. good afternoon, everybody. welcome to "power lunch" alongside kelly evans i'm tyler mathisen big news out today, a big drop in inflation, december cpi falling just a bit the first drop big in the sense that it's the first since may of 2020, kelly. >> plus, a food fight.

mcdonald's versus young's. big macs versus tacos. which is the better buy right now? first, a check on these markets. dow and s&p higher than nasdaq earlier at risk of breaking its four-day win streak. >> get to the markets in a minute dom chu and kristina partsinevelos. dom you first. >> big stocks. dow components disney, probably stock of the day. that stock targeted by activist investor nelson peltz trian management jockeying for a board position pushing for changes there, although says those change doss n changes do no involve bogb iger or breakup of the company. executive chairmanship from nike taking over. a lot of movement. disney shares up 4%. watch what's happening with momentum upside on industrial side of things caterpillar shares one of the

few if not the only s&p 500 dow stock notching a record high mining, construction equipment, showing upside moves up 2.5 intraday keep an eye on disney and caterpillar from the dow side of things christina, what are you checking out on the tech side from the nasdaq >> thank you, dom. still seeing a lot of names hovering near one-year lows. questions about when is this bottom going to settle in? tesla, for example 18% off 52 week low and one of the weakest on the nasdaq 100. trending lower cloud name, zscaler, workday lower. conflicting messages morgan stanly downsg grades, a zscaler down, and revising guidance, lastly end with airbnb trending higher over 4.5%. continues to be a hot name hot name yesterday, too.

travel sector as a whole has been in focus after some recent positive analyst commentary. ty >> christina, thank you. consumer pry index falls 0.1 percent from november to december pretty much as expected and is, however, the biggest monthly drop since april 2020 peak of the pandemic year over year, headline cpi did rise 6.5%. that's still high, but it is the smallest year over year annual increase since october of 2021 numbers reinforcing what are the biggest concerns for ceos this year recession and inflation. joining now to discuss what he's hearing from ceos, steve odland, president and ceo of the conference board and also a cnbc contributor. always good to see you happy new year great to be with you recession remains the number one concern of ceos generally, but inflation is second, and so i would think that ceos feel a

little bit better today than they did yesterday >> yeah. hard to know the conference board just completed its major annual study, and we have over 600 ceos involved in this study around the world, and you're right. the top three worries of ceos around the globe are recession, inflation and also labor shortages. that's an unusual compensation, tyler. typically, going into recession, you tend to see layoffs, which we see a little of it, but in the aggregate here, we have, we have unemployment at its very lowest level basically full employment. to be external factors those top internal factors, how do you drive revenue growth and drive talent retention and acquisition? and the then profitability that comes out of it. what are ceos doing about it taking steps to amp up innovation and digital

transformation they're taking steps to focus on high-growth geographies and high-growth products and services and reducing costs. that's important as investment in digital ai and these other areas in order to make um for the labor shortage. >> you point out a couple things interesting here ceos are concerned about recession, but they say, i can't get enough workers those things seem opposed. the other thing that seems opposed, they're worried about recession but also worried about inflation. how do you fight inflation raise interest rates what does that do? increases the possibility of recession. >> yeah. that's right so this is a very unusual time typically when going into recession, you're seeing a big hit to employment. this is the first recession we've seen where you've had full employment and labor shortages as result. therefore, this is a fed --

created, people say it that way -- fed-created recession interest rates are raised -- >> talking like we're in one you don't believe we're in one right now, do you? or do you? >> most economists say we will be entering one in this quarter. anytime now, tyler, it's going to depend, but regardless it's weak and what ceos tell us and they need to deal with that. this cpi report, yeah a little better, but headline report was impacted by a little lower gas prices in fact, if you look at the core without food and energy, it actually went up month to month as you noted we're not out of this yet which means the fed will continue to raise rates and what ceos are really worried about where does it end and can they have a near soft landing, and they don't think so. >> steve, curious how ceos behave this year when staring at an economy that could be going

up the phrase that we sel self-reforcing, reflectivity, i think he called it anyway, trying to advance, hang on to labor, so hard to get in the first place? what are they doing about capex? what are you hearing >> a really important point. ceos could create recession by taking action. this time, typically you see big layoff ares and you're seeing a little in the financial sector and tech in total, you're not seeing layoffs. you're seeing employment growth. that's a big difference. when you are seeing things scale back is in capital investment. part of that is due to the increasing cost of that investment, and, you know, that's driven by the interest rate so you're seeing a little less investment there if you see a lot that could, you know, exacerbate the situation and create a huge, huge recession, but i don't think that's what is going to happen that's not what ceos tell us they say relatively shallow,

relatively brief and should be through it by end of '23 and should start seeing inflation hit fed goals ip around 2% in 2024 >> yeah. we'll see. steve, appreciate your time. steve odland with the conference board. turning back to markets rallying as cpi cooled in december back towards session highs our next guest is warning a soft warning is unlikely and expects higher rates for longer. senior portfolio manager at franklin templeton investment solutions. great to see you, mike why do you think we're heading for a harder fall here w >> well, not that it's guaranteed don't get overly excited great to see green on the screen after such a rough year. last year one of the top five worst markets in almost 100 years, but despite the good cpi report today we have to remember, there's still a long way to go. the wages and services

component, the cpi, stickiest and will require most amount of work the fed will continue to raise rates and they know the lessons of the 1970s they're going to err on the side of raising too much rather than declare victory too early. if the fed is successful winning the battle with inflation what are we then left with? the economic slowdown and recession. how bad is that? what is the impact on earnings and that could be the next major head wind for the market it's important not to declare victory too early right now. >> one of the things that's interesting in my notes from your earlier conversations from one of our producers is that you say, higher rates will shift flows from equities to fixed income basically, that feels to me -- i read a piece from howard marks a couple days ago. this feels like an epical change in investing, for the past d decade or more bonds were not investable you got no return for doing that now you're getting to a point

where the there is a normalization, let's call it, of interest rates and so fixed income looks much more investable >> it's going to be a major regime shift, tyler and it's going to be generational right? a decade -- a generation of investors have come to the market putting money in savings account or buying bonds has done nothing for them used to say not alternative but equities now there are alternatives the equity market has to adapt one of the major areas you're going to see that adaptation is around equity market valuation equities have to provide more in the realm of earnings and profitability in order to garner those types valuations they saw in the past. the types of stocks that are going to do well when fixed income is an actual option are different than those over the last ten years you're see a bigger shift in value in areas of the market potentially growing a little less, a little more steady,

slower, but where there's greater earnings profile today. >> very interesting. sort of agrees with what howard said don't want to put words into this mouth far from me to do that, but the idea is that it the kinds of storks that will excel in this different, there is an alternative world, will be qualitatively different from what worked in the past. high growth, high beta kinds of names. so let's talk about abroad our investors worried about ukraine? worried, more worried about china? what what should they be more worried about? >> yeah. look, part of the positive news on inflation is not the only positive news in the market. towards end of last year we saw a lot of the saber rattling coming from china cooling down you saw the war in ukraine start to slow down as we entered the winter issue is, neither of those two issues are going away. structural issues we have to deal with. war in ukraine starts to flare

back up in the spring and major supply considerations. china is still going to be a very turbulent relationship. you saw legislation coming out of the house of representatives still very much anti-china trade disputes and don flict there. this is adding to inflationary pressure pushing deglobalization more reshoring and also add to potential volatility in markets. again, don't want to have a false sense of confidence. >> sure. when it comes down to tactically what to do with the backdrop, overweight recommendations of yours, utilities guest yesterday, analyst utilities, lack of better word trading to the highest value since 2004 already had a good year. what's your response >> not all utilities of equal. pay attention to valuations and there are cheaper values in the market duke energy trading at utility sector as one. look outside utilities for

utility-like performance why do they have a good year last year? because strong dividends, less sensitive to economic cycle. many issues we may encounter in 2023 other sectors you can look for that aren't quite as bit up as utilities. things in health care. companies like pfizer. the telecom sector very, very resilient in the economic slowdown. stocks with at&t very high dividend and still not priced up. you can even go in more traditional sectors. industrials. lockheed martin or other areas of the market outside of utilities that provide lower beta, less attention to the economic psyching. an important area to diversify to this year if we continue to have some of these head winds come through. >> mike, thank you very much appreciate your time today. and coming up, a food fight. mcdonald's versus young's, chicken ggnuets versus kfc fried chicken. which is the better stock to buy now? two analysts make their cases.

food fight, next on "power lunch."

a get of a food fight brewing. two names popping up from multiple firms one would be mcdonald's. the other, yum and mcdonald's up double digits in the last three months but which of the two should you use to feed your portfolio right now? here with a bull case for yum, david tarantino. bear director of research and

senior research analyst and bull case for mcdonald's nick feteian wedbush analyst. nick, go first and merrick the case for kwai you think mcdonald's of these two may deserve more of your capital right now? first, thanks for having us. i think the answer is pretty straightforward. just a, a straightforward simpler story with mcdonald's. i think the visibility is very high, around 2023 expectations i think in an environment where the customers will become for value conscious. mcdonald's seems to win consistently european concerns are overblown. clearly gaining share in europe and i'd rather err on side of caution to europe than china and i think volatility on china is here to stay and much rather own shares of mcdonald's than yum. >> david, almost like we could

put up a chart of, you know, china stock market versus the s&p or something and often behave like proxies. do you like yum because of the china factor what about the volatility nick's talking about? >> yeah. thanks for having me on the show, and, you know, first i should preference this saying we have an outperform on both mcdonald's and yum, a bit like asking me which is my favorite child, but we do think there's more upside in yum! and the china recovery is part of that as i look at why we like yum! we think structurally over the next few years they can compound more top and bottom line growth than mcdonald's and do that with a model that requires less capital, and we think inherently that deserves a higher valuation, and in the setup for 2023, we do think there's a lot of emerging markets including china but also outside of china that are still recovering from covid, and we think that can

lead to really strong top-line performance for yum! and that should help sentiment and potentially help valuation metric expand. one thing i would note is yum! look out to our 2024 estimates trades at a discount to mcdonald's and we think that that can reverse as the sentiment improves and they show good operating results for the year. >> nick, do you want to respond to what he just said there what david said? >> i'm looking at 20.4 but 2024 -- yum! traded over 19 times and mcdonald's trading sub-19 a month ago, you know, i just think now looking at 2024 is a little, you know -- just don't have that type of visibility i do know that i have very high degree of confidence in mcdonald's 2023 numbers, and i

just don't think it's -- you know, worth taking a risk on the volatility in china. particularly the covid numbers, if they go up. >> all right interesting conversation, gentlemen. appreciate your time nick and david, thank you. and haven't settled the question which would you rather, tyler, mcdonald and yum! brands? >> probably go for yum! brands, more variety of -- restaurant selections, i suppose. >> if tacos and burgers aren't to your liking maybe a subway sandwich is. get this privately owned fast food chain reportedly obtained advisers to report sale of the company value at over $10 billion. not huge considering how many locations they have. a subway representative told cnbc it doesn't comment on structure plans but focused moving the brand forward with transformational journey to help franchises were successful and profitable drama from recent year. up next, california reeling.

the infrastructure making a shocking 180 going from $100 billion surplus to a $22 billion deficit. we'll look at how. plus nelson helping disney laying out a case for a disney proxy fight. we'll be right back on "power lunch. stay with us.

welcome back california reeling from its most severe and sudden reversal in the state's financial history. robert frank here with incredible details. >> just six months a $100 billion surplus. now looking at a deficit over $20 billion. we've never seen a reversal of f fortune like that for california known for booms and busts. all about the stock market california gets from top 1% of taxpayer and all of that or much from tech. ipos, stock options, all the stock sales. we know what's happening with stocks over the past year. capital gains have gone from over $31 billion last year to about $16 billion this year. >> wow. >> that's cut in half. we haven't even seen the worst of it, when sort of taxes get paid in april. we're going to see what happens as a market goes forward, but

