overanticipated the economic breakdown. >> all right, finally? >> feels so good to give a final trade in 2022. i'll go out saying charles schwab, and most importantly, be long health and happiness. >> happy new year to you all all of you, too. we look forward to spending 2023 thll of is now. >> thank you, scott. hi, everybody. i'm kelly evans and here's what's ahead today on "the exchange." stocks unable to keep the rally going in this final trading day of the year. we'll take a look at how we started versus how it's going, and get the one thing that could have the bulls charging next year speaking of bulls, energy is the only sector finishing the year higher, and not just a little bit. it's up by 58% but 2023 could be the year of the run ends and we'll tell you why. plus s.n.a.p. proved to be the

canary in the advertising coal mine everyone now reporting a spending slowdown. what does next year hold we'll get to that. first, to today's market action. let's get to bob pisani over at the new york stock exchange. >> hello, kelly. happy new year, everybody. we're ending the year kind of where we've been for a good part of the year, which is on a modest down note with growth sectors underperforming. let's look at the major indices. we're down about 200 points in the dow jones industrial average. that's been an outperformer all throughout the year, relative outperformer s&p 500, the only real suspense here is whether we end the year down 20% or not. 3812 would be down 20% for the year that's kind of an extraordinary number when you get down 20, that doesn't happen very often. nasdaq is down more than 30% in fact, let's take a look at the major indices for 2022 the dow has been a relative outperformer, because it's only down 9% because it's got a lot of those consumer names, value names. the s&p, just on the cusp of down 20% the russell, you can see the nasdaq, the big loser down 33% why has the dow done so well,

because of those value names you have energy stocks, a huge outperformer that's not typo. chevron up 50% merck was at a new high a little while ago. caterpillar rallied big at the end of the year on hopes for a better 2023. coke, johnson & johnson, all the consumer names all outperforming. that's why the dow did so much better i don't want to guild the lily, it's just been a terrible year in fact, if we end down 20%, this will be the fourth worst year for the s&p since world war ii that is not a typo, either so 2008, if you take a look, that was the worst year we've had in a long time, down 38% 2002, 23%, and 2022, we don't know, but you can see, it would be the fourth worst year if we end right where we are right now. what makes this difficult to figure out is what's going to happen next year in a year where the market is down big, it does tend to happen that the worst sectors tend to outperform in the next year. if that's the case, you would look at the big losers, which

are tech-oriented consumer services, technology, including repeal and replace and consumer discretionary. the problem with making this prediction is there are confluences of three big events that are occurring that make 2023 really hard we have the continuing effects of covid, the russian invasion of ukraine, and fed higher for longer and what kind of recession are we going to have when you have this kind of confluence of big events, it makes it really difficult, and this is why the analysts and strategists are kind of clueless right now on what's going to happen in 2023 but who cares, kelly because guess who's here we have art cashin he is on the floor for the first time this year we have 100 retired and current members of new york stock exchange they're going to say, wait until the sunshine, nelly. just like they did years ago, 1:30 eastern time. you, me, kelly, and art cashin, right here >> i can't wait for that 1:30 p.m., people, eastern time, coming up in about half an hour. bob, thank you bob talked about how this has been one of the worst years for the markets ever

how did we get here. let's look back at where we were starting in january. we kicked off 2022 with the fed funds rate near zero a ten-year yield of 1.6%, basically unmoved for the entire previous year, and yet a very hot economy, with half a million jobs added in the month and an inflation rate of 7.5% everyone thought transitory was the way to describe inflation, not so much, as we started heading into the year. we got the strong jobs report in february, i should say by june, things really started to hit a peak. a fever pitch, if you will the fed started hiking, the fed funds rate moved up to 1.6%. the ten-year yield was up at 3%. the cpi shot up at 1.9%. the average gasoline price, we all remember, it rocketed over $5 a gallon. the russia/ukraine war didn't really help. transitory at this point was becoming a running joke. fast forward to today and it's almost kind of back to where we started. the fed funds rate way up at 1.4%, no joke. a huge jump from january the ten-ier yield near 4%.

the cpi back to 7. it's starting to recede a little bit. the labor markets slowing, but still strong, 263,000 jobs added. and with everything the fed has done, $12 trillion erased from the equity and crypto markets. where does this set us up for 2023 let's ask mark avalon, president of potomac wealth advisers mark, welcome to you the only thing we know about this year is no one saw it coming >> well, that's right, kelly and we all had an anticipation of a correction, especially after the robust 2021 that we had. but the severity of the drop and the rapidity of it, how quickly it happened. if you look at those charts, things have been relatively mild the second half of the year, but the first half was a devastating drop we hope this recent trend we had of championship directionless, certainly not a robust positive bull market, but at this point, we'll settle for championship,

finding a bottom, settling out and then hoping mid-2023 offers a little more optimism >> i feel like you're right in this you think the key will be wage growth kind of what i hinted before the job market still quite strong look at jobless claims they're still basically fine by historical standards what does that tell you? how does that illustrate the quandary we're in. >> oil prices have leveled off the supply chain is working out. you're getting discounts at furniture stores and all of those goods that we had driven up in price. but what's not coming down are wages. and he has said as much. that they are not going to relent on their anti-inflation push until he gets indications that wages have been suppressed, or at least at a normal run rate i know that that sounds cruel and it's unfortunate for workers who are finally enjoying wage gains. but wage gains are bad for

inflation, bad for corporate profits, and not good for stocks >> where does that leave you in the market bob highlighted some of the sectors, everyone wished their portfolios were just merck this year where are we for 2023? >> we like financials, but people immediate to slow down. there are a lot of different types of financials. when i look at the risk of recession, i don't like banks as much as insurers both benefit from higher rates, but insurers don't have revolving lines of credit. they don't have consumer loans their debt is long assets, in real estate, well thought out, we hope, but well-thought-out real estate that can navigate the office glut. and they're anchored in long-term assets, not subject to short-term economic cycles so higher rates benefiting their huge bond portfolios, finally giving them a rate of return, and they can avoid the recession shock that consumers feel that banks may feel >> and we'll talk about this next hour, and they're raising

prices and that could again flow through to the bottom line so you like insurers where else would you be? are there areas, obviously, we've seen the correction in high-valuation tech stocks areas in particular you would stay away from what would you with energy, for example? >> well, energy is, i think, is mostly a rearview mirror mirror. i don't think it's a bad trade i think it will normalize and be more of a market player. it's interesting, the breakout between oil prices and the oil stock prices is at a relatively high range with oil stocks higher than the commodity, we wouldn't dive into that i think other areas we like, it's interesting, this is one of the few times in my memory that democrats and republicans are agreeing on increasing defense budgets. the democrats have hictched thei wagon to supporting ukraine, and democrats traditionally are supporting aerospace and defense. and that's an area that given the massive spending we have in

this budget for those areas and what we see happening and countries getting really nervous about drone warfare, we think the aerospace and defense sector is poised to benefit >> that's a really interesting point. one the chat bot didn't come up with, that's for sure. thank you so much for where are time today and just to underline it, you said the one factor that would move you out of neutral into the bullish camp would be if that wage growth slows. that's the most important point. >> that's what we're watching. >> mark, appreciate your time today. happy new year mark avalon, potomac wealth advisers for more on the markets, don't miss tonight's cnbc special, "taking stock," focused on the economy in 2023, they'll talk about wage growth. it all starts at 6:00 p.m. eastern time it's no secret that energy is the best sector since january and will likely be the only group to end the year in the green. but in this case, a rising tide did not lift all boats pippa stevens here to explain. pippa? >> that's right, energy is the

top sector this year but we need to distinguish between new and old energy, because 2022 saw a big divergence between the two going back to 2020, the xle lost 22%. in 20 st, oil and gas stocks gained 36%, while clean energy shed 31% the xle is up another 56%, while the pbw has lost more than 40% oil and gas has now been the top s&p sector for the last two years, and that's notable, because no sector has ever led for three years according to data from e-trade. now, looking forward, there are bullish and bearish factors for both groups. starting with old energy, a global economic slowdown could cut oil and petroleum product demand companies' free cash flow will also likely be lower than this year, due to sliding commodity prices with such performances, investors could also simply take profits. on the flip side, earnings still look pretty good at $80 wti. the sector also offers earnings

visibility and management teams are focused on shareholder returns. for clean energy, bearish forces have been rising rates, a rotation out of growth, production delays, and uncertainty around key policies. tailwinds include the inflation reduction act, still evaluated commodity prices, and record demand but kelly, this was supposed to be a big year for clean energy and it just wasn't >> yeah, and it started to be, when we were talking with the blake charging ceo yesterday, he said, yes, when gasoline prices spiked in june, everyone wanted an ev, now they're not so sure anything beyond that, you think, are themes to watch going into 2023 >> i'm hesitant to say anything super vague after reading this letter today, but -- >> usefully vague is fine. >> at the risk of being vague, i think one thing that was really illustrated this year is that the energy transition will not happen overnight, and it's not going to be linear and that even though we saw a big resurgence in coal and all of these devastating and catastrophic really extreme weather events, we also saw

progress in the european union, they're doubling down on their renewable goals. here in the u.s., we had the climate bill it provides hundreds of billions of dollars of support for decades to come. and that was really something that was over -- that was an overhang for the industry, because with flip-flopping governments, you could never make these long-term policies. but now with assurance that there could be support, that will drive the industry. however, as we know from prior booms, just because there's all of this support and so much growth, it doesn't necessarily translate to stock performance >> and a reminder again that the fed is such an important factor, even while one part of washington is fighting so hard to move this industry forward, that liquidity tide seems to tell the fortune of which way it will go. longer term, maybe some goalposts will help out. i thought that was very clear. pippa, thank you very much we appreciate it coming up, retail like the rest of the market wrapping up its worst year since '08 so which names and brands are best positioned for a

bounceback wells fargo's top picks, next. plus, art cashin is back on the new york stock exchange. his first appearance since last year we'll get his thoughts on a turbulent 2022 for stocks and a look ahead at how next year is shaping up as we head to break, a quick look at the markets. red across the board the nasdaq down 9/10 of a percent. the ten-year yield down around 385. it was almost 390 this morning we're back after this.

welcome back to sch"the exchange." investors came into the holiday shopping season worried about the consumer because of inflation, would they be more squeezed well, they were resilient, but the process took down their savings. joining us now, ike boarciao, and melissa repco is here as well we've already talked, melissa, a lot about this holiday season and the restaurant spend ike, have you given us your top picks for 2023 yet >> we haven't officially come out with those, kelly. what i would say is that a couple of months ago, we became much more compelled by the off-price sector we saw the tail winds developing, trade down was beginning, the middle income

consumer starting to get a little more squeezed burlton became a top pick. we would still kind of echo that a lot of what we saw this holiday season was value, was really core to the consumer. there's a lot of price promotion. it really plays right into the offprice thesis. what i would say is, ross and burlington are still two of the names that we really like right now heading into next year >> why does tjx not make the list >> it's a different business i know we all kind of qualify them all in the same basket as off-price, so they're all the same, but they're not all the same tjx is a much more affluent end market demographic if you look at ross and burlington, their margins are much lower, their productivity is much lower versus pre-covid they have struggled with the low end becoming under pressure in 2022 that's all inflecting now. they're more of an inflection story, versus tj is just kind of steady as she goes, less exciting >> that's really interesting melissa, how do we get here? this is a little bit of a back to the future feel companies like tjx were some of

the best executers of the past decade and then they went haywire during the pandemic. >> we saw a change during the pandemic i even heard this from a lot of real estate folks, as they think about 2023, they're talking about how retailers want to be close to these offprice names. ike mentioned, they're seeing a lot of growth. they want to be close to grocers. both of those categories, which are value oriented and necessity orient have had seen a surge and that's intensifying, as people think a little bit more carefully about their spending >> that's interesting. ike, am i wrong in thinking that we had a big luxury deceleration at the end of the year normally, i think of that category as pretty resilient, no matter what. how would you describe -- how do you feel about some of these companies. how do you feel about their momentum going into 2023 >> we haven't seen a lot of pressure there honestly, i kind of view it little bit differently i barbell it a bit i think the low end, which was under real pressure in 2022, you'll start to see some of those headwinds dissipate, maybe even become tailwinds. you've got cost of living adjustments, gas prices will be

