>> it's recessian resistance jason? >> bdx stay long. finally, joe >> staying long free port mcmoran. that does it for us. i'll see you in "overtime. tom lee is joining me then "the exchange" begins now. hi, everybody. i'm kelly evan tone deaf, amid myriad signs the economy is slowing, the fed stays on its course. there is one data point flashing a big warning sign we'll discuss it plus the house of representatives finally has a speaker, but the concessions made to get there may not bode well for business. we'll tell you what the need to know apple shares have been a

stubborn weak spot first, we welcome back the bespectacled dom chu with the latest. >> a new look, but i have a feeling the contact licenses will be back soon enough kelly made an allusion to the fed. whatever the commentary from this past week, it's not enough to derail the big rally we saw on friday, and it's carrying through to today we are just in the middle of the trading range, but still generally positive the dow industrials is up, pushing back towards that 4,000 mark for context today, up 4 is right now, the highs of the day, we were up 5 points at the lows, we were still up 12 there's your trading range on balance of 1%. the dow up 0.5 of 1%, and you double the s&p, and up 215 points one reason for that tech

outperformance has to do with the semiconductors which is one indicator that some traders use as a matter of trend. they're providing some kind of a bid there, especially for nvidia and amd. tech, key, computer chips key. and speaking of mid december, bit coin prices back above 17,000, highest since mid december, coinbase highest levels since about mid-december on the heels of, yes, some of that bitcoin bullishness on a relative basis jeffries out with a coverage

initiation and a hold today. on balance, though, coinbase have shed 83% of their value last year, we always like to show you the one-year chart, because it's been a tough road, not been easy so far i'll send things back over to you. coming off the jobs report, we await thursday's cpi report there's an argument to go made as the fed is not as data dependent as they claim to be. steve has more >> mary daly just on the wire saying the 25 and 50-base-point rise is in play. and that it's too soon to declare visibility torrie and stop hiking rates. some are questioning whether that's true raphael bostic

telling me last week there's more work to do. tom barkin from richmond saying the inflation fight isn't over the minutes of the meeting that came out last week say no fed official is forecasting cuts in 2023 meanwhile, you have the ims services contracting the inflation rate running around 2.5%. look at how the job market reacted to all of this an economic weak necessary ahead, he said that act like we have a date with 5% or higher,

almost no matter what happens here what is strange at this moment when things are so ambiguous, is for the fed to act as if their actions are so predictable the fed may have it right, but they could be making a mistake, such as last year, when they all decided the recession was transitory >> yes, yes. that quote is so good. it's odd to be in an environment we've never been in before, yet why is everybody talking about a number instead of arguing about the data and what's leading, what's lagging, and whether the bond market can -- let me bring in catherine. take a test. who is the most hawkish? >> i haven't pedestrian attention because they all sounds the same. >> and they're using the same talk

with technology the way it is, with global cyst, thereon on the decline, anyway, i don't want to keep you >> no, this is great kathy is a chief economist at nationwide mutual. the one reason that you could argue for the fed staying the court is the labor market, but even here there are many shades of gray, and the ism services report, what does that tell you about the strength or lack thereof in the future? >> thanks, kelly happy to be on with you. the ism service report was quite surprising and ugly, really, you know, we started new orders, demands plummet, you saw the overall headline index notably fall, and that's the fine line between contraction and expansion. it suggests that non-manufacturing is actually crewing.

that's pretty surprising we knew manufacturing was. ism manufacturing was down two months in a row. when it does go below 50, it's typically in line with recession. it makes me think about the employment numbers that came out an hour and a half before that, that that was the last stand on payrollsaying it was consisten with gdp -- and they're starting to pull in their reins, and hiring can't be too far behind >> the market goes, we're all forward-looking, we all know this data -- if you look at when they started stimulating aggressively, march 2020, let's call it, we didn't hit peak nominal growth unit -- until the

last quarter of 2021 they don't care what december's annilreport was. >> people want to hear that the fed is in the same university. when they tee inflation coming down, okay, maybe are still a believer, but where is the discussion about risk? and more importantly where is the discussion about the subject of the balance sheet is that 200 basis points how much is that and does that give the fed any pause? here is the thing, kelly it strikes me if we can avoid a recession, we ought to try to do so. >> absolutely.