they have a $300 billion budget they just proposed by the governor and haven't really cut spending by much, and look at pre-covid, budget was around $200 billion they're spending has gone up by a third throughout this covid, and they just, until now, haven't had to adjust. >> have people -- is the wealth migration affecting california in the way that we hear it is affecting in new jersey, new york, connecticut, so forth? >> it didn't last year, just like new york, a lot of millionaires and billionaires who left, but those who stayed made so much more in wealth and cashed in stock, it masked that problem. now we can start to see that problem more exposed, because the people who are staying in california are just not making as much or becoming millionaires and billionaires. >> and a couple dynamics here as well what do they do with the surplus? at one point considered or gave checks to blunt the cost of

inflation to constituents now feeling the market was there a rainy-day fund is this deficit going to trigger consequences >> i had a whole chapter in my last book about california's budget problem where they're so reliant on the most volatile of the income stream which is the wealthy. right after that, no the because of that, but right after that jerry brown pass add rainy day fund they've now got $30 billion in the fund terrific but legislature already saying, spend it to make up this $20 billion. two-thirds already could be spent over the next year and that's the good thing. the other thing, you mentioned they gave a lot of it back in the form of rebates checks not repeated, but, look, the markets, unless they really rebound, unless we have an economic boom nationwide in the back half of this year, you're just not going to make that up and new york is in a similar situation. not because of tech but because of wall street. >> wonder when you think about muni bonds and people looking for yield everyonewhere.

a sure thing not saying default, but bigger risks than maybe you thought. >> and pensions. a lot of california's cost bail out pensions now also deeper in the hole. >> true. >> because the stock market. new york, illinois, california all of these folks now have pension obligations that add to the budget pressures. >> robert, thank you very much robert frank. to bertha coombs for the cnbc update. >> what's happening at this hour u.s. attorney general merrick garland appointed a special counsel to investigate how classified documents ended up in president biden's home in wilmington, delaware and an office in washington, d.c. his choice, robert herr previously searched as u.s. attorney for maryland. >> earlier today i signed an order appointing robert herr a special counsel for the matter i've justified described the document authorizes him to investigate whether any person or entity violated the law in

connection with this matter. >> on capitol hill more house republicans are calling for representative george santos to resign fellow new york congressman mike lawler sy said santos loz suppot of constituents and that santos should step down, and also it was added, "obviously he won't." government agencies say global temperatures did not set a record in 2022, but it was the fifth or sixth hottest year on record the agencies agree the important trend is that temperatures over the last seven years are above previous levels. tyler? >> thank you very much, bertha coombs. ahead on "power lunch," yields on the move following today's cpi report investors looking for any clue on where the fed will take interest rates next. we will hear from pimco's jerome schneider next with rates the way they are, maybe not the time to buy a

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welcome back to "power lunch. inflation is cooling just a bit. the dow trying for its first three-day win streak since, guess, november. bond yield pulling back some ten-year yield a tick below 3.5% at 3.451 the question on investors' minds now, will the fed keep raising rates, or pause and have a position meantime. live at cbo our own rick santelli and managing director and head of portfolio manager at pemco. rick, yours. >> thank you, tyler. welcome, jerome. happy new year get right into it. when i looked at the landscape especially close crpi and a big drop in buying, first thing thinking how juicy yields look out to the three year. your thought >> recalibration meaning bonds

are back yearly yields back investors see it across the curve. despite? your outlook is or what you think the federal reserve will do there is a song of safety front end that we have to be cognizant about despite uncertainty where the economy's going and where the preserve might ultimately prove its defstination to be. >> and the short end, investors think, love it 410, 414 in a two year or 440 in a t-bill but rollover risk. >> right not only capital today to preserve but capital over the next one to two years to preserve that has to allocate. reallocation of capital over the past year one that higher rates, higher cost of capitals led to recalibration of risk. where we stand today bonds offer revolve total precedence over portfolios simply said, consider this in an environment no matter what interest rates, where they're headed

inflation might be a factor data point du jour we need to be in position to put it in a portfolio and rationalize income is actually something substantial. >> a big discussion on cnbc this morning. who is correct can the market or fed be wrong discussed this off-camera. not an easy topic. rime going first i think markets wrong for one reason if the information of the moment, people make markets, people that take markets willing to financially put themselves at risk to give you a price. that price at that point in time, given all the information is the price if things change, it will replace. your thoughts? >> actually see that in markets going on behind us each and every moment of the day. the tension between destination where the federal reserve and monetary policy and market expectations are jobs clearly remaining hot weekly jobs data pay attention to it. >> continuing claims. >> exactly. >> a big deal. >> the tension here is