down, pretty meaningfully year over year in the first half. actually, low end is improving, high end is resilient. middle income, like i said earlier, that's really the consumer where we're starting to see the pressure build and i think you can see that across companies like walmart or kohl's or other companies that have kind of called out activity that's the thing we look forward. i would call that middle, as being the soft spot. >> would you avoid -- i know you probably don't cover the likes of walmart, target, the rest of it would that be an argument for shig away from what others would view as these stalwart consumer ch chains >> i can't comment on those specifically, but we have an underweight on hanes brands. one of the issues that we see there is they're very exposed within general merchandise, c within the mass partners like target and walmart that's a tough place to be right now. i believe those retailers are going to be de-emphasizing the general merchandise and apparel categories into the first half of next year that's kind of how -- from a soft lines perspective, that's

how i look at that >> fair enough melissa, as we head into the january period, there are people going, okay, if it was a bad holiday season, maybe i can pick up a deal. where are we on inventory levels, on markdowns, on profitability. how do you think the sector will come out of this time of year looking? >> we haven't heard the lathe inventory numbers, it's hard to say. but we are seeing intense urgency among retailers to clear through their stuff. i was looking at some retailers' websites today and anthropology, which is owned by urban outfitters, for example, was giving $50 of future spending towards people who are spending $200 to me, the interesting catch there was that you had to spend that $50 before the end of the month. which conveniently is the end of their fourth quarter >> interesting >> so again, there's this push to sell through apparel and a lot of those discretionary categories, so they start the next year on a cleaner note. >> quick final word, ike, because i've got to go to anthr, but when we talk about the shift from goods to services spending, which seems to be happening

post-pandemic, is that a big factor here as you look into next year? >> yeah, i think, look, for our space, it's all about demand versus margins demand, very uncertain a lot of these companies are still overearning on sales, in our opinion. if you look at the run rate of where they should be so i think that's a problem right now. i think we're going into a macro, you know, slower macro with revenue bases that are too high on the margin front, you know, i think you guys mentioned it, inventory, it's the number one bulk case for inventory retail investor we end clean, we're going to come in 2023, with a ton of mark down opportunity, because margins were hit so bad last year so inventory ending holiday is the key data point we have to look for >> all right we'll wait with bated breath, ike. thanks for your time today, appreciate it. coming up, tesla and meta are battling it out to see which of the megacaps will have the worst 2022 a closer look at the losses, next plus, is the ad market ready for a spending slowdown next year

we'll look at the players who are most at risk with the ceo of a top ad tech firm as we head to break, here's the dow heat map i don't see -- two greens on the screen today jpmorgan and chevron, eking out gains. home depot and disney among the worst leaders. chevron, up 52%. avrck, 44% trelers, amgen, and caterpillar round things out we're back after this.

welcome back to "the exchange." we are ending the year much like we started, with markets lower the dow is down 329 points this is definitely session lows right now. the nasdaq down 1.25%. and today will have such a big impact on those stats, like bob mentioned. is the s&p going to be down 20%

or not, we'll find out according to bespoke, this december is tied for the third most 1% declines in the s&p during the month in at least 70 years. there were eight 1% drops this year, 7 in '08, and six this month, marking the fifth time that's happened since the 1970s. again, it's been a very ugly end to the year. as for today, big tech in the red, apple shares holding up slightly better, down about 1% big tech also -- i'm sorry, apple also outperforming this year you can see it's only down 28% microsoft, a similar decline alphabet down 40%. amazon has lost half of its value, meta down 65% and of course, in tech, we have to talk semiconductors in the red again today with micron one of the biggest laggards you can see the sma down 1.7% there. micron getting a downgrade to hold over at argus, citing deep operating losses in coming quarters

and the micron etf is down 35% since january, just over that 200 level, trying to hang on there. let's get to seema mody now for a cnbc news update >> kelly, good afternoon here's what's happening at this hour so far, there are few notable takeaways from this morning's release of former president trump's tax returns. however, there are warnings from republicans about a precedent being set. kevin brady, the ranking republican on the committee that released the trump returns says the move will make american politics even more divisive and disheartening. russian president putin and chinese leader xi pledging to deepen ties between their two nations. neither directly mentioning russia's war in ukraine, even as russian missile and drone strikes hit ukrainian cities today. putin says he expects xi will make a state visit to russia in the spring and an internet personality known for his misogynistic stances has been arrested on suspicion of rape and human trafficking. romanian prosecutors say that they have evidence that six women had been sexually

