are you supposed to step in and buy in >> a buyer, okay down 8.5%. that's interesting joe, you go next >> merck >> okay. josh brown >> berkshire hathaway, up 7% on the year while the s&p is down 4. that's not an accident 150 billion in cash. >> okay. >> if they can put it to work, it is a port in the storm. >> good stuff. thanks for watching it "the exchange" is now. ♪ thank you, scott hi, everybody. welcome to "the exchange." i'm kelly evans. take a look at the ten-year yield today. i'm going to say it is trying to make a drive towards the 2% mark 1.86, the high point of the session. regardless, it is the highest yield we have seen in two years and it is pushing the nasdaq back below a key technical level and almost 10% below the november peak. then goldman missed on earnings. add it up, energy just about the only bright spot we will have the latest on the markets. the other bright spot is video games.

the stocks are top performers in the s&p after microsoft's surprise bid for activision, the latest on the deal, on whether it will face publishback and whe it leaves the competition. and with another bad earnings day, we will look ahead to the companies reporting tomorrow to see if the selling trend can and will continue. first, the latest on the sell-off, dom chu with numbers >> in certain parts of the market we are heading to session lows right now but you see a redominant sea of red behind me. energy is the least decliner meanwhile, the worst is the financial sector we will get more to that in a moment interest rates playing a big part of the story, but kelly mentioned the 200-day average on the nasdaq composite still 2.25% declines for the nasdaq 14,556 the last trade. 90 handles to the downside for the s&p 500. if you look within the overall picture of what is happening with rates, it is having an impact on thefinancials, yes, but also in the homebuilders as

well kelly mentioned interest rates for long term government debt at two year highs, also near two-year highs for 30-year fixed rate mortgages those interest rates keep going higher as a result denard, dr horton, pultegroup, nvr, some of the worst performing the ishares down 4% as well. keep an eye on the homebuilders, very much an interest rate player there the stock of the day so far, driving a lot of the headlines, intraday so far, an earnings report from goldman sachs disappointing. still up 16% though, but down 8% right now, 32 points, translating into roughly 200-some points on the 550-point drop you just saw for the dow jones industrial average goldman sachs a big part of the story. of course, we have a lot of other big bank earnings coming out over the next couple of days here so keep an eye on though. kelly, back to you >> higher head count, expenses

hurting them as well we will have more later on dom, thank you we are seeing the impact of the fed's recent hawkishness as rates rise and tech stocks sell off. the consensus is for four rate hikes this year and investor bill ackman this weekend said the fed should consider a surprise half-point rate hike. steve liesman is here with more. how much more hawkish can we get at this point? >> you left something out, kelly. i will tell you what it was in a second you are right, stronger inflation and hawk yush comments from fed officials prompting a reset in expectation for tighter interest rate policy this year it is four hikes plus qt, quantitative tightening with upsides risk to that a march rate hike now a near certainty. a second hike in june carries an 85% probability according to refinitiv. the third hike is baked in for july or september with strong odds of a fourth hike now in december but that's just what's priced in to rates fed observers also expect qt or

quantitative tightening with growing agreement the fed will reduce its balance sheet this year, maybe as soon as this summer that's the equivalent of another rate hike or two, and something the fed should do, goldman sachs writing four hikes plus qt may not be enough. they said in the kcommentary the may need to do enough to tighten financial materially to be sure, those who see the recent round of economic weakness suggest that the hawkish forecasts are maybe getting ahead of themselves, but the strong trend so far has been for forecasters to raise tightening with much depending on how much head the fed gets from the market itself >> sure, in those tightening conditions, we spoke with dave zervos last week who said normally we see a 10%, 15% pull back, all of a sudden maybe we are down to three hikes or two or they change their tone.

he said he doesn't think it would happen this time around, it would take something along the range of 25% to 30% for them to change their tune >> i think, you know, you could do worse than get advice from david zervos, i will tell you that right now and i think he is probably right i will tell you why. two things are going on. first, the fed has to get back to where it was more or less before the pandemic, and that just goes without saying but layer on top of that the fed has a 7% inflation problem so there's two reasons for the fed to get where it needs to go, and that may be that it needs to sacrifice more of the market to get where it needs to go to get inflation under control and ultimately over time that's better for the market than letting inflation run out of control. >> an interesting way to put it, sacrificing the market to get inflation under control. steve, thank you our steve liesman reporting. my next guest has doubts about the fed hiking rates four times this year. she thinks it will be fewer and

