ahead do they just have to wait, scott, and play a little catch up or is this like a serious setback? >> i think they have to wait, but let's not kid ourselves. it's not like ipos were rushing to get out the door in the current market conditions we've been in. maybe it's just another thing that companies that wanted to go public have to deal with short staffed s.e.c., et cetera. >> what are we going to do how many years have we been waiting for this one, finally, right? >> i think this shutdown gives, to your point, it gives everybody air cover. the real villain or culprit is the fact the market has been down until recently.

20% in a week, week and a half the move in the market might help but this government shutdown gives a lot of people air cover. we're going to wait for the government shutdown and that's really what it is. >> i was going to say maybe it's not so much about uber what about everyone else who also wanted to get out there do they literally get crowded out now with the resources >> some of the smaller companies, smaller cap companies looking to go public are the ones that need money more quickly. some of the bioteches have been called out in the ipo pipeline they may be the ones more impacted by the shutdown delaying that process. uber has come out and said, look, we'd like to go public in 2019 but our balance sheet is strong and if it's not the right time, it's not the right time. >> the s.e.c. would prioritize that if they wanted an excuse not to, they have it but they've got to do it at some point. >> the next uber i take will be the first and that will bring us an amazon which -- >> you've never taken an uber?

>> of course not i was a lyft driver for a day. >> i would have expected you'd take an uber by now. >> but you live in new jersey. what do you do in new jersey >> i get in my 17-year-old tahoe and drive myself where i need to go amazon's ceo jeff bezos and his wife announced they are divorcing after 25 years of marriage they announced this in a tweet this morning they plan to remain cherished friends. he said we see wonderful futures at parents, friends, partners, ventures and projects and as individuals pursuing ventures and adventures what is amazon, what do the shareholders need to focus on in terms of this breakup? >> i don't think much. >> the shares did not react well initially. >> well, yeah, but we're talking about a $1600 stock reacting by $3 or 4 bucks? that was a short-lived decline if you around investor in amazon, are you worried about

the split? >> does he lose control of the company if they have to split the shares in his position in it >> maybe, but if you -- they sort of try and put to rest this is going to be some big, you know, drawn out acrimonious battle now, remains to be seen, obviously. >> if she becomes a shareholder of half of his stake, does that mean she has more of an influence on the company is that -- >> she's been there, from what i understand, and i didn't know much about this. she's there almost since the beginning. one of the earliest employees. she probably has a lot of stock in her own name perhaps, i'm just guessing. so i don't even know if that's much of an issue i have no idea i'll have to turn to "access hollywood" tonight >> i missed my divorce law class in school. probably when i was hanging out with you >> maybe you can make a bullish case and say he reimmerses himself into the amazon ecos maybe he'll get himself so engaged that amazon, instead

of -- >> i don't think that anyone is worried that jeff bezos isn't throwing himself into his work >> guys, thank you all morgan and scott, guy we'll see you in a bit shares of lennar are higher despite reporting disappointing home sales in q4 we'll get a check on the health of the housing market with the chairman of lennar, stuart miller in an exclusive interview. "the exchange" is back in two. so lionel, what does being able to trade 24/5 mean to you? well, it means i can trade after the market closes. it's true. so all... evening long. ooh, so close. yes, but also all... night through its entirety. come on, all... the time from sunset to sunrise. right. but you can trade... from, from... from darkness to light. ♪

you're not gonna say it are you?

welcome back home builder lennar reported fourth quarter earnings before the bell what a story this is diana olick is here to break down the numbers and what this is saying about the state of housing. >> lennar's q4 profit broke expectations but revenue, delivery and new orders. the average price of homes delivered was also up 9%

and affordable is really the crux of the problem in housing right now. shares, though, are higher by about 7% and lennar's chairman stuart miller said in the release that the housing mark set adjusting to a temporary disconnect between sales prices and buyer expectations but that the fundamentals in housing do remain favorable he also said, though, that due to continued softness and uncertainty, they are deferring guidance for fiscal year 2019 until the market's further define themselves. and that's where we want to start and welcome in chairman stuart miller to "the exchange." thanks for joining us. >> good afternoon. >> we want to know about this guidance issue you said you had some preliminary guidance on sales for q1 and part of the year but what is so uncertain in your mind what are the biggest risk factors going into 2019? >> look, first of all, let me say it's nice to see our stock going up again it's been a long ride down for some time for the builders since