exploited by andrew tate, his brother, trystan, and two others, a lawyer for the tate brothers, declined to comment. kelly, back to you >> seema, thank you. coming up, we are moments away from continuing one of the longest-standing transitions at the new york stock exchange. the traders are setting up and bob pisani is in the middle of it all robert >> and it's been a transition for 160 years, barbershop quartets singing on the floor of the new york stock exchange. when we come back, he's here the man himself, art cashin is here he'll lead us in this traditional singing of "itwa until the sun shines, nelly," when we come back! . oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast,

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welcome back to "the exchange." it's the final trading day of the year, which means it's time for a new york stock exchange tradition dating back to the early 1900s. let's get back to bob pisani, who is joined by the man, the myth, the legend himself, mr. art cashin hi, everybody. hi, bob. >> hello, there, kelly this song was written in 1905, and immediately became a sentimental favorite on the floor of the new york stock exchange it was particularly popular during the depression, when its essential message, look to the future, it's going to be better,

had particular resonance and i think it's a message that will have particular resonance for everyone who has gone through a tough year here is art cashin to lead the floor in the traditional singing of "wait until the sun shines, nelly. arthur >> thank you on three one, two, three. ♪ wait 'til the sun shines, nelly ♪ ♪ and the clouds are drifting by ♪ ♪ we will be happy, nelly ♪ ♪ down lover's lane will wander ♪ ♪ sweethearts you and i ♪ ♪ wait 'til the sun shines, nelly, by and by ♪ [ cheers and applause >> happy new year, everybody happy new year happy new year, peter. happy new year, everybody.

happy new year happy new year happy new year how are you? good to see you. david, happy new year. nicholas, happy new year great to see you as always. arthur, come on over here. come on up here front and center here first off, it's so great to see you back down here we didn't show it, but the floor erupted when arthur came on the floor. you haven't been down here in a year your thoughts on coming back on the floor. >> i didn't realize that i owed that many people money >> and they're collecting today. >> yeah, no, it's great to be here it's one of the most wonderful places in the entire world i spent 60-some-odd years here my children tell me i'm also getting it down pat now, but we're working. but to everybody out there, all the viewers, have a very happy new year maybe a little bit bumpy at first, but we're going to make it through and you'll be happy at the end when we sing nelly again >> and your christmas poem, of course, was a big hit, your new year's poem just came out today,

also a big hit it's been a tough year a difficult year to get your head around. when you look back on the year, what sticks out to you most, and what is most important to you? >> well, i think it's the fed. we've had everything from covid problems in china to the invasion of ukraine. they've all been very serious. but for now, for the investors, it is what the fed is doing. not to be too boring on a celebratory moment, but keep your eye on the money supply, folks. it just fell off a cliff >> and kelly's got some questions, too, kelly. >> i think you just answered them art, it's great to see you again. you said watch the money supply, art, but what is your instinct tell you about the year we're going to have after the kind of year we just had >> well, i would love to tell you that it's going to be like "the wizard of oz" and everything will be in glorious color in a moment or two i think we may have a bumpy first quarter. and depending on the fed, it may

last a little longer than that but i think -- i've seen this movie before, and there's a happy ending, so i think the viewers wait and enjoy it. >> i think the important thing is, you have lived through some of the worst years ever at the new york stock exchange. this will go down as the fourth worst year since 1945. you lived through '72, '3, '4, down year then 2002 was a down year, 2008 we have had big events this year, covid, russian invasion and the fed higher for longer. is this one of those rare occasions where you get something that's going to continue into next year. i'm asking for a prognostication. is 2023 going to be a down year or an up year. it's extremely unusual to have two down years could this be one of them? >> there's a very narrow universe to look through them. i think it may be a little rough in the first quarter, the first half i think we'll come out of it and i think both of the economy and the country will be better for

