china. we've got kyle bass on we'll talk about their energy needs. "taking stock" join us. >> nick barty was bearish last hour he said it wasn't that strong last year. you don't need any more warning spots. we've had enough thanks for watching "power lunch." >> "closing bell" starts right now. the year end rally investors have been promised stocks surge today this is the make or break our. i'm mike santoli the s&p 500 is around 2%, it's been in that 3850 zone for a couple of hours. some of the largest stocks in the nasdaq are leading the way, playing catchup. you see the nasdaq up about

2 2.5% look at some of the names leading for now, some of the more beat-up ones. we have tesla up 6%, illumina, is bouncing today as well. coming up on today's show, market expert tom mcclellan says there are some encouraging signs for the nasdaq in the new year, if you know where to look. he will join us soon to explain all of that. plus, the inside scoop on tesla, elon musk sending a letter to staff telling them not to be bothered by stock market craziness, but how do employees feel about it? we've got the details. let's take a look at how this rally on the day, this comeback that gets us positive for the week, shapes up in the broader context here 3800 on the s&p has been pretty sticky in the last couple of weeks. the second half of december normally strong. hasn't really shown up until today. signs that some of the year-end selling of the losers' portfolio, the manicuring might

have run its course. you see here, we're still kind of in this range we've been in for a little while well above the lows but still sort of struggling to get to the upper end of it right now. the largest stocks are, as i mentioned, getting a bounce. that's because they have a lot of catchup to play take a look at the top 50 stocks in the russell 1000, basically the largest stocks in the market over two years against the equal-weighted s&p 500 at the peak of the market a year ago, they were right in sync with each other. since then, it's really been the biggest stocks that have been a huge weight on things, carrying the market downhill. the equal-weighted s&p up above and it has been bifurcated and a mirror image of what you saw last year when you had a surge in big stocks over the pandemic that took us to the record highs. we'll see if that will continue. we're going to bring in tom

mcclellan of the mcclellan market report to get a setup on how things look going into next year we have what's going on in the indexes, we have what's happening more underneath the surface. what does all of that tell you at this point? >> we're at the collision point of a couple of big forces. you mentioned seasonality and going into january, which is a strong month the opposing force is the fed that is raining on the liquidity parade so those two are going to battle it out and they're not going to be stationary. one side is going to win for a while, the other side is going to win for a while the fed is going to win in the long run you mentioned the large cap tech stocks are pulling the market down through yesterday and bouncing today actually, 39 out of the nasdaq 100 stocks are above their 100-day moving averages. it's not a broad-based down-trend everywhere, so

there's a disagreement there and that's an encouraging sign that seasonality might get a little traction going into january. >> so we do have that chart. so you basically see once again that there is a little more upside participation in, i guess, the number of stocks below the top ten or top five in the nasdaq so seasonality into january, you think that there's a bit of a tug of war with what the fed is up to and how that's going to manifest itself. have we not already felt the effects of that to some degree with the tightening of financial conditions this year >> we've seen that happen. there's a lag in how that takes effect, though one of the biggest things that's happening right now, the fed is doing a huge experiment. they are shrinking the money supply, and i'm talking about m2, shrinking it faster than has ever happened before in the history of tracking the monetary aggregates, and that goes back to 1959. we have never seen this big of a six-month rate of change in m2

that takes away the excess money, which was working to lift stock prices if you produce a bunch of money and it doesn't have anything to do, it goes looking for a job and boosts stock prices. it does that with about a one-year lag we haven't felt the lag go by for the big shrinkage in m2 and we'll be feeling that all this year at the same time, the fed is still doing quantitative tightening we're in the third-ever round of quantitative tightening, so the first one they did was in 2008 and that didn't work out too well for the stock market. the second one was in 2018 and that was counteracted by some tax cuts which helped lift the stock market so it caused a draw for 2018 as the fed was pulling away liquidity now we don't have the tax cuts, we have a drop in m2, we have qt3, so you've got a perfect storm. and seasonality is going to try to fight against the storm and it's probably going to be able

