lauder thing quality products, great margin profile. but if you think china is going to reopen, which does look like they are, they have 34% of their revenues tied to that region >> farmer jim? >> boeing. i think this stock is done being a punching bag today's pullback gives you an opportunity. >> bold statement. thank you. thanks, everybody. see you in overtime. "the exchange" with kelly begins n now. >> thank you very much, scott. hi, everybody, welcome to "the exchange." i'm kelly evans. and here's what's ahead. stocks are down again today, key yield curves are getting more deeply inverted. jamie dimon says we've never lived through a time like this, so how do you invest we'll get some advice for 2023 the housing market, as we know, slowing rapidly. the equifax ceo saying earlier today, we're already in a mortgage recession the numbers that show just how quickly things have changed. plus, the georgia senate runoff today. the race is close and the result

is critical. why a 51-49 senate is much different for business than a 50-50 split. but first, we begin with the market numbers for that, back to bob pisani at the new york stock exchange. bob? >> kelly, good to see you, as always the bottom line is very simple this mini boom let that began with jay powell last wednesday remember that speech it's basically over. we've completely on a round trip take a look at the major indices right now. dow industrials are being weighed down goldman is notably weak today. basically, it's a very defensive day today. the only thing that's up is names like united health, mcdomd's, coca-cola, other big names like visa are to the downside the s&p is being weighed down by tech stocks, consumer discretionary. nasdaq is the weakest sector, as you can see here not only are the arc stocks down, semiconductors are also underperforming. and if you look at big cap tech in general, meta is not having a good day, as you can see here, down about 6%.

most of the semiconductors like advanced microand nvidia are weak apple is 1.7%. travel stocks are weak today now, we had some downward -- jpmorgan downgraded royal caribbean there. and carnival is weak, norwegian is weak. expedia also weak as well. all the travel names are notably weak they had been rising recently. it's interesting to hear them down here today, because at the goldman sachs conference, a big goldman sachs financial conference that's going on today. and a number of companies have commented on the travel business here american express was talking this morning they said they're still seeing record travel bookings bank of america spoke, the ceo there. brian moynihan, he said travel was strong, consumer is still strong, although the rate of growth for the consumer is slowing a little bit and ally bank expect a soft landing or a mid-landing the banks are not doing well

the banks have been terrible performers in the last few days. jpmorgan is up today, because morgan stanley -- oh, now it's down jpmorgan was up all throughout the morning. it got an upgrade at morgan stanley, but amex down, bank of america, zions had a terrible day yesterday. some of these banks are starting to appear to be anticipating somewhat weaker economic conditions in 2023 where are we, kelly? remember the powell press conference last wednesday? we went from 3950 to 4100 on the s&p. there you go, kelly, that is a complete round-trip. we're back to where we started, just a half hour before jay powell started talking last wednesday. that was 3950, we're now at 3941 kelly? >> excellent point, bob. just before i let you go, what do you think account for the weakness, the heavy trading again that we're experiencing as we go through the amp fternoon here >> i think investors really

trying to come to grips. 2023 is the story about dealing with the recession and how bad is the recession going to be and this weakness in bank stocks here, they seem to be trying to price in some of kind of increase in loan provisions for loans going bad, because the economy is going to be in tough shape. and yet, we don't see this happening yet. we don't even hear about it, necessarily, at the goldman financial conference that's why we're all listening in on it, to look for this stuff. but everyone seems to be wanting to believe that it's happening it's one of these little things where wall street suddenly levitates itself into believing something. maybe it will get more sensible or maybe we'll get news that will confirm or it negate it at this point that's definitely what's going on >> the only news flow lately, layoffs at morgan stanley that are just coming in bob, we'll leave it there for now. we heard from a number of ceos at the business roundtable and jamie dimon didn't mince words about one of his biggest

worries. >> though the risk we have is quantitative tightening, we've never had it before, ever in the lifetime of mankind. i look at that as something that we should be quite concerned about. >> and rick santelli is here to react. and to tell us, rick, what's the latest with that yield curve >> yeah, you know what, jamie dimon really nailed it i remember ira harris and i during the credit crisis talking about how the quantitative easing then, which wasn't half the speed it turned out to be in the last couple of years, only reached up to $4 trillion back in the credit crisis, how we ended up taking a ride out to mars but does the central bank know how to get us back look at a two-year-to-date it's up, yes, 365 basis points it's settled a bit under three quarters of 1% at the end of last year. look at ten-year, they're up 205 basis points on the year they settled last year around 1.5% the reason i'm giving you that is not only to underscore minus

