ev rollouts, the autonomous business, trades at six times earnings does have an implication for tesla. i'll leave that aside for a second 1.1% dividend yield, below book value. do i have to go on >> sure. but you can't, because we're out of time. thanks, everybody. stock summit continues over the final couple of days of this week i'll see you in "overtime," the exchange begins now. >> thank you, scott! hi, everybody. i'm kelly evans, here's what's ahead this hour. cracks in the consensus, 60 minutes to the fed minutes and everyone is wondering whether there will be signs of a fracture about what the fed should do next we'll get you set up and run through the latest on jobs and inflation as well plus, more dc drama as the gop struggles to elect a house speaker. why this could set the stage for two years of tail risk and the potential fallout for the economy and the markets. and speaking of the markets, if you're a stock picker, you can get some high quality names at bargain prices right now

our market guest brings four of his favorites and there's a twist. but first, we begin with bob pisani down at the new york stock exchange how's the markets, bob >> kelly, we're right near the highs for the day and the santa claus rally, believe it or not, is very much in tact let me show you the major averages the nasdaq is doing better a small outperformance compared to the dow industrials the dow outperformed the s&p and the nasdaq last year, so today the nasdaq is doing a little better, because tech, except microsoft, doing better in general. the dow leaders today, stocks that had a tough time last year. disney had a tough time last year, it's a leader today. so did intel that's doing a little bit better american express didn't have a great year, it's up. boeing is on a real tear, folks. i mean, that's got big momentum. that stock is only, what, 10% or so from a 52-week high here. in terms of the laggards, think last year's big winners. now, the one exception here is microsoft, which got a downgrade today over at ubs, but think health care had a really great year last year, united health and humana had a terrible two

days, down notably there it is. you know, sell the winners last year, same with energy oil's approaching, approaching a 52-week low. some of those big names like apa, which had huge years last year, again, another down day today. elsewhere, i mentioned the santa claus rally. it's ending today and we may have a winner. remember, it's seven days, the last five days of the last year and the first two of the new year, the average gain is 1.3% it's up 80% of the time it's up in the seven days. and we have to have it work. it has to be over 3822 we're well over that in fact, we're up about 1% this is close to an average gain for the s&p 500. this is in the last seven days, so the santa claus rally very much in tact i almost forgot, guys, salesforce, a big mover today, as well. marc benioff saying he's cutting 10% of the workforce, that stock, remember, not far from a 52-week low. >> and that stock is up 3%, bob. but a lot of people looked at that with a little bit of nervousness and said, is this a

sign that we're not going to see a lot of resiliency in big enterprise spending next year? what's it tell us, so many different companies use salesforce technology. the fact that they're looking at pulling back 10% of their staff, what does that tell you? >> but these companies staffed up dramatically in the last four or five years. when you're in an environment where the economy is a little slower and slowing down, you want to contract your workforce a little bit that's only prudent management, overall. i'm not surprised marc benioff is doing this at all by the way, he didn't complain at this one, the stock was at 52-week highs. he's been complaining about productivity, recently he didn't say that at 52-week highs. definitely some pressure on the stock prices, a little motivation here. >> bob pisani, appreciate it now to the big question on everybody's mind, are there any hints that the fed could start considering an earlier pause of rate hikes we get some major clues top of the hour with the minutes from the last meeting released. steve liesman is at the federal reserve in washington with more.

steve? >> yeah, kelly, unfortunately, minneapolis fed president neel kashkari dashing any hopes for any signs of dovishness ahead of the release of the minutes from the december meeting he said he's looking for a 5.4% fed funds rate this year that puts him at the high or hawkish end of the range for the fmoc, which is pretty united in its rates going higher for longer 17 of the 19 members forecast rates, ending the year at 5% or higher, compared with the current rates of 438 that means your average fed official has 17 basis points some have a full percentage point baked in meanwhile, the market has two more 25 basis point rate hikes, built in somewhat less than the fed hitself today's minutes will be scrutinized for any cracks in the fed's consensus. if they show concern like weakening job growth or slowing

wages. if they acknowledge declining recession or increased recession chances make a big deal about monetary policy lags today's data, meanwhile, icm survey shows more weakness in manufacturing activity, along with dlip declines in price lev. the jolt survey saw only a modest decline in job openings that remains at a high level contrary to what the fed is looking for, the labor market still looks to be very tight, kelly. >> that is so key. and we know you'll be speaking, 8:30 tomorrow morning with kansas citi fed president, esther george. very, very much hanging on every word at the moment stay with us, our next guest who has been taking one lick after another in recent weeks is still optimistic that this year can turn out okay and brings us five things that could go right let's bring in ed yardenni how are you holding up welcome! >> i'm holding up just fine. what was it, covid and rsv, and

how many different things went wrong? it sounds like you had a who were there >> three out of four of the viruses. i just didn't -- i don't want to jinx it, i did not get the flu, but the other three. covid and rsv and pneumonia. but i'm recovering, i feel fine. >> all right, god bless. thank you for joining us maybe you of all people can make some grand analogy about this and the markets. you're still steadfastly sort of seeing glass half full here for 2023 why? what do you think can go right >> well, i think we're going to have a soft landing, not a hard landing. the data so far shows no landing. as you know, the real gdp number for the third quarter of last year was solid and it looks as though we're closer to 4% now, looking at the fourth quarter so, second half of last year, there was no sign of a recession whatsoever and no landing whatsoever. i think the consumers are going to remain resilient. i think that while they may eke into excess savings over the

first half of the year, i think wages are going to rise faster than prices, and i think real wages are going to increase. meanwhile, i think the labor market, as steve pointed out, still looks pretty strong. so employment is still going to generate some purchasing power the housing market is sort of a mixed story. we've got very weak single family, but very strong multi-family so that's kind of a rolling recession that's going through the housing market we've had a rolling recession in the consumer area, and instead they're spending more on services i think the consumer is the key and i think they're going to hang in there. >> i might say that the whole market is hanging on, and i'll turn to you for this, steve. basically, when is the fed going to stop hiking i can't tell you how many people from home building analysts to stock pickers, you name it, they say, i will get more bullish when the fed stops hiking rates.

>> the first thing i want to tell you is i believe, i always read that stuff, but i believe it more now. anybody can go through what he just went through and still be optimistic, there's a lot more to that forecast now than maybe there was previously so i think that's important to add. let me show you where the disagreement is. before i get there, guys, if you could pull up that, the may debate full screen that we created. first of all, they're in pretty good agreement on february and march, every 25 basis points when you get to may, that's when it gets interesting and the markets start to diverge you have a small percentage think they're going to cut once they reach that 488 level. another percentage thinks they hold a larger percentage thinks they're going the raise another quarter, and another small percentage you can see the distribution there of probabilities now, one of the reasons that's interesting to think about, kelly, for the difference between the fed and the market, if you're a fed official, you have to go in and write down a number for where you think you're going to be if you're in the market, you can take small bets on all four of those different positions i just showed you, and that's why you get a distribution

it could be, one person has all of those bets or one person could be betting on one particular outcome it's the distribution, the idea that one is modal and the other is not that's part of the reason for the differential but really, it comes down to the data between now and may that will be ultimately decisive. we start to get the jobs report on friday. we have a cpi report next week and that's where ultimately, those continuation of that through may, i think the fed does go to 488 and then the question becomes 5 or higher and for how long >> and ed, i guess that makes -- in light of this morning steve is right to highlight just how strong the jolts data has been, the labor market in general. would you say the most important data point for the next couple of months is the jobs report, anything that hints, jobless claims i have to imagine, as soon as that softens, the fed will pause. >> i think anything jobs related is important the fed will give it a lot of weight, but so are the inflation numbers. let's not forget, that's how we got into this mess last year,

the inflation turned out to be more persistent and less transitory than i and other -- and fed officials anticipated, as well as other economists. the markets were really surprised by that, and the fed was kind of very late in catching up to the curve and once they realized they were behind the inflation curve, they really scrambled to catch up and that's why they've turned so hawkish in the second half of last year, increasingly so so right now, they're still into that hawkish mode, trying to convince us all that their credibility is still in tact and that they intend to bring inflation down but i think we're going to probably see that the terminal fed funds rate is going to be between 5 and 5.25%. i think that will happen over the next three meetings, with 25 basis point increases. and then i think they're going to keep it there for a while, which is what would be different this time than previous cycles in the monetary policy >> yeah, still, you say, you think 2023 will be a better year than 2022, to which we would

add, that's a pretty low bar, we hope, to pass. guys, thank you both very much for your time today. ed yardenni and our own steve liesman. while the markets have had a rough ride in 2023, my next guest says, if you're a stock picker, this might be your year. it's a great time to scoop up high-quality names at attractive prices joining me now is chief investment officer at centerstone. abe, when i see you, i'm reminded of all of these kind of real versus reddit segments we did the last couple of years and you were always saying these valuations made no sense, so ryo were right >> well, i don't know i was the only one saying that it was kind of obvious but, yeah, that era has passed, thankfully and now we're into a new era, it looks like i don't know thatthere's no more downside. i'm not going to make any predictions like that, but what the last couple of years has helped to do, though, especially last year, is helped to bring prices down reasonably, kind

of -- good companies back down to reasonable prices and that's allowed us, value investors, essentially, we're value ninvestors to spread out the portfolio a little bit or to have better quality companies. more so than we had for a few years before that. environments like last year, those are -- you don't know it, but you're making your money last, in companies that you're able to buy, that you can hold on to. and a lot of times, those types of companies, i don't have to do so much thinking about them, but management teams, the reason they're franchises, the management teams are good, they're stable and able to grow and it takes a lot of exguesswo out of it. >> when you lay out that case, i think, i bet he's going to go to boring but strong large caps but the names you have here to me are truly provocative we're talking about ten cent and porsche and ryanair and even ross stores. there's a lot of international names here a lot of people are concerned that you can even hold positions

like that for a long time. connect the dots for me how you get from, this is a year for stock picking to those kind of stocks >> the common element there is, i think, reasonable prices for what are franchises? franchises meaning that they're solid market positions with plenty of growth opportunities and if you look at all of them, they occupy parts of their, their niche occupies a market that is, itself, growing, and they have a low-cost or a low price, some sort of value that they can add to or offer to the client that they're looking for. ryanair has the lowest costs for air transportation in europe, ross stores is like a t.j. maxx, you know, that industry is growing and continues to grow during this weakness or recession or whatever you want to call it and you know, on and on and on and on but the chinese companies, we started -- i've never owned any chinese stocks until the fall,

and for many of the reasons that i think everyone is well aware of, but i bought several of them around the time of the communist party meeting, to reappoint xi the stock market had completely given up because of that and some of these stocks were already kind of cheap before and they got to points where some of them were trading at five, ten times earnings and got to dominant positions a lot of these stocks have already rebounded. ten cent almost doubled from the bottom, right? but there's still a value case to make there. good, solid businesses now, you have a valuations correct, but now you have with china opening up, obviously, there's going to be some transition period over the next few months, as they get through this wave of covid but, yeah, there's so much demand, just waiting to get unleashed on the world and domestically, as well.

so you have an earnings story there that's probably pretty long-lived in nature in europe, people are very much focused on the obvious things, energy and that kind of stuff. but there are plenty of opportunities there where multi-nationals like a porsche would have you, to manage all of that meanwhile, they trade at good prices >> i want to bring you back for a separate discussion. but anything like the fallen angel-type thing, where you think, this is now a good opportunity, real quickly? >> no. the one area where that would be, you know, sort of complimentary are these chinese companies. they occupy some of the same types of segments in their local markets. they're platform-type companies. but they're in completely different phases of their cycles >> no, it's well said. and i did not expect -- i thought you were going to go one place and instead you went to several others and i think our audience might find it quite useful

abe with center stone. still ahead, we're piling into consumer staples. the sector was only down 3% last year, but is that enough to justify its high multiples three names reporting results tomorrow before the bell that's coming up on earnings exchange but first, the house speakership still in limbo and that could have big implications for investors waiting on policy changes. we'll get the latest from washington next on "the exchange."