we started reporting some softness back in q2, q3. but, you know, this is the toughest time of the year to get a read on the market this is the seasonally slow time of the year. we're starting to get a little bit of a read. i noted in our conference call that in december, as interest rates started backing off, we started to see a little more traffic. but november, december, even into january, are the seasonally slowest time of the year and we really don't get a good read until we enter the more robust selling season starting in february, march and april >> but i know you rely heavily on technology in your analytics. you must have a sense going forward. you are on every sale. i've seen the war room in lennar in miami of what's coming up and you talk about mortgage rates. you must know what the reaction is among consumers >> we're in the war room right now but even a great war room with great analytics can't

define what the market is going to do as we're in the slow time of the year. we've seen this year after year. it's just a very quiet time of the year in the home building world. as we come into the end of january and february, we'll start to get a better read on the market and that's when we'll start to come out with more defined guidance going forward >> but on mortgage rates specifically, this is interesting. your stock shot up specifically right around the time on the conference call when you said you were seeing a reaction in buyer traffic to that drop in mortgage rates i want to put up that chart of the 30-year fixed that we saw a sharp increase at the start of the fall sales pulled back and then this sharp drop in december and the atlanta fed president bostick was suggesting the central bank should be patient and wait a little more for economic outcomes before making their next move, and that really made your stock price surge on mortgage rates specifically, do you feel your buyers are that

sensitive to these tiny moves? >> so let me rewind just a little bit and starting in our third quarter we really articulated the fact that over the past few years, we've seen sales prices moving up rather rapidly. now when you layer on top of that the very quick moves in interest rates that we saw from the fed that translated into the mortgage rates, it really created an element of sticker shock because it's a combination of purchase price and monthly payment derives from purchase price and interest rates that really defines the consumer's appetite and elements of sticker shock that translate into the customers' confidence. and so in the third and fourth quarter, we definitely saw sluggishness that tied to both the escalation and sales price and interest rates with interest rates tapering back, we think we're seeing an elevation in consumer confidence

and we think we'll see the customer come back to the market remember in the housing market we've seen a production deficit over the past ten years. that means very limited inventory. limited supply and we think that the fundamentals of low unemployment, wage growth, consumer confidence, together with limited supply are going to bring the market right back. >> stuart, it's kelly. we've talked aboutera rates goig down how much do you think home prices need to come down to resolve the affordability issue? >> we're trying to find equilibrium. the cust smer coming out to the market with interest rates tapering back. i don't think you'll see a big reduction in purchase price. you've seen some escalation in the use of incentives in new home sales for existing home sales you've definitely seen in many major markets the backing off of pricing but i don't think you've got much farther to go, and that's simply a -- that's simply

derives from very limited supply short supply in housing. >> all right stuart, thank you for joining us stuart miller from lennar and diana olick. we didn't even get to the labor issues for home builders, there's more than just the macro picture. >> the cost of labor is going up increased costs for labor because of such a shortage >> diana, thank you. shares of advanced microdevices trading higher today and having a monster 12 months we will have an exclusive interview with chief executive lisa su right here next on "the exchange." hey, batter, batter, batter, batter.

[ crowd cheers ] like everyone, i lead a busy life. but i know the importance of having time to do what you love.

at comcast we know our customers' time is valuable. that's why we have 2-hour appointment windows, including nights and weekends. so you can do more of what you love. my name is tito, and i'm a tech-house manager at comcast. we're working to make things simple, easy and awesome. welcome back from flying cars to home assistants, the electronics show has reveal ed a lot of gadgets. now an exclusive interview with the ceo of amd, john >> thanks. lisa, you just got done with a keynote here on the ces stage. new product announcements in your competition with intel and nvidia a i want to ask big picture.