by the way, we were just talking about leading indicators we have a quick market flash with rick. what do you see? >> well, the three-month to ten-year, once again without belaboring the point almost on a daily basis, and even since the fed minutes, we continue to see more inversion the 3s, the 10s basically in the neighborhood of mine minus 110 basis points this is the most inserted since the inception when we started moving from price to say yields for the three-month bill it doesn't just end there, but three weeks is the last time we've seen ten-year note yields at this level, and fed funds for june of this year that were the trading after the hawkish minutes. the fed is date dependent. they pick out the date and

decide what they want to do. it's more likely well over its skis is because it's so painfully obvious that inflation has slowed up. >> kathy, do you want to respond to that? >> well, i think there's some truth that there's a lack of disagreement on the fomc i think what the fed reserve is worried about is the service side of inflation may not slow as quickly there are certainly indications things are slowing, but how quickly? but certainly if we get wage growth continue to go decelerate and employment really starts to slow materially, then i think the fed has to reassess. maybe right now there's a talking tough, but they have to be ajill, and it can be very

difficult to avoid a recession if they go too restrictive >> aren't we see some movement in predictive markets? where we had gone from thinking a half point was to -- this is their meeting in a couple weeks. >> i'm going to give you a current update it's down a bit, but they're till banking on the peak rate it's what hatches away that. 35 or 50, i think 77%, but i want to go back to something that rick was talking about. if you have a chart about some of the economic rejections and you can see they're all sort of united there is some thinking that the more together they are, the less

right they're likely to be i think that goes back to the transitory notion. had there been a distribution or dispersion of these things, but now? i don't know, it seems like something to talk about. rick, last word? >> i think we're all having a good discussion on the issues of the federal reserve, but a better discussion is investors aren't paying as much attention as we are lately i think that's a good thing. investors seeing all the data that the fed sees, and i think thee quite grown up to see the change in inflation will reap nice rewards if you jump on this trend early, as opposed to waiting for an all-clear from a government agency. >> i agree with what rick is saying. >> kathy is nodding, too

the decided not to -- people are talking about po% now. we'll leave it there we appreciate all your time. job cuts are already hitting the financial sector goldman sachs is set to lay off thousands, following similar cuts for banks hugh song joins us didn't we already speak about a round of layoffs at goldman? >> i admit it gets confusing even as a report tracking all this they were previously reported up to 8%. we reported that last month. as you know, there's a process in which investment banking and trading heads go back and forth with ultimately sullivan and his deputies let's not cut too back

more the result is a layoff of 3200 is that better or worse? >> 6.5%, basically 800 jobs better than want feared. however, if you look back, this is by far the biggest job cuts of any american investment bank. this is double what morgan stanley did last month at 16 had you been for an investment bank with arguably the best reputation, this puts them in the same category as credit suisse, which is a very beleaguered swiss invest bank. we talked to you about golden

they tried to go big in the consumer business. that's not really pays off here as well. some of this is idiosyncratic, but what are you hearing from your sources about reining things in in preparation for a slowing economy? >> basically we have 14 bank earnings on friday and on tuesday of this week after that, they all paid bonuses, which will be down 20% to 40% is my understanding, and after that they're wait and see. if february and march are not as good as the base scenario of revenue for the year, in it turns out the ipo market is still frozen, deals are still moribund, then they have to cut jobs, the one thing in their control. >> very interesting. hugh, thank you. we have a news alert on

mortgage rats. diana olick has the story. i'm looking at the ten-year and saying they must be down. >> i was just going to say, you were talking about the ten-year, mortgage rates are dropping to start the year they loosely follow the yield on the ten-year the average on the 30 hit 6.14% according to "mortgage news daily. that's down 30points from just a week ago the rates dropped sharply on friday after the monthly job report and then mover lower today. the rate last peaked at the end of october 7.3%, so the now of monthly payment now about $260 less than in the fall. that has consumers feeling much better fannie mae's monthly sentiment showed more people are now saying it's a good time to buy, and more are saying they think home prices will fall further.

