cheap. >> steph link? >> i'm a buyer of broadcom today down 3.5% on the apple news they will insource some chips this is not the be all, end all. vmware deal will offset it i like it very much. >> thanks everybody. i'll see you in "the ot. "the exchange" is now. thank you very much, scott hi, everybody, i'm kelly evans here is what's ahead today the good news, jobs are growing. the bad news yield curves are flashing at huge warning sign a downturn is coming why isn't the fed acknowledging it and talking more about it we'll debate plus, if you are looking to deploy cash in this market one of our guests says there are two sectors to bet on and three stocks right now he tells us which one. microsoft reportedly making another big bet on open ai's

chatgpt but so are hackers the latest on both fronts. dom chu has the numbers. green like your dress, what we have now, kelly a look at what's happening for the s&p 500, the dow and the nasdaq, we are generally speaking to the upside we've seen either end of that neutral side of things, so gains and losses for the s&p 500 holding right above the 3,900 mark, up about nine points at the highs of the session up roughly 21 points, down 15 the lows of the session. there's the trading range tilting a little bit more towards the upper end of that today, up about a quarter of a percent. 42 points for the dow industrials. 33,559 and the nasdaq up about 43 points. 10,678 up about half a point. one other place to keep a close eye on, it's still very early in the year, but i will show you a year-to-date chart anyway. what's curious about this, in the few short trading days we've had so far, we have seen an interesting reversal of sorts

playing out, whether it has legs, that remains to be seen. but energy stocks right now represent some of the worst performers on a relative basis so far this year meanwhile, consumer discretionary and communications services among the biggest laggards in last year's trade are among the outperformers so far in a year-to-date basis here again, too early to call a trend but would be interesting to see whether or not some of those big losses that we saw last year outperformance this year and vice versa one stock that's flying high, pun intended today, delta airlines along with, generally speaking, a lot of the airline complex. delta shares 2% right now to the highest levels going all the way back to june of last year due in large part to analysts over at bank of america who reiterate their buy rating and call delta among their top picks in the industry for 2023. they like their cash flow generation, better relative profit margins in the industry

and the fact they could expand market share in the u.s. this year after expanding more hub activity at places like minneapolis, also detroit, atlanta, of course, and other parts as well, salt lake city. watch delta airlines those shares up 2% right now yes, flying high, i said it. back to you. >> dom, thank you very much. fed chair jay powell doubling down on the fed's inflation fight even as critics say they risk going too far. in a speech today in stockholm powell said restoring price stability can require measures that are not popular in the short term as we raise interest rates to slow the economy. should markets rule out a pause and a pivot or not joining us now is bill lee, the chief economist at the milken institute. steve liesman as well. what do you think about the fed's current stance >> well, the fed is actually not convinced we are on our way down to 2% inflation. a lot of incoming data shows

initial signs of it, but when you go to the forecast meetings at the fed, the first thing that's always asked, the last data point come about because of a change in the shift or did wages actually come down what corroborating evidence do you have the employment cost index hasn't come out yet a lot of the data now pointing in the right direction but there's not convincing evidence. the fed is not in a rush and they always say we don't move on one data point >> the stockholm speech, what do you think the net impact is of it and of the -- what do you think the point was powell was trying to convey >> reporter: can i just go back and challenge bill a little bit? >> sure. >> i just want to challenge you on this because what you posited was the reaction that wages are going up and that will create inflation, but what happened on friday you had the unemployment rate ticked down and wages came down. so your phillips curve

framework, at least for that, blew up there. i'm wondering if we are maybe potentially in this world, bill, perhaps we can have low employment and lower wages as well and that maybe that connect the fed is making is an errant connection >> and, in fact, exactly what chair powell said a few years ago when he said we don't look at models because models have failed us. economists have failed us because the forecasts have been so wrong they've been expecting higher inflation as we got more and more disinflation. i think chair powell has learned his lesson to say we're looking at the data. we have to have enough data to be convincing. as a lawyer he will have to say the bulk of the evidence has to be convincing enough to convince a jury and here the jury is the fomc >> steve >> it's a weird world here, kelly, and you can see the weirdness of this world by looking at the nfib survey this is the small business survey done by our friend. 41%, a net 41%, are looking for

jobs, and in that same world a minus 10% see higher sales and then look what's happened to the percent planning to raise prices it crashed down ten points on the month to the third largest decrease in the 50-year history of this survey and at 24, kelly, it's back darn near the average of the past several years which is just 21 those planning to raise prices so there's good evidence here that both will have hiring going on but also lower inflation in the pipe >> steve, also, i want to circle back to what the chair is trying to tell markets. we could joke and say it's pretty obvious he's telling them they're going to keep hiking the question is, when will they believe him, and when will they believe that he's either going to hike because he wants a steep downturn or hike because he doesn't believe one is coming.

what do you think he's really trying to convey here? >> i think, kelly, i think, kelly, the fed sounds to the market like the teacher did in chose old "peanuts" cartoons i don't think they're hearing it anymore. wonk, wonk, wonk i think that's what it sounds like to them i went on and had the new comments at 12 chock clock from michelle bowman, the fed governor, and they're not hearing that either. i think unless the fed steps up and does something that i've been chatting about with my friend and some other folks and does some yield curve control, that is goes in and tries to push up using quantitative tightening, the long end of the curve, i don't think it's in a position to try to rhetorically tighten conditions any longer. >> let me wrap my head around that mcculley is saying he wants to raise long-term rates? >> he's not saying that. don't read too much into that, kelly. it's just a little back and

forth -- it's a back and forth that i had with paul this morning where we talked about -- i've talked to other people about this idea how could the fed get the market's attention, and we both agreed that one way they could get the market's attention is by, for example, selling longer end paper >> oh, sure. we just want to get this three-year note auction in and see if it gives us more on the markets. rick santelli, what can you tell us >> reporter: this three-year note auction was off the charts strong i gave it an a real quickly, 40 billion three-year notes the auction yield 3.977. it was trading 4%. lower yield, higher, higher, higher price, so it priced well. the bid to cover 2.84 the best since april of 2018. here is a good one, indirect bidder, 69.5 you like this one, kelly these are foreign entities 69.5 my database goes back to '03 i don't have a bigger percentage

there. direct was very light at 13.2. otherwise it would have been an a-plus the dealer is taking 17.3% i also don't see a smaller number than that on my database. so this really was, quote, off the charts strong outside of the one fly in the ointment and that was direct bidders i think this goes a long way to the argument steve is trying to make that the fed needs to have a bigger field of vision as to what prices are doing to try to get into the same realm as investors because to step up for a three-year note auction, you have to be thinking that the peak of inflation is behind us >> bill, do you want to give a final word on that >> the markets are reacting like a recalcitrant child the fed needs to raise rates and hold it there until they see inflation coming down. >> but you don't worry, bill, if they wait to do that, they're going to have overdone it?

>> they may overdo it and they've told you the risk of overdoing is much less than risking inflation to take off again which they really want to avoid. >> that's fair steve? >> the problem, bill, and i would love for you to address this, the more the fed raises rates, the more convinced the market is a mistake is being made and the more the market actually reduces rates, which is why i think this idea of -- you have to make the trade be unprofitable for investors and for traders. right now it has not cost them anything to challenge the fed. >> if inflation expectations come down and nominal rates come down, real rates are unchanged and the fed is looking carefully whether the real yield curve has inverted or not and right now the evidence is not clear that it's inverted. >> what real yield curve >> inflation adjusted on both ends >> all right we'll leave it there for the sake of time, gentlemen.

now we need a five-minute postmortem to get on the same page thank you. we appreciate it we'll continue to follow the story. speaking of the fed, galaxy digital founder says they are the reason why crypto has crashed so hard. >> when powell took out his golden hammer and started beating inflation on the head, bitcoin and lots of other assets that had benefited from the easy money came down. 2022 was a grand washout for growth stocks and for crypto and so anything associated with it especially that was growthy, that had big cost and revenue shrinking got hammered >> such as coin base certainly one of those names down 86% last year now the stock is soaring 20% this week after today's news of a second major round of job cuts kate rooney is here with the details this is a 20% reduction for the second time in just seven months wow. >> reporter: yeah, kelly the first round was in june.

it was 18% of coin base's workforce. today, 20% of the remaining workforce so 950 people or so. it speaks to some of what mike novogratz was talking about, the end of an era when it comes to growth i spoke to brian armstrong, the ceo of coin base, about the decision here. he was saying it's emblematic of what's happening in silicon valley, this new focus on operating expenses and really tightening belts across the board. you've seen major tech layoffs that definitely speaks to what's happening here with coin base, but they said they're trying to do more with less. they're trying to get back to some of the startup roots of really being lean, and they're among the companies that seem to have overhired and really become what he described as sort of too bloated and as a result we're moving too slowly and we're definitely seeing this theme play out in san francisco, silicon valley, not just tech in

general, kelly >> 40% of the workforce gone in the space of under a year. did they higher that much? it's almost twitter-esque at this point >> reporter: twitter has been inspiring to some ceos you talk to the venture capital investors we speak to have mentioned that as a realization for some leaders that it really has shown people the extent to which you can compare back when it comes to employees here they had really geared up on hiring this was a relatively small company. i think it was 200 employees in 2017 it rose to more than 5,000 and there was sort of this competition and growth especially on the employee side. we've seen a mark of how well you were doing which is another thing brian armstrong talked about. a measurement of success and that has completely reversed and the measurement of success in the eyes of wall street at least or how lean can you be and how

much can you do with the resources you've got >> that is the mantra right now for sure kate, thank you very much. mortgage rates dropping to four-month lows. but how are buyers supposed to take advantage if there's nothing on the market? why did one upgrade zillow to buy? he joins to us make his case why our next guest is looking at industrials as we head to break the look across the markets the russell 2000 small caps up nearly 1%. the dow hanging on to a quarter point gain the ten-year note 3.61

welcome back to "the exchange." industrials and materials, two sectors that have underperformed the broad market over the past year but it's where our next guest is looking to ride out 2023 joining us with three of his favorite names and to defend this whole idea, the seen why are portfolio manager, cnbc's dominic chu rejoins us as well this will not be a wonky but wonderful thing. >> we have to save those for the next hour. >> yes, that's true. brian, it's great to have you. you focus on mid caps but, in general, why do you think this setup favors looking at

industrials, materials and the stocks that have cost your interest >> i think it goes broader than that it's about owning companies that are not tied to the generosity of the fed trading data points trying to guess the response the fed will have the paradigm is changing they will no longer come in and be generous to companies that need capital or support to drive cyclical demand. our focus on industrials is really in large part trying to find companies that control their own destiny and take the tail winds of secular as >> the names that have dividend paying capabilities to them and one of the things we've not talked about in quite some time given the notion we have treasury yields that are yielding -- >> what they are

>> nobody talks about dividend yields right now there are still investors who look to dividend yields as ways to own stocks and get paid while they wait. the curious part about it is if you look at the s&p 500 and the dividend yield we saw at the end of 2021, we had very low interest rates relatively speaking at the time and yielding about 1.2% for the s&p 500. fast forward to today and the market sell-off we've seen, that yield has escalated up >> still not that great. >> still nothing compared to ten-year treasury note yields but it's something and i think when you talk about dividend paying stocks, oftentimes you look to some of the industrial names, some of the materials names, which might be, bryant, one of the reasons they are attractive for some people to own because of that dividend paying capability. >> the dividend is just one way, we don't have a bias as to what we want a company to do. we want acquisitions, organic

investments, et cetera so the dividend is nice to have, but what it's telling us these companies have the ability to use a consistent cashless stream it could evolve from what we saw in the past decade, again, in response to what the fed is now doing. the companies you see, they've transformed themselves through asset sales and then acquisitions and partnerships from a cyclical exposed end market to a company that will provide solutions and answers to the most challenging problems we have like climate change or onshoring. the end markets and the stability that provides in terms of cash flow will allow for higher dividends but also is massively underpriced today where we see the stock trading today. >> bryant, can you give us a word on valuations as we look at these names? what are the multiples nowbut what might they look like in another few months' time as recession risk bes go even higher from where we are

