say that jason snipe. >> i like unh. they just reaffirmed the guy and they have really strong earnings stability there. >> all right joe, why don't you wrap us up? >> a health care name we don't talk about it much ticker symbol abc. >> still likes health care, obviously. dow is down 543. i'll see you in o.t. good weekend, everybody. "the exchange" is now. thank you, scott hi, everybody. i'm kelly evans. here's what's ahead with stocks sliding more dow is down 543. more on that in just a moment. the market is still not getting the message according to one of our guest ts today. the fed will have to stay tough on inflation, no matter how much recession risks are growing. we'll talk about that. plus, a major option expiration day we could see big moves on the close and does it set us up for a near-term rally? we'll talk about that.

and it's out with f.a.a.n.g., i with bang. four names in health care one analyst says are working way better than the tech trade he joins us to make his case but first, kristina partsinevelos with the numbers on this continued sell-off >> i don't want to come here with bad news on a friday, but it wouldn't be 2022 without some volatility near the end. that's a key threshold for tech traders. we can see that it has dropped lower. we saw the same thing happen to the nasdaq, as well as the russell 2000 yesterday so what has triggered this sell-off kelly mentioned a few things we got the ecb and the bank of england both join the 50 bips club, hiking their target rates and the fight to get inflation down is still very much in play over there some even questioning over here if that 2% target should even be the target, given how high wages have stayed and how high services have stayed so if we bring it back to today, though, what is moving on the markets? all sectors are negative today you can see a sea of red with

energy the only sector in the green, on the week, and also only sector higher on the year and that was up about 50% year to date. and i'll leave you with one particular market mover. that would be meta, the biggest winner on the nasdaq 100 and poised for a weekly gain after an upgrade from jpmorgan they like the cost cuts. shares are up 3% kelly? >> kristina, thank you very much, kristina partsinevelos markets have been reeling since the fed's hawkish meeting on wednesday, but my next guest says they're still not getting the message. the fed will have to be a lot more hawkish for possibly years to come because of big changes in the labor market. joining us is diane swonk, the chief economist at kpmg. also with us, steve liesman. before we dive into this, you do have some fresh headlines. >> to go right along with this conversation once again, hawkish comment from one of the most dovish members or previously one of the most dovish members of the fmoc, mary

daly saying 11 months is reasonable for how long the fed may have to be on hold and it may need to hold rates at a peak rate longer than it usually does every one at the fed, she says, expects to hold rates all of 2023 and she does not understand why markets are so optimistic about inflation, something we've been talking quite a bit about, this gap between markets and the fed. daly saying we're far away from a price stability goal she has a higher peak, held longer than some bond investors have predicted i'll keep it there, kelly. but this is part of an ongoing issue of the fed being in a different place from the bond market, having a different outlook for inflation than the bond market. having a different outlook for interest rates than the bond market and i think the key question here is what the fed may have to do to get the bond market's attention. and there's only one answer that my reporting has come up with. >> which is? >> you know that old phrase, the beatings will continue until morale improves? keep hiking. that's the only answer >> that's the perfect place to bring in diane swonk because, diane, you also look at the market's reaction to data,

when it's pushing the fed towards dovishness and think, there's no way -- you think the fed will have to be even more -- way more hawkish than what's priced in now. why? >> well, i think what we're seeing is, first of all, the fed is really worried that we're going to hit a floor on inflation that's too high that becomes something more corrosive, a longer bout of inflation. that's long been their concern they're concerned about it in the service sector, that services excluding shelter are going to be a floor on inflation. and that's something that the financial markets, the more that they ease up on weak economic data and good news on headline inflation and some of the other inflation aspects of inflation, the more the fed has to raise short-term interest rates. and i think steve's exactly right on this. this is something they clearly also made a decision at that meeting in december, that they would come out with a unified view the decision was made before the meeting, to see how unified the fed is in 2023 on rate hikes,

with seven participants above that high end on the rate hikes of 5.12% at the end of 2023. also, we had two participants actually pencil in a recession and let's face it, a fed that's forecasting a stalling out of the economy at basically zero in 2023, with a 1% rise in the unemployment rate, already raises the issue of how hard a land sthg going to be? >> in other words, it's extremely difficult to pull off that kind of maneuver without risking a much bigger downturn and steve, is that a risk they're willing to take here it sounds like your reporting and what diana is saying is the answer to that is yes. they would rather risk a larger downturn >> kelly, you're a reporter, and there are times to talk about the things you're reporting on and things to be quiet this is probably a time to be quiet. but i want to tell you where my head is at i've got the brilliant diane swonk here >> are we to infer from that you