thursday we do get the monthly consumer price indix if it shows inflation cooling against. mortgage rates will fall even further. >> i was speaking to an agency yesterday, who she had she's never had this low of inventory in 40 years. now lawmakers need to agree on a set of rules for the next two years. how that could change the legislative landscape. tesla shares have taken us for a wild ride, so you might be surprised our next guest has started buying the stock nancy taylor joins me next on hexcng"t ehae. lily! welcome to our third bark-ery. 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

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welcome back to "the exchange. you need a strong stomach for the stock market recently. but our next guest says volatility is a gift she even started buying shares of tesla nancy tangler, thank you for being here, nancy. >> so good to be here. >> welcome, welcome. i couldn't believe when i read this i loved it, that you're buying shares of tesla. so what attracted you to it?

>> well, valuation for one it entered our buy range we did the fundamental we're not sure what the catalysts are. we identified some and in addition nated a position on the 4th. >> growth at a reasonable price. >> yeah. >> in one way serious investors will pay attention, but on the other hand, is it a sign that their strong growth days are over >> that's probably true. if you look at it compared to the major automakers, much better margins, still growing fath the stock is off because people are worried demand is softening and that the company isn't going to grow again. i owned it one other teem when elon musk wag sleeping on the floor of the factory >> almost going bankrupt. >> we got out and we left a lot

of money on the table. we took a double, but we left money, because it felt like gambling notify you have earnings, a pretty stable board and management team. i liked it when larry ellison was on the board we just initiated. i think we got in at 109 but three years from now if it's at 300, i'm happy. there are some people who have disqualified it because of the elon musk factor, one of the most unusual ceos. are you not concerned about the risk exposure there? >> i guess my response would be ignore him or underestimate him at your ounce peril. in the previous period, he was in trouble with the s.e.c. over his tweets, on top of all those

other things i think up to step back and say are they the industry leader much like coach in the old days that had huge margins, it attracts competition that's good for the end consumer and ultimately good for tesla. very, very intriguing. you say in general the market is presenting a lot of opportunities like this. i'm looking again at all the different projections. one of the smartest oil analysts thinks we could have at year-plus on the oil run before a crash. they're not sure how they're going to time this, and how to get out at the right moment. >> you have seen it's time in the market we made some shifts in or port portfolios we had been out with the bond, so we've been moving them in short ladders. in addition to that, we've been focusing them in the equity

market in our dividend growth strategy that has been an historically good place to be we're buying the fastest-growing dividend yields. that gives us information -- what management is thinking about, because a different is a portion of that. we're taking our risk in equities in a more defensive measure, but it's still outperformed >> so at the point we are probably in a recession, what do you do as a money manager? do you shift people out of it? how do you manage through that you've done it many times before. >> february of 2020, we hedged so we can do that on the side. within the portfolio, we began shifting, we were going towards companies with a proven track record asylum, for example, they showed

positive growth in europe this last year, when europe was actually not growing so we look for companies that can do that. raytheon is a defensive way to have exposure to the indu industrials. we're back to stock selection, i would say. >> do you even try to figure on the which part of the market to be >> we do we have a top-down overlay there were years when i came on and talked only about healthcare stocks we're moving toward a market way and overweight in technology i think this nothing that technology is dead, may not be in -- i went back and looked at microsoft. i bought it in my personal portfolio in 2009. it's up 860%, so for your viewers i'm not investing for

the next couple weeks or month i'm investing for the next 3 to 5 years. >> i remember during the financial crisis, starbucks under $5 you're looking for those kinds of opportunities. >> i bought that one, too. if you get high quality companies, you can get paid to wait to sit base and wait for the fundamentals to turn around. bl i bought microsoft we weren't even talking about the cloud >> you know, it's a good reminder and good perspective, especially on a day like this. great to see you. >> great to see you. nancy tengler. we'll look at the fallout for inflation. plus apple coming off its seventh straight week of losses. are you buying that one? >> yes but top tech analyst toni

sacconaghi is warning of even more down side we'll see. we should have a bull/bear debate on this "the exchange" is back in a moment don't go anywhere.