it and i hope you all enjoy it, god bless you all. >> one of the things -- i have a book out, and you're the only person that has an entire chapter devoted to him just alone. and what you have taught me over the 25 years you and i have been together about not just the stock market, but more importantly, about the art of story telling. and how to tell a story. how to take arcane information about the stock market, and actually weave it into a story that's interesting for people. this natural story telling gift that you have, which has had such an impact on me and my life, that i devoted a whole chapter of my book just to you and your thoughts alone, what did you acquire that and what advice do you give future people who want to explain the world to people? >> well, it goes back thousands of years people have been talking in parables and other ways to convey knowledge and stories and it's always been important to me, you know, one of the classics was, we -- around the

cuban missile crisis, i thought there were rumors around that the russians had pressed the button i was trying to buy a putt or something to sell. i went down to the local pub, which was my university and professor jack was there and i said, jack, i heard the missiles were flying and i tried to buy some -- he said, kid, sit down buy me a drink and listen carefully. when you hear the missiles are flying, you buy them, you don't sell them. and i said, you buy them you don't sell them? he said, of course, because if you're wrong, the trade will never clear, we'll all be dead >> and that's a lesson for next time the end of the world happens. art cashin, so many people owe so much to you thank you, everyone, for coming -- many of these are retired members of the buttonwood club from the new york stock exchange. they've been here 50, 60 years ago along with arthur and came down here to pay tribute to arthur and of course, to continue that wonderful tradition, "wait 'til the sun

sm shines, nelly. thank you for your leadership. we'll be here next year with art cashin and the buttonwood club and everyone from the nyse kelly, merry christmas and happy new year >> to you as well. one of a kind, art a wonderful interview by bob pisani it's great to see everyone back on the floor down there. our best to you all. still ahead here on "the exchange." it's been about three months since hurricane ian wreaked ask across western florida, but its effects will extend far past just the cleanup the eye-popping impact a single storm will have next year. details ahead on "the exchange."

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2023 will likely mean sticker shock for american businesses and homeowners paying property insurance. florida especially getting hit by high premiums and hard-to-get coverage contessa brewer joins us now >> floridians already pay nearly three time the national average. the most in the nation according to the insurance information institute. and on track for 33% annual increases. the cost for insurance is so high in florida, so hard to get, that real estate development deals are just imploding, according to a global brokage. costs are skyrocketing for insurers, too. inflation, of course, partly to blame, but lawsuits and fraud in florida, and then on top of it the monster storms like hurricane ian. all of these factors that forced more than a dozen insurers to fold or flee the state, another two dozen on the financial watch list the legislature in florida has just passed a new law to tackle some of those systemic problems. no more one-way attorney fees, where the insurers bears the cost of the plaintiff's lawsuit.

apcia which represents insurers says that that lines the pockets of billboard lawyers at the expense of consumers, pointing out the plaintiff's attorneys get nearly three quarters of what insurers shelled out. this new law bans the assignments of benefits, where a homeowner signs over the right to make a claim to, for instance, a roofing contractor who then in turn can sue the insurers, even without the homeowner's consent. that led to both fraudulent claims and more lawsuits and the legislature created a kind of reinsurance fund of $1 billion or so. it requires customers to get private flood insurance if they can find it and only pay 20% more than what citizens charges. that's the state-backed insurer of last resort, kelly. they're really trying to move people off of citizens the ceo of slide insurance told me that he thinks that the reforms largely will fix florida's insurance market, but people are going to have to wait a few years.

>> can contessa, i already hear people complaining they'll say, my auto premiums are going way up, in some cases, homeowners as well what kind of sticker shock, even as investors are saying, insurance stocks look pretty good rate here, what about the consumer are they going to be able to handle these price hikes >> in every state, insurance is a regulated industry the regulators go in and look at what the insurers are paying out for claims and what they're taking in for premiums and part of the reason why premiums are going up is because the price of everything that has gone up. if you look at the -- if you get into a car crash, what it costs an insurer to repair or replace your car has gone way, way up. and so, that's part of the reason why you're seeing sticker shock. but when you're looking at the stock, say, of all-state and progressive, those stocks have had an extraordinary year, even though the auto insurers themselves have been strapped for cash why? investor now see state

regulators coming to the table, approving hikes in rates, and they think all-state and progressive will be able to charge enough now to improve their margins. >> it's such a weird business, where the worst they do, the more excited investors get for the future contessa, thank you, appreciate it contessa brewer. still ahead, it wasn't just consumers that reduce spending this year, advertisers kick off concerns across the media landscape. what will happen come 2023, we'll dive in next as we head to break, check out the sector heat map for 2022 energy in the green, up 58%. the only sector higher, while communication services and discretionary in the rear. 30 to 40% declines now, here's the s&p, by the way, everybody. 3812 if we close below that, that's a 20% drop on the year we're three points below that level right now. "the exchange" will be right back