>> what you will see in the companies, you see companies priced under the view they're cyclically exposed the next three months to three years is a change in the character of the cash flow stream to higher margins, more stable, more predictable across all three of those stocks today. >> dom, it will be an annoying year >> it could be an annoying year as you characterize it or stock picker's year. bryant and others try to find relative opportunities, and i would say this, if you look at the valuation standpoint, we focused on the valuations for the s&p 500. if they've come down from a high of 24 the last few years down to 17 or 18 which some argue is relatively high, but if you take a look at that versus small cap or mid cap parts of the market there might be relative value trades that start to play out and that lends itself to people who pick stocks in certain key parts of the market across all

caps >> absolutely. well said. we'll leave it there, general. bryant vancronkhite and dom chu. how much upside for ai or will it be another meta stumble? plus, the pandemic's pet boom still has no sell ratings on the street. the ceo joins us live from the jpmorgan health care conference. as we head to break, a look at the dow heat map unh the biggest ggd.laar

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welcome back to "the exchange," verybody. we went negative and the dow is now up 62. the nasdaq leading the way up half a percent let's check out the mega cap names, apple in the red again today, 129 only tuesday but posting its eighth straight negative week. amazon up 3% on the bottom there on pace for its third straight day of gains for the third time since october. elsewhere, key bank upgrading bumble to overweight with a $27 price target around $21 today they say dating remains resilient and they believe bumble is best positioned from international growth and a weakening dollar the stock up 6%. trash talk on the street, republic services the worst, waste connections still their top pick they're also upgrading casella waste, the smallest name

$4 billion cap upgrading to a buy who knew up 2.5% today. over to tyler mathisen california congresswoman katie porter announcing her campaign for senate today. porter has made herself a name among progressive circles known for tough questioning during hearings on capitol hill porter's announcement comes amid uncertainty whether california's 89-year-old senator dianne feinstein will retire at the end of 2024. feinstein said she'll make an announcement about her future at the appropriate time two democratic congressmen have filed an ethics complaint against george santos. the complaint calls for an investigation into possible violations of campaign finance laws santos, the freshman new york republican, has previously admitted to exaggerating parts of his background and in response to the complaint says he has done nothing unethical. and the mega millions

jackpot over a billion dollars the jackpot hasn't had a winner in nearly three months and is now the fifth largest in u.s. history, a winner who opts for a lump sum in cash could take home nearly $570 million. kelly, on that note, back to you. >> thank you, tyler. see you soon stimll ahead the housing market has been hit hard by rising rates we'll pln nt.exaiitex (vo) with verizon, you can now get a private 5g network.

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welcome back to "the exchange." prospective home buyers are getting a little relief. rates are hovering just above 6% down 30 basis points from last week my next guest predicts an improvement in the spring selling season and double upgraded zillow to buy from underperform joining us now is curtis nagle >> appreciate the time >> i'm thinking of a group on our air talking about their third round of layoffs why is zillow going to benefit

from the same climate they are suffering from dramatically? >> a really good question. we do think that trends could stabilize or trough, mortgage purchase applications are stabilizing the past three months that gives us confidence it will start to improve number two, if you look at growth in 2024, it can go 10% up on improving affordable, on rates going lower, and pricing getting better number three, specifically for zillow, a number in the works right now. but we think it could get growth above the market we think it could double from this year to 2025 and shares are still below historic multiple

averages, so we thought it looked attainment. >> when we all look at properties and, of course we all do we're on the website stalking things all the time, the real money is when you click to connect with a realtor is that the idea >> that's correct. if you went on the site and click on a button on the site that says i'm interested in this house, that sends a signal out to the buy side agents that are subscribers to zillow. those leads then can lead to hopefully a positive transaction. that's how zillow makes most of its money. >> i was speaking with an agent who says this is the least amount of inventory on the market in her town in 40-plus years in business. that has to be a major headwind for a site like zillow >> it has been you look at where trends have gone, the market down basically

since the fall of 2021 so, yeah, look, things are still difficult. we're in the middle of a buyer and seller strike but we do think in terms of friends, they start to get better, at least the next couple of months, again, as pricing eases and mortgage rates get better. that should bring some people back into the markets. still tough for sure. >> what's the valuation and what kind of multiple do you think is justified? and do you think that we can reasonably forecast their earnings the next couple of quarters in this kind of market? >> great question. so in terms of about 16 times forward ebebitda, a good questi, if you look at how their revenues have trended relative to markets, they're pretty much in line or have been for the past four or five years.