rationalizing what is currently the truth in the market versus where the destination make reside three, four months and evolve aring over time earnings, s&p valuations things come under pressure further in the economy imcoe expecting results over the course of the year. >> a point in time using things like the greater theory. people, investors buying things that didn't make sense. >> right. >> always knowing there's negative interest rates. a great example in europe. why buy them next person will pay more than you. don't mean it insulting way at all. creating a sentiment with the fed. many people believe there will be a recession, yet trading stocks on long side and interest rates looking for rates to go down how can you explain that >> i think look at a different paradigm capitalization people trying to buy on the fallout looking at a situation second component of returns, full

return is income and income generation you don't necessarily need to be exactly right in the forecast of the person to come out to you today especially with rates at 4% and 5% and some offering 5% to 7% yields actually attractive. precision isn't exactly what's needed recalibration of rates, liquidity environment higher cost of capital are all things actually playing positivity to the outlook for investors whether institutional or retail. this is a safe spot. >> everything pause, pause when is the fed going to pause i personally think remain sticky and high for as long as possible, because i don't see any golden reasons why they should put their butts on the line and do anything different than that. but investors are trying to maximize returns there are, they are at odds a bit. what in your world could give the fed a concrete reason to draw a line in the sand and pause? >> a difference between a line in the sand and drawing a line with a permanent marker.

fed avoiding using a permanent marker pushback today in realtime with regards to how we think about the market fed is pushing back on easing financial positions. really what the market has to focus on gets too easy, fed might push back. >> no matter what the future holds. i believe some of my compatriots on the jersey side have a question. >> leave it there, rick and jerome thank you very much. not a bad time to be manager of a short-term high-income fund. let's turn to commodities, oil is closing for the day higher energy, best performing sector in the s&p 500 let her out of her box. >> out of my box. >> to the parents' table here. >> thank you, thank you very much a little -- turning to oil it is higher today for the sixth straight day of course, optimism thanks to inflation report and some jitters maybe the cycle will slow its rate hikes and then won't see a huge drop-off in

crude oil demand commodity prices volatile but really feels like there's been a little sentiment shift in recent sessions, and, of course, turned more optimistic with china's demands front and center especially with the lunar new year around the corner trading energy sector top group today. every component is up more than 1%, but there are two notable movers first up is hess record high. then slb talked about that name at a high since 2018. >> wow the most important person this year you know why energy could spoil the fun look back to 78 got down to, what? below 74 china reopening. gas price as help. if they come back bad news bears. >> certainly can't expect that oil and the energy complex is going to deliver that kind of decline in the inflation rate. >> exactly. >> 2.3, that it did from this

point a year ago >> bingo >> exactly it was the biggest contributor to the overall decline >> and that's probably not going to happen again. >> exactly we can't rely on that going forward. begs the question, what are we going to see from the cpi report of 2023? also it's important to take a step back and look year over year, because prices are still up while not as bad it's still bad. gas up 19% electricity of you 14% year over yore, impacting consumers. >> i noticed bills going up 20%, 30%, 35% and curious about it. hopefully relief to come. >> gasoline now, i've seen in new jersey at least under $3 a gallon for regular at some places. >> there's been actually -- tracking this, surprisingly slight demand lately, for gas. >> yeah. softer yeah, yep, yep. >> do we know anything about that >> looking for data and research there but certainly something i just got off the phone with a capitalist, and there has been

soft demand and we're not necessarily going to hold going forward in that sense. a key contributor here, of course we shall see. >> who wants to go out >> just the weather. you know >> yeah. >> i don't know. >> and changed, too, i think people don't go out and drive around quite as much as they used to. >> they have these teslas just -- >> pandemic effect. >> whatever. pi pippa, welcome go to have you out of your little toolbox. over here. sales of an ultra luxury condo launches in miami on exclusive fisher island, but couldn't have come at a worst time diana olick is treitmo. he wh re >> reporter: prices on this project, an island unto themselves run the numbers and the risks coming up next on "power lunch."