says the best approach to investing is to pick so-called goldilocks stocks. joining me is nancy prile. nancy, welcome tell me how you expect this all to play out. >> so we are cautiously optimistic that the current rate expectations for four or possibly more rate hikes plus quantitative tightening and some chatter about a potentially surprise hike in january, 50 basis point hike in the first round, are based on backwards looking data it is based on the belief that the 7% inflation rate is where we are and that it could possibly even go higher from there. now, some parts of what we've seen in inflationary are going to be sticky, particularly wage increases, range increases, et cetera but we think what the market may be missing and what we think the fed will be focused on are signs coming in the future of a decline in some of the raw

material and other cost pressures we've beenseeing, particularly with the point to the easing of the supply chain imbalances as well as some softening of home price increases. >> in other words you think that the inflationary pressures will resolve themselves so it won't be that the market has to sell off deeply, it won't be that the fed has to throw in the towel on its plans. you just think that we won't have the inflation pressures -- i mean but look at energy, even today, right isn't that going to be a big source of upward pressure? >> so we think that this will be a process over time, and we do think that over time we will see that the rate of inflation is coming down. that doesn't mean we won't have inflation higher than we had before the pandemic. we fully expect that inflation will be 2.50% to 3% and we fully expect two-plus rate increases or two rate increases plus quantitative tightening, but we think the fed will remain data dependent. as the data comes in and shows a

softening of the rate of increase of incompiflation that give them the room to let the first rate increases play out into the market, and that the market, which is rightly addressing the fact we will have rates higher and that the fed needs to get back to where they were prethe p the pandemic that won't have to go quite as sharply as the market is forecasting. i will remind our viewers we saw a similar rate in the increase in the ten-year last year which did not play out into the rate increases the market expected. >> absolutely. we remember from the past ten years practically every time they tried to tighten they had to reverse course. let's talk about some of the stocks you like here, goldielock stocks tell us about these. >> we think in the market environment we are seeing a recalibration due to rise in interest rates, and we are seeing the market change from a growth at any price total

available market focused area, that it makes sense to focus on what we would call the road less traveled we want to find stocks with excellent growth prospects but selling at reasonable valuations one of the areas we are still bullish on is digital transformation because that is not only happening faster than expected but it is a way for companies to combat some of the cost pressures of wage increases by substituted capital for labor. both zurora in the software space and digi in the communication equipment space are ways to benefit from the trend without having to overpay for the growth digi in particular is communication equipment that helps with theinternet of things so you can keep your networks running think of applications like smart cities, think of applications like enabling remote work, think of applications like some of the sustainability in green technology that's are the backbone that helps power that communication between all of the things out

there and the other things out there, and they will benefit from easing of the semiconductor supply chain >> which is having its own impact on the semi stocks today. let me just also, nancy, get you to -- as we depart, address this question for those who are still wondering about the nasdaq and is this an entry opportunity and what about some of the big tech names that have been stalwart and are in correction territory. what would you tell people to do there? >> so we think that we may be approaching a point where you can start to nibble at some of these big tech stocks and some of those areas that have been very popular areas in the past that's one of the reasons we like zuora in software is we think sentiment will shift there. having said that we think it is still a little too early expectations are still high, valuations are still high. we need these stocks to stabilize, to adjust to a lower multiple, and so we would pick our spots carefully and remind investors that trying to catch a

falling knife can be very dangerous. better to wait for some basing, some stabilization and let's see how the earnings come out as we get the earnings reports in january and february >> all right wait it out a few more weeks still, see what happens. nancy, great to have you thank you. >> thank you, kelly. >> nancy prial with essex management coming up, a shock and awe deal microsoft scooping up activision for nearly $70 billion in cash plus oil prices hitting a seven-year high, not helping inflation and rates. the latest on where the industry sees prices going from here. as we head to break, disney, visa and merck pretty much the only gainers in the dow. we are back in a moment. this is "the exchange" on cnbc