might have some insight on your mind, you just don't want to share? >> something on my mind that i want to throw out. the fed may have to keep the growth rate permanently lower. if you follow jay powell's thinking, which is what i've been doing, and i've been thinking a lot about it, the thing that was so hawkish to me and down batebeat about his spet brookings is he sees no help coming from the labor market y'all at home can play the how to measure growth game its productivity plus labor force growth if productivity stays the same and labor force growth is permanently lower, that's a permanently lower potential to the u.s. economy and if i didn't ask him the question yesterday about whether or not he's concerned about financial tensions, chi thought was the most important question, the next thing i was going to ask him was, hey, jay, are you thinking that the u.s. economy economic potential is perm permanently lower? what does that mean? it means, he has the stamp on the neck of this economy for a

very long time to get it blow potential or the prior potential and get labor, get the demand for the economy in line with labor supply, which is permanently lower. >> what would you add to that, diane? >> well, i think, you know, steve and i have actually talked a lot and talked about this issue, and i think it's exactly right. i think what we see now is a fed that looks at the labor market as a secular supply shortage problem. a secular labor shortage, which frankly businesses agree with them and i think that's very important to understand, even in the brookings speech, the one thing you never hear jay powell talk about immigration, legal immigration. the need to grow the labor force. that's not out there right now and he's laid out a scenario in which not only does he have to raise the unemployment rate now, but the fed when it settles into the post-pandemic world -- >> keep it there -- >> -- there's many within the fed that are worried about, are worried about -- exactly, worried about having a higher unemployment rate, needing to

have a higher unemployment rate, as the non-inflationary rate of unemployment they thought they could get to 3.5% he admitted that he thought that was their goal, and that they could do that without inflation. that's no longer the case. this is a new world and i think that's a very different kind of economy in the one in which we left and it's a very different mind-set for financial markets to sort of let sink in and if they don't let it sink in sooner, the fed has to go further. >> is there a weird silver lining here -- not weird, it would be a great silver lining if it meant that you should turn around right now and press for more wage gains. this is what we were talking about with some of the bad luck, lower-income fields, especially that there's al of pricing power right now. just look at the rail dispute that the president had -- or congress had to step in and resolve. look at what the hanls analystse saying about marriott. so what you're telling us is pretty optimistic in some ways >> i talked to a cfo the other day who said, what he's got to do is look at his company and say, these are the people i

need, i'm going to give them all big raises the people i marginally need, i'm going to let them go there'll be some margin compression in that story. i just look at the way that powell is looking at the labor market and i think he has it right. congress is not opening the doors to legal immigration the illegal immigration doesn't really count in this regard, in terms of labor force growth. he said, retirees are still at an accelerated pace of retirement, and kelly, if you don't mind, this may be personal, but as far as i know, women cannot give birth to 25-year-old working-age people >> right >> you have some personal experience >> you have to go through 25 years -- >> diane has personal experience with that. if somebody can tell me where the labor will come from for the current demand level other than that, i have to think about a potential run rate for this economy that's somewhere below 1-8. and i also have to thinkthat i powell wants to create slack in the economy, he's got to keep

this economy below 1.8 for some period of time until demand and supply of labor are in alignment. >> and so, diane, when investors are talking, they're saying, okay, well, what is this -- do stocks have to permanently reset to lower valuations? i mean, what are -- talk us through the takeaways here if you're right >> well, i think there's a couple of things first of all, if we were to have a -- and i don't think a recession is a good thing, but i think the fed is already planning on a recession. let's not split hairs here when they're talking about a 1% increase in the unemployment rate, which i think is going to go higher than that, anyways, and stalling out the economy, that's a hard landing for a lot of firms and the idea that the fed is pushing so in unison, again, there was a little shine of light between people within the fed. now they're all on the same page, again, because they're really worried about that underlying inflation and getting to a floor that we can't go below. and that's important, and it means that we could have a