it is a market call in terms of -- we're positive on zillow but do think the market can return to growth if that's the case, zillow should be right there with it. >> finally, this isn't the only company you cover. an underperform or wayfair does that jive with what you've been telling us more broadly >> for sure. starting with wayfair, we are underperform rated, a better housing market that's not a bad thing they're not a direct beneficiary. as we outlined for our sector yesterday, we do prefer earnings quality. i'm looking at wayfair, earnings have been pretty volatile. the margins are negative cash flow is not particularly high earnings quality isn't all that high for wayfair looking at how the business is done, a better holiday but we

don't think that's sustainable due to the fact we think it was in part driven by more vendors doing to them and that could fade in time rh, the housing market has been on top and suffering from rates. they're a proven caretaker over years, a bunch of initiatives like a new international business and a product launch. we do think they can return to growth in 2024, and last week they announced or put out a press release that basically said they had accelerated the share buyback. that could mean business could be more confident in the business >> on zillow in particular, 14% in two days has people asking questions and you have a little bit of the reason why. thanks for joining us, curt. we appreciate it >> thanks, kelly >> curtis nagle. another day, a another $29

billion valuation report for chatgpt. microsoft could cough up $10 billion in the latest round of funding but there are also big risks emerging we'll cover that next on "the exchange." 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. bring on today with comcast business. powering possibilities. this tiny payment thing- is a giant pain! hi ladies! alex from u.s. bank! can she help? how about a comprehensive point of sale system... that can track inventory, manage schedules- and customize orders? that's what u.s. bank business essentials is for. (oven explosion) what about a new oven, can u.s. bank help us there? we can serve loans in as fast as 12 minutes.

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welcome back microsoft plans to invest $10 billion in open ai, the company behind chatgpt, part of its quest to take search market share back from google it would give microsoft 75% share of open ai's profits until it makes its investment back and would have a 49% stake the news website doubling down on the $29 billion valuation reported by "the wall street journal" but the technology is not without risks like these new reports that hackers are using chatgpt to write code for malware because hackers are lazy, too. eamon, what do we know

>> reporter: we know the folks at checkpoint research have been looking into the dark web and they're finding hackers are already talking about how they will use chatgpt and already are using chatgpt to write malware what they're finding, they tell us, a lot of these hackers who are doing this right now don't even have any software development experience whatsoever they don't have the skills needed to write software but they're writing it with chatgpt anyway the other thing we're seeing here from checkpoint criminals are spotted writing code that can steal documents and encrypt files, some of the basic things, and ai is used to create new dark web marketplaces. i talked to a person at checkpoint and he said this changes the game for hackers because it changes who can be involved in writing software take a listen. >> you don't have to be as highly skilled, to understand

code or how to correct the different pieces when creating a malicious attack you can describe what you want the tool to create for you >> reporter: what is interesting about this, kelly, i talked to mark about this earlier today. the software industry itself, malware is software, just written for a bad purpose. the software industry itself is now facing this kind of change as well because you could see a future of automation where some of those high-paying, white collar jobs developing software are outsourced to a bot. it means a lot of people will lose their jobs. >> sure. so the hacking piece does make it interesting because one thing you never want in an acquisition is open up self up to a big legal risk in the future what are we learning about microsoft investing $10 billion? >> let me give you an even bigger number, kelly $79 billion is what they will commit to in investments and

acquisitions add on act vision, $69 billion in video games and ai $10 billion over a period of time. so, look, we know what they're investing in we know where they think the industry is going. and, yeah, let's compare that to meta which took a shellacking because of all these losses in the metaverse. they believe that is the future while we are looking at microsoft saying, no, no, it's ai productivity and gaining -- >> you foe where my sympathies lies i think the ai stuff is creepy and fascinating and amazing and is new and game changing the question about monetization requires them to have technologies that it has done and replicate it into others like google. >> we're seeing tons the information reported over the weekend microsoft is planning on putting this into office apps, microsoft word,

power point. it will come back and makeyour power points and essays for you. everyone is working on the ai ty the image thing, show me a picture, and it makes that picture. google is working on it. apple, not so sure they're not strong in ai this is the best one >> if i'm siri, this is a potential threat to me siri is also artificial intelligence and chatgpt is better in ways eamon, let me bring you back in. going back to the risks here that something like using the website for hacking or other nefarious exposes from a legal point of view, a, this tells you how much moderation -- content moderation will need to be from a business model point of view it might be terrible the amount of people who will have to be involved in what it's allowed to do and not and,