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with great ip, we really saw this as an amazing opportunity because gaming's continued growth over the years, microsoft's big on gaming, we are continuing to invest here. we see it as a real strong catalyst for us in the consumer categories >> all right for more on the impact of this deal let's welcome eric handler, senior analyst at amk partners and rush kotick. let me point out the obvious, even with a 20% rally, activision is trading at 82 and the deal price is 95 >> right well, i think that reflect, one, you have obviously some risk you are dealing with but i think there are some concerns with this deal as a result of investigations and losses going on regarding internal issues but at the end of the day i think the deal will go through do you, eric, anticipate regulatory pushback? because we just heard from lina khan talking about their increased and aggressive posture against deals almost without the

usual justifications, almost because they're deals from big companies and people are saying even if it were to go through it could take two years to complete >> it could take some time to complete, but at the end of the day given how broad the gaming market is and it is not like microsoft is the dominant player by any stretch of the imagination in this market, i don't see regulatory issues being a problem. >> russ, maybe you could speak to that a little bit what is the positioning of all of these companies in gaming, which has become so important? and microsoft has to be one of the top five if not top two or three. >> yeah. they're absolutely up there. for microsoft there's no question where their focus is. predominantly they're having so much success in subscription space with game pass service they announced they had 25 million subscribers with that. by having these acquisitions they're essentially buoying this service and creating the netflix of gaming they've been dreaming

about for the last decade or so, and it is finally hitting in a big way. there's a question whether it will go through, but microsoft spends a lot of money on lawyers to make sure it will >> on a scale of one to two, how big is this? >> i would say it is probably a seven. their biggest hurdle they need to get across is obviously activision is in a tough spot right now. you know, organizationally it has been pretty dreadful they've got the sexual harassment lawsuit, the gender lawsuit, so they have to work overtime to make sure their reputation is fixed. a lot has to do with removing higher ups at activision who fostered this environment. >> fair enough, although it seems like an opportune time to come in and scoop up assets on the cheap. we have seen video game consolidation, take two wanting to buy zynga and really weird share reaction there where people weren't sure what to make of that move what would you say is most

likely to -- is this going to set off a lot more mna across the space? >> mna has been going on in this space quite a bit over the last couple of years. we are seeing a lot of consolidation. it is getting larger scale now with, you know, the take two acquisition you just mentioned, today's microsoft acquisition. you know, this is -- the gaming industry is about a $200 billion a year industry. it is very fragmented. platforms are expanding, especially now as we talk about the metaverse, and there's going to be several different metaverse platforms. it is important for these companies to have owned ip that they can position on their own platforms to draw interest among consumers. >> yeah, and i know you are saying, you know, watch sony, maybe they could look around at ea or take two itself as the number of independently owned billion dollar franchises with cross platform potential become more scarce.

russ, would you say as well? is microsoft a friend or foe of the video game industry? there's certainly a battle for control right now, wouldn't you say? >> i mean if this acquisition goes through they are a large, large chunk of the video game industry so friend or foe is a question it is a question of whether we want, you know, four or five major, huge companies essentially owning the marketplace, which it does in a lot of different sectors and certainly gaming, this would push that even further in that direction. i think right now microsoft offers a very good value for what they have in the space, whether it is through game pass or their games specifically. what happens after this merger goes through, you know, as more larger companies gain control, they might change their strategy a little bit it might not be as generous as it is now. so kind of a question. >> well, we know netflix has big ambitions in this space. we will watch the rest of big tech, not to mention traditional media names as video games absolutely on the scene in a very big way with this move

today. russ, eric, thank you both don't miss a special edition of "capital exchange." in her first on-camera interview, lina khan will join andrew ross sorkin and kara swisher of "the new york times" "sway" podcast for a consideration on big tech, big business and the ftc's approach to the current wave of deals that's 10:00 a.m. eastern to catch that and we will bring you the headlines and highlights here on cnbc coming up, the case for netflix. the stock down 15% already this year and earnings are due out thursday why one analyst says you should buy ahead of the report. plus, the story, the action and the trade on three big reports tomorrow from bank of america, morgan stanley and pg&e all of the stocks in the red today. will they continue to suffer the same thing as goldman and jpm? we are back in a moment.