shorter period of time i have a recession that brings inflation down a little faster than the fed does. but not a lot faster i have the fed cutting by the end of the year. and the good news is a fed-induced recession is easier to recover from. but we're not talking about, if at all possible, the fed does not want to go back to zero rates. and the kind of world steve and i are talking about is a more inflation-prone world, with higher interest rates, and a very different kind of environment for different winners and losers >> i need to interrupt you, though i need to say one thing. real quickly, it's a higher inflation world, while growth is above the new potential. once it gets down to that potential, it's actually a lower interest rate world. because a lower interest rate would go along with a lower demand for money, relative to the growth of the economy. >> well, now you've just changed this all on its head, steve. zb >> you have to get there, first. >> and we know there could be some getting there

>> and getting from here to there is no easy task. >> that's the message that the fed -- they could be wrong, we could be wrong, i would love to be you know, steve, i've been hoping for your soft landing scenario, even though i don't have it. that said, i think you have to understand where the fed's coming from now, and if you don't understand that, you're also going to be on the wrong side of the fed. >> and kudos, steve, for flagging this issue on the immigration and the labor force all year long. you guys have been doing some great work >> thanks. >> we'll leave it there for now. diane, have a great weekend. we'll check back in soon diane swonk and our own steve liesman. but also be sure to check richard clarida we have a massive options trade looming with nearly 4 trillion in options threatening to expire will this slog continue or do we see signs post-expiration of a break out. let's ask chris murphy, co-head of derivatives strategy at

susquehanna. good to see you again, chris i've heard some moosing that we could see a rally after today's big expiry, why? >> today is the last real big liquidity day of the year. if you are looking to lighten up your positions into year end, because of everything from what's going on with the fed and the ecb to the economic numbers, this week and today is probably the day to do it when vacations start, when the markets are thinner, that can obviously work both ways, but that will be the argument for a much thinner, really late kind of santa claus rallyinto year end. >> and then what where do you see kind of the next leg of the stock market move heading >> we're always going to be tracking the options trading it does appear to be pretty close to consensus through that trading that, you know, we're going to hit the potentially the final low for this whole process in the first quarter -- >> it's pretty bearish, right?

>> yeah, a lot of put buying, sometimes when that's the consensus, you want to at least think twice about it, if everyone is on the same side of the boat but that's definitely what we're seeing in the options. >> and you were thinking that that points us towards some time in the first quarter of next year >> yes and you know, there's also kind of a sentiment that everybody is expecting it and everybody wants to kind of buy that dip, whether you look at a lot of prognosticators talking about 3,300 or 3,000 or whatever if everyone's on that same side, and we have been seeing reports of positionings really pared down, are we going to get all the way down to that level the vix doesn't seem super concerned right now, so maybe we don't actually ever get there. everyone else is hoping to buy that level >> what else will you be watch i ing. >> every sell-off is obviously different, and we've been waiting for that vix spike all year long. this has been much more of a

grind of a slog of a re-pricing of risk. if we do finally see that real spike in the vix capitulation signal, they n, of course, we'l see more comfortable with it this sell-off might be more difficult, but we're certainly on the lookout for it. >> we all know the math and the history of recessions. it could mean we still have quite some time left in this kind of down market, right i don't know if you have any comment on that? >> well, you know, once again, just looking at the options trading and seeing, we're not seeing that vix volatility spike. and everything seems to be pointing towards a long, drawn-out. we got a kind of payback from the froth of the last couple of years. looking at the options, looking at the vix, could certainly point to a flat, grinding lower kind of 2023, which no one is going to really be too excited about. >> no, for sure. for now, chris, thanks appreciate it. chris murphy from susquehanna. coming up, health care is on track to snap its longest quarterly losing streak since 2009 but the sector is still only 5%

off its 52-week highs. a top health care strategist with his best performers joins us next. plus, stocks are headed for their first negative december since 2018 so how do you invest in a market like this one? we're debating growth versus value, stocks versus bonds all of that with two chief investment officers ahead. as we go to break, a look at the dow, down 547 at the lows, just 50 points off that level at the moment with pretty consistent 1.5% declines across the board today. the s&p is the worst performer, down 1.6%. we're back after this. zero-commission trades for online u.s. stocks and etfs. and a commitment to get you the best price on every trade, which saved investors over $1.5 billion last year. that's decision tech. only from fidelity. - [narrator] if your business kept on employees through the pandemic, getrefunds.com can qualify you for a payroll tax refund