81 and 2s versus 10s, but how long-dated treasuries picked a direction. a lot of this happened after the august pivot with we're having is a battle de jure versus selling, versus slowing. that's exactly what the yield curve is telling us right now. it's looking at a slowing economy, so long-dated prices are going up, yields are going down but the quantitative tightening is barely in the first chapter and that's going to put pressure in the other direction that battle has really yet to be waged and the central bank has no idea how demand may suffer if the globe goes into recession without our central bank being the buyer of last resort >> and we've got to talk about those spreads, rick. i mean, we started off the year by saying, hey, it's not all about 2s, 10s for instance now here we are saying, the ones, the three-months, any measure you want to look at is pretty deeply inverted and to pick up on what bob was

just talking about, what has changed or hasn't since we heard from the fed chair last week now? has he done anything to un-invert them >> well, i love bob's comments t the equities have given it all back, but treasuries have not. especially long-dated treasuries we settled under 3.5% the other day. this is big-time a bit of divergence there and i think it continues this is going to be a tough one to handcap on how the globe is going to deal with long-term rates, especially at a time where a lot of those global buyers may end up here, not in europe, not in asia, especially not the asia and when bob says the banks and people are strapping their head, i say, quit scratching and just look towards history all of those low-interest rates for too long by our central bank or negative rates in the rest of the world, there was a lot of deals, a lot of loans, a lot of derivatives that have yet to breathe like a bottle of wine opened up with these new higher

rates. believe me, there's going to be ongoing pressure in many of those deals that were consummated prior to around 2018 >> great point great analogy of -- we appreciate it, rick. always pleasure. our rick santelli. let's turn back to stocks falling again on those concerns that the fed could tighten us into a recession my next guest says, while earnings will drop, they won't collapse he believes the market will surprise to the upside in the first half of next year. joining us, senior portfolio manager sat morgan stanley investment management. and you're starting to go against the crowd a little bit here, andrew what makes you comfortable with this kind of optimism? >> well, it's mechanism for the first half of the year i'm not so sure i'm as my optimistic on the second half. i think the story of this year, one of the stories of the economy has remained far more resilient than what many of the bears predicted. earnings have come down, but they haven't collapsed i'm a portfolio manager. i listen to companies and

they're telling me, there are pockets like technology where you're starting to see slowdown, but overall, i don't think bwe'r going to see this big earnings collapse in the first quarter. i expect to continue to see the economy to remain more resilient than the first half kind of collapse expects i do think, however, as rick has so well articulated, the yield curve is inverted. and that is a very good predictor that there is a slowdown out there it's just not a very good predictor of when it will invert and i suspect that we eventually will succumb to this tightening and it will just take longer than people or the bears expect. >> so we promise people that you might have some strategies so we all go, great. it's going to be a question of when and how bad the recession is and yet, what do we dollar cost average into stocks. you think lennar would be a name to own k web. these are not the safe stocks

that might make people feel comfortable sleeping at night. alibaba is on your list as well. >> well, you make your money buying low and things don't feel great. and when you're buying stocks that make you feel great, that's a danger sign. you know that, kelly let's start with the housing stocks look, these stocks peaked long before the housing cycle turned down they peaked when rates bottomed. mortgage rates bottomed. and as mortgage rates went up, they got clobbered they have had a bear market. so if a stock is down 40 or 50%, you have the question, could things change. the point of this is, if rates were starting to come down, we're seeing the long end of the curve come down, mortgage rates could come down, we may be through the bear market for these stocks, even though the housing -- housing could turn lower. that's my view on that, in terms of china, this has been a disaster for the last few years.