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welcome back to "the exchange." it's been several years since a house speakership needed multiple ballots and it doesn't look as if we're getting a resolution anytime soon. y lan mouaylan mui with the latt >> kevin mccarthy failed to secure the 218 votes he needs to win that top job once again. so, frankly, not a whole lot has changed since this process began 24 hours ago today, 20 republicans voted against mccarthy one republican who previously supported him voted present. yesterday, 20 republicans voted against him, as well only four republicans can oppose him in order for him to secure the speakership. now, this time, conservatives did put their support behind a

florida republican named byron donalds. donalds is someone who had initially supported mccarthy, but then changed his position. one of the leaders of his opposition, scott perry, declared today, that he is not backing down because it is time to end the status quo. so, as it stands right now, we appear to be headed to a fifth round of votes for speaker mccarthy told reporters that he would prefer to adjourn so that republicans could negotiate in person, face-to-face, and if he believes that that happened, that they could come to an agreement today. but kelly, republicans need 218 votes in order to adjourn, and mccarthy doesn't have that, either >> all right, ylan, thank you for now. for more on how the house votes and the policy implications, let's bring in chris krueger, he's managing director and washington research strategist with keown great to see you, chris. welcome. this is some drama >> it is, it's something no one has ever seen. this is now four failed votes inside of 24 hours, with no real

path forward there's no momentum for mccarthy, he's actually lost votes since this began, so the outlook remains incredibly challenging for mccarthy and republicans. >> and two years of tail risk for investors, is what you already see as a result of this. >> it is i mean, it really underscores, you know, the next two years, it only gets harder from here this is typically the easiest vote you cast. it's largely ceremonial. in market's favor, most of these sharp policy objects were taken off the table at the end of last year with this huge omnibus spending package, so congress doesn't really have to quote/unquote do much until late summer when the debt ceiling comes into focus, then you'll have to fund the government into the new fiscal year. so you -- we can put up with a

couple of weeks or longer of noise and theatrics, but the rubber does start to meet the road come this summer. >> the main concern i'm hearing is about the debt ceiling, would you say that is a valid one? the most important one >> for sure. you know, i think, in particular, too, when you rewind the tape a little bit to 2011, the last time there was a real debt ceiling crisis, obviously, then you got the first s&p downgrade. but at that time, republicans had a 17-seat margin and you had a steady hand at the till with speaker john boehner you now are going to have a four-seat majority, maybe less, given the, shall we say, you know, legal considerations swirling around congressman-elect george santos. >> oh, right >> so, you have very little

margin for error and you can't even get 2 -- you can't even get 200 votes on some of this. so it's going to be real challenging. we'll see how it all unfolds but a pretty poor beginning, i think, by any metric >> so for people thinking through the exposures of their different sectors, debt ceiling aside, what do you think would be the difference between a more serious republican majority and the kind of, if we call it majority that is likely to emerge from all of this, in terms of policy making as specifically as you could, for instance, on everything from defense, health care, you know, the irs. i can't even think of all of the ramifications. >> right well, you know, like, the debt ceiling is, you know, the most macro event you can think of the entire global financial system is based on the idea that treasuries are riskless assets and congress in its infinite wisdom will put that to the

challenge later this summer, early fall regardless of who comes out of the speaker's race, though, you still have these members who are going to be very, very challenging to coral what you do have, though, if the speakers -- once the speaker race continues and is concluded, you know, tax increases are off the table for the next two years. which is something that, you know, is -- should be welcomed by markets now, you do have that fiscal cliff coming up in 2025, when all of the 2017 tax changes snap back, although the corporate rate remains at 21%. so outside of the self-created headline risk and tail risk on capitol hill, the policy environment from a legislative standpoint within divided government should be pretty good for two years.

>> all right we'll see if they look through -- we have to get through the summer, get through this vote, first, to do that chris, thanks for your time today. >> thanks again. chris krueger with keown coming up, oil prices, they're sliding again today as crude starts off the year with a pretty steep sell-off. look at wti, below $74 a barrel. one energy expert says this gridlock in washington we were just talking about, it could really hamper energy policy hopes. we'll dig into that. plus, apple back above the $2 trillion level in market cap, but can it keep climbing back or are those $3 trillion days a distant memory the exchange is back after this.