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welcome back to "the exchange." it's been a tough week for investors with the market sell-off picking up steam. tech and health care all seeing declines, but in a challenging year, tech has been pretty hammered, while health care has held up relatively well in comparison in fact, my next guest argues that bang is the new f.a.a.n.g. in terms of performance. here to explain is jarrett holtz with oppenheimer jared, welcome, bmy, amgen, these are not sexy names, but putting them altogether, you're seeing pretty strong performance, aren't we >> i think the premise is that health care is somewhat offensive, somewhat defensive. it gives investors a little bit

of everything. valuations across the space are somewhat reasonable. i think it all leads to this sector continuing to perform at least relatively well versus the market and yes, tech has been in many cases obliterated with some of the biggest household names down dramatically on the year and health care has performed very well against it. tough to say when tech is going to come back, but i think this continues for a bit. >> in some ways, health care names are becoming more household, given the way cold and flu season is performing for bmy, that's your beat, up 19% year-to-date amgen up 18% neurocin biosciences, up and gilead, up 20% that's incredible outperformance >> yeah, that was just a cross-section that gave me a good acronym

it could be anything in large cap health care that kind of gave investors a little bit of a safe haven, you know, those four have all had, you know, very mixed years in terms of fundamental news or progression as far as their drugs are concerned. but as you look across the entire landscape, whether it's bmy, amgen, even throw johnson & johnson in there and merck, these are large cap dividend-paying stocks i think in a market that's obvious very tricky, it gives the street something to kind of gravitate towards. and i think when you look at, you know, whether it's bang or some additional large-cap health care names, fundamental performance is pretty good and earnings look like they're going to kind of hold in, at least relative to other subsectors so i think that's why we feel like health care is going to be at least a pretty good sector over the next couple of quarters >> all right, so let's kind of just go back on that point for a moment why has health care outperformed

by so much this year and why is it likely to outperform again next year, do you think? >> well, i think health care has performed well, because it's really dominated by large-cap pharma, managed care, drug distributorers there are really three, maybe four large areas within this sector that comprise the vast majority of the xlb or how we would define health care it's come from a small number of companies. these are low valuation or much more value than growth the rotational effect in the market has benefited them greatly. many of these were not really beneficiaries of the pandemic, meaning they didn't crush numbers and dominate the way that other sub-sectors in health care and other industry groups did. so i think there's a benefit there. and i think as far as existential risk, you know, you and i have talked about in the past, drug pricing and medicare for all, those two major risk factors that have kind of surrounded health care, in my opinion, have been significantly reduced this year.

the drug pricing with the inflation reduction act, and then this has been, you know, a very liberal political front we've had here, and they've really walked away from universal health care or medicare for all i think that has helped pharma companies and it's helped managed care companies, both of which have been great performers >> great points. final question, you're even going as far as to recommend the xbi, that's had a really tough time as the fed has gone into reverse here why wouldn't the bad liquidity environment still be a headwind for biotech names next year? >> i think it is i feel like we're coming into the year at a better entry point. two really horrible years for biotech, obviously xpi, right around 80 so it's bounced off of the lows. it seems like it stopped, at least going down consistently. whether it gets a real bid is questionable but you also have, you know, an m&a backdrop, which i think is pretty helpful, and data sets around the industry, at least

from larger-cap player have said very good. it's more of a conceptual idea i'm not sure this is a rip roaring space next year, but at least we're headed into january at a better level. >> i like that we say better entry point. that's what this reset has given us it's true. jared, thanks so much for your time today appreciate it. >> thanks, kelly speaking of health care, centene is seeing higher guidance, but lower revenue. the shares down a third of a percent. centene ceo will join us in an exclusive tv interview, her first since taking over in march. that's coming up next hour, 2:00 p.m. eastern on "power lunch." still a still ahead, fears about a recession aren't stopping some shoppers you won't want to miss this story. and remember all the hype about bob iger's concern the stock is down 3% and disney's big bet on its new "avatar" movie is front and center this weekend. as we head to break, take a look