yet, what gives me comfort is the dollar is breaking down, em currencies are starting to rally, and you have a pivot in china from zero covid to resuming their goals i think china could be the best-performing markets in the world in 2023. and that's coming off of a very short time ago, where the belief was they were uninvestable >> these are some fabulous calls. that the housing bear market is behind us, that china could be the asset class to own, that we might not have an earnings collapse next year, maybe let's end with, if there is a couple of places that you really worry about in the market, what are they where wouldn't you be? >> well, what i worry about is what happens if oil goes to $100 a barrel because, i -- one of the reasons why i think we can get a rally from here into year end is that we have the ppi coming out

monday, cpi on tuesday, all of those could actually support, you know, a little bit of a rally into year-end. but if we get oil back higher again, i think that would snuff out kind of this elongated economic downturn that i believe, i just don't think it's as sudden as many people believe. >> very interesting point. we'll talk a lot more about that in a moment. andrew, thanks so much andrew with morgan stanley speaking of morgan stanley, let's get a quick check on their shares, as the company is set to announce it's cutting 2% of staff. the staff down 3.5% near session lows right now, as the financials are under pressure. for the full story, head over to cnbc.com coming up, georgia's senate runoff race won't shift overall control of the chamber, but the split could have huge kb implications for policy and your

money. up next, brian sullivan goes inside of europe's energy crisis with a look at its massive gas gap and a look at the stock market impact. we're live in the netherlands with the story after this break. get refunds.com powered by innovation refunds can help your business get a payroll tax refund, even if you got ppp and it only takes eight minutes to qualify.

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welcome back to "the

exchange." we're continuing our special coverage of europe's energy crisis, because while european natural gas storage levels are better than hoped, what doesn't get enough attention is the other problem, and that's cost what it may mean tlo lower-incoe countries outside of europe as well brian sullivan is back from the netherlands. brian? >> reporter: that's really the third leg of the stool here. earlier this morning, we talked about demand i don't want to say it's unlimited, but certainly europe will take all it can get then we talked about supply. we went out in a boat in the port of rotterdam. we had a drone that was very cool to get up close to these lng ships. one of the ships you're seeing now, 10 or 12 of those would be 1 billion cubic meters i'll bring that up in a second, because the numbers are pretty staggering talked about supply, but now let's talk about cost. here's the other reality of the energy crisis. can europe get most of the natural gas it needs well, it certainly did this year storage was 95% full and everybody said, okay, problem

solved remember, more than half of that was done with russian pipeline gas. that's not quite zero now, kelly. the idea is, can they get all they need for next year? maybe, but the other issue is, at what cost europe, it's a wealthy area. the netherlands, wealthy, in part because of natural gas. they can afford to take on debt and buy natural gas that might go to other places so another leg of the story you've got to remember, europe, they're going to keep their citizenry happy. but are they stealing natural gas from companies that simply can't afford it? countries like pakistan or sri lanka or other places where they might need one or two tank loads of lng, but they can't outed by europe we're already seeing some of these problems keep in mind the cost issue. then it comes down to the electricity cost generation natural gas itself, it's good for making chemicals, for electricity. you remember this summer when electricity prices went sky

high when all of these countries were p trying to buy it up at the same time trying to debate a possible price cap. they got to one on oil, not on natural gas yet. we'll see if they do but what's going to happen next year with electricity costs if they don't get a price cap they were paying ten times what we were paying in the united states and when you travel around europe, you see lights dimmed, you see basic services that are starting to get hit around the margin by the way, the other thing i will say is this i'm not going to dive into the climate change conversation, which just becomes all political and nasty. as we import all of this lng from the u.s., norway, and other places into the netherlands, just keep in mind that the netherlands has the largest natural gas field in europe. it uses a slightly different type of natural gas. and there have been obviously some earthquake issues, which i'm not minimizing in any bit,

but as part of their effort to go green, the netherlands will be winding down the biggest field in europe, which by the way, has about 3,000 bcm, when the shortage this year will be about 30 bcm, but import it by ship from places like the united states, into the harbor. so the natural gas is coming from somewhere, they're going to outsource it to the united states >> i'll leave that to the viewers' imagination >> absolutely. as you're traveling around there, do you sense resentment amongst europeans about the extent to which they've born the bunt of this crisis or pride that this is the way in which they're trying to push for what they feel is the right resolution on the russia/ukraine war. do we think we need to be doing more are they glad that we have the resources? what do you pick up on >> by the way, you're hearing

bombs go off these are not bombs, they're fireworks. morocco beat spain in the world cup. so there's honking horns i don't anyone to be alarmed if they hear explosions these are good explosions. to that point, you know me, i talk to everybody. anybody i get my hands on, i'll talk to. they kind of approach it in sort of the quiet way that you might imagine. what they say is, we support ukraine, we think what happened is disgusting, putin is disgusting, but then they wonder how long and how bad might it get for them, because of what's happening there. it is an extremely complicated geopolitical issue everyone, once you get to chatting with them a little bit has their opinion. they'll say, how much longer can we suffer, because their costs are up 2 and 3x, kelly, but they're not getting the pay increases like we are. and the ones i talk to are thankful to the u.s. all of those out there, they

take their punches in the united st states, here in europe, people are pretty doggone happy to have u.s. liquefied natural gas because they get to keep the heat on. >> exactly brian, wloe'll leave it right there. congrats to morocco. brian sullivan in the netherlands. our next guest says it does produce an opportunity for u.s. to fill the void rob thumbel is portfolio manager at tortoise. it's great to see you. welcome. >> thanks, kelly >> a couple of headlines, we have crude oil trading under tremendous pressure, at a time we're talking about shortages and the zrat need for these resources and this energy crisis why are we looking at the price of wti at $73 a barrel it's gone negative on the year >> i think it's global demand.

the concern with china and the lockdown will probably get worse before it gets better and more people get covid, like has happened all over the world, but china will drive the crude oil market in 2023 likely means higher demand, with global inventories very low, you're probably going to see oil prices go higher as a result of that >> were you as surprised as everybody by the fact that we saw one of the great bull markets in energy of recent times completely collapse and reverse earlier this year. and it's kind of remained more abundant what do you say to investors who say, i jumped in at exactly the wrong moment why should i stick with this space for 2023 >> that's a good question. no one wanted to talk to us the last couple of years about energy and this year is also the case

it's a good place to be. and probably continues to be, for a lot of reasons number one, there's a lot of free cash flow andthe market is rewarding fre cash flow. and so, if investors are looking for earnings, free cash flow, and ultimately, dividends that are paid to investors, the energy sector is a great place to be. it will be a great place to be for the next decade. that's something that we're excited about. >> are you sure about that, that it will -- if we -- we have to look at the federal reserve, maybe, to have an about face that could be more supportive of crude oil prices here. the tightening right now has been a terrible headwind for crude. what are your sort of tactical stock picks? are they oil names, are they gas names? where do you think people -- >> we think natural gas has a huge -- makes a big difference going forward, globally, but possibly becomes a bigger story than oil, in the next decade you know, if you look at natural gas, in terms of its percentage for the global energy supply, it's risen every year for the last couple of decades, oil has come down. natural gas is decarbonizing,

the whole world needs to decarbonize. china, india, all need more natural gas. where is that going to come from from the u.s stocks that you can like as a result of that are the biggest natural gas producer eqt. he's an outstanding ceo, he gets it shenear energy they have exported roughly 70% of the lng to europe, this year. so that the demand for u.s. energy and natural gas in particular is probably just going to keep rising and u.s. energy sector will be needed for decades. >> we have a key senate election today. we have another presidential election coming in a couple of years. what about sort of the general appetite for more fossil fuels as we continue to hear europe.

>> we like the insureer. we think you're going to need more u.s. and canadian oil and gas around the rest of the world. that provides the rest of the world with encourage security, but to do that, you'll need a lot more infrastructure. even if demand for fossil fuels declines, and we think the demand for coal could probably decline a lot, but that will be offset by increased demand for natural gas and obviously renewables as well, that play an important role longer term, as well >> infrastructure always seems to be the quiet. gold rush, energy boom, you name it we'll see if that works into next year. thanks again for your time today. we appreciate it we'll have some new numbers coming up that will show the affordable crisis in housing it isn't getting better and it's actually getting worse we'll dig into the data with a

housing economist. as we head to break, take a look at stocks at session lows here only three names in the dow are positive, as the nasdaq are down another 2% the pblue chips are down 4% disney, boeing and goldman are some of your worst performers today. we'll have more after this opportunity is using data to create a competitive advantage. ♪ ♪ it's raising capital that helps companies change the world. it's making complicated financial concepts seem simple. opportunity is making the dream of home ownership a reality... ♪ ♪ ...writing new rules and redefining the game... ...and driving the world forward to a greener energy future. (applause) ♪ ♪

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we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why? ♪♪ welcome back to the the exchange very familiar picture today. we're seeing an intensifying sell-off with the dow down 435 points the nasdaq has a year-to-date decline to just about 30%. relentless selling pressure here while everyone's been talking about the possibility or likelihood of a year-end rally i want to show you shares of

paramount in particular, plunging today after ceo bob backish said fourth quarter advertising is trending below q3 and on pricing, he says, paramount plus is very much value priced there's no question they'll move it up, but investors still sending the shares down more than 7%, and the shares are down more than 40% since january. got an exclusive interview with the ceo tomorrow, 10:00 a.m. on squawk on the street you definitely won't want to miss it. let's get to kristina partsinevelos. >> special counsel jack smith has sent to subpoenas to local officials in three states where former president trump sought to overturn 2020 election results this according to the "washington post." smith is reportedly seeking records from officials in arizona, michigan, and wisconsin. in washington, law enforcement officers who defended the capitol during the january 6th insurrection have been honored with congress' highest honor. leaders of the house and senate recognized the officer's heroic acts with the congressional gold medal with a ceremony in the capitol rotunda.

and in north carolina, shower should be restored by thursday morning to the thousands of people left in the dark by an attack on the power grid utility crews have been able to turn the lights on for nearly 10,000 customers, but about 35 tho 35,000 customers remain without power. >> kristina, thank you no matter what happens today in georgia's runoff election, democrats will still control the senate, but winning just one more seat would make a huge difference to policy she tells us why, next plus, the latest read on the housing market when toll brothers reports after the bell. realtor.com's chief economist joins us with the trends she's oueing and what it tells her abt when the housing bear market might end stay with us ur audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers

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welcome back to "the exchange." the runoff election for a tightly contested georgia senate seat is underway, pitting incumbent raphael warnock, a democrat, against republican candidate herschel walker. the showdown is one of the most expensive congressional races in history and there's a lot at stake for both parties on a national scale ylan mui joins us with those details. ylan >> kelly, you're right senate race in georgia is the most expensive in the country

for this cycle raphael warnock running against herschel walker. and according to data from open secrets, combined spending by the two candidates and outside groups stands at $380.7 million. now, democrats are leading in that tally federal filings show warnock himself has raised $176 million. that's roughly three times the amount that walker has gotten, $59 million. it's more than warnock raised during his last campaign back in 2020 those numbers cover the entire election cycle but if you just look at the runoff race, the number is jaw-dropping as well $84.5 million in ads have been cut since the four weeks since the midterms according to ad impact democrats had the advantage there, accounting for 67.7% of the ads, republicans bought about a third. this time, control of the senate no longer hangs in balance democrats have already secured those 50 seats, but eric cantor, former house gop leader told meat cnbc's financial adviser summit this morning that a true majority of 51 would make a

difference >> you have control of every committee. so that means you set the agenda, that means that you can seek and have subpoena power without the okay of the other party. you have the ability to affect your nominations in the senate this has a lot to do with control and the ability to get whatever it is they're going to be able to get done for president biden in the senate. >> so, kelly, this is about both political wiggle room, as well as power over the legislative process. >> absolutely. ylan, thank you. ylan mui let's dive a little deeper into why that 51 number is so key for democrats. let's bring in libby cantrell, she's head of public policy at pimco. it's great to see you, libby the impact on big tech are areas to watch, right? >> and good afternoon, kelly nice to have you back. just to sort of reiterate what