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♪ welcome back to "the exchange," everybody dow is down more than 600 points session lows so far, down about 650, slightly off that level right now. 1.33% decline. the nasdaq is now at 14,500 and change the 200-day moving average was around 14,700. big tech cap in focus with meta leading declines followed by amazon and alphabet. meta down 3.6% you wonder if it is about the

move into the metaverse. seeing big declines today, it has been a tough 2022. the worst performing applied materials down 7%. look at that, it is below 300, it peaked around 318 295 is where we are trading today with another nearly 4% decline. on the flip side, the cybersecurity stocks are holding up better today. you are even seeing green back for z scaler, palo alto up a couple of percentage points. crowdstrike, fortinet still under pressure e-commerce names, take a look there. we've seen difficult trading for this batch of names and that continues today, which just tells you what kind of environment stocks don't like in 2022 they don't want higher rates they don't want hawkishness from the fed. all of those trades are playing out and more declines here posh mark down 11% shopify down 6%. so on and so forth there is a bright spot though, the stock tracking for its best month since february for deere

some of the more that triggsal na traditional names holding up better now to rahel solomon for an update >> hi, kelly here is what is happening at this hour. the white house using the strongest language yet to describe the chance of armed conflict in ukraine. this as russia sends more troops to the region for military exercises with belarus secretary of state blinken will meet with ukraine's president tomorrow and russia's top diplomat on friday >> this is an extremely dangerous situation. we are now at a stage russia could at my point launch an attack in ukraine. what secretary blinken is going to go do is highlight very clearly, there is a diplomatic path forward >> the senate menin the meantim began debate on election reform bill white house press secretary jen psaki says americans deserve to see where their senators stand on the right to vote drugmaker gilead sciences is suing some distributors for selling fake versions of its hif

drug gilead says it identified more than 85,000 counterfeit bottles. a look at crime in america and vigils held for victims killed in a new york subway and a bus stop in los angeles. that's tonight at 7:00 eastern kelly. >> rahel, thank you. coming up, bank of america, morgan stanley and proctor & gamble out with results tomorrow are investors nervous? we will tackle each stock and the key things you need to know on today's "earnings exchange" right after this

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♪ welcome back i'm julia boorstin with a news alert on verizon telecoannouncing that it is agreeing to temporary limit deployment of 5g near certain airports this follows a similar announcement from at&t they will enable 90 million americans to experience the

speed of 5g but they say they voluntarily decided to limit it around airports. airports have not been able to navigate safely around it. they say thanks to the best team in the industry for delivering this technology. as you herard with at&t, similarly verizon pushing back at the faa at the inability to be able to launch nationwide tomorrow so they're karching out the areas around airports while they do move forward with the deployment of 5g in all the other areas. so, guys, you seaver eye zon shares trading down a fraction of 1%. back to you. >> all right we are still waiting for more detail on how that will work, julia. we will have more next hour. let's get to earnings exchange now, shall we, where we give you the action, the story and the trade on three stocks ahead of results tomorrow. stock number one is bank of america. the bank stocks were off to a hot start in 2022 until we got to earnings. when that rolled around, goldman

and jpmorgan both getting hurt post-results in fact, jpm down for the second straight day goldman down 8%, almost 9% there is bank of america down 3.5% they're set to report in the morning and they've beaten estimates in ten straight quarters will their hot streak continue here to break down the story is our wilfred frost joined by todd gordon with our trades today welcome to both. i guess jefferies was a warning after all. it has been bad news after badder >> jefferies missed on fixed trading. the interesting thing for bank of america is whether they can do well on the two key issues that brought jpmorgan's stock down on friday, and that was guidance on income and on the cost front on the cost front we know that has been key at bank of america. they've been bad during the pandemic the last two quarters showed signs of improvement nothing over the last month or six weeks from brian moynihan and bank of america have suggested they're going to guide

for bigger costs in the area maybe they will all of a sudden but that's not currently expected on net interest income, they are the most interest rate sensitive. maybe they won't overwhelm on the guidance but i think it will be a surprise if they under well many there's a reasonable chance bank of america will come out in the wells fargo camp of discord of earnings >> true. >> rather than the jpmorgan side of negative. >> before i ask about b of a specifically, any other thoughts on jpm why were analysts and investors caught so flat footed here >> goldman super it up, really bad stock performance after a record performance for revenues and earnings and returns over the full year. so there's one aspect of which they've run up too much in the short term, particularly at the start of the year coming into earnings as the stock market has rotated. the key thing that they both share, slightly disappointing on

trading and disappointing on guidance for costs we'll see if morgan stanley and bank of america have that disappointment in terms of guidance for costs when they both report tomorrow >> goldman shares are now up only 16% over the past year, over the past 52 weeks interesting. todd, let's do bank of america what would you do with the stock? >> i don't own it, kelly, and, yeah, i think if we take a step back real quick on the financials, we have to keep in mind it is one of the strongest sectors right now leading the market along with energy any weakness we are seeing in the financials i think is more macro related and obviously interest rate related. the ten year pushing up through 1.8%, that's resistance, it is broken it is a problem but, guys, w still have a steep yield curve we have seen a flattening in the middle part of the curve even if we get four fed rate hikes we are a long ways away from a flat or inverted yield curve. as i said, banks are strong. specifically bank industry within the xlf are doing well,