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welcome back, everybody. we're just off session lows. the dow is down 520 points add another 1.5% to the deep sell-off we've already seen this week and here's a check on the megacap names. all on pace for a losing week and firmly in the red for december for instance, microsoft, down another 2% today over the past six months, apple, in fact, is the only one of the major guys hanging on to a 3%

gain meanwhile, adobe is leading the s&p and the nasdaq, up 3% after an earnings beat last night, maintaining its forecast for the year the shares are up about 3.5% the stock is down 40% since january. even adobe is having its worst year since 2008. and tesla is back in the red after being one of the few stocks to close higher yesterday. tesla is down 15% since monday its close to its worst week since the depths of the pandemic in march of 2020 it's down 4% to 151 today. let's get over to steve kovach in a cnbc news update. in an instagram post, brittney griner says she's happy to be home and excited to play basketball for her team, the phoenix mercury. and she says she knows president biden is committed to freeing paul whelan and other americans prisoned overseas. the club "q" shooting suspect needed mental health treatment and was stockpiling weapons more than a year before the deadly attack. the judge made the comments

while dismissing charges that anderson aldrich had kidnapped his grandparents and the energy department is starting to refill the strategic petroleum reserve. the agency says it will buy 3 million barrels of crude oil it's the first purchase since this year's record 180 million barrel release from the stockpile. crude prices rose after the announcement, but remain lower for the day. kelly, back over to you. >> steve, thank you very much. still ahead, despite this week's stock slide, one of my next guests says there's still a chance for a santa claus rally how he's posiongneitni, xt

welcome back to "the exchange." stocks are sliding again with the dow, the nasdaq, the s&p all on track for a second straight week of losses, in fact. the s&p is now down 19% for the year but my next guests aren't deterred so where are they putting money to work? joining me here on set is kevin munn, the chief investment officer with henion and walsh. andy capren is here as well. it's great to have you here, as well and andy, i'll start with you. what do you tell clients right now, and how do you figure out kind of where to go for 2023

>> sure. so after a year like 2022, it's hard to be optimistic, because bonds are down, stocks are down. it doesn't feel like there's been any place to hide, except that's the set-up that sets you up for a better 2023 what happened this year is, we let some air out of a bubble stock valuations went from very high to quite reasonable bond valuations went from being completely unreasonable for nearly a decade to now offering pretty solid returns going forward. so this is a good set-up you just have to be willing to take advantage of it >> all right so, kevin, you know, we've talked a little bit about this but now the fact that there is an alternative to stocks, right? it was easier to make the case for the market in 2018, when everything else was at zero. and it was either do nothing or try for some return. the now you can get a lot, you can get 4% in a savings account, over 4% in a cdc good returns on parts of fixed income do you start to tilt that way or stick with equities? >> it really depends on what the

objectives are for each individual client. we know that timing to time the market is an exercise in few tilt in fact, going back over the last 25 years, had you just missed out on the ten best days of the market, your returns would have been cut in half. there are ways to position your portfolio, even for the oncoming threat of recession, which i think is real in the first half of the year. one area we really like are utilities. i know they're boring, but historically, they have been one of the best-performing sectors during periods of economic slowdowns and recessions and they also provide a good income, as well. >> they could have a challenged time of it with higher rates and that goes back to a discussion we were having in the a block. have rates put in their highs or not? and maybe we can use the ten-year, for instance obviously, they'll keep hiking but do you have to make that call in order to own utilities, for instance >> you do not. i think it's fair to say that the worst is behind us right now with respect to rate hikes and with respect to inflation. perhaps we get 75 basis points more of hikes in the first half

of next year and perhaps the economy dips into a recession the economic outlook is not good but if the worst is behind us with respect to inflation, with respect to rates, where do you position for growth? if it's going to be a choppy first half, look to utilities that provide you with some income, that provide you with an opportunity for growth even if we're in a recession, kelly, people still have to pay to keep their lyights on and hea their house. >> they're monopoly. warren buffett loves them. >> andy, what about you? >> i think there are some stocks that benefit from this kind of environment of high uncertainty. and really in my view, what is going to happen next year is cash flow will be king companies that are positioned to currently generate cash flow and that have the discipline to look through an economic cycle and grow that cash flow over time are ones that are more attractive some of the businesses that fall into this category include health care, pharmaceuticals, and medical devices. these are companies that are not so simple in the first place, but also do a really good job of