again, questions for the companies backing this about whether in 10 or 20 years' time, like we're seeing with social media, society will be coming after them with a big shakedown. >> reporter: it's a tool that can be used for good and bad purposes what the chatgpt people argue this is like microsoft word. you can use it to create a document that is criminal in intent -- >> true. >> reporter: that doesn't mean microsoft is in cahoots with you in that crime, right they're saying this is just a tool that's out there. my question about all of this, you talk about that mode, can you use chatgpt to write software for a chatgpt at some point they become se self-iterative and it's terminator >> why do you think if this is

the most most important video source, what should the rest of the industry be doing to compete? >> plow tons of money into ai. that's what it is. we've seen this with the voice assi assistance the arms race between alexa and siri and google and they're basically at parity now. this is the next level this openai product, which microsoft is involved in, is the leader but that doesn't mean someone can come up with something better it's advancing so quickly, kelly. a year ago we would have never imagined we could tell a computer to draw me an image of kelly evans sitting at a news desk and, boom, here it comes. >> maybe not me but we haven't even talked about the images, the music -- >> voice they came out with one that can mimic your voice, three seconds of a voice sample from you or me and they can create a bot that can talk forever in our voice. >> and now we're really out of a job. >> i wrote this whole hit on

chatgpt -- >> and had a bot deliver it. >> that's not really him >> i'm dating myself but that's where we are >> you are, yeah eamon javers and our own steve kovach, appreciate it very much. shares of zoetis are down 14% and taking a big dip in november on a sales warning. we'll talk to the ceo kristin peck about the sales drop and if she expects parents to get frugal or not. g like it did yesterday. while it's more unpredictable, its possibilities are endless. from paying your people from anywhere to supporting your talent everywhere, we use data driven insights to design hr solutions and services to help businesses of all size work smarter today. so, they can have more success tomorrow. ♪ one thing leads to another ♪

welcome back that pandemic pet boom boosting zoetis, shares up 49% since the march 2020 low they're also off the highs nearly a year ago to the day by about 29%. the company lowered sales guidance back in november citing supply chain issues, vet workforce challenges joining us is kristin peck, the ceo of zoetis along with our very own meg tirrell kick things off. >> reporter: thanks for being here with us let's start with what jpmorgan called the covid puppy boom and the fact the majority of your business is companion animals. what are you seeing in terms of how resilient the consumer and the pet owner in the united

states is where some analysts pointed to some softening there in europe amid the economic troubles >> we see an incredible strength in the companion animal business globally, and that is driven by exactly what up said which is that pet owners are more engaged than ever with our pets, spending more time at home with their pets and part of it has to do with who is adopting the pets, millennials and gen-z, a lot more high-income households are adopting pets, more than one pet. with pets as a more important part of the family, we see the resilience of the industry when you add that to the innovation of zoetis, significant above market growth led by innovation in important areas such as the number one franchise, dermatology, and even in europe we continue to see strength in our portfolio there. >> reporter: one of the things kelly alluded to was capacity issues there are so many more pets, not

enough vets to help take care of all of them. how is that shaking out right now? >> what we talked about that boom, it was truly a boom and a lot of those were puppies. lots and lots of visits last year thankfully for your furniture, the puppies grow up to dogs, and they need less visits. the you're talking about is really important and really what you see is a lot of burnout and turnover what you saw in other industries, turnover here meant less productivity in the vet they could see fewer patients. vet visits are still on the incline. as you take it before the pandemic to now, they're still up and historically, they grow at about 1%. but for our business that's not the most important factor. actually, overall the animal health industry has grown on average 5.8%, so it really drives that growth more and more is innovation and the importance of the pet and the owner's willingness to spend when they go to the vet.