one consistent theme is bond yield and the more deeply inverted yield here. let's get to tiler mathisen for a cnbc news update californians are dealing with more rain, snow and

flooding today, north of sacramento, high water slowing traffic to a crawl on the coast, evacuation orders have been issued, and across northern california, several school districts have closed because of the storms arizona cardinals trying to put their very disappointing season behind them the team has fired cliff kings bur b b bury kli if. f kingsbury. disney saying hybrid workers have to work in the office four days a week, saying it's key to the create activity. the rules goes into effect march 1. get ready, disney folks. meantime, kelly, back to you

still a huge contentious issue for so many workers. still ahead, getting to work in washington, kevin mccarthy elected house speaker after the most drawn-out and dramatic process. with the lower chamber to set new rules for governs. was last week a prelude to getting business done? we'll have more when "the exchange" returns. dad, we got this. we got this. we got this. we got this. we got this. yay! we got this. we got this! life is for living. we got this! let's partner for all of it. edward jones

. the fight for the speakership is timely over, with kevin mccarthy, making unprecedented concessions. now legislators have to establish new house rules. ylan mui has a look at the changes. >> kelly, the first order of business will be to adopt the rules that will govern the 118th congress and reps want new constraints on spending in washington the rules they'll be voting on today include preventing bills that increase mandatory golf spending, forcing the cbo to estimate statistic impact of certainly bills and allowling dynamiscoring, it would also

get rid of the mechanism that allow -- when a budget resolution is pass, also to a three-fifths super majority, and beyond these official changes to house procedures, conservatives also want a laundry list of more informal commitment. three seats on the rules committee and agreement that any increase in the debt limit must be paired with corresponding spending cuts and promise for the house to vote on a balanced budget if kevin mccarthy reneges, the new rules would also allow any member to force a vote to oust him from his job democrats are saying these demands are total nonstarters. rosa delaura called the back-rooms deals that killed the 2024 -- and she says it all but guarantees a shutdown.

a lot of these issues will not come to the foreunder the second half of the year, but clearly the battlelines been being drawn. in fact, in his latest note, one of my next guest calls it a dumps at the fire, that, by definition is to change. and sarah chamberlain, ceo, aligns with -- welcome to you both chris, what are the implications, especially for investors here >> well, we're setting up a real witches' brew of not only headline risk, but meaningful tailwind risk. not only do you have a very tight governing majority in the house, you know have given control of the house by the rules committee to the most hardline members of that caucus.

you have the debt ceiling sometime late summer, early fall, you have a shutdown fight on october 1, so you have a number of cross-currents that have really only been made more challenging by the changes to the rules and the rules committee. >> so, sarah, explain this how you see it, as a positive, as a negative, what do you thing investors should know here >> i think there's a group of conservative main street members that will not shut down the government and they will increase the debt ceiling in this country they are not going to do that. some of the other changes they do support, but those two things, i'm not concerned about in getting those two things passed they will work with anyone they can that never works for republicans. i'm not overly concerned about that. >> that's why, when you say that, well, i don't know

we've seen this before, and everyone goes, no, we wouldn't do that, yet it happens time and again. why do you think this time would be different >> we learn from or mistakes last time, frankly it's a no-win situation. we reopen the government, everybody gets back pay, the members of the partnership just don't want to do that. you play with the credit of this country, which we can't be doing, especially in a recession time potentially with inflation so high, it's just not something that the members of main street will do. >> i know government workers who -- by law they can't touch it, and then get their back pay when it reopens. perhaps there's not as much risk as we might think. >> i mean, i'd like to think there won't be, you're already seeing it. you'll see it begin probably in the spring when the budgets come