generating cash flow, growing that cash flow, and growing their distributions over time, which investors may find attractive in a less-certain environment. >> i see that merck is one of the stocks why would you like adp wouldn't that be highly exposed to the labor market? >> it would be exposed to the labor market the cycle that's coming our way, we're likely to enjoy a recession. it's going to be an atypical recession. one of the ways that it won't be like what we've experienced over the course of the past 20 to 30 years, is employment is not likely to decline very far why why? >> look at the statistics. there are 1.6 job openings for person looking for work. a lot of employers are hoarding labor. they're not letting people go, but perhaps they're finding other ways to try to cut their costs. and this suggests to me that adp is actually in a pretty good environment, if people aren't cutting back payrolls, they'll need a vendor like adp to support their human capital management >> we used to talk about the

jobless recovery, kevin. do you remember those days i think this would be the jobs aplenty recession or something >> this is true. >> and we have talked about it, that companies are holding out before they have to cut a workforce that they spent years trying to assemble in the first place. >> even if you look at the fed's projections for the end of next year, they anticipate employment going to 4.6%. i think it's going to be closer to 5%. they also forecasted gdp growth for the entire year at just one-half of 1% i think investors would be wise to position their portfolios for an economic recession during the first half of the year but don't try and time the market, knowing when to go to cash, when to be risk-on stay true to your risk tolerance, stay true to your investment objectives, stay true to your objectives >> when you say, positioned for a recession in the first place when you say, come july 1, come hell or high water, you get into the stock market, and no matter what's happening, you just go. >> i hate to say it, it depends, but it does depend if the fed stays too aggressive

and go beyond their terminal rate, you could push this economy into an even deeper recession than would have otherwise occurred >> there's still a lot we're going to find out. gentlemen, thank you leave it there really appreciate it today coming up, shares of dollar general are bucking the down trend today. they're eking out half a percent gain we'll get a look at their big bet on the more affluent consumer that's next. the'a eape, ers snk ekright here on "the exchange."

a rough week for the markets, but shares of dollar general, they're faring pretty well up about 3% as discounters are widely expected to weather a recession a little bit better, dollar general is also so certain of that ability. it's launching a new store called pop shelf, aimed at more affluent shoppers. the discounters aims to hope 300 pop shelves next year, despite the fullback that's expected in consumer spending. nbc's melissa repco got an inside look to check it out.

dollar general is betting big on a new brick and mortar retail concept called pop shelf, where most shelves are stocked with items priced at $5 or less. >> the pop shelf store is really built around those discretionary categories like celebration, like home, like seasonal contrast that with dollar general, where most of our shoppers are coming into our stores really to fulfill their daily needs and more essential will have type products. >> reporter: emily taylor, dollar general's chief merchandising officer, says pop shelf is going after shoppers with an average household income of $50,000 to $125,000, while the average household income for a dollar general customer is $40,000 or less. today, there are more than pop shelf stand-alone stores across nine states, mostly in the south, like here in hendersonville, tennessee, a suburb of nashville. >> we've announced that we'll get to 150 by the end of this year we're going to double our store count next year. >> pop shelf's plan, unfolding in a challenging market, where

inflation is driving up prices and competitors like walmart and target have noticed have been wealthier shoppers becoming more price conscience and thinkin twice about buying more than the necessities. >> this is part of a very big strategy for you and the question is, can you afford for this not to work >> we have a strong history of launching initiatives at dollar general that really are rooted in a test and learn philosophy and so, as we continue to open stores, as we continue to go into new neighborhoods, we'll see what works >> sales at dollar general rose in the third quarter as customers made more trips to its stores but the retailer's profits were hit by supply chain troubles and softer sales of higher-margin merchandise, like apparel and seasonal decor its pop shelf stores are designed to have higher sales and higher profits than its namesake stores. each pop shelf, projected to hit $1.7 million to $2 million in sales annually, with an average gross margin rate that exceeds