to win for a while i'm looking for an important bottom next week, the first week of january, we're going to be a little bit disappointed. we're not going to go up right away on january 3rd. then the rest of january should be great and it's going to get everybody excited about the january barometer, we're going to have a bullish year once everybody gets shifted to the bullish side of the boat, then we start sinking again. >> i do have to go back a little to the m2 chart. for one thing, that chart looks broken by the pandemic money supply raced so high and at absolute levels never imagined before at the top, so we're contracting from there if you look at things like m2 relative to total stock market cap or m2 relative to gdp, nothing looks too dramatic there. it's kind of middle of the road. i guess i'm just struggling with what the information content is in just the base money aggregates out there that we now

measure in the form of m2. >> it's a good point that you raise and the proper way to look at it. actually, m2 versus gdp is shrinking. we've never seen this big of a drop because gdp is still growing. we've still got inflation growing at 7% or 8%, depending on who you believe, so that's raising gdp in nominal terms it's normal that m2 grows, because when you have an economy that's growing every year, you need more money in it for every transaction that takes place, every payroll item that takes place. that money has to move around, so you need a little more to lubricate the transactions when you have gdp growing but m2 shrinking, suddenly you have a musical chair situation where there's just not enough money to go around and people go scrambling for it all at once, and when they go scrambling, they pull the chair out of the stock market where that excess money has been lifting up stock prices through the late 2021 top. now all that money supply coming

off, all the qt coming off and the expiration of all the stimulus that the fed was doing is underway and we're not done with it. i wish i had better news. >> that's all right. call it as you see it. now, in terms of the way the year might play out or the first part of the year, you think we get a little belief in january if we roll over from that point is your assumption that the indexes make new lows or go back to the recent october lows where might it settle out? >> well, 2022 has been an official regular downtrending bear market year '23 is going to be more sideways it will be a great time if you can be a short-term trader, you can buy low, sell high, and repeat it a bunch of times january should be a great month and should get everybody excited. february should be an awful month as all that excitement wears off. i come to this conclusion because we watched the secured overnight financing rate futures, the sofr futures.

those are what the big banks do to offset their interest rate and lending risk and they don't do it in an even way. their ownership and trading and that so the ripples they show in the way they trade the futures show up with a lag in the stock market we're getting a big heads-up, about a year leading indication, my subscribers are talking about what the big banks are going to do in terms of liquidity surges and flows. they're saying big month in january upward and it all pays back in february and march and it's going to be a choppy sideways opportunities all through 2023 but the time to buy and hold is still not coming up yet. >> well, some early excitement and then maybe some trading thereafter, tom, appreciate your thoughts thanks very much. >> always a pleasure the consumer discretionary sector is down nearly 40% this

year should you bet on a consumer comeback in 2023, even as recession worries swirl on wall street we'll get top picks from an analyst in the space right after the break. you're watching "closing bell" on cnbc.

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starbucks announcing changes to its loyalty program starting in february, customers will have to accumulate more reward stars to redeem a free item the loyalty program has nearly 29 million members in the u.s. the coffee giant seeing shares higher today, up 46% from this

year's lows. starbucks is your top pick for 2023 sharon, obviously this change to the rewards program may be taking a little bit of pricing by starbucks in a less visible way. i know that's not core to your thesis but how does it fit into your general view of why you like starbucks >> i think there are a lot of things to like about starbucks right now. we've got what you just referred to, which is the loyalty program change, which is not what we had anticipated, but should help gross margins. really what we like the most about starbucks is the momentum they have in their business. we are seeing continued strong traffic trends at starbucks, really globally, with the exception of china and now with china starting to ease, we're expecting china to now accelerate as well so really positive traffic momentum at starbucks, and that ought to lead to pricing power,

which we expect them to continue to execute, in part through this loyalty program charnge. >> and how does the valuation stock up so many growth stocks have suffered valuation compression starbucks is off the highs what do you think is built into the stock in terms of further anticipated growth >> so i think the company really surprised people with their outlook that they gave in september, looking for acceleration across the board. and with that outlook, where they're looking for accelerated earnings growth, comp growth, accelerated unit expansion, we have seen the multiple come back up and the multiple is more or less in line with where it's been historically we think we're going to see this company grow at a 15% to 20% bottom line clip, and i think as you look across the broader or large cap landscape, there aren't too many companies where you can have good clarity on growing the bottom line at 15%