welcome back to "the

exchange." some green over here for once. the dow was up 273 we're up 191 right now 1% gain for the s&p and nasdaq, which are outperforming today. now, tesla is trying to rebound from its worst day since september 2020 after those disappointing delivery numbers shares are up about 4% today they're still down 8% since yesterday, but arc invest kathy wood still buying the dip, adding about 19 billion shares tesla makes up 15% of the arc-k. it's the third biggest holding behind zoom video and exact sciences for more on what she's buying, head over to cnbc.com/pro and check out that list. let's get to tyler mathisen for a cnbc news update >> a california man was arrested for attempted murder and child abuse after investigators say he intentionally drove a tesla off a cliff on monday. the suspect, another adult and two children suffered serious injuries monday morning after the tesla they were driving in

plunged 250 to 300 feet down sth side of that cliff investigators believe the incident was an intentional act. the singer william -- excuse me, william "rick" singer, the mastermind of varsity blues admissions scandal is scheduled to be sentenced in a federal courthouse nearly four years after the scandal was exposed. prosecutors have asked him to serve six years in prison and over $19 million in fines and asset forfeitures. he pleaded guilty at the time to money laundering, conspiracy to defraud the u.s., obstruction of justice. he agreed to cooperate with the government's investigation and there was no mega millions winner in tuesday night's drawing. the next drawing, friday estimated jackpot, $940 million. that makes friday's estimated jackpot the fourth largest in mega millions history. kelly, back to you >> i'll see you soon, tyler.

thanks walgreens, constellation and conagra all report tomorrow morning as investors brace for bad news on the earnings front this year. can they buck the trend? we have this story, the action, and the trade on earnings exchangene , xt realtor.com (in a whisper) can we even afford this house? maybe jacob can finally get a job. the house whisperer! this house says use realtor.com to see homes in your budget. you're staying in school, jacob! realtor.com. to each their home.

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welcome back to "the exchange." we're not officially off to the races with the first earnings season of the year yet that really starts next week with the banks but we still have three big consumer names reporting before the bell tomorrow, and we can take any clues on the economy right now. let's get the action, the story, and the trade on all three and we'll start with walgreens this stock was one of the worst dow performers last year, down 30%. the street keeping an eye on its push into health care and its earnings have beaten estimates 17 out of the past 20 quarters let's bring in david katz to trade it matrix chief investment officer. walgreens seems like the type of stock that should have done well last year. what happened? >> it's an odd thing, earnings have come in at or better than expectations, and as i said, the vast majority of ties. they are cleaning up a lot of stuff. people have concerns about the quality of earnings. that's been one area of the health care sector that did poorly last year with the drugstores we think their earnings will be

fine tomorrow. again, a beat on both th earnings and the revenues. and we think the stock is pretty reasonably priced. it's a low p.a., it's a very attractively priced stock with a very good dividend, but we think that they're pretty far behind cvs in terms of converting from a health care company to a drugstore company. we think it's okay, but we prefer cvs >> basically, if you like walgreens, you'll love cvs that's a stock that's not too expensive? >> cvs is at 10 to 11 times earnings we think the drugstore group is going to do well, cvs the best, and wall krgreens should do fin. >> cvs has really refreshed its look around here constellation brands always say, go with alcohol, it's recessionproof the shares did relatively outperform last year, down only about 10%. so the big question, david, is whether this falls prey to general slowdowns in consumer behavior, what not, and its

valuation. what would you do here >> so, they really are a very good quality business. they've been able to grow their earnings very nicely over time the stock is at about 20 to 20 1/2 times earnings. it's a little bit below its historic averages. so if you want a good growth company, we're very comfortable with constellation brands. they've also beaten about 7 of the last 8 quarters. we think there's a good chance they'll do fine tomorrow with a good outlook so we think it's an okay hold. we're pretty excited about a lot of areas of the market that we think are very attractive. this is just okay. >> let me ask you in general, david. so we get these three sort of consumery staples companies in the morning at a time when people are so anxious about earnings for 2023. and they're saying, we're so anxious. not just about the earnings, it's about the guidance. are you worried about that kind of messaging in these reports? and obviously, once we get into the banks next week? >> so we're worried about that kind of messaging as we go through earnings season. we're not so worried about that

messaging. so we're expecting okay things for them we think the rest of the earnings season is going to be a lot more telling we would not read too much into what the companies say tomorrow. really, it's going to start happening next week. >> the final one is conagra. it was up about 13% last we're people know these brands they've got slim jim, boom ch chickapop. we saw restaurant spending was up big we thought people were trading away for supermarket brands. what would you do with the stock. >> so the group has done very well last year if you want a consumer staples company, we think it's fine. we think their earnings and revenues and outlook will be

fine we prefer tyson foods, because that serves under ten times earnings conagra is absolutely fine >> you mentioned some of its other consumer staples, peers are fully valued, ie maybe too expensive. you know that everyone will look to get defensive in the market this year. should this be the sector that they put capital into? >> well, evening it's exactly the opposite the reason that they did so well in the last year is people were migrating towards defensive stocks consumer staples did exceptionally well on that migration and the drug stock as well we think that although there's uncertainty in the economy in the upcoming year, we think, ultimately, the economy is going to be getting better, as we end the year, and the markets are going to starting to discount that sooner rather than later. so we would be taking money out of consumer staples and putting it into other areas of the market technology has gotten creamed. financials have done poorly. we think those are better places to put money and we would be using some of the money from the consumer staples area for that

>> very -- we've got to get you back, talk more about that one for sure for now, i'll let it go. we'll look for those reports in the morning. david, thank you so much >> thanks a lot. have a great day >> david katz with matrix. coming up, the great china reopening continues despite the surge of covid cases there we'll get the latest on concerns about new variants and the data scientists areoongor hexcng back after two.

welcome back a world health organization advisory group met yesterday to discuss the covid surge in mainland china amid urging from the global community for the country to share more data and a major concern given the rapid spread there is that new variants could emerge. meg terrell is back and she joins us now with that story welcome back, meg. >> thank you i feel like we're socially distanced right here, but i'll come and see you very quickly. the good news is what we learned from that meeting is that right now, about 98% of the cases that are being sequenced in china, at

least as what they're reporting, is an omicron sublineage, or two different omicron sublineages. those are relatively familiar things was as you said, the thing that people are concerned about is that we're not getting enough data from choina, just across te board. the worry is that we could get a more worrying variant because of severity they are watching xbb.1.5, which in the united states is growing incredibly quickly they said today this is the most transmissible subvariant they've seen of covid yet. of course, that makes sense if it's going to grow so quickly. we've seen it now more than 40% of cases in the u.s. in the most recent week of estimation from the cdc, up about 4% just three weeks ago. the good news is, while they don't have definitive data on the severity of this variant, day don't expect it to be more severe and we have a lot of background of immunity in the united states, because of all of the infections and all the vaccinations that we've been getting, which is not the case necessarily in china >> and come on over, if we're

allowed to do that now so, this is an interesting one, because there are people who say the question of variants is one that we've already put to the test, because of the spread globally and that opening up china doesn't necessarily present as much of a risk to new mutations. what are you hearing in terms of the risks here, further mutations, the severity of those mutations, and all the rest of it >> the one thing we know, the more people who are infected, the more opportunities there are for more mutations to arise and more variants to come out. that's what we have seen in india and a lot of spread. that's where delta came from that is a concern. but omicron has been so contagious, what we've been seeing is a splintering of omicron into these many different sublineages, and hopefully, we won't see one emerge that is more severe, that really beats our vaccine protection the government's message is, keep getting boosted that should keep you protected against severe disease it probably won't protect us against infection,though >> where are we on the vaccination question even we were just talking with

ed at the top of the show, and he was like, i got my vaccines, i got my boosters, all the rest of it. he still got covid does it provide protection against the severity of those symptoms and are there any lingering questions about harm caused by the vaccine itself >> well, we know a lot about the vaccine's safety profile and of course, there is that rare heart side effect for specific groups, particularly young men under 30 but that is pretty rare. the idea is that the vaccine, while not protecting against getting a case of covid, should continue to protect well against severe covid the government warns the farther you are out and the older you are, perhaps that will diminish over time, but they are holding up pretty well against severe disease. >> and finally, what should we expect next from the w.h.o, organizations like this? again, the rest of the world kind of asks them to step in here, but what is it that they have the capacity to do? >> yeah, that's been a problem the entire time. they can provide information, they can provide guidance, but they have no real ability to actually affect any sort of changes in any countries