40%. >> we're very pleased with the results that we see today and will continue to lean in on that and make sure that we're offering product that's relevant for the shopper. >> melissa joins me now on set i love it, okay? sign me up, bring 'em to jersey. would it cannibalize a target, a walmart, potentially >> definitely. it's really going after such an interesting cross-section because of its merchandise mix it has some pet splupplies, crafting supplies, plenty of things you might find in the front of target or across walmart stores it's taking a piece of market share potentially from a lot of different retailers. >> and did you glean anything from them on what they think is happening with their consumer or likely to happen with the economy next year? >> elm lei taylor why interviewed in the video talked a lot about how she thinks that the store can do well in any economy. she spoke about one of the inspirations behind the store is that shoppers want something without the guilt. they want an affordable treat. and that is even more relevant during a tough time, where people may feel guilty getting a big-ticket item, but may go to

their store and stumble across something like an inexpensive lip gloss or a toy for their child and view that as a little indulgence >> do they have an ecommerce aspect to this at all or strictly brick and mortar? >> it is online, but in a small way. they have a website and have some curbside -- they really have almost a curbside pickup option, where you can come and pick up your purchase from online, but it's a minor part of what they do a lot of their model is similar to what t.j. maxx does, in terms of the treasure hunts. you come and it's a different assortment every time. >> that's what it reminds me of. we've had the success that tjx has had. this is a big bet for the company, as you mentioned. are they coming to new jersey anytime soon >> they have very ambitious plans. after 200 they'll get to next year, they're going to expand to 1,000. they haven't disclosed all of those locations, but ultimately they see room for 3,000 stores it's a pretty safe bet that new jersey will be on the map at some point they're really starting close to their headquarters in nashville. and a lot of the places they've gone to are fast-growing

suburbs, parts of texas, parts of florida >> yeah, yeah, we know, jersey doesn't make the cut for those places, we get it. no, it's a big bet by them and a very intriguing time as, as well great reporting, melissa, thank you very much. melissa repco. for the full story, head over to cnbc.com still ahead, $2 billion, that's how much disney's "a "avatar: the way of water" needs to make to break even. but as the media industry reels, is that target feasible? plus, which other companies that disney areoong rti for "avatar's" success those answers, next.

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streaming stocks are still struggling to find their footing amid increased competition netflix tumbled 8% yesterday on a report that they're returning money to advertisers after missing viewership targets the stock down 50% this year disney down 42%, on track for its worst year since 1974. and their turnaround ride in part on the release of their latest blockbuster, "avatar: the way of water." but can "avatar" deliver a $2 billion payout at the box office let's ask shaun mcnulty, author

of "the wake-up" at thie inanglr julia, $2 billion, is this a break-even sum they need to reach? >> well, maybe that's the number that the creator of all of this, james cameron, said that would film would have to hit in order to break even he said the film would have to be the third or fourth highest grossing movie of all time to break even that's how expensive it is we'll see if that number ends up being true a lot of that depends on how much money was spent on marketing. that's a quote that james cameron gave to "gq. but the budget is estimated around $250 billion. there's no doubt that this movie has to perform well. but the key thing going into this weekend, "avatar" is not the kind of film that is likely to have a massive first week the real success from this film will be how it performs between now and mid-february >> and shaun, i mean, the box office looks pretty horrible this year. can "avatar" -- how good can it do, you think? >> well, you know, "top gun:

maverick" did $1.5 billion "black panther," did about one third behind the team. $2 billion, it's steep, but underestimate james cameron, be my guest this is on 3,0003-d screens. the average price is $2 above t ticket at theaters it's a matter of how much revenue per ticket which could thrift above top gun and other pictures that have come out this year >> in a way, i would love to see it do bell, because it feels like normal when people used to go to the movie, but there's something deeper going on for disney they got increasing pushback about how much they paid for fox, and avatar was a key part of that. i don't know if you want to weigh in on that and what's at stake for bob iger in particular >> five years since they bought it for $71 billion, and what did

you get? you have the star business, fx, the simpsons, is that worth $71 billion? that's the big question. not that avatar is going to solve that, and avatar, they made two more films so there's a lot more even riding on this, forget the rest of disney. they invested a lot of money in this if this doesn't hit a certain metric, it doesn't look good for two and three, which are already shot there's a lot going on just in that sense disney needs, no question about it, they need money, and streaming is not going to do it for them for quite some time this needs to turn a profit for them, definitely >> if it doesn't, julia, or what other cards does bob iger have to play here >> so many other cards to play, but it's important to think about this as representing one of the key assets that bob iger acquired back the last time that he was running disney, so they want to make this work i think the performance of this film will not only impact the way they think about the avatar franchise but also theatrical