even in front of insurance and securities and asset managers and specialty finance. as you said, i don't hold bank of america i am holding regional banks like fifth-third, so on bank of america is trading 14.7 times forward earnings they have a current p/e of 14 compared to the p/e of the xlf which is 9.5 which is expensive. it is well below their peers i would like to see them increase their dividend here a little bit just quickly on the consumer business, they're showing really good increase in customer deposit. checking account values are up but loan growth is lagging, down about 12% year over year with inflation rates, bank of america will have to kick up the yields they pay on checking accounts it is going to hurt their margins. >> you are sticking with more regionals than the big guys here hold your thought. we will turn to morgan stanley, reporting tomorrow and down 4% year-to-date now, similar to goldman which has fallen today on the earnings miss morgan is expected to show a decline in trading in their

business tomorrow morning. their business model is different, especially after adding eaton vance will high salary costs bite them, too? what is the story here >> trading is a key point as you mention, and in particular equity trading is disappointing for morgan stanley they are number one in equity trading, it is a more important area for them. will they show the 10% year over year decline we'll see that in terms of the comp costs, people's pay and bonuses, again, they're not as tilted to investment banking and trading as they used to be with 50% coming from wealth management. that doesn't have particularly as variable annual comp costs. the other point on costs we mentioned, investing in tech and things like that, james gorman said part of the rational for buying e*trade was buying in th tech there's room for them not to disappoint to the same extent as goldman somehow managed to despite a record year this morning. to your point on the share price performance, morgan stanley was at 106 briefly on the 12th of

january. it is down 12.5% in a short space of time. >> wow thank you, wolf. todd, what would you do with morgan stanley >> yeah, i agree with wolf a lot of the point you just said we hold morgan in our growth portfolio. we have a 2.75% weighting. we love the stock. we love the 2.9% yield heading into earnings here, look, i think they beat the last six quarters as wolf said, comparing to goldman, we hold goldman also, it is a .85% target. seen prior to the earnings report goldman was being sold off relative to not only the s&p but financials they don't benefit from higher rates as other banks do. goldman report, i don't think it is forward -- it is fair to extrapolate that report on to morgan they cited wage inflation, but also slow down in equities trading. i mean q4, guys, was very sideways except for a run-up in october. it was a sloppy equity range trading revenues and fixed income are expected to slow to about 3% i think wolf kind of said it i think the street is going to

give morgan a pass here. this is really a better place to be the technicals have been sideways since august. i think they're pushing through that lower range, kelly. i think if we get to 90 you can nibble if you don't have it already, but i continue to hold the stock. >> 9350 is where we are now. very di verging fortunes lately for goldman and morgan thank you todd and wolf. we will see you on "closing bell". finally today proctor & gamble reporting tomorrow the stock has mirrored that this quarter, up 10% in the past three months having spent most of the pandemic trailing the broader market is it time for more catch-up here dom chu is here with our story hi, dom. >> kelly, let's start off with the expectations first of all. proctor & gamble is forecast to post earnings of $1.65 a big focus for many traders, many analysts will be on what the costs look like and are

forecasted to look like in coming months. last quarter proctor & gamble managed to counter some ofthe cost pressures by raising prices on key items but managed the expectations by warning of bigger inflation risks ahead this is going to be a very interesting kind of litmus test on whether or not the brand cache that a company like proctor & gamble brings. we are talking pampers diapers, bounty paper towels, some of the biggest consumer brands out there are owned by proctor & gamble do those brands have enough marketing power to get consumers to go out and buy them in a time when costs are higher? that's going to be a big key by the way, if you are looking for a kind of stock reaction tilt towards this, in five of the last eight quarters in which proctor & gamble reported earnings the stock has been higher in five of them it is something to keep an eye on them as the numbers come out tomorrow >> todd, at a time when a lot of people are bullish on consumer staples, are you a fan of proctor & gamble >> you know, kelly, i missed the