eric cantor just said, i mean, the difference between a 51-49 senate and a 50-50 senate is actually a pretty significant in terms of a governing majority. for all the reasons he just laid out, subpoena authority, running the committees, running the floor agenda, also just more money for the committees right now, under the power-sharing agreement, all the funding for the committees are split 50/50. that changes if democrats win this seat today. and to your point about oversight, just the ability actually to put some teeth in terms of oversight, they would be able to not only have oversight of some of the agencies that you discussed, but also, of course, of ceos they would have some subpoena authority to demand energy ceos for instance, to show up and talk about high gas prices, as an example so, again, it really means that under -- right now, a power share agreement of 50/50 senate,

again vice president kamala harris, of course, is the tiebreaker if you go to 51-49 senate, that's true power and something that president biden would like given that democrats don't have control over the house in this new congress >> even a senator like manchin might not back a more progressive fcc candidate, whereas that could remove an agenda that might lean differently for a lot of the members of big tech. i mean, what would your sort of advice to investors be about how material the impact will be from whether we find out tonight or in the weeks ahead, from a more progressive versus a less so, general regulatory agenda. >> you know, that's absolutely right. and because some of the moderate democrats are in cycle like senator manchin, like senator sinema, like senator tester, president biden may not be able to rely on some of those senators pushing forward his

progressive nominees again, with a 51-49 senate, maybe a little bit more easier to do that but we shouldn't overstate this. i think this is somewhat inside baseball from a markets perspective. they still only have a very narrow majority. obviously, not a 16-vote filibuster-proof majority. so their ability to really inform policy is still going to be limited here, especially given that republicans will control the house next session of congress. but again, it gives them a little bit more cushion, a little bit more wiggle room, particularly when it comes to appointees, assuming that because senator manchin in particular is in cycle, he may be less -- or more reluctant to vote for some folks who are perceived as more progressive. >> it's a great point. finally, where does this leave us for the next 18 months or so before that 2024 election. what is the overall message, you think, to business >> we've been saying to clients, kelly, is that the most important thing going into the election and coming out of the election was the fact that one

chamber flipped to republican control. that, of course, means gridlock. the markets have tended to like that, if you look at the year after midterm elections. most years, the equity market has rallied, particularly in split congresses so gridlock, no tax increases, so that means sort of any progressive tax increase headline, you should fade, because that's not going to happen but at the same time, the threshold for fiscal support, especially if we do have a hard landing, which is not pimco's call, if we do, the threshold for additional fiscal support is also going to be higher. so, gridlock, no tax increases, all of that's good more oversight, that's going to be good from a markets perspective. but also some downside, should we have a harder landing, the threshold for more fiscal support will be much higher. >> interesting it's almost pro cyclical more bearish when they're fine, more bearish when they're not.

>> libby cantrell with pimco up next, after more than 50 years, the era of boeing's 747 is coming to a close phil lebeau is in everett, washington, at the boeing plant for the last day of its assembly phil >> reporter: welcome back, kelly. the big bird finally getting ready to say a final good-bye at this plant here in everett, washington so what's next for boeing, especially when it comes to the largest of the airplanes that are flying out trehe we'll talk about that when "the exchange" returns.

welcome back it's the end of an era for boeing the last 747 is rolling off the assembly line today. it's the plane that inspired the moniker, jumbo jet phil lebeau is in everett, washington, at the boeing plant with that story and what's next, phil >> reporter: kelly, it's hard to

put into words just how important the 747 is when it comes to commercial aviation you go back to the late '60s, this was a revolutionary aircraft when it was first introduced a double-decker, the size was -- it dwarfed anything else that was out there. the number of airlines that lined up and said, yes, we want this this really did usher in the era of mass trans-atlantic, trans-pacific travel and then the question becomes, okay, what's the future for boeing after all of these years, with more than 1,500 747s built, when you look at the wide-body portfolio for boeing, you're looking at the following, the 787, more than 400 of those, the 777, more than 300, and the 767, some of these, by the way, have been able to replace the traffic that used to be occupied by the 747. when there's the 777x. the first flight for the 777x, we were out here in washington when it took place in the