to 20% we think starbucks is in there and they have more control over their own destiny right now than a lot of other consumer names. >> and you do cover a pretty broad selection of consumer related stocks what's your general view of how things will hold up in aggregate next year for u.s. consumers >> i mean, i've actually been really surprised about how things have held up in 2022. the consumer was thrown a lot of curveballs this year and we've generally seen spending hold up pretty well. i think as we look out to '23, certainly rates are having an impact, but inflation is coming down i think the key wildcard is unemployment if unemployment can stay 5% or lower, i think we have a good chance of the consumer hanging in pretty well in 2023 maybe better than the street is currently anticipating >> i was interested in another one of your topics for the year, which is planet fitness.

again, one that was viewed, i guess it got swung around by pandemic dynamics, but how is it positioned right now >> sure, so we were all supposed to be on pelotons and never going to visit clubs that was the 2020 thesis that many held. what we've seen the consumer largely do in 2022 is go back to what they were doing in 2019, that includes going back to fitness clubs. we've seen planet recover the fast majority of its fitness club usage and we've seen -- this is consistent with starbucks as well, really cross-generational appeal and more appeal the younger the consumer is. so it might surprise you, but 9% of all millennials and gen-z already belong to a planet fitness. that's a nice tailwind as we continue to see more generations come into the fitness club arena. i also like that planet has a $10 entry price point, which today, i don't know what you can buy for $10 other than a monthly

subscription to planet and that is encouraging and that should be fairly recession resilient. we look back at the great recession, fitness comped double digits the entire time. >> so 9% of people 40 years or younger are a member of planet fitness? >> yes, provided they're of age to be in a planet fitness. part of gen-z is not of the age to belong. but of those 18 or older, 9% belong to a planet. >> wow i guess that shows that they have traction brand-wise, if nothing else sharon, great to talk to you thank you very much. >> good to see you. let's get a check on the markets here you see the dow is up still about 336 points, holding onto most of the gains, just a touch off the highs. the s&p hugging the 3850 area. tesla stock looked like it was going downhill into year end,

but it is rebounding today as elon musk looks to reassure employees. we'll break down his message to staff next. >> as we head to a break, check out some of today's top-searched tickers. they are tesla, apple and amazon, all of those are among the top five, along with the 'lbe s 5 yield and the&p00 wel right back.

check out tesla, getting a boost today. up about 7% after weeks of downside pressure. elon musk sending a letter to employees yesterday saying, don't be too bothered by stock market craziness let's bring in cnbc's tech reporter, who obtained that memo and follows the company closely. so, laura, a little bit of a pep talk a lot of ceos say just focus on the business, don't worry about the stock price. but there's been some extreme moves and i would imagine extreme swings in employee sentiment at tesla >> i think some employees are

concerned about the share price because a long-term reason to stay there is to earn stock options. others have a feeling of if my options vest when it is low, there are mixed reactions. you've got to understand a lot of tesla employees try to ignore elon musk's other business and his politics and all this stuff and just stay focused on the environmental mission and making really cool cars >> yeah, that certainly -- i guess we shouldn't lose sight of that, that they are kind of in a long-term project here i do wonder what the general feeling is given that he, by all appearances, is dedicating an enormous amount of time to running twitter as sole proprietor, and maybe less so day to day at tesla. >> elon musk has repeatedly claimed that twitter is, like, 10% of the complexity of tesla and it's not taking that much of his time, but it has certainly

caused him to sell, you know, tens of billions of dollars worth of his tesla shares. he told twitter employees he sold tesla to save their business he's bringing some tesla employees over to help him at twitter. so that is definitely a concern. many shareholders and some of the employees would prefer that elon focuses on tesla, and it's for sure a concern i think it's probably one of the reasons he sent this, although he does traditionally send these end-of-quarter encouraging emails to workers. i think employees at tesla after layoffs earlier this year are feeling kind of overworked and it's a really big ask. one thing in that email, elon is asking for volunteers to help with end-of-year deliveries to get customers their cars it's a really big ask, especially considering it's new year's eve. >> no doubt about it we do know based on some of the

pricing incentives that they are in one of those end-of-quarterly rushes to try to get deliveries up do you think there's a sense out there that there's just -- tesla as a brand has become a little more controversial and politicized to some degree based on what he's doing with twitter. is there any feeling that that's purveyed the employee ranks? >> yes, you're definitely correct, like the market research from organizations is finding that tesla has become an elon musk, and more so a partisan brand he's holding the liberals, basically, people who hold liberal ideologies are feeling differently about tesla and about him. i would say when you look at the data on employees from which companies, a lot of tesla employees donate to more left wing politicians and causes.

but, again, i want to emphasize that the employees are focused on the environmental mission or designing and making cool cars, so they try to ignore the ceo's kind of political dramas and how he's needling some followers on twitter with all of this. >> yeah, i'm sure they're somewhat used to having to keep their heads down and tune things out. it's great to catch up with you. >> thank you for having me >> thank you. after a break, should wall street be bracing for layoffs? goldman sachs is reportedly looking to cut head count as soon as january. we will ask bank analyst gerard cassidy if he thinks more will slash jobs when "closing bell" returns.

some 4,000 jobs may be on the line next month at goldman sachs, according to a new report and the year-end message to staff, ceo david solomon reportedly told employees that are several factors affecting the business landscape, including tightening monetary conditions that are slowing down economic activity. joining us is gerard cassidy

gerard, it's good to have you here it's been a tough year, probably no surprise there will be some trimming of staff. is there anything else going on at goldman in terms of a restructuring, a reorientation away from some businesses that this reflects, these potential layoffs? >> thank you for having me you did put your finger on it. i think, obviously, 2022 has been a very difficult year for the investment banking business. in particular for the ecm business that being said, though, goldman has the added challenge of restructuring their consumer banking business, and this business which they diversified into about three or four years ago was expected to try to smooth out their earnings from the cyclical investment business and they've struggled since jumping into it. they've been very successful with their markets deposit product.

as a result, there's going to be reorganization they'll give more details when they announce their fourth quarter results in january. >> i was just looking at ballpark numbers in terms of revenue per employee at goldman and it's up this year, tracking higher than, let's say, ten years ago. you can't look back to the heyday of '06. does it look like it's staffed for the franchise looking ahead? >> it's interesting, we're coming off of two record-breaking years for the industry, in 2020 and 2021 in '21 we had record ecm business in terms of ipos and then dcm broke records in 2020, the advisory business last year was also record-breaking for the industry and goldman goldman had some very significant private equity and equity gains in 2021, which added to their bottom line they also hired i think over

10,000 people since the end of 2019, so now that revenues are going to be down meaningfully for them this year, as well as the street, it's just natural, you need to cut expenses as you can imagine, the biggest expense for any investment bank is people. that's why we're going to probably see layoff announcements not just for goldman, but the street in general. >> more broadly, looking into next year, what are your thoughts about the banks and where you prefer to play clearly there's an overhang, people worried about the consumer and corporate cr creditworthiness is the banking sector prepared for that, are the stocks priced for it >> it's a great question that investors are asking all the time i think it's a little too early to jump on investment banks. we need to get better clarity on the fed's policies going into the middle of next year. we know they're going to be

tightening going into the spring with raising interest rates. so i still say we stay on the sidelines with investment banks for the time being you bring up a good point, the banks that have good core consumer deposits, which for 15 years nobody ever looked at. with the fed funds rate maybe getting to 5% in the spring, imagine how the banks with good core consumer deposits that don't pay any interest, for example, on consumer checking accounts, these regional banks and even bank of america, for that matter, will be able to have very attractive margins well into 2023 so i think the banks that take in deposits and make loans will have enough revenue growth to handle the increased cost of credit and we, no doubt, will see higher credit costs next year, 2023, as the slowdown hits or recession hits. but the banks i think are very well prepared for it and have the revenue growth and should be able to handle it, assuming the slowdown doesn't turn into a recession of an '08 severity,