you're in a quiet peertd, but semiconductor markets have been going through a lot of turbulence is that what you expected and do you expect it to right itself rather quickly >> first of all, jon, thank you for being here it's great to be at ces. you know if i take a step back, i'll say we look at the industry over you know, you know, three, four, five year periods. and when you look at that, there's an incredible need for more semiconductor content whether you're talking about more devices or more data b and so you need more silicon and you need more high performance silicon. for us here at ces, we start the year really very optimistic b about what we can bring to the market and you know as you said, there's a little turbulence in the market but i don't think it changes anything about what the long-term picture is in terms of you know the fact you need more high performance capabilities. >> what about china emerging

markets as far as how those are faring based on what we've heard from other companies just in the past few days? >> so certainly china's a very important market for our industry it's an important market for amd. there is a little slowdown some of what you've heard from other companies you know we see that as well but again, i look back and say from an industry standpoint, we, we see good growth over the market over the next couple of years. and it's really a matter of just working through you know some of these you know, some of these disturbances right now >> the gaming market has been strong for amd it's important for markets like the u.s. what's your feeling on the appetite for that segment and the dmoesic market general? >> we love gaming. it was a large piece of what we talk eed about here.

gamers are really demanding. one of the things we see is it's not, it's really across all platforms. you talk b about pc gaming cloud gaming you see it on consoles we were joined by some of our partners on stage today. and we all see the same thing. the answer is gaming is social brings people together so we believe it's a strong secular growth market and in north america as well as you know in all of the other regions. >> you talked about cloud partners that you have including megascale players like amazon and microsoft with anthony yur questions around hardware demand especially after the memory warnings we saw from micron and others from your point of view as you're trying to sell chips into those providers, how's the demad demand feel? >> the thing that's interesting is they always want more performance. there's a strong you know sort of demand for more performance

now cloud also tends to be lumpy and so there have been some conversations about hey, you know, is there a little lumpiness in the cloud market, but fundamentally, we're coming from a place where we're trying to really offer something new and different. our next generation we believe will be best in class and you know the cloud is a really, really important market for those types of products. >> your stock was one of the best performing last year. it's down 34% since october with a lot of others. do you view that as a good gauge of some of the lumpiness that you talked about or are investors perhaps out of sync with the demand environment? >> what i would say is first of all, we're making bets that really pay off over a couple of years. and we started this journey a few years ago. you know, high performance computing. really being focused

bringing new technologies to market being very, very innovative long architectures. i am 100% convinced we're doing the right things the market goes up, it goes down, but we're pleased with the fact that our customers and our partners and our ecosystem really understand why this is so important. >> big stage here at ces, congrats on the keynote. back to you. >> thank you so much thanks to lisa as well guy is here with a big picture look at amd and stock. if the cloud is lumpy, it's more than just amd that we should be concerneded about. is their sell off overdone >> i thought it was, but it was a stock cut in half from the fall and traders traded from 34.5 down to 17.5. bounced, retested and bounced. clearly today, the street's not like what they're hear iing, but

you have to ask yourself, i think that's sort of flip. i think amd stands on its own, i like, i think you can own this stock understanding that i think to your point, i mean, are we getting to a level of commoditization or have they turned the koerner corner i think they're learning how to speak to the street and a hard lesson to learn. >> the new fed chair is still learning it, too thank you so much. the dow is off its highs today, but we're still up more than 100 points and just moments away from the december fed minutes. we'll see what they had to say also netflix is surging in the new year with a nearly 20% gain so far but one streaming come pepetoas 'saining ground. 'saining ground. that's next. hang on. radar that senses things the human eye can't. busted. and the ability to make a thouns

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. just one more quick thing. guess who added more u.s. subscribers than netflix hule u. they added 8 million and the field is getting more crowded. still netflix shares up 19% this year we want your take. e-mail us at the change. tweet us at cnbc the exchange. that does it for us today. i'm going to go join tyler and melissa in a minute on "power

lunch" which begins right now. >> and welcome to "power lunch." i'm melissa lee along with tyler mathisen kelly will be joining us shortly. we are watching this market move higher, plus a big interview with the ceo of viacom, but we begin with breaking news on the fed. >> melissa, we got a little definitional help in the latest edition of the fed's minutes the frad that caught everyone's attention in that december fed statement was that the fed judges that some further gradual increases are warranted. the minutes show that the addition of word some was intended to independent kuwaica relatively limited amount of additional tightening. the minutes say the use of the word judges is supposed to convey that the fed is data dependent. it underscores the fact that the economy is uncertain about how the economy will evolve. there was a will the of debate over the solid economi