out, speaker mccarthy promised a vote on a balanced budget amendment that would balance the budget over ten years. that would set up an approximately $75 billion. we see also chance of that passing into law, but you're already seen what elon mentioned earlier. the battlelines been being drawn. it's not just a debt ceiling issue. it's a shut zhaodown fight >> especially as we hear reports that president biden is planning to run for reelection, what is the constructive vision that the republicans may have to say, okay, this is not just about shutting things down, this is not about playing with the debt

and the rest of it what is it about then? >> for us i realize it becomes a political issue, but it is a real issue for the american people the partners live in these swing districts. they're not going to do it again. they're going to increase the debt ceiling they are not going to be willing to play with the economy in this country and with our debts and our credit rating. i know it's fun to talk about it, okay, they're going to do this or that, but i don't think you'll see that happen, as i said earlier, we have learned from the last time we've done this it never works well for republicans. if we did it, i think it would only give joe biden frankly a victory going into his reelection. >> what other than not doing that is the mandate you think they now have been handed? what is it that you think investors need to be watching for in terms of what they would

like to do. >> one of our members, ken calvert will be the appropriator who is in charge of that, but you are going to do, like, what's wrong with trying to balance the budget in this country? certainly we did that many years with bill clinton, and we had great success. i think you'll see discussions around that. i'm actually pretty excited about where the republican comps is going i know it was a rough start, but we're pretty excited about where we are and where we're going in the future >> chris, hearing that's correct i'll give you the final word does that make you more or less nervous? >> if the house is talking budget cuts, the senate won't go along with that. when biden's budget comes out this spring, i would be surprised if that went along with that. again, like you're seeing the

ballots lines emerge it will be a question of when does the ballots end does it end before or after october 1? >> i predict it will be a bull market for your business, chris. that's one thing i'm pretty certain of thank you both for joining me. still ahead, shares of trucking companies surging over the past week, xpo up more than 13%. lunar new year looks like a big boost. plus take a look at the dow, sharply lower, about to give up its gains. we just heard from raphael bostic to be more cautious we'll break it down in a moment.

welcome back for some logistics company, busy season didn't end in december. lunar new year is another

potential high-traffic holiday frank holland joins me with his story. >> we talked to the ceo of xpo about trucking rates, and it may not seem like a big deal, but it's the first uptrend since q2 of last year lunar new year, workers traditionally take weeks off last year the port of new york saw a 15% rise in import containers that are full xpo counts many s&p 500 customers among them he does not see a similar bump this year. >> there is more product flowing into the country and they are being able to get access to the raw materials and products to

fulfill the orders that they had from their customers when they were in the supply chain so we're seeing supply chains operate more efficiently our customers, there's still pent-up demand where some of the production is still happen. >> they're speaking of the truck manufacturing space. xpo is manufacturing its own trailers he said that there are surges to capitalize on, but having that additional capacity. >> trailers for us equals efficiency in certain days of the month, end of the monday or end of quarter, where you have a higher amount of volume and you had need the trailer to move and handle, where it allows you to operate and wessal more more freight. >> efficiency neve every business, and right now, the --

you have to remember trucking rates are still 20% higher. >> i had no idea that lunar new year was a big holiday. apple is up today, if you said to call it that we'll losing rapidly but still down off the 52-week high despite the recent drop, one top analyst says the stock is still too expensive. that's next on "the exchange." you might take something for your heart... your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally discovered in jellyfish, prevagen has been shown in clinical trials to improve short-term memory.