and it's more like '01 if it does happen at all. >> that seems to be the working assumption, that it would be more like the early 2000s downturn aside from bank of america, any other institutions that you think are attractive >> i think when you take a look at the regional banks, that's where investors should be looking, particularly key corp. or fifth-third they're out there trying to prove they've changed themselves and then the stronger banks that went through '08 and '09 without much trouble and are doing very well today, names like pnc, m&t are names investors can look at. particularly when the fed stops and teaches the terminal rate, that's a pivot point for the bank stocks to do better that could come as early as march if the fed hits its

terminal rate. >> pretty much coming into view. thank you very much. happy new year thanks for joining us today. >> you're welcome. happy new year, mike and here is where we stand in the markets, with about 25 minutes left to go the s&p 500 still around that 3850, 1.8% gain on the day the dow is up 1%, nasdaq and russell 2000 continue to be the leaders after lagging into today's action >> up next, we'll tell you about the stealth mover in the food space that is up nearly 30% on the year >> and later, why one analyst just gave netflix a rare double upgrade from sell to buy we'll break that down when "closing bell" comes back.

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now for today's steaming hot stealth mover, cambell's soup is an absolute superstar this year, one of the best performers on the s&p 500 outside of energy, currently trading near its highest level since mid-2017 it is up a cracking 27% this quarter, tracking for its best quarterly gain in nearly seven years. the company able to pass on higher costs to customers without seeing a dip in demand campbell reporting 15% organic growth in the most recent quarter and hiking 2023 guidance. >> chip stocks are making a comeback ought as a chip shortage turns into a glut, should you avoid

the space in 2023? >> plus, a double upgrade for publix and bookings for china. he'll take you inside the market zone

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you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market. we are now in the "closing bell" marketing zone let's kick things off with tech. the nasdaq is the big winner in today's session, but the big loser of the year. down more than 30% christi christina, what stands out to you? >> you could say it's the jump

in initial jobless claims or maybe china reopening and what that means for growth and inflation, or just good old-fashioned hunting. we've seen the nasdaq drop so dramatically over the past few days, volume is lower. it's the biggest rebound we're seeing out of all the indices. right now there's roughly less than five names in the red in the nasdaq 100 walgreens and enphase energy not even a half percent lower. a turnaround in fintech and payments affirm, sofi, ebay, all at least 4% higher or so. affirm seeing the largest jump, over 8%. i know some of our viewers are, like, not again, we've got to bring up tesla i have to bring it up not because of musk, but it's having a largest impact on the nasdaq 100. it's jumping over 7%

i did get some research from s3 partners that says tesla was the most profitable short of 2022, so the shorts are making money i'll end with mega cap tech because we're talking about the biggest point impact on the nasdaq these names you're seeing on your screen are really contributing to the drive higher, meta, netflix, microsoft and amazon. >> you mentioned the profitability of tesla as a short recently really does probably apply to some of the other stocks you mentionedaffirm, the fintech stocks i guess, if nothing else, the market action today is suggesting that that sort of end of the year dump the losers type action, that probably has been weighing things down on the nasdaq for a week or so now. maybe it's just run its course. >> are you implying that given this rebound we're starting to see a little short covering because these are heavily shorted stocks is that what you're implying >> short covering, as well as

the end of the tax loss related selling that we probably were also seeing. >> yeah, we did see that in the last few days. >> we'll see if we get more than one day in a row of action lik this >> santa is here i'm just joking. >> thank you. netflix rallying today after catching a double upgrade from cfra analysts changing the rating from a buy to sell and boosting the target thanks to the launch of the ad tier julia boorstin is with us. other media names also having a strong day what seems to be behind the action >> this is a bounceback after a year in which we've seen a massive media sell-off and a total shift in the way that these companies have been valued it's worth noting that netflix had this big bounce higher today, obviously this double upgrade. but this is a stock that's still down about 50% year-to-date.

we've seen all of these media companies, including netflix, for so long they were valued based on how many streaming subscribers they had, how fast the streaming growth has been. and now everything has really shifted to average revenue per user and profitability and i also think that one reason there's this new enthuz yichl is the fact that they have a streaming model and they're taking steps to monetize their user base. that's something disney+ is doing as well. they've talked about being more judicious in the kind of backing. i think across the board we're seeing an increased focus on ad-supported streaming options, as well as free ad-supported streamers calledfast channels lot of the folks in the industry are talking to me about lately. >> for sure. julia, i also wonder if part of the thinking around netflix, and maybe to a degree disney as well, aside from trying to get

average revenue per user up, is the fact that if consumers are going to be canceling some, streamlining what they subscribe to, netflix seems to be at the core and maybe is the last one, perhaps, that folks might consider canceling in other words, a stickier subscriber base. >> sticky and this analyst note from cfra cites some of the new shows, emily in paris, glass youn onion, but even if you want to pay less, now you have an option you can say i'm going to pay less and agree to watch some ads. i think there's an assumption that people might be cutting back on the number of subscriptions they pay for, they might go from five to three. they're not going to get rid of everything. >> for sure. and netflix also trying to crack down on password sharing and things like that so maybe just earning a little more on the audience that they now hold julia, thanks very much.

we'll talk again soon. chinese travelers are getting ready to head overseas for the first time in years as covid restrictions ease. this comes as the country grapples with a wave of new infections glenn fogel saying on cnbc earlier today, the travel industry should brace for a huge surge in demand. >> you have literally hundreds of millions of chinese customers who want to travel, they've been wanting to travel for a couple years, they've not been able to get out of the country they want to go. so what's going to happen to global travel -- the global travel industry when several hundred million chinese people start traveling outbound to the u.s., to europe, to southeast asia in terms of demand, it's going to be a spike. >> let's get to seema mody for more on what fogle had to say and really how we have another, perhaps, reopening effect hitting travel >> yeah, mike, you heard glenn right there say he's beth on that china rebound not so concerned about the

restrictions placed on travelers from there he also called the restrictions more political in nature, while also acknowledging the lack of transparency on china's front. but back to the demand story, he shared with us that his team is trying to figure out how to accommodate the anticipated surge in travel from china his timeline is spring of 2023 that's when he's expecting a significant pickup from east to west what booking holdings is trying to solve is a supply issue, making sure there's enough hotel rooms, flights on their platform it's going to become more competitive between the online travel giants over the next few weeks, especially around the chinese new year on january 22nd, mike. >> for sure. and how does that stand up against what i guess a lot of folks are anticipating might be a little bit of waning demand in terms of domestic travel i'm not sure there's a lot of evidence of it it's more anticipation that

perhaps folks got a lot of travel out of the way, consumer confidence is down and other clues like that going into next year >> yeah, this is the big wildcard while the economy is expected to slow down and take travel down with it, we have this one bright spot emerging, which is china. 1.4 billion people that have not traveled for nearly three years because of stringent lockdowns. it's an uneven forecast going into 2023 for the domestic story, travel is expected to remain strong going into spring or summer. that was the latest estimate provided by expedia. but for home rentals, average daily rates are expected to fall compared to this year. that's sort of reflected in shares of airbnb you'll see the stock is now trading at its lowest level since going public, down nearly 50% this year. you compare that to marriott, down just about 3%, that really tells you a story about how we're seeing that shift back to hotels and how pricing power is

starting to dissipate when looking at home rentals. you can see booking definitely faring better than airbnb. >> vaneck is on space for its first monthly loss in the past three and its first annual loss in more than four years. let's bring in ed snider from charter equity research. in terms of the larger picture for semiconductor supply and demand, has this year done a lot of the work that might need to be done to get the sector valued in a way that makes more sense based on what we might expect next year from demand? >> we certainly have moved in that direction, of course. the question is, is it enough to compensate for what we think lies ahead i don't think so i think you're going to see 2023 is going to be a rough year for

semiconductors in particular, largely because the fed has no finished raising rates yet so the only proxy we have is probably the 1980 recession. if you go back andlook at all the metrics from that recession, you'll see that you had to get to what's called real positive interest rates that is the fed fund rate exceeding inflation. once that occurs, then you get a sustained rally. between where we are now, which is the fed funds rate is well below inflation still, in that position, you're going to get a number of rallies, but a number of steep sell-offs you can see in the last two or three months we've had another big sell-off this is going to be the typical behavior certainly into the first half of next year and maybe the full year. it depends on how inflation reacts to the fed's moves. >> for sure. now, apple is bouncing today and there's talk of restarting production in terms of apple suppliers or just handsets in general, they've been a tough area. how does it look from here

>> i think chance is they'll have a tough year. certainly in the first six months you've already seen the fallout in the chinese oem samsung is talking down volume apple has not done it formally that shoe is going to drop in the first quarter. then we might reach the bottom it depends on what happens for the rest of the year if the economy continues to get worst and raising the fed fund rate is going to increase unemployment, lower gdp, you're likely to see lower native demand now, that said, handsets are a product that you can't really go without. so if you break your phone or crack it, you'll put it off. whatever demand we don't feel this year will be stronger than expected in 2024 or late in the fourth quarter of this year. so we'll see. >> we will ed, thanks a lot appreciate you popping on. >> my pleasure. >> let's get more on the markets. on the penultimate trading day of the year. katherine, good to catch up with

you. big debate going into next year, hard landing in the economy, soft landing has the market already had the bear market that we should expect around a recession? you're pretty confident that we will, in fact, get a formal recession next year? >> well, mike, if the fed is serious about its 2% target, which apparently it has become, then i think recession is inevitable one of the primary drivers is the demand side. so salary is not commensurate with 2% inflation and the unemployment rate is not close to what we estimate the non accelerated rate of unemployment below that rate, we think it's about 4.9%, the labor market remains inflationary so the fed has to force, as your previous guest said, rates higher, unemployment rate will likely follow suit, consumer

confidence drops as a result the consumer has been remarkably resilient and it's primarily because they still have jobs everyone has a job salaries are maybe not equal to inflation, but they're rising. that makes you feel good that's except consumer confidence pretty resilient and consumption strong when we do get that turnover in the labor market, however, that's when i think the equities are going to take a further lick lower and the economy does roll over into recession. the good news is that brings inflation down and next year it should be close to about 3.5%. >> one difference now versus a year ago in addition to valuations and the fed was going to be starting tightening last year, is that bonds now offer a little bit of yield. there was no cushion in bonds a year ago is that an attractive area or is that a little bit of a trap? >> i think it's the most attractive area right now. i think going into 2023 and the

unknown of when the recession will hit, i think it's generally consensus that there will be a contraction in domestic demand, private investment and consumption. when that happens, you can get t-bills, three months, six months, commercial paper, 4.5% to 5%, investment grade paper. that's pretty attractive for the foreseeable months going into later in 2023, as the fed reacts to a higher unemployment rate, dropping inflation, that can add duration and we can look for more risky assets for the near term, i like short-term paper, investment grade and cash and cash equivalents. >> and within equities, would that suggest that you would prefer to stay defensive, which is essentially what has done real relatively well this year. >> that was my call and it's done very well, generally the sectors that have done well, relatively speaking year to date

in 2022 are those that we should stay overweight in 2023. those are, of course, energy, utilities, staples and health care i still like them. start to accumulate fixed income i think fixed income, we do have alternatives and thank goodness for that, mike. >> yes unlike a year ago, perhaps, there are some relatively safe alternatives thank you very much. appreciate it. >> my pleasure as we go into the last minute of trading here, we still have the s&p 500 tracking around the 3850 level take a look at the internals might be getting about a 90% upside volume day. a little nip and tuck. look at berkshire hathaway relative to the market that's been quietly breaking out on a relative basis, value and quality, as well as some financials the volatility index pretty subdued coming back in under 22,

and that's obviously reflecting a relatively gentle pace of trading going into the final trading session of the year. sf s&p 500 about to go out up for the week and it also is down less than 20%. that is going to do it for "closing bell. now to "overtime." thank you very much. welcome, everybody i'm scott wapner you just heard the bells we're just getting started here at the new york stock exchange we'll get the outlook in tech in 2023 from somebody who has made a lot of money investing in. rick heitzmann, is there more pain to come would he put fresh money into silicon valley startups right now? we'll begin with our talk of the tape despite today's bounce, it is still the wors