beginning of 2020, pre-pandemic. and at the time, they said, look, we'll put this into service in 2023. there have been a number of delays there, not just with the aircraft, but with the engine, manufactured by ge, and as a result, they have continued to push it back the 777x is expected in 2024, going into service in 2025 more than 326777xs and the delivery target for this aircraft, 2025 that will be the aircraft, if you say, what's replacing the 747, nothing can truly replace it, but it will be a more fuel-efficient aircraft, just as large as the 747 >> so, phil, we don't see a lot of these 747s still in passenger service, but who does still fly them >> right a number of the asian airlines and lufthansa.

and most of them are primarily in the freighter market. >> phil, thank you our phil lebeau on an historic day. we appreciate it coming up, mortgage rates spiking this year, but well below that 7 handle they hit for the first time back in september, at least for the first time recently. and the equifax ceo making a bold call on the mortgage market atrlier today. th and a check on what's next for housing after this quick break. w, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq

welcome back the schexchange toll brothers reports after the bell shares are down 36% this year as the industry gets hit by the one-two punch of affordability at record lows according to realtor.com for the weekend ending december 3rd, that's pretty recent, median listing prices were up 10% from the previous year, new listings fell 8%, and active inventory jumped more than 50% homes are spending about nine more days on the market now compared with 2021 all of this as mortgage rates sit above 6% demand had dropped to multi-decade lows when we saw that spike above 7%. it's since recovered a bit, but

this ceo of equifax is warning that we're already in a mortgage recession, probably the deepest we've ever seen. here to respond the danielle hale thanks for dhthat data. >> i think that's absolutely right. the housing market has pulled back in a big way, especially since just a year ago, we were seeing some of the busiest housing market conditions that we've seen in decades, thanks to close to record-low mortgage rates. so mortgage rates have adjusted to their highest level in 20 years, and housing activity is adjusting to correspond to those new pricing conditions for shoppers in the market >> i'm surprised to see phoenix, austin and denver with the most price reductions what does that tell you? >> so those areas are seeing big increases in the number of homes in the market. they're, in the west region, we have seen the biggest pullback and a lot of buyer interest in the west region. it tends to have higher home

prices than other areas and a lot of those markets benefited from relocation, as california residents were able to relocate during the pandemic, take advantage of workplace flexibility. some of that is we're seeing a pullback in, so those markets that had benefited from that relocation are starting to see activity adjustments. where homes are increasing and we're seeing that buyers have a little bit more negotiating power, sellers need to be more mindful of buyer demand and adjust their expectations accordingly. >> you know, if there's one refrain i've heard lately it's people going i'm waiting for the housing market to crash so that i can buy. what does that tell you about how different the psychology might be this time around than it was, say, back during the boom and bust cycle of 2006 to 2008 >> yeah, i think in 2006 to 2008 i think there was a widespread feeling that home prices couldn't decline and we of course know that that's not true. it has happened in the somewhat recent past. i think that actually is a big help for the housing market.

people have bought with that mindset of knowing that today's value might not necessarily be what a value is in the future. so i think that makes the market a little bit faster to adjust, a little bit more flxible. but look, we've had a ahuge run-up in mortgage rates and that has changed the purchasing power for a lot of home shoppers so it makes sense that the housing market is going to have to adjust to those new conditions but to go back to things that are different about this housing market compared to 2008, for example, we're looking at homeowners sitting on record levels of home equity. not just in total dollar amount but relative to the value of real estate. so the homeowners in aggregate have about 70% of the value of their homes in equity. back in the early 2000s that number was closer to 60% so homeowners are in a better position today than they were roughly 15 years ago >> you know, they are so long as prices don't fall. do you think that in 2023 prices could fall and wipe out some of that equity? >> so home prices could fall our base case forecast is that