>> as we debate the labor market and how strong it can remain, do we understand you are hiring a lot of people who might have been laid off from the tech space? if so why, and do you expect your business can be recession proof more or less this time around like it has often in the past >> well, i would say if you look at the pet industry in general, we're not recession proof but we're pretty resilient if you look at, say, the last great recession in 2009, the industry grew at 2.6% and historically zoetis over the last ten years has grown anywhere from two to five percentage points ahead of the industry that is because it's very resilient. we did a study, for example, for an average household if they had an income change of negative 20%, would they spend less on their pets and no one would spend less on their pets in fact, there's research from the human-animal bond research institute that 86% of pet owners would spend, quote, whatever it takes to take care of their pet. i would say a lot of that are

our colleagues we're a purpose driven company and we've been able to attract great talent in the digital area to help fund some of our great innovations around artificial intelligence and diagnostic with images we're proud of that track record. >> i want to ask you about what's going on with the supply chain. i think that did cause some hiccups in the last year how is that turning out right now? >> yeah. like many companies, we definitely had supply chain issues last year the beginning of the year they were focused on our monoclonal antibodies, we have three for pets, and that was because we were competing with human vaccines for a lot of those inputs understandably they went to human vaccines first which was a challenge. what we saw in q2 and q3 were challenges in our parasid sighs and getting that with supply chain issues was hard for us the summer when everyone makes sure they're getting the medicines, we did see that, but the good news is we've resolved

those issues and back in full supply in fact, we ran great pro mos in q4 such as great brands. we're happy to say most of those are behind us. it was a challenge for us in q2 and q3. >> one thing i'm curious about, that trend where a lot of people got dogs during the pandemic you heard anecdotically some aren't keeping them now that we're all back to work has that turned up in your bottom line at all >> they're returning them in the same percentage they have. everyone has been waiting for that story, but we spent a lot of time and partnered with shelters, zoetis for shelters, and they're not seeing that trend at any more higher level than you have and part of of that is a lot of people have remained home with their pets and making them spend more time with them. we see these trends of companionship which a lot of us learned during the pandemic as important durable, long-term trends and add that to our

innovation and we think this will be strength for animal health and for zoetis for the future. >> thank you so much for being with us. kristin peck, great talking with you. >> thank you so much. >> people love their dogs and so do i one more interview coming up from the jp morningen health conference, dr. rob califf. >> a personal agenda i see what's happening meg tirrell and kristin peck. the emerging markets are running off with the bulls but if you think buying exposure is the way to go, you might want to think twice. 'lte ywel llou how the pros are positioning next .

welcome back one more thing before we go and that's emerging markets. the emerging markets index is up 14% over the past three months as you can see here. seema moody has a look at where and who institution institutional are seeing growth and why china is a part of it. >> we've been speaking to

funding managers. this year they're more interested in finding secular growth stories to invest in. strategists at goldman sachs showing 70% of emerging markets benchmark funds right now are overweight mexico and brazil, while only 30% are overweight china. they say that's one of the reasons they see more upside potential in china morgan stanley expecting an additional 16% gain in chinese stocks by the end of 2023. and they're also anticipating investors to diversify their chinese holdings going beyond the large cap tech names we focus on they're recommending chinese sports wear companies as the country reopens, aircraft company boc aviation, cathay pacific and midea. even with the 7.5% gain we have seen in the china index over the past week, they argue at goldman sachs that china's trading at a 19% discount to its emerging

markets peers and there are thematic etfs a number of fund managers were mentions like the ishares self-driving etf, the global lithium etf with china exposure. >> that's where people go okay, is this whole thing coming down to a bet on china, and its reopening? you have doubters who say can it live up to the hype? >> india and china make up 50% of the emerging markets index and with this reopening story under way, there's clearly a lot of anticipation and excitement around what this could mean for not just the china specific etfs but acccaterpillar that could sa benefit on the ground in the mainland that will be a big topic on the earnings call later this month. >> caterpillar, starbucks, you name it. that does it for "the exchange." the smart money is looking for growth in emerging markets we're going to go value hunting here there are alternatives to stocks out there and we run through them "power lunch" begins right now

>> and welcome, everybody, to "power lunch." kelly evans i'm r mathisen climate change, tw today. president biden discussing it at the north american summit. fed chair, jay powell, talking about the fed's role in fighting it lots of people talking about the news that ozone layer may, in fact, get this, be healing plus we'll talk to an analyst who has ideas on how to make money off of our clean future. and forget the cpi, the ppi, pmi, all the data points we have our eyes squarely fixed on the american consumer we will look at some alternative economic indicators that may paint a different picture of the economy than what fed and the markets seem to be focused on. very much looking forward to that hi, everybody. let's look at stocks in the green right now, although they were slightly negative earlier on the dow up