boat here. we have no exposure in our portfolios we missed it they rotated in quite well industries within staples doing well are soft drinks, tobacco, tires, food retailers. personal products which is from p&g lives making a recovery, acting well. i think unilever's big move down is weighing on the industry group. i might be looking to add to the portfolio as yields about 2.18% i think. they've got 5% year -- or five-year growth of 3.1% trading 26 times next year's earnings i think it is expensive. they're expected to make $1.65 as dom said. what is interesting is their margins are dropping mid 21, they're about 24%, they went down to 23%, and last quarter the cfo on the conference call said they were looking for about a $2.1 billion after-tax commodity headwind with freight costs, and obviously input costs going up they guided up to 2.3, and it

was before the latest omicron wave so i'm wondering if that inflation is going to bite into this p&g i would look to buy it lower around 145 but i don't own it. >> $11 below where we are right now. we will see if tomorrow we get a better set of reactions. todd, thank you so much. todd gordons with trades today dom, thank you for the story on p&g as well. our dominic chu. coming up, crude prices are hitting the highest level in seven years. wti was about $85 a barrel earlier. this is a new breakout or another false dawn we will exple.or something diff. oh, we celp with that. okay, imagine this. your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, like asap! so basically i can pick the right plan for each employee. yeah i should've just led with that. with at&t business. you can pick the best plan for each employee and get the best deals on every smart phone.

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♪ welcome back to "the exchange," everybody oil prices hitting a seven-year high due to ongoing concerns about supply and geopo geopolitical tensions. west texas crude breaking above $85 a barrel brent was over 88 before pulling back but the ceo of exxon didn't sound that bullish on oil prices

earlier. he addressed it as part of their plans of being net zero on operations by 2050 >> frankly, we anticipate lower prices as we go forward, so making sure our plans are robust to that wide range and then run the business efficiently, cost competitively, reliably, make sure you are doing that and taking care of your emissions and your other environmental macros that's kind of the base plan we're ex kiting today. >> here to react is ihs market vice-chairman dan gergin t it is great to have you here >> thank you >> how do you expect this to play out >> i think in the short term we are in a tight oil market and it is probably going to get tighter because of basically lack of investment and demand has simply been stronger than many people anticipated. on top of that, as you said earlier, there's a whole geopolitical overlay here. here in washington i have to tell you the sense of nervousness about ukraine is

very, very high. but i think on the other side on demand, there's a fact that people are kind of discounting omicron's effect on china, thinking that it won't collide with its no -- zero tolerance policy but, you know, longer term, of course, it is a cyclical matter take there is a question about preemptive underinvestment in oil that i think is weighing on the market it is part of the underlying concern. >> a quick question. how much of a ukraine premium do you think is built into the oil price right now? >> well, that's always, you know, a guesstimate. i think there are kind of a couple of dollars. i will tell you, here in washington people are working on war games, figuring out what to do obviously the discussions with the europeans about where do you replace supplies if they're disrupted and europe gets 35% to 40% of its gas from russia so it is certainly in there in the price. every day it seems that the tensions, the concerns, the

timeliness about when something is going to happen draws closer. >> absolutely. i wonder, dan, you know, the stocks are not doing as well as they were in 2014. they've been up big over the past year, but relatively speaking the market caps were larger in two2014 for these companies than they are today. is that because people think by the end of the decade there will be a smaller market for oil than there is today >> well, certainly that message is out there our own view is that, in fact, oil demand will continue to increase during this decade, which is what part of this problem investment is. of course, increasing number of investors are looking at esg, not wanting to support the sector, or thinking it is only temporary and it is going to revert sooner rather than later. clearly there's more interest among investors in these companies than there was six months ago >> yes, and if you want the hold-back story i can recommend not only the book behind you but

the whole library of dan yergin on some perspective of the challenges we face thank you. we will believe it there appreciate it. >> thank you netflix in the red after giving up all of its gains from 2021 we will hear from an analyst who see sees 50% upside from here. we are back in a moment. what the world needs now... is people. people who see energy a little bit differently.