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welcome back to "the exchange." from social to streaming to traditional, across the board, the ad spending slowdown hit media of all kinds this year twitter, meta, and s.n.a.p. all reporting a huge pullback in advertising in the second half netflix and disney plus launching ad-supported tiers shortly thereafter to try to target customers cutting back on

their spending, as well. what does the competition mean for 2023 let's ask mark douglas, the founder and ceo of ad tech firm mountain and cnbc's very own julia boorstin welcome to both of you mark, i'll start with you. i haven't got, to check in with you after we've had these juicy productions about netflix possibly being merged with another company and taken over and the drama with warner brothers discovery what are your big, bold pred predictions? >> i think the whole industry is obviously in a lot of turmoil. the biggest thing that's occurring is with all of this new content coming into the market from netflix, from disney plus, that's going to cause a price war. so you're going to start to see prices for inventory come down they are already coming down in q1 and that's going to last for a bit of time and so 2023 will start a bit rocky. but also, if there's more supply than demand, you've got to get more demand into the market. that's going to come from direct response advertisers, which ironically in a lot of cases are

spending less with meta, less with google. so there's a lot of change in this market. that's the biggest prediction. and especially for the television market, they're going to see a lot of turmoil in the first half of the year >> julia, is it all just a consequence of companies cutting back on their budgets, or does it reflect a change in power of where the eyeballs are >> i would say there's definitely a notable change in power. there's so many different factors at play right now, and so many transformations over the past year, one fact that i would point out, that i think is really important to note is the fact that this is the first time that google and meta have not had over 50% of digital ad market share since 2014. this is according to insider intelligence we've talked a lot about the digital duopoly in recent years, the reality is that detail duopoly is losing ground to the likes of amazon, to the likes of amazon and i think it's really going to be interesting to see what happens in this apple versus meta battle, because we really have seen meta and other of

these players really curtailed in their ability to target ads luckily for them, they're going to be coming up against some better comparisons when it comes to dealing with those issues but i think, look for what we call the rise of the rest. the other players, as meta and google face more challengers >> got to get steve case to front that so mark, julia mentions amazon how big of a player are they becoming, apple as well, when we start looking further into 2023? >> i think in the case of amazon, they're essentially selling their search results, which used to be free. used to go to amazon search for the products you were interested in and you got the results, and amazon figured out, they could start monetizing those search results, when you search for products so their ad business is very unique in that they just took an asset they had and they started essentially taxing their sellers on amazon in order to get the best search results. that's very unique

i think in the case of apple, one thing that's really interesting. actually, pivoting from apple to meta, there's a number of people that think that the meta verse is as much a play for facebook or meta to get off of apple's platform in other words, if you create something beyond you're not sub you know, apple's whims in terms of their technology and what you're allowed to do and things like that. so, you know, facebook -- meta, i should say -- is playing a very long game in terms of the metaverse to essentially get beyond apple in the future >> sure. >> i think in terms of apple's business, there's rumors they're going to enter the tv market, more supply, more downward pressure on prices honestly, i don't see them having the heart for it. just have never really -- >> well, they'll develop the heartbreak too late and come into big bucks, ready to spend it around. julia, what would you add to that >> i think he's absolutely

right. i've heard that as well, nobody wants to be playing a game with rules another platform has created. that's what happens when meta is operating meta and facebook on apple's devices. ten years down the line, they want to make sure they're serving you as in the metaverse on their devices and playing by their own rules there. i would also just say this is the year that we've seen at the end of the year the launch of more ad supported streaming services with netflix, with disney plus. next year we're going to see the combination of the discovery warner media assets into a single streaming app i think it's going to be a new phase for the streaming wars and a lot more competition and i think the question is whether maybe we'll see more free ad-supported services coming mark, i don't know about you, but i hear a lot about the add-supported channels maybe down the line, netflix and disney will launch their own fast channels. >> let me throw in as well, one of the things we're not focusing on enough is the regulatory