welcome back the so-called condo luxury, and luxury real estate grinding to a halt diana olick has more for us. diana? >> reporter: kelly, i am

standing in the last undeveloped lot on fisher island just off the coast of miami beach it is a 216 acre collusive ultra exclusive community only accessible by ferry or yacht and only accessible to residents, their guests and guests of the small luxury hotel here. miami mega developer george perez bought the land at a premium and building a 10-story 50-unit project with sell outprice tag of $1.2 billion units start at $15 million and the project includes a $90 million, 15,000 square-foot penthouse and 55 million dollar ground floor villa with a half acre backyard and yacht slip pending sales of all miami condos in the $5 million-plus range were down 89% year over year in december and perez just launched the sales here last month. >> we still see a great level of interest for those people that can afford the best.

so in this one, for example, without really doing any marketing, you know, almost 30% of the units are spoken for. contracts have gone out for over $300 million. >> reporter: now, if he does get $90 million for that penthouse, it will be not just the most expensive on the island but most expensive condo sold in all of south florida. the last condo that sold here on fisher island a year ago sold fors 40ds million. back to you. >> and how do you explain decline in sales at that upper end? it's probably not interest rate related, particularly? >> reporter: no. because nobody in that range is using a mortgage right? not concerned about mortgage rates going up but the markets, overall concern in the economy interestingly, when you go to the 50-plus million dollar range, those sales are still soaring. still stuck under 50, might be worried.

over 50, you're not. >> are foreign buyers as prevalent or important to this, to this kind of project as they once were? and where are they >> reporter: well, the short answer is, sort of in the middle, because what we're seeing here in all of miami is actually a shift you're seeing more new yorkers more californians, coming in to the state than you are usually it would be all brazil perez told me some from brazil, some mexico, some canada but a lot from new york and they don't usually see that share here. usually a lot more foreign buyers the market flipped to more domestic. >> interesting diana olick, thank you very much drew the lucky straw and got to go to florida. coming up, three big scks to making bigger headlines. disney's proxy fight, american's sky-high profits and nike just doing it this year "three stock lunch" is next. hey, that's what u.s. bank is for. anything else? how about a loan for a bigger car?

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♪ every search you make ♪ ♪ every click you take ♪ ♪ i'll be watching you ♪ - [narrator] the internet doesn't have to be so creepy, the duckduckgo app, lets you search and browse pria blocking most trackers all forf your search history is never tracked, so it can't be shared. and when you leave search, duckduckgo helps keep companies from watching you as you brows. join tens of millions of people making the easy switch by downloading the app today. duckduckgo, privacy simplified. welcome back to "power lunch. nelson peltz not holding back when he think needs to change at disney pushing for a board seat. what he told our david faber earlier today. >> i'd like to see this company stop running like a matrix and

start running like the companies we've been involved in where they have real ceos and businesses with real pnls, real cash flows and real projections. i know it's hard in the movie business, but it's not that hard in the streaming business. okay and they've got to be ableto d that i know many other shareholders of disney, and if any -- if there is a shareholder of disney that's happy with what's going on, that guy's been short the stock. >> all right what should you do with disney stock, if you own it trade that name in today's "three stock lunch." joining us, lee munson, portfolio wealth advisers president and cio. what is your view or disney, lee, and this spat >> you know, i think it's a non-issue. i get it a lot of old-school value players depressed because stock is down. i don't like seeing the stock

down love to see it down gives me opportunity to buy more shares also disney is one of the only stocks now in a sort of trading no-man's-land where i'd actually buy today with confidence. i understand that people can't tell if you're getting parks for free or streaming for free all the cash flow everybody's clayning about got them more subscriber growth than netflix, movies people want and content people want and gibve it time disney and ceo knows they need to get to profitability but you need to spend more than people are comfortable with and it's a killer deal and do think getting a board seat is critical disney will do what they're going to do and so far winning streaming wars. >> all right the stock -- maybe it will come around to your point of view what about nike? this stock up 9% in january. >> and think about -- kudos to everybody who is buying this