home prices will actually continue to increase because we've seen such a huge run-up in prices even late into 2022 we're starting to see some moderation in the rate of growth, but ultimately home prices are still growing you quoted our weekly stat home prices are still up 10% relative to a year ago we expect them to moderate to about half that. so 5% for the year as a whole in 2023 even with that moderation, even if home prices were to decline, homeowners would still be in a better equity position than they were in 2008 i think it's a really different market thanks to the fact that lending practices have changed so much over the last decade and a half >> so what would you say to those friends, colleagues, neighbors, folks we've heard from who say they still want to buy, maybe they can't afford the place they want to purchase and they're hoping or waiting for a price correction are they going to get one? >> so our expectation is no. certainly not in 2023. we have seen home prices soften a bit. so they're not growing at the

same pace. in that sense it makes it a little easier to keep up with the housing market as a buyer. but if you're waiting for a crash, i don't necessarily think that's the best way to make a decision we don't know what's going to happen to housing in the future. we have some educated guesses based on what we've seen happen in the past. i think the right way to approach the housing market as a buyer is if you find a home that fits your needs, it meets your budget, and it's available and there are many more of them available right now, you know, then it's the right time for you to make a move youdon't know exactly what's going to happen in the future, but as long as you're checking those boxes and making sure you're setting yourself up for success, not spending too much on your mortgage payment, making sure you have a good savings cushion in your -- left over after you make the home purchase, i think it's the time to make a move when you're ready, whether or not the market conditions have shown that home prices are declining >> it's like trying to time the market but for something even more important danielle, thanks so much for your time today. great to have you. >> sfwlult >> danielle hale with

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welcome back want to get to one more thing before we go, and that's the boom in renewable energy the iea is predicting here in the u.s. pippa stevens is here with what's expected to drive growth and who may benefit, pippa >> hey, kelly. the iea saying today that russia's invasion of ukraine is turbocharging renewables as countries seek energy security with the global energy crisis triggering unprecedented momentum behind clean energy including in the s the paris-based agency raised its u.s. renewables outlook and now sees the industry growing 74% by 2027. and on the heels of the

inflation reduction act executives hope to meet this newfound demand with domestic manufacturing. in the four months since the i.r.a. passed a host of companies have announced now or expanded domestic facilities that includes names like new solar, piedmont, friar and general motors more are expected once we have additional clarity from treasury and the irs on implementation. the top line spending figure is $374 billion for clean energy. but credit suisse is among those who believe it will ultimately be higher to the tune of 800 billion thanks to the uncapped nature of the credits. add in the fact that federal support typically spurs private interest, and they said spending could hit, kelly, $1.7 trillion over the next ten years. >> yeah, huge numbers. everybody's drooling at those prospects. but european looters -- leaders, i should say, like macron have raised concerns about the inflation reduction act, saying it's unfair, trying to push back and hinting that maybe biden has

agreed to some kind of rollbacks. are any of these projects at risk >> well, the i.r.a. was on the ad agenda yesterday and basically at issue here is as you said that european officials said they felt blindsided by the i.r.a. and that the subsidies will come at the expense of european growth. now, there are some hints that some progress was made during a press conference with france's macron biden did say that some of the language could be amended including around the electric vehicle materials incentives and changing that from those we have free trade agreements with to our allies and so some progress there has potentially been made but at the same time european commission president ursula van der le yen saying the eu needs it own round of funding to boost its own internal activity. some questions still remain. >> pippa stevens that does it for "the exchange," everybody. but it's not just clean energy poised to boom u.s. chip manufacturing could

see huge growth. we'll look at taiwan semi's record investment in the u.s. coming up on "power lunch. it begins right now. welcome to "power lunch. i'm jon fortt in for tyler mathisen here's what's ahead. stressed, slowing. it's not just a description of your work life in december it's how the consumer's being described by the ceos of some of the world's biggest companies. we're going to look at what that means for spending and the economy as we head into the holiday season plus, boeing's big run the iconic company has been under pressure for years but the stock is making a dramatic turnaround, up 35% in two months is this the start of bigger gains? a deep dive on boeing later this hour kelly? >> jon, thank you. hi, everybody. and let's look at the markets where we're sinking again throughout the day just off session lows. the dow is down 417 points all 11 sectors in the s&p are lower. 3935 to bob pisani'po