distribution you have a whole industry trying to figure out how long to put movies in theaters before they're available in streaming, whether you should put more content direct to streaming or protecting the theatrical window and remember if you're looking to it disney and bob iger, there are all these other questions like the health of the theme parks. will the theme parks continue to be robust through the holiday season and also things like challenges to the ad business, the adver tizing market has been contracting and challenged the various disney assets that are exposed to advertising >> there's a lot of bigger currents than just what bob iger can do in the short term, but as you look into 2023, what year do you think it will be for these streaming companies. another year of cut-throw competition or does it change? >> not a lot of optimism in the streaming business right now the q4 earnings call in january and february are not going to be great. this is going to lose another $1

billion in streaming i don't think at peacock or warner brothers, none of this news is going to turn around at least until mid-year at best if you want the predict the economy at large at that point, be my guest. i would say not great. everybody was projecting for 2024, the economy kind of fell out beneath them at the worst time so they can't steer a ship or turn the ship that quickly, so they're in for at least a couple tough quarters if you're an optimist, by summer, this narrative will start to change and looking ahead will be more bright, which is what wall street loves to hear >> when you see, for instance, now warners brothers discovery, $1 billion more in scrapped content charges, is that a move in the rightdirection or is this just a sign of how deep the problems run >> look, they're nine months in, as i'm sure david would remind you. but even in the new numbersthe released they said this won't really churn through until the end of 2024. so they're saying two more years before this is all done with,

and they, you know, reserve the right to say that number could -- write-offs could still go up. it's not looking great there they're the company with the most to turn around, and i think they were even probably a little surprised at what they found when they finally got the keys to - >> quick last word, julia. >> the key thing to watch is streaming, how that impacted the box office during economic downturns the box office tends to be robust. this may be different because of the streaming options at home. keep an eye on the ad supported players like netflix and disney, and another term i'm going to throw out there, fast channel. these are free ad supported channels a lot of attention on the potential there to get people to watch and generate ad revenue without paying a subscription fee. >> fast channels that threw me for a fast one thank you both we appreciate it as we watch the box office this weekend. >> coming up, industrials are one of the better performers this week. materials one of the biggest

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welcome back one more thing before we go, everybody. check out the industrials. one of the worst performing sectors this week, falling nearly 2%. kristina partsinevelos is here with a look at what's driving that action. >> thank you, kelly. industrials are continuing to fall, this is because investors are worried, a companies going to postpone expansion, and in turn, demand fewer input resources. the sector is on pace for its second straight weekly loss. if you zoom out and look at the xli, which is tradeable, that's how we can trade it for industrials, it's on pace for its first negative year since 2018 year to date, it's down almost 8%, but today, let's talk about what's moving today. some industrial and material names leading the dow. for example, caterpillar is up

.3%. i had these guys in the green before going live but that changed. boeing is negative on the year, but on the short term, it's outperforming caterpillar and honeywell. let's talk about one stellar performance, cf industries it's the best performing s&p 500 materials name and on pace for its fifth positive year in six so the big question now is what's going to happen in 2023 some analysts are divided. morgan stanley believes machine and construction offer a good entry point since margins are underperforming the market average. they increased their price target on caterpillar and also on cummings, so these are the two names on your screen right here, and on the flip side, deutsche bank believes industrial names have not cut in recession, so they're avoiding names like illinois' tools works and terrex >> that just highlights again the big dispersion between those

who feel like we can hang in there with those stocks and those who think the worst is to come thank you. and thanks everybody for tuning in that does it for the exchange today. ahead on "power lunch," three big names are about tareport next week and we'll get the trade on nike, fedex, and micron "power lunch" starts right now >> welcome to "power lunch." i'm jon fortt in for tyler mathisen here's what's ahead. breakdown or breakout. the nasdaq hit hard this week, but do the charts signal a bottom is near when you look at the technicals to find out which two tech stocks are about to bounce >> plus, storied wall street bank goldman sachs reportedly has plans to shed 8%, up to 8% of its work force. are there more layoffs to come those stories and more in the hour ahead first, to kelly with a check on the market >> thank you, jon. welcome. hi, everybody. stocks getting slammed once again. the dow's three-day losses totaling more