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♪ welcome back, everybody. the market firming up a little bit as we move throughout the afternoon here session lows just over an hour ago, we were down about 650 points we are down around 500 on the dow and for the nasdaq only 2.3% still has been a tough run netflix is set to report earnings on thursday, less than a week after announcing an immediate price hike for new users. while it boosted shares on friday, netflix has mostly been under pressure lately. the stock is down 15% this year and has given up all 2021 gains, but my next guest maintains a buy rating and $750 price if i have that right.

joining me is nat shandler, bank of america analyst are you still sticking with that >> yes, i am i don't change my netflix price that frequently because it is based on a long-term calculation and peak penetration discounted back so it doesn't make difference w is saying today versus you know, three to four weeks ago when the stock was quite a bit higher i do believe in the story at this point and i believe that subscribers follow content and the content rollout has been big in q4 and will be bigger in q1 and q2 and that should drive more people to keep watching netflix. i don't have a reason to believe at this point that we aren't back to that fundamental cadence that they had pre-pandemic of about high 20 million met

subscriber ads per year. the pandemic did cause a fluctuation in that. to a whole bunch of new subscribers into 2020. that made it harder in 2021, but that should end as we go forward from here. >> fair enough so it's been kind of harder to look at what the fundamental story is because the pandemic distorted it i was just going to ask about competition. you know, hbo max gets all the buzz right now and what does that mean for a company like netflix? especially as it just raised prices pretty considerably >> so this might seem strange, but i don't really believe in competition here and the reason being is people don't watch, they don't watch channels anymore you don't want nbc versus cbs. you watch shows. if you want to watch stranger things, hbo max is not going to help you so it doesn't really matter what is on disney what is on hbo max and even if

it did, if you compare the amount of shows and the amount of content being created by netflix versus the others, it's not even close they're vastly farther ahead and what you get for the same price is far more than netflix now, hbo has some great shows and that will continue and people will subscribe to hbo, but will they stay and be a constant subscriber like they have been with netflix >> i'm looking at the content spend. i think disney's in the $30 billion range this year. to your point, everyone's driven by new shows apple picked up a bunch of people is that content arms race one that netflix can keep winning? >> it's interesting you bring up disney disney is the only one, they are not competing for content because disney makes disney

franchises and if you want to make a star wars show, you don't go and bid it out to everybody you have to go to disney or marvel or something else that is the way, disney is in its own world. yes, apple coming into the market buying, their spend to date is still quite small relative to netflix 20 billion a year and even relative to amazon's but they've had this competition for a very long time there will continue to be competition for good content netflix spends the most, creates the most, and has been the most successful >> a final question about video games, which netflix said it was looking to get more into now we have this huge acquisition by microsoft of a activision blizzard. how important are they to your view on the stock? >> i think the video game story for netflix is poorly fleshed out upside and by that, i mean i

don't think there is very much anticipation for video games at netflix. so far, everything they have announced is basically creating titles that are mostly mobile only titles that play off their content. so just expand upon stranger things with a mobile game that relates or something to that effect that is not the same as making $60 console games at activision, and it certainly isn't as big a moneymaker so i think there's a very long way to go until netflix has really developed a gaming strategy that really would move the needle on their revenue base >> well, it's -- >> if they come with something new, it would be upside. >> poorly fleshed out upside it's been great to have you on above consensus for how revenue and eps will do for netflix this year thank you for your time today. >> great, thank you. still coming up, the

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you to buy an nft because it is not easy right now kate rooney is here with the details and a surprising partner. >> that's right. mastercard and coinbase partnering today this deal is the latest big partnership between a payment giant and crypto company coinbase customers will be able to use mastercard, credit and debit cards, to buy nfts anything from digital art to music. it's part of coinbase's nft marketplace. it hasn't launch yet executives say they're looking to reduce some of the friction of the buying process. mastercard meanwhile says it

sees big potential for nfts beyond just art and collectibles so growth area for mastercard there. both mastercard and visa, two of the biggest payment networks, have been on somewhat of a deal spree lately mastercard teaming up with backed to enable banks and merchants to offer services. also partnered with gemny. visa has partnerships on a debit cart amex has been quieter. some are pointing out crypto currencies like bitcoin were first designed to get around the intermediaries but some of the banks and payment companies have embraced block chain and crypto. i talked to dan dola this morning. he said this is an example of mastercard really thinking outside the box in its approach to crypto. over the long-term, he said block chain technologies could be a threat to some of these

network ecosystems and a challenge to that trusted third party concept. >> it is beyond ironic and kudos to the incumbents for muscling their way in there thank you for you. that does it for the exchange. thanks for your time, but stay right there. "power lunch" begins right now all right, everybody welcome to "power lunch. it's not only windy outside, it's windy in the markets today. here's what's ahead. rates rattle the markets the retreat is broad and steep our market expert this hour has a list of what he calls some safety zone stocks oil prices, seven-year eye exxon rise ing to one h-year hi. and beyond profits, larry