so we are continuing to look to them for information, they are continuing to urge china, probably more strongly than, especially we saw at the beginning, to share information. beyond that, we look to them mainly as a source of information. >> meg, thank you. great to have you back got to find a different topic soon turning now to another china story. the lasting impact of the covid shutdowns, which in particular are weighing on apple. we've been talking all along about the weakness we've seen here in recent months, highlighted yesterday. shares are bouncing back about 2%, a little after that sharp sell-off, but it's been a rough year apple hit a 52-week low around $124 yesterday it's still about 30% off the highs. now it's back slightly above a $2 trillion market cap today, but it dipped below that level for the first time since march of 2021 yesterday. so will they be able to pick up the iphone sales this quarter? and what about recession and china concerns steve kovach, return to the man for some insight >> the man thank you, kelly it's a story here with apple of resistance versus uncertainty.

resistance last year, apple was better off than its peers. down 27% and meta on the other end of the spectrum, down 64%. now, apple appeared to be immune to a fall in demand that its peers saw in pcs and phones, so uncertainty, kelly, that's all that's left right now. apple told investors in november, iphone demand was still strong the question now is will that demand hold up this month and throughout the march quarter will apple be able to pick up the slack in iphone sales like you just said? it all comes down to china, kelly. china's new covid policy put its workers at risk of getting sick. instead of lockdowns, we may see people get too sick to work. we saw thatwith tesla already, shutting down its factory in shanghai earlier than expected, because of sick workers. now, look, we have to wait a few more weeks, kelly, when apple reports its fiscal q1 earnings that was the december quarter. was it worse than feared and what guidance will we get for the current march quarter? i know i say this every quarter, but this will be one of the most important apple reports since the pandemic began, kelly. >> come on over. so we were speaking with chris

k chrisante the investor yesterday, skand i said, why no apple? it cruised to be at a lower multiple last decade it's still fundamentally a hardware company it has the siccyclicality. >> one thing, i've been talking about this throughout the day is buybacks we don't talk enough about how much just tens of billions every quarter of buybacks apple is buying there's that benefit and a lot of people do credit, you know, apple hanging on and resisting last year, because of those buybacks in addition to outperforming on the demand side. and then, look, it's -- the other thing is, even if we head into a recessionary environment, people are still going to upgrade their phones maybe they don't upgrade it this year or get cold feet as a recession might come this year and say, okay, i didn't get an iphone in time for christmas i'm going to hold off another couple of christmases to see how things pan out if i lose my job, whatever but eventually, it's going to

come back. the bulls will tell you, look, apple's going nowhere, sitting on $200 billion in cash, it can stop making iphones today and last through any recession >> i keep thinking about brian sullivan's argument. >> exactly it's a subscription business, it's not a hardware company. we'll see! that will be put to the test this year. thank you, steve kovach. still ahead, both crude and exploration companies falling. oil is down 16%, nearly. but the oil field services etf, that's up 24%. we'll look into this contradiction. it could continue, according to one industry watcher 'lte uwh nt. hel lls y,ex another busy day? of course - you're a cio in 2022. but you're ready. because you've got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want - your team, ours or a mix of both. with the nation's largest ip converged network. from the most innovative company.

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welcome back oil prices are sliding again today. wti and brent both down more than 4%. seems like those concerns about a global economic slowdown and it comes on the heels of a record year for the energy sector the only up in the green, up nearly 60%, but the rain may soon be over my next guest says the recession concern could lead to meaningful demand recession kevin, it's usually not the energy people who are bearish on energy everyone in their own sector is

usually telling us why it's going to do so well so i appreciate your contrarian point of view here what are you concerns? >> there's a couple of things going on at once glaringly, the recession risks are right in front of us started the new year with pessimism. there are some structural shortages out there. if you ask what does it mean to put a price cap on russian products, probably sounds like there's more room for confusion, dislocation and maybe price risk to the upside. on the other hand, demand looks more responsive. in recent years in the aocd and ocd, my colleague points out when you have a lot of demand concentrated in one place, china, or one product, in this case, jet fuel, there's a lot of room for disappointment if they come up short. there are some reasons to have pause when you see weakness on the horizon. >> yes, so as an energy investor then, you point out the oil field services for instance,