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the past year. one analysts saying this year might not look better, expecting iphone revenues to disappoint in 2023 and sees potential downward revisions as the year goes on. given that, he says apple is too pricey he cut his target by $45 to $125 a share. tony sack nothing gi is research analyst at bernstein great to see you

nancy just said she's buying it. this is a good entry point pour the long run >> thanks for having me on, kelly. the tech sector overall was down 34%. apple was down 29. it fared a little bit better apple isn't any cheaper than it was one year ago i think more importantly when we look to fundamentals, apple has had a great two years. operating profit on average in the five years going into the pandemic was about $66 billion last year it was almost $118 billion. we had this huge surge in profitability over the last two years, i think in part because apple was the covid beneficiary and we may see giveback this year for sure. we're below consensus estimates. at about $5.80 a share

the street at about $6.20 a share. we think as numbers come down, it's tough for stocks to work, particularly since apple is not inexpensive at current levels. >> i think it's a great point. we talk about the pandemic reset in chips and even in cars. most people thought apple might be a little different story. in part because of the services and the subscriptions as a service. for those new hand sets sold, why won't the reliability of service revenue help them get through a time in which hardware sales might be slower? >> it will help but it's not big enough services revenue in total is about a third of its profit. more importantly, most of that services revenue is not recurring. most of it is app store and advertising. both of those are subject to the overall health of the economy and consumer spending. so we estimate that only about 6% or 7% of apple's total revenues are recurring in

nature it is a transactional business model. apple needs to sell iphone, ipads, macs and benefit from advertising and app store for the business to work it is very limited recurring subscription revenue at apple. >> what do you think a justified multiple is here it's at 21 times are you questioning the consensus earnings trajectory? do you think the multiple needs to come down to something maybe in the low teens like we've seen in the past? >> you know, i think that's the big debate on apple, kelly apple used to trade at a discount to the market right now it trades at about a 30% premium to the market. i think that's a big debate win vesters. my concern is that, if numbers come down and iphone disappoints, then investors may say, look, the story of apple

being this impervious consumer franchise, not cyclical, there may be some doubt cast on that yes, maybe numbers come down 4%, 5%, 6% that's not that big a deal but if the multiple comes down because people are questioning the thesis that they're this impervious consumer franchise, we could have multiple compression. i think apple deserves to trade to a premium tmarket whether it's 10% or 20%, it's hard to say. the final point i'd make on valuation is every large technology portfolio manager is trying to make a decision on five big tech stocks, the faang stocks, microsoft, apple, amazon, google and facebook. they comprise more than 50% of the technology index apple is much more expensive than google, much more expensive than facebook, in line with microsoft. all those companies have better

growth so the valuation is not only absolute it's relative to the largest choices that large technology portfolio managers need to make. >> i take your point if they're looking to cull, it might be the one they cull from. toni sacconaghi on apple appreciate it. the high end market is typically immune to slowdowns. we have headwinds facing the industry we'll break those down next.

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♪ dreaming is free. ♪ accenture, let there be change. we look for economic indicators everywhere. we found one with super cars high-end carmakers reporting record numbers for 2022. but now questions over how long that can last. robert frank spoke with the ceo of rolls royce and he's here with the details >> it's the rolls royce indicator, setting a new sales record of ever 6,000cars last year the ceo telling me there's no

sign of a spending slowdown by the wealthy. the u.s. was its largest market with 35% of sales. china could retake the lead now that it's coming out of lockdown >> once the pandemic is over in china, quite some stunning business for us. the market is still particularly in the luxury segment in growth mode i would not be surprised to see one day china being the largest region for us worldwide. >> the average price of a rolls royce last year was $534,000 that's twice what it was a decade ago much of it due to its bespoke program. that's where buyers customize rolls royces the biggest seller was the suv it just launched its first electric feek, specter, doing much better than the highest order projections the ceo told me we've got lamborghini, bentley,

ferrari and other super brands expected to post record results this month kelly, no sign yet of a slowdown. >> all right for now, robert, thank you that does it for "the exchange" everybody. "power lunch" begins right now >> kelly, thank you very much. welcome everybody to "power lunch. i'll tyler mathisen. stocks rising today as the markets seem to be buying into the soft landing and second half recovery narrative the fed does seem insist stent that the inflation fight is not over far from it. meanwhile, signs the consumer starting to crack. political pandemonium. 1200 people arrested in brazil after protesters stormed the government buildings to protest what they believe was a stolen election here in the u.s., how will