stock in the general october lows up like 40%. most large growth, indexes are, up a big nothing this is a classic american company that's done very well. they beat estimates but it's got a few issues one, look at analysts price targets. it's right about where the price of stock is. analysts haven't had time to raise their price targets. so i think can give you a little, not a lot of energy on institutional ownership. get to the heart of the matter if nike's going to continue working and not bump into the macro later this year it's because that direct-to-consumer growth is going to stay there. i think it will. i understand people still like to go to foot locker and look at shoes. the profit is in direct consumer also china's opening up and on top of that the dollar's getting weak sell most of the stuff abroad. it's got a tailwind. i think you can see the stock continue for rest of the year. >> move on to american airlines. is this a name you own or one that you don't

>> i don't own this stock. i fly american a lot i like gold, platinum -- let me tell you how i see this. i think if you've been buying it recently and trading profit, take some profits off the table. i understand they're going great. as far as profitability is concerned, but we still have an issue with how do you have enough pilots and enough planes to get people to do what to buy tickets business class, high-profit tickets, in the front of the plane there's simply not enough business class seats to go around for all of the upscale leisure travellers to meet demand, and for this stock to continue on for the rest of the year, i think that you've got to see pilots come online i think you've got to see more planes with more business-class seats come online, and i'm leery about that reality happening in the next six months. >> all right lee munson, thank you very much. appreciate it. and don't miss an exclusive interview with ceo of nike john

donahoe coming up in a few minutes here on the "closing bell," just after our program. shares of anheuser busch dropping earlier today ub f downgrading to sell, pour it away. lowering price target a few dollars. ubs citing weakness in china and overall lack of positive catalysts. ubs expects consumers would trade down to the value segment busch beer, which could offset weakness else where and heard younger people drinking spirits and wine, not beer. always a next big thing. this is big earnings under the microscope, next. >> announcer: catch the market zone today and every day on "closing bell."

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earnings out in the morning and dom chu putting it under the microscope. >> reporting we've seen over the last weeks focused a lot on job cuts seeing on wall street and some bonus compensation or compensation cuts we could be seeing in the offing now it's important, because for many viewers out there who work on wall street, as i once did, this

is bonus season. right? the time a lot of people look towards what they're going to get paid over the course of the last couple of weeks i mentioned, news reports seen roughly 5,000 employees that could be affected by job tightening and job cuts at major wall street firms including goldman sachs, citi, wells fargo and morgan stanley amongst others seen numbers roughly in 3,000 jobs range that could be cut a big focus for traders and investors for sure in bank stocks as he report earnings in the coming days in the offing. reason why is because with the job cuts that are happening, could it be enough to help offset some of the weakness we are seeing i mentioned in the last hour some of the profit declines we're expecting to see at major banks. what it will come down to for a lot of folks, whether or not cost cuts happening now are enough to kind of offset some of the capital markets weakness and

some other pullbacks seen from mortgage businesses like wells fargo or elsewhere in the market that's the reason why a little more interesting because of compensation side of things and whether or not those moves will move the needle for these bank investments. >> job cuts. you mention bonuses. what are you hearing where bonuses come in? >> heard reporting some wall street firms cutting back on bonus pools. credit suisse has its own problems and others cut by 50% according to some reports. what's curious about this is whether or not this could be that bolt umming process coming out. right? is the in news now bad enough f some banks a sign a catalyst for a turnaround reason why i mention that, is if you look at a chart of the financial sector mentioned out performance of some of these banks overall. it's not really the banks, though, outperforming in the financials look at a one-year chart of the financial sector spdr spversus p

500 and regional bank etf. white financials green and orange the banks under performing financials. it's the insurance company -- >> the insurance company that -- >> correct why banks are key. could be an important signal about whether or not the banks could be having a bottom now. >> totally. >> great to see you. thanks very much. thanks for watching "power lunch," everybody. "closing bell" starts right now. stocks higher a third straight day cooling from the prior month a make or break hour for your money. high of the day of the dow up 319 points nice brought rally, s&p up and three sectors lower. the defensive safe haven sectors. everybody else up today. energy leading real estate another bi