risks coming from the administration even as i keep asking, what about netflix or what about this merger or that merger, is there a sense that no merger gets done and that's what's creating this state of suspension where ad prices keep falling because there's so many options out there, consolidation is tough? >> yeah, in terms of the media companies, i think you're going to see a lot of consolidation. essentially some of the -- i keep referencing there's as price war coming with all this new supply coming in the market, it's going to trigger the prices for ads to go down and i think there's a lot of tv networks, a lot of content supplies that are going to struggle to survive that as stand alone companies. so, i think you're potentially looking at a lot of media mergers and acquisitions over the course of next year. what's really interesting is that, you know, google, amazon, meta, these companies can't get an acquisition past the ftc. amazon can't acquire a vacuum cleaner company right now

without the ftc trying to block the deal so, it's rough out there for those players. >> just because everyone knows rumba. they've got to go with something more obscure we'll leave it there thank you both today, mark douglas and julia boorstin i want to take a quick moment to thank our executive producer maria beau biden on her final day here at the helm trying not to tear up while i say this there she is back in the control room she is integral in the formation and launch of this show nearly four years ago now she's moving up to start her day a little earlier at cnbc her energy, enthusiasm for obscure market stats and her ability to work with me are unparalleled maria, we're so happy for you. best wishes. thank you for everything we're also thrilled to welcome in one of the greats here. matt quail we are so lucky to have him take over, and we really look forward to that. and we should toast. coming up, champagne sales are expected to post another record

year in 2022, topping last year's $6 billion. but the future isn't looking so inthkso ime clat change that's next.

welcome back i want to get to one more thing before we go, and just in time for new year's eve eve, it's champagne. but bubbly, they say, is at serious risk due to climate change diana olick has the story. diana? >> kelly, it's not just for new year's eve anymore champagne sales have been soaring in 2021. $6 billion exports jumped 64% from the dwyear before and this year may be stronger a new report shows champagne is increasingly at risk due to climate change region's exposure to physical risk caused by drought will nearly triple by the 2050s according to s&p global

sustainable one. it will double again by the 2090s. we saw record drought and heat last summer cause the champagne grape harvest to move up a month to august. the same thing happened last year the grapes have beenmaturing faster due to heat and drought while drought is the primary challenge, champagne's risk of extreme heat and fire will double france's famous wine region saw unprecedented wildfires last summer lvmh is the brand with the biggest names. no surprise that champagne prices are rising along with the bubbles. so, drink up, kelly. happy new year >> so, is it just a timing issue, or, you know, in a way you wonder, could the champagne-producing region end up migrating or something like that >> well, it can't migrate far because champagne is called

champagne because it comes from the champagne region of france you can get sparkling wine anywhere really. they make it england i just learned that yesterday. there's process coe in italy and sparkling wines. champagne has to come with champagne. they're stuck with whatever the climate is it's not just the climate but the wildfire risk. and we saw so much of that in california >> it's a good point it's become much more common i have a thinking that at home there's press sec coe, sparkling wine, it's almost becoming a commodity. i know people want the champagne itself for the high quality, making a statement and all the rest of it could those other categories come to supplant champagne and even with the market share, especially with these existential risks. >> of course it could. but you go back to the snobs out there that say it has to come from champagne that is the true champagne it goes to the market of are you going to buy the ultra luxury

that comes from the original place it was created or do you buy -- i don't know, it's not a knockoff to say. but you can certainly get it somewhere else >> i learned a lot about the tour de france this summer a bonus highlight. diana olick. that does it for "the exchange" everybody. "power lunch" begins right now and happy new year's eve eve and welcome to power lunch everybody. i am brian sullivan in for tyler. maybe you're sipping a mimosa or whatever here's what's ahead from the fed to the merging markets to maybe a generational opportunity in fixed income we have got your ultimate 2023 playbook plus youtube gets in on the nfl. apple gets into soccer and an nba team sells for a new record by the way, our exclusive reveal of the best cities in america for the stock market this year and the worst. can you guess? it's the big power city index reveal, and it is ahead.