we've seen a sort of switch there where they've been outperforming lately why is that and can it continue with what you're describing? >> we look at the s&p sub sector proxies sort of as a market intelligence look ahead and things to come to the extent you see wti underperforming the enp sub sector, under performing the services sub sector, you get a sense that maybe cyclical underinvestment we saw during covid, you're not getting so much out of the shale price. so maybe what we need is more ability to get oil out on the other hand, you want to be cautious about this, kelly. like everything else, if you're sliding down, all of energy tends to move with it. >> exactly what are you concerned about in washington in particulars we watch this fight for the speakership? how could that impact energy investors? >> just to start with, if you're asking if you're going to get a lot of cooperation out of

congress, so far this week, you're probably not getting cooperation even within one party let alone two. that means the administration really has the spotlight for energy going forward there's serl things we expect. a lot of rules out of washington that's been in the offing for some time and really behind pace but also federal superpowers the ability to open federal lands to wind and solar, but also to take a stance on offshore oil and gas drilling and to stave off oil and gas themselves not likely to continue probably not a climate emergency declaration, but we've seen a lot of muscular intervention from government over the last year doesn't look like it's about to stop anytime soon. >> i find it out that people say, like david katz, the stock market was defensive last year, now he's getting interested in technology, maybe financials, because he's anticipating beyond the recession, let's call it it's striking to me that financial markets are behaving

that way while energy and commodities seem to be acting as if we're still heading into this recession event. that timing difference, i don't know if it's going to mean one side is right and one is wrong or if people who are bullish on stocks for the long run are bullish on oil it may go down but in the back half of next year, it should recover. what do you think about that >> i don't want to deliver a spontaneous ph.d. dissertation, but the oil market is tightly geared a small change in balances can have a big impact on price the forward expectations can have a lot to do with the movement of molecules and electrons to their destination you can have room for optimism deep into the future when you look past recessions into terminal values and discounted cash flows for equities, but when you're actually dealing with a surplus or shortage in the energy market, it can rebound much closer to the front month to the price you see on your screen in realtime. >> yeah. we can do the ph.d. dissertation

maybe afterhours, but it is a fascinating point. kevin, thank you so much for all the questions, for taking them today. >> thanks for having me. >> still ahead, higher rates anned low inve inventories presn auto sales last year, but what about 2320 what happens to the automakers we'll dig into expectations next

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godaddy. tools and support for every small business first. welcome back one more thing before we go today and that, auto sales they hit their lowest level in 11 years last year the question is will they bounce back now let's get to phil lebeau for some answers phil >> good question, kelly. we know what happens when a recession hits automakers usually see sales under pressure it's a little bit different this time as we take a look at what the auto sales were for the fourth quarter, for december here's what we need the keep the mind first of all, start with general motors fourth quarter sales up 41.4%

and for all of last year, gm sales were actually a slight increase compared to 2021 and their 2022 sales up 2.5% they edged toyota for the crown of best sales in the united states remember in 2021, toyota manufactured and sold more than in the u.s. than gm. in the fourth quarter for all of 2022, sales were actually down 9.6% for toyota. then you've got hyundai, december sales up 40%. remember, it's a year-over-year comparison and we're still dealing with lumpiness when you're seeing companies coming out of the restrictions and tight market when it came to semiconductors as you take a look at the auto index, auto sales are expected to come in between 13.8 and 13.9 million that will be the lowest rate since 2011 and it's not a surprise we knew this was going to be the case now the question becomes how much can they increase sales in 2023 most are saying they believe that the industry can get sales

back up into the high 14 million. potentially if things go well. 15 million range but again, you never know what happens when you have a recession if a recession hits. >> absolutely. phil, thank you. and that does it for the exchange "power lunch" begins right now >> indeed, it does welcome to "power lunch," everybody. we are just seconds away from the release of the fed minutes from the latest meeting. ahead of that report, stocks are higher let's go to steve liesman for that report. >> minutes from the december fed meeting, tyler, show that no fed members thought it would be appropriate to cut interest rates in 2023. all of them in their forecast for rates raised the path of their funds rate relative to where they were in september they believed it was needed until they were confident inflation wa