the man in lilac >> i am not -- thank you, i am not in this stock yet, but it's setting up, and i really like this type of setup docu sign, this is a name in 86% of draw down right now it's having trouble attracting anymore sellers at these levels. i think the down side risk very well-defined there could be huge up side here >> see you then. the exchange is now. thank you, scott hi, everybody, and welcome to the exchange what does it say that we can't hold this rally? the dow flying after the cpi report first came out this morning. we're up more than 700 points. now we're negative by 60 with the next fed decision looming in 24 hours you can see the s&p holding onto a ten-point gain right now, the nasdaq up 61, this a very different picture as yields has plunged today the two-year, and ten-year both dropping about 20 basis points

look at the numbers there in the red on the right the homebuilders seeing a nice jump higher as rates drop today. again, total only talking about 2% gains or so right now some tech names also trading better like alphabet, meta, lam, and nvidia we talked yesterday about how the semiconductors have been doing well meta up 4% so what will the fed's next move be now should they slam the brakes on rate hikes the consumer price index rose 0.1% last month. my next guest says there's no way the fed is going to shift. michael, we have a nack for talking to each other before this big fed pivot points.

the hawkish one why do you think they're going to stay the course now and this won't be a dovish surprise >> kelly, it's a question on insurance. they're still confronting super high inflation i think they're really losing conference or have lost confidence in their ability to predict it even after the good report today. i think it changed very little for what jay powell is going to say tomorrow yes, we like the progress, we like the direction but there's a lot more work to do. >> steve, we see these signs of discord emerging within the fed. we talked about the journal piece, obviously you hinted as well maybe this galvanizes some who might not be totally onboard with more aggressive rate hikes to really push the case for pausing. >> yeah, and powell does have to keep the committee together. i think he's okay to brook a little bit of dissent but not a

whole lot. i think there's, you know, from the former doves, now they're all sort of turned into hawks. i mean i don't think you're going to get a reversal from people like, you know, mary daly from sfrask wsan francisco and guys like neil who was previously a dove and now he's among the most hawkish out there. i don't think there's a whole lot of support for stopping here i think when i look at the march contract -- guys, i had this chart in the back that might be worth looking at i think this might reflect where the fed is as well this is where the market is. take a look for the debate over market about 30% or 28% of folks see the fed being done at call it 462, that's about 75 basis points from here half of the market sees the fed done in march at 488, and then another 19% say the fed goes up

5. guys, that's the first chart the second chart, the far chart is the one i was after there, and that will show, i think, kelly, the dispersion in the market and probably the fed. note all those numbers are higher from where they are here, and the way i like to describe it very similar to the way described is if you're putting out a fire and you're by yourself you pour one bucket of water but if you're a fire ranger you pour more than one on it >> the market seems to be saying monetary policy is already restrictive. look at the yield curves if you take that message seriously they're telling us we're not going into a recession but going into a deep one. does the fed have a responsibility to keep that from happening? >> the curve was an excellent p predictor of recessions and market people talk about

two-year, versus ten-year and power is pretty limited and that's largely -- right, the fed's balance sheet has been so big and i appreciate it's shrinking, but that's really distorted that signal. the fed in a way it's almost circular it's bought so many bonds but driven down long-term rates and consequently it's not telling us that much. >> are you bullish on the economy, michael is that what you think we're going to end up having a decent gdp number or is that not the point? let's mention for a second the tweets from rick reader today and this is a view he doesn't hold only himself here that you could have inflation readings by the 3% range middle

to late next year. >> this is a feature and not a bug. and that's eventually going to run. >> i was going to point out the fed has a long way to go here.

and another thing interesting to me is michael's forecast at 3% next year. that will change the conversation a lot and then we're going to have a talk about 3% or 2% being our target rate, and what was going to happen at 3% especially if you have rising unemployment and i think the fed may take what it can get here while it has support on high inflation and can justify these hikes and prepare for a downturn >> if you guys don't mind stay right there. we just had one of the options come in. i think the 30-year. let's get out to rick santelli how did it go, and what are the

take-aways >> well, i'm looking at intraday of 30-year bond yields, and folks listening on the radio and watching on tv you can see the rate is going up which means the auction didn't go well today's 30-year had a th three-basis point tail 3.513, about three basis points from where the market was trading, around 3.48 and change. higher yield, lower price. no way around it they just didn't show up again and if you consider -- let's go through the internals, some very interesting -- i gave this a disney as in dog, the lowest bid to cover since 2021. the smallest amount since '21. there was one bright spot that saved it from a d-minus grade. direct bidders, large funds, institutional funds, pension

funds, they showed up in droves. 23.1 they showed up they haven't showed up that intensely since deets of 2014. a lousy auction. it really does demonstrate that one of the big issues is rates have been rather tame, probably slow the economy, fed will probably overtighten, but somewhere on the backside down the road, quantitative tightening and the notion of issuance is going to take its toll, just like at auction today. but between then and now, still looks like markets want lower rates. kelly, we had four days of inverted curve with regard to the knob, 10s versus 30s, still lightly inverted but it is starting to get closer and closer may call is 30-year bond yields will remain the buyer's darling of the globe for those looking at the economy slowing all around the world >> rick, thank you back to michael schumacher we have this auction to digest,

the cpi report, the market turning negative on the session today, and the fed looming tomorrow what do you think the big message is here from the fact that we couldn't even hold on to this rally as we head into this big decision tomorrow? >> pretty simple it's don't fight the fed you've got the fed coming down the pike in 24, 25 hours, whatever, and a great cpi report is just not enough when you've got the fed looming. i think that's got people concerned. liquidity tends to get pretty weak as we know this time of year there have been so many strange events not a lot of people want to take a lot of risk right now. i think they looked at the performance this morning and said pretty good, let's back away, and hear from mr. powell >> thank you so much as we turn to the house financial services committee's hearing on the collapse of ftx under way, founder sam bankman-fried was all planning to testify before he was arrested in the bahamas last night. now we're getting a look at the charges against him.

kate rooney is following that story. >> he was taken into custody in the bahamas around 6:00 p.m. last night the latest we got was an indictment this morning from the southern district of new york, bankman-fried is charged with eight counts, including wire fraud, money laundering, and conspiracy to defraud the u.s. and violate campaign fyinance regulations. this started around 2009 when ftx was founded, 2019, and they plan to hold a press conference in about an hour we also got a complaint from the cftc accusing bankman-fried and his other companies, ftx and alameda of fraud they said customer deposits were lig accepted, held by and/or appropriated by alameda for its own use. that violated the regulation it allowed alameda to maintain

essentially an unlimited line of credit on that platform among other issues it echo what is we heard from the s.e.c. as well this morning, which said bankman-fried committed, quote, a massive years-long fraud diverting billions of dollars of customer funds for his own personal benefit and say he call a house a foundation of deception. we heardbankman-fried's lawyers, saying he is reviewing the charges and considering all legal options. rueters is reporting that he may fight bahamas extradition. he's leaving the courthouse in nassau sometime this afternoon >> hoping we might get some images of that as well what do you make of it being on the eve of this hearing and maybe fighting extradition >> the timing was such as pentagon officials to a lot of people lawmakers came out last night with statements. maxine waters said that the

american people wanted to hear from him, it was really an opportunity to hear from him under oath, and lawmakers -- and he's been mentioned all day in the current hearing still going on with the current ceo of ftx, john ray, legal experptts i've talked to say one of the reasons he may not be testifying because they wanted to avoid what they call poisoning the jury, the idea if he continues to speak publicly, it could affect an eventual hearing, although he has done multiple media interviews, not clear what we would have gotten or why they pulled the plug the night before but there are still some questions as to timing and why they wouldn't give him the opportunity to testify if it had some legal implications when he does eventually go to trial. >> does it suggest this is all coordinated somehow or the op i is the, that these jurisdictions are working at odds and in some ways trying to one-up each

other? >> so, it does suggest some degree of coordination we've heard from john ray as well, the current ftx ceo, saying he's sharing information with law enforcement he is essentially helping them on the back end and providing as much evidence as possible. so you do get a sense there is coordination between ftx's current management and law enforcement. the cftc, s.e.c., and doj here, southern district of new york, they all really came out at almost at the same time with that press release there has been a bit of a turf war in terms who's regulating crypto, so unclear if this is part of that, but it does seem like they're working with the doj and all sharing information, at least that's what it appears. >> sure. like you said, we'll hear from them around 2:00 p.m. eastern time look forward to more detail from that kate, thank you. kate rooney reporting. coming up, we'll continue to monitor the ftx hearing and brick bring you the fresh headlines. we'll speak with a congressman

in that hearing right now. we'll get his reaction and take-aways and the market making big moves between the cpi and the fed decision tomorrow. our next guest has three names to hem you ride it out another look at the dow. we raced a 700-point gain, went negative, back up by 6 the 10-year yield remains just under 3.5%

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my next guest says the consumer price index print helps prove the case that we are headed for an economic slowdown. jim tierney, cio of u.s. concentrated growth at alliance bernstein. great to see you welcome. >> thanks for having me, kelly >> do you think that's what the market is realizing, yay, cpi is decelerati decelerating, oh, wait, maybe into a recession kind of thing >> there's a bunch of things going on, one, nervousness about chair powell's comments tomorrow afternoon and the reality that

earnings will be under pressure for the next few quarters and for most of '23, quite frankly. >> when we see earnings are under pressure for 2023, what do you think the market has priced in and what do you foresee >> the bottomings-up numbers are a little scary, 235 on the s&p 500 versus 220 this year that's a high single-digit gain, but the top-down strategists are closer to 200, which implies a decline in earnings next year. my guess is that earnings estimates are going to be revised downward when we get to fourth-quarter earnings in late january and early february >> yeah. that's going to be another tough slog for the market to skwallow you say you see opportunities here why not just wait it out and pick everything up more cheaply. we have a blog out on that today. i think companies that have inelastic demand, have real secular growth, pricing power, cost-cutting opportunities, those are the kind of companies that are going to prosper in 2023 and i don't think that's fully

discounted in a lot of the names that are going to be those winners. >> yeah, but all that said, and you have a name like tjx, for instance, parent company of t.j. maxx, cdw, charles schwab, maybe a market headwind, for tjx, there's a recession, you would expect a price reset below where we are right now or not? >> the interesting thing about tjx, as their customers look for value, tjx is the best by the way, on the buy side with goods they're able to buy right now, phenomenal deals, which means their margins will go up next year, not down. with schwab, the opportunity from the net interest margin reset, so everything that's happened this year with rates going up, schwab is going to benefit from that in '23, '24, and even '25 so a great tailwind, which is why we like it even with the

tougher market they're far more rate sensitive than market sensitive. >> do you have any other parting advice for investors who say, okay, what should we be bracing for from the fed tomorrow or in the coming months? will they prioritize a slowdown that some have inflation falling to 3% next year or make sure their hawkishness is vindicated and wage pressures don't make inflation sticky here? >> rates don't have to go up that much more, so we won't be fighting the fed too much longer the challenge is that earnings will be under pressure if there's advice, it's management teams that can navigate the tough environment because at the end of the day those are the kind of teams that we think are the winners and those are the kind of companies that we want to be invested in >> very munger-esque like the longer they did it, they just cared about good news. first cared about price then less about it. then it was management, management, management jim, thanks so much.

good to see you. >> thank you >> jim tierney a news alert on mortgage rates. diana olick has the details. >> the cpi did it again. the prospect of cooler inflation sent investors to the bond market shrinking yields and consequently mortgage rates. the average rate on a 30-year fixed dropped 11 basis points to 6.82%. it wasn't as big as the last post consumer price index drop in november, which was a stunning 60-basis point drop because cpi does build the case that inflation is turning the corner, rates will be careful about reading too much into that potential shift given the volatility of the data in recent months that's according to matthew graham of mortgage news daily. the bond market is watching for what the fed does tomorrow as well rates are now down over full percentage point from where they were last peaking in october at 7.337% so take a $400 authorization mortgage that's saving you about $291 on the monthly payment just over the last couple months

but that payment still close to $600 more than it was just a year ago we know the rate drop last month did not exactly help spur more home buying and we're now in the historically slowest month in the market, so i guess, kelly, we wait till january to see what the effect is. >> there has been some widening in the spread between the 10-year and the mortgage rate, probably about three points right now. is that normal or should we expect that to widen >> what is normal? what is normal you can't ask me a question is that normal. what's the new normal? no i mean, look, rates have been coming down. there's obviously the effect of what the fed is saying, but it's what the fed is thinking in the future that also affects mortgage rates as well >> diana, thank you. diana olick. still ahead, boeing is having a quarter to remember, and now it's getting a major boost from one of its biggest customers. we've got phil lebeau with that story. as we head to break, look at the dow heat map boeing up a half a percent but

chevron, goldman, and merck are leading the way. ibm hitting its highest level for ar fe arnelyivyes.

the dow was up 700 points before turning negative, now up about 103, the s&p up about 0.75%. apple, microsoft, alphabet, amazon off session high bus in the green today. the biggest performer alphabet with a 2% gain keep an eye on moderna shares at their highest level since january, not a covid story here. their mrna cancer vaccine showed promise in an early trial.

the stock is having its best day since march of 2020 with a 24% gain on the flipside, oracle erasing a 5% gain after beating estimates on the top and bottom line last night. you can see those shares have turned negative by about 0.75% in a tough market, and of course tesla continuing its decline it's the worst performer on the nasdaq today down almost 4%, trading at its lowest level since november of 2020 it's also falling below $500 billion in market cap for first time as well this used to be a trillion-dollar stock a couple months ago its forward p/e is down to 29. how humble on "power lunch" we'll look at the biggest reversals in the market to see which may be worth snapping up. first bertha coombs has the "cnbc news update. a lot of wicked weather. the massive storm blowing across the country has sparked tornadoes in oklahoma and texas. this is the damage in wayne,

oklahoma, where numerous homes were destroyed and power lines were down in the northern plains blizzard warnings are in effect in parts of four states, and 200 miles of interstate 90 in south dakota has been closed due to heavy snow and icy conditions. meantime, at least 100 people have been killed by floods in the capital of congo many homes have been destroyed and roads have been turned to rivers practically landslides have also added to the destruction. some 12 million people live in the neighborhoods of the area hit by the heavy rain. and some good news, maybe. for argentina soccer fans. 4-year-old giant panda predicts the south american team will prevail in its world cup semifinal match against croatia. panda is one of who's given qatar ahead of the world cup,

however their predictions have not always been spot on. they incorrectly chose spain to beat morocco last tuesday. you know, whether they're wrong or not, they're cute >> we're pulling hard for argentina on this show >> and messi messi has yet to win a world cup. hopefully he gets it this time >> bertha, thank you very much bertha coombs. still ahead, sam bankman-fried may not be part of the hearing on the hill today, but my next guest was. representative jim hines was there to question the current ceo john ray he'll be here live next with his biggest take-away and whether he thinks washington needs gtoet more serious about regulating crypto ♪ ♪ opportunity is using data to create a competitive advantage. ♪ ♪

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welcome back the house financial services committee grilling ftx ceo john ray today on the heels of sam bankman-fried's arrest last night. ylan mui has more with the highlights from capitol hill >> current ftx ceo john ray said that sam bankman-fried played zero role as one would hope. ray spent much of the past three hours or so outlining issues

with oversight, corporate governance, and management throughout the company, thinks a lot of the problems at ftx came down to what he said was old-fashioned embezzlement >> there was no corporate controls, no corporate oversight, no independent board. and the owners of the business, the senior management had virtual control of the accounts of each of the silo including money or assets as they desired undetected by customers. so to the extent there were rules, there were very few, obviously they were made to be broken >> ray said there was no question that ftx international customer assets were transferred to alameda they said they are still investigating the commingling of u.s. funds but that there is a potential that there was some improper use there as well and that sam bankman-fried claimed that the u.s. part of the business was sol vent, it's simply not true. ray also acknowledged that some

of this money may simply be gone for good >> at the end of the day, we're not going to be able to recover all the losses here. money was spent that we'll never get back there will be losses on the international side and on the u.s. side. he'll answer to others related to what happened here. our job is just to find the assets and try to get customers their money back as quickly as possible >> kelly, ray said that process could take months or potentially even longer. back to you. >> i'm sure. ylan mui, thank you. jim hines, a democrat from connecticut who sits on the house financial services committee. congressman, thanks for your time welcome. >> thanks for having me, kelly. >> biggest take-away so far from everything you've heard. >> well, you know, the biggest take-away for me at least, and there's cameras everywhere and this was going to be a blockbuster event and sam bankman-fried was going to show

up sadly, he was otherwise disposed of it sort of has a hollywood feel. the biggest take-away is if you read the southern district of new york indictment, what went wrong here is old-school, right? there was commingling of customer funds with the hedge fund there was, according to the southern district of new york, wire fraud there was misleading of investors. there were all kinds of things that we've seen for generations. now, there is an angle on this which is new, right, and you were just talking about it, are they going to recover the money. one of the angles that is new is the existence of this token ftt inside of ftx. so this was used as collateral they made it up. i think that's where this is slightly different than enron or mf global or other examples of corporate malfeasance that we've seen here. b >> but what are we going to do what is the pursuit of justice as it relates to the ftx case and crypto more broadly? let me play a sound bite from one of your colleagues today,

brad sherman, i believe, who had quite some words about the whole industry he think this is not an isolated case take a quick listen. >> the five years i've been trying to ban american investments in crypto, i'm the only member of the house to get an "f" from the only crypto-promoting organization that rates members of congress my fear is that we'll view sam bankman-fried has just one big snake in a crypto garden of eden the fact is crypto is a garden of snakes. >> what's your response to that, congressman? and what regulatory measures do you think should be pursued now? >> well, my friend brad sherman is and always has been on the sort of no crypto extreme of things i will tell you inside the congress there is a small group of people who would ban it i'm not even sure you can ban it anymore than you could ban any other payment system if we ban it in the united states, it will continue to exist offshore in ash and europe

where it's already being used in a meaningful way but most of us are crypto curious and excited about some of the possibilities even as we are conscious of the both fraud as we're hearing about today but the nonsense, the nonsense this feels like the early days of the internet to me where, you know, you knew there was something there but you didn't know exactly what it was going to be. what should we do? we should regulate stable coins. there's $50 billion a day in stable coins trading today that's -- you know, somebody is using it out there we ought to do what we started to do, which is come up with a bipartisan framework for regulation of stable coins then this gets to ftx. we need to stholve that problem. the current s.e.c. chair says the laws already exist, these people need to comply. they're not complying so gary gensler and the s.e.c. are doing the occasional enforcement actions, which gets everybody all atwitter, but the point is if we have the laws and people aren't complying, we need to close that gap and find some way, either through explicit

guidance or through more enforcement where people begin to comply. by the way, if gary gensler is wrong and the laws are insufficient for one reason or another, that's where we come in we have to plug those gaps with new legislation. >> to quote from your colleague one more time, he basically said lit let's not arrest sam bankman-fried but still pass regulation is the final version going to look like something he would have been, like, yeah, this looks great, i'd be fine with this >> look, our job as government is to keep people safe, right? we need to stop fraud. we need to make sure that people aren't investing their life savings and, you know, fraudulent or wildly volatile things it's up to the market to determine whether there is a use case for crypto. it's not up to me or brad sherman or the congress of the united states. now, maybe brad sherman is right and nobody at the end of the day 20 years from now cares a thing about this crypto is the pet rock of this century. but it's up to us to make sure those markets are fair and free

and not subject to fraud >> and you feel confident we're at that point or going to be at that point shortly what's the legislation look like that you would feel comfortable passing here >> so, we're obviously not at that point we're not at that point because every week, and this is where brad sherman is right, every week there's another blowup, right, there's all sorts of runs on all sorts of different exchanges. so, no, we're not close to that point. part of the reason we're not close to that point is because the congress has largely been silent on creating, if they're necessary, a new set of laws so, again, what would i do i would pass stable coin legislation, because actually a lot of people out there are using stable coins, so let's pass that legislation that makes sure that those markets are well reserved and funs ction well then's move on to solving the problem that you have offshore entities which appear not to be complying with securities law. >> have you supported the idea of the central bank, the federal reserve doing its own kind of,

you know, central bank digital currency, and do your views on that change at all in the wake of all that's happened >> yeah, i would tell you that three or four months ago i wrote a report that suggested that we ought to keep up the research and keep up the development around a central bank digital currency by the way, the libertarians hate that because the whole point of crypto for them anyway is that you have a totally decentralized, totally anonymous currency out there you know, the reality is particularly in the last three months where we've seen these spectacular crypto meltdowns, you know, $2 trillion in market value of crypto assets simply disappeared, i think there's probably a stronger case today for a central bank-backed digital currency that people trust because it has the full faith and credit of the united states government rather than the full faith and credit of sam bankman-fried. i think there's a case again, we don't want that to squeeze out private stable coins, but i think there's a pretty powerful case for the equivalent of the dollar bill in my wallet right now but that is known to be safe and known to be secure >> or unless i would's about

crowding out the dollar bills so that only the digital currency remains, and, you know, there's sort of a lost aspect of privacy at the bottom of that, in which case people would say, well, you've taken one crisis as an excuse to get out a very different problem if you want to call it that, that's existed in this country for quite some time >> well, let's not do -- nobody's saying let's do away with physical dollar bills, by the way, other than the market i don't know about you, but i think i'm using physical dollar bills for about 3% of my transactions today i think that's true of most people, and i think most people understand when you use a debit card, when you use venmo, you know, there are people who have the ability to look at what it is that you're doing so, you know, i think most american consumers have gotten over the privacy hump with respect to electronic forms of currency so now the question is how do we just make sure, you know, that privacy is appropriately protect bud that these mechanisms are secure and safe and people don't lose money >> they're all related, all different, but again, consequential day for ftx in

particular and perhaps for regulating crypto from here on out. congressman, thanks for your time we appreciate it >> thank you >> congressman jim himes of connecticut. still ahead, boeing is going to have to fire up the 787 dreamliner assembly lines big time thanks to you nighted's massive new order. up next, we'll give why the order could be a boon for both company bus the shares not trading thatay w

welcome back united and boeing announcing a massive order for the 787 dreamliner, but look at shares of united, down almost 7% today. phil lebeau is at the boeing plant in charleston, south carolina, and spoke with both ceos about why such a massive order is being placed. phil >> it's all about timing, kelly. don't confuse united being down about 7% with this order that's separate. that has to do with sentiment regarding airline stocks when you look at this order, look how huge this is.

the largest ever for a u.s. airline. we're talking about 100 787 dreamliners, an option to order 100 more, and 100 737 maxes, 56 order, and options being exercised on 44 others for you nighted, the timing makes sense. why? because the supply of new aircraft is going to be fairly constricted over the next several years. it wanted to lock in delivery slots. when we talked with ceo scott kirby, he said this is all about making sure they get the planes they want when they want them. >> demand is fully recovered, but supply is going to be below trend for years to come. and we want to get ahead of that curve, we have gotten ahead of that curve it's going to be really hard for anyone to catch up to us >> i give lots of credit to the united leadership team for understanding the world's supply constraints and wanting to get that oar in the water. there will be more to come and i'm confident we will see that

through. >> that's the big challenge for boeing now, ramping up that production rate. as you look at shares of united airlines, they're going to be receiving 700 new aircraft between now and 2032, about half will be brand-new to service, adding to the fleet, the other half will be replacing older aircraft as you take a look at boeing, keep in mind that the big focus right now, increasing production not only here in charleston for the 787 dreamliner, but also out in washington for the 737 max. back to you. >> not to be a debby downer, but why are those shares down today, phil what is it about the outlook for the airlines >> it was jetblue's guidance, and that guidance saying they've seen a little weakness in the revenue translates into demand you combine that with some of the commentary and the reports from spirit as well as from a couple other airlines in the last few days that has people saying, wait a second, are we

seeing a drop-off in demand? i should tell you, everybody else that we've talked to within the industry is saying we see strong demand going well into 2023 but all it takes is one or two airlines saying, we're not crazy about what we're seeing right now, and that has spooked investors. >> jet bblue down about 10%, dea down as well phil, thank you very much. >> you bet >> phil lebeau in charleston today. coming up, shares of this payment company are up more than 23% over the past few months, and piper sandler sees more than a 30% upside from here the name and why coming up next.

if your company actually practices the values that it posts about, then, yeah... you're on team earth.

...comes the legendary cat with 9 lives. hmm, hmm, 8 lives. 7, 6 5, 4 3, 2. you are down to your last life. i am not really a math guy. rated pg. well, we fell in love through gaming. but now the internet lags and it throws the whole thing off. when did you first discover this lag? i signed us up for t-mobile home internet. ugh! but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same. what could you do to solve the problem? we could get xfinity? that's actually super adult of you to suggest. i can't wait to squad up. i love it when you talk nerdy to me. guy, guys, guys, we're still in session. and i don't know what the heck you're talking about.

welcome back it's been a rough year for the payment stocks block was on the chart before the break. those shares like paypal's have fallen about 60% since january piper sandler initiating coverage on block, paypal, and amex, but they're only bullish on one of them it's block that you like here, kevin. why is that? welcome. >> thanks, kelly block stands out to us because

it's been able to generate s significant revenue growth particularly in cash app and their square franchise block has been able to produce roughly 126% growth within subscription based revenue over the last couple years. we expect them to be on pace for over 40% growth over the next year and with that revenue growth comes significant operating leverage that i think the market is not appreciating thesis stocks have been under a lot of pressure given fed interest rate increases and other things, but i think that turns around as we move through the next 6 to 12 months. >> should they rename it back to square every time i think block, crypto has collapsed. >> the ticker is sq, so definitely >> true. let's talk about - >> i don't know if jack dorsey is listening to what i'm saying. >> of course let's talk about paypal and the venmo app.

kind of a sister story in many cases to what we were discussing but you're neutral there why don't their prospects look brute brighter next year >> they have extremely valuable customers especially within venmo, and i think longer term, the ability for them to monetize that customer base and get those customers really use that for transactions with merchants as opposed to peer-to-peer money transfers, i think is really the key to what's going to happen with paypal over the next i would say three to five years. monetizing venmo is extremely important. however, what we're seeing is had revenue growth from the company has been slowing, especially coming out of the pandemic, which is making it tougher for them to generate operating. in fact, we're seeing operating margins go down. we think the stock garners a lower multiple relative to block, and therefore where it sits today, it's in a tougher spot but we'll caveat it and say

there is a lot of potential that if they're able to execute, it could be very strong performance. >> sure, and finally, amex, a quick word what would get you more excited about the stock. you nextated with just a neutral. >> amex is a great company, one of the best customer bases within credits cards or payments overall. it is incredibly resilient through recessions it's more expensive relative to peers. it's outperformed relative to peers over the last year it's a more expensive stock relative to what i see out there today. this is more of a relative call more than anything else. if we have a soft landing with the economy and we start to see cpi slow, like maybe we saw this morning, on the other side, american express would do well because spending is going toremain elevated. we expect spending to slow down in the next year which is going to put a headwind on the revenue side >> we'll see kevin on the block.

thanks for your time kevin barker joining us with his picks. >> coming up, private equitly is dead a look at how rising rates are changing the landscape of funding private companies and the firms ispoed to ramp up spending next year don't go anywhere. because you've got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want - your team, ours or a mix of both. with the nation's largest ip converged network. from the most innovative company. bring on today with comcast business. powering possibilities.

welcome back want to get to one more thing before we go it's only the future of deal making robert frank is here with why those failing offices we talked about before could be the new pe firms in 2023. >> that's right. the favorite investment for family offices next year is private equity a survey found that nearly half planned to allocate more to private equity, private companies and private debt next year that compares with only 24% who plan to put more money into stocks private equity now makes up 27% of their portfolios. that's up from 21% last year

family offices now have an estimated $6 trillion in assets and this could be their golden opportunity right now to take market share from the big private equity funds that's because those funds are struggling with higher interest rates, a lack of financing, investing withdrawals, and a lack of exits because of this frozen ipo market. that has all opened the door to family offices who have hundreds of billions of dollars in dry powder and much longer timelines so they don't have to cash out anytime soon now, bankers say more and more of the nation's biggest companies are turning to family offices for funding. you can read more about the family to family investment boom and our latest family office investor interview with a very inspiring tech ntrepreneur, bill sprool, all of that on cnbc pro. >> you know this is one of my favorite topics because if you call it family office, it sounds

cozy, but this is kind of just a financial investing firm by a different name how long until regulators crack down, do you think >> look, there hasn't been a scandal anytime soon, and the money is just growing, more than half of the $6 trillion in assets in family offices have been created since 2010, so this is a massive industry, and as we're seeing with private equity, they are changing the investment landscape very quickly. >> if they're here to stay, is it going to be a brain drain from those other areas >> it already is we're seeing them recruit from goldman sachs, all the investment banks, the private equity firms the big talent now is going to family offices because that's where the money is going that's where these big fortunes are saying rather than going to traditional wealth management companies. they're really seeing a big upgrade in talent and executives >> i have this vision of them working in a library with, you know, a nice whiskey or

something and thinking about these investments. >> they have nice corporate offices that look like global investment firms some of these family offices which are billions of dollars, they look like investment banks because they essentially are but just for one family. >> if it quacks like a duck, looks like a duck, it's a robert thank you very much. >> it's a family office. >> that does it for the exchange while the family offices hunt for private companies, "power lunch" is hunting for bargains we have quality names including blue chips at incredibly low valuations "power lunch" begins right now >> all right, kelly. i'm going to see if i can walk like a duck. welcome to "power lunch. i'm docknic chu in for tyler mathisen here's what's ahead. federal prosecutors minutes away from discussing the charges brought against sam bankman-fried, sbf, eight criminal counts including securities fraud and money laundering, the