something to watch with the property and casualty insurers as well. also worth noting, all the major averages turned well right now the s&p, which i care more about. i know david does. >> they're both in the dow. >> yeah, exactly it is at 39.96 right now. >> all right that will do it for us on "squawk on the street. "tech check" starts now. ♪ >> happy tuesday welcome to "tech check." coming up this hour, citi group ceo has mixed messages from the banks who kicks off earnings season including that $2 miss on goldman this morning that stock down 6% so far. plus, disney drama a fiery response to nelson phelps calling him, quote, oblivious. new details on that growing proxy fight are next and later, call it bet baba and

beyond ryan cohen reveals a stake in the chinese giant. why he thinks alibaba can be doing more on buybacks and i guess why he thinks he can make a difference. >> we will chat about it let's first get a check on the markets. the major average is falling to start this shortened week of trading. bumpy so far this morning. wall street is coming off positive back-to-back weeks. sentiment is weighed down by the latest new york manufacturing activity, which plunged in january. energy and staples are leading the games. we have been covering the banks all morning. and, of course, goldman sachs weighing down the dow. we heard from goldman. posting its largest miss in a decade the bank setting aside 50% more than analysts expected for potential credit losses. all four bets purported have been putting money aside, more

money for bad loans, including our next guest jane frazier joins us now live at the world economic forum in dabos, switzerland sara >> good morning. yes, i'm honored to welcome jane frazier here to our snowy set. good to see you. >> great to see you as well. but yes, indeed, winter in dabos. >> has arrived just as of now it was beautiful all day look, we're all talking about the global outlook which is uncertain and has changed. it feels like depending on where you sit we're getting different answers. the financial companies, to me, sounded a little more negative about the outlook. is that true >> as you say, it depends where in the world that you are sitting. so different countries are in very different positions it is hard to make generalties i think we are all quite pleased with how the year has started in the sense we've got a warmer winter in europe it doesn't feel like it right

now, sara. but a warmer weather in europe we have also had china, which has opened up quite dramatically with a human cost to it. but nonetheless, that should show strongergrowth there together with market friendly moves they made recently and the u.s. economy performing reasonably strongly. so i think all in all, the year has started off better than everyone expected. >> what comes next >> what comes next you know, sometimes it is very easy at the beginning of the year with that flurry of activities to mistake that different parts of the world, different dynamics going on. >> you characterized it as a mild recession for the u.s., what you are expecting why are you confident that it's mild with the federal reserve still tightening >>when you look, when you look around the connect in the states, we are seeing the tail risk either side coming in so those that were feeling the economy would have a soft landing, this was going to be

fine are a little more cautious now. equally, those that thought it was going to be a hard landing, very difficult to do also coming in and i think everyone is converging now in the states more around a mild, manageable recession scenario driven by the strength that we've got in the labor markets. and as a result, together with persistence in inflation for services, you will see a resolute fed. >> the folks were talking about the loans. everyone is setting aside loans for bad loans, all the banks including you. a sharp increase how do we read that number as far as your expectations >> i would say don't read too much into it as we look out to consumer credit in the states, we don't think we'll get back to the pre-covid levels until the end of '23 in terms of some of the delinquencies and the like and that was not recessionary levels then. so this will take some time to

get there. the consumer has still pretty strong balance streets they're dipping into savings but we're less worried on the credit side, just the vulnerabilities you normally heading into slower economic growth don't exist at the moment strong corporate balance sheets, strong consumer balance sheets and banks in very good health as well. >> what about consumer spending? what are you seeing on the credit card data >> it's interesting. we're keeping an eye on where that goes. that will be the real leading indicator. we're seeing more softness in those with lower fico scores in the states, but we're seeing -- you know, we're seeing those wanting to spend on travel, on entertainment, those areas are still strong whereas, jewelry, luxury goods, some of the electronics have come off quite a bit a real difference in the spending patterns and that pivot to services that began last year has really taken hold.

>> and it's still continuing strongly. >> yes our wonderful partner at american airlines and others we're seeing a lot of growth in the spend in those sectors year over year. >> when we spoke back in may here, the concern was all around inflation. you in particular were concerned about food prices. we talked a lot about that how much better about the inflation situation do you feel now that we started to see the numbers moderate >> i was worried about inflation particularly from what sort of global growth slowdown it would cause. we have seen this taking hold. so as the rate hike has been even greater than i think any of us anticipated back in may and when we're seeing it now, good inflation has come way down the supply chain constraints were almost back to where we were pre-covid levels. the fluidity around the world of supply chains. we have also seen the first time that some of the new rentals are coming down in pricing

so it's core inflation you have to keep an eye on. and i think that will start coming off the boil. but it's still persistent. the labor supply is very, very tight in the states, and the fed will be the central bank that will continue, i think, leading the way of hikes i don't think we're done yet. >> you think we're getting closer to the end? >> i think the feds will end up plateauing at some point, so we're closer to that we will have a lot more information in four months and a lot more economic data so i honestly think we'll have a better feel as to when they will start really making the turn rather than the slowdown is more likely to be in the late spring, early summer. >> and you're not of the camp that expects great cuts on the other end of this. as soon as this year, the market signaling that. >> i fear the market is a bit wishful in its thinking. and, you know, i think because it's been such an unexpectedly strong start to the year, that's

taken a tad more optimism. and i think we're in danger of being complacent on a few fronts here. >> so you see high rates. >> we see them plotateauing and staying high because you don't want to bring them down and bring them back up again i think we see a fairly resolute fed for a while longer and then they will come down. >> do you see a risk of the fed overdoing it on the economy in. >> i don't think so. i think they will keep a close eye on it. we'll see what happens this week it is more likely 25 over a 50 dip increase but i, again, we need to look at what the data tells us and some of that data is pretty lagged we will have a much better sense in a few weeks, few months time. >> you have a better sense with the business around the world. we talked about the u.s. what about the rest of the world. yes, europe has been lucky the winter has been warmer, yes. but there is still very little growth there and very high inflation. >> i think we're more focused on some of the medium term

challenges around the world. there is a lot of sovereign government debt that's out there that will cause a few challenges in emerging markets, some of the peripherals. china is a good story from the growth we're seeing. we're expecting growth at 5% this year. that will also provide a bit of lift it will be more of a services driven growth. so not all the benefit from that it is not the old model, but it is more of the new model india is a good story. japan is a good model. there are a number of pockets they see us having strength. i worry about europe from a structural point of view over the next two, three years. that has not sold into this year as i say, fiscal debt and a number of other things we have to tackle, tight labor markets so we're not out of the woods yet. it is a bit of a cautious

optimism, but certainly pleased to see a good start to the year. >> what about the capital markets? the fees business obviously has been hurt across wall street are you seeing any signs of recovery or at least bottoming out when it comes to debt financing and m and a and ipos and everything that's dried up >> i'm certainly relieved and benefitting from a more diversified business model right now. we're seeing strength in our services, businesses and others that are helping counter the shrinkage in the wallet going on it's been a strong in the debt markets in the last couple of weeks. >> that's a healthy sign, right? >> that's a healthy sign it's been in emerging markets. it's been in parts of europe we think investors will carry on over equities and credit and the other piece we have strong m and a dialogue.

we're seeing a lot of transformational ideas from different ceos there pursuing them this is on the back of healthy balance sheets and prices. i do see the risks/rewards in the market we're seeing both investors and issuers starting to get their arms exactly around what that risk/reward means. so i think we will see some people cautiously testing out the capital markets. but i'm not going to predict the turn as to when that will happen. >> it sounds like there is a pipeline there. >> there is signs of hope. but i think, again, we're still just being cautious on exactly whether this continues on or there is a bit of a but to the yes. >> what about cost cutting a number of your competitors, morgan stanley, goldman sachs, we have seen layoffs, particularly in the investment banks. how are you managing that situation? are you doing layoffs? >> as i was saying before, we really benefitted from the strategy we're putting in place.

we're not all the way done with it but citi is a company that's k focused on customers with cross border needs at the moment globalization means a huge amount of volatility there is a lot of complexity and movement of supply chains. so our transaction services, security services has seen over 30% growth this last year. it's huge. so we have been investing and growing in those areas at the same time, as i think any company does, there are other businesses that we have been taking capacity out of through the course of last year, the back end and we'll probably do a bit of that this year, too. but nothing -- nothing really out of the ordinary. >> not like a big retrenchment ahead of a big economic backdrop. >> that's not what we're anticipating if it does go a bad way, we're ready for it we're mindful this could turn in a big way and we want to be

ready for that, too. so we're poised. >> thank you very much good to talk to you. thanks for braving the snow on our heads. the ceo of citi group. back to you guys in new york. >> sara, it always seems to hit when you are talking to us on "tech check. we're looking to more interviews this week. john, really great interview this jane frazier said a number of interesting things probably a big takeaway for the markets is we look at what bank ceos are factoring in. she thinks the fed isn't done and there will not be a big pivot but maybe higher for longer still a mild recession it is interesting you can have both of those things what she's seeing on the services side is no major slowdown consumer spending remains strong she says don't worry about loan loss provisions too much that's just to be extra cautious don't see anything alarming right now. she says that that services hold, which you have been talking about forever now is firmly in place, the idea of

spending on services over goods. >> yeah. don't worry too much about the loan law provisions. but then, at the same time, for those hoping or expecting that the fed is going to be cutting rates as soon as the end of this year, frazier saying i think we're in a bit of danger of being complacent on a few fronts where that goes. mention the possibility of 25 basis point hike rather than 50, which is now what the market is expecting. but, hey, if things are going so well, maybe people shouldn't be expecting that i don't know then she mentioned strong m and a dialogue happening we'll have to pick up that theme in a few minutes. >> yep she said pockets of goods. she mentioned that china story, which we will be talking about later on she mentioned that human toll. coming up on the show, a bold call out to sell. lacks the skill and experience

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let's turn to the markets. investors are the most underweight in u.s. equities now since 2005 that's the main take away from bank of america showing the streets fleeing tech going into utilities, emerging markets and euro zone stocks let's take a closer look with managing partner brynn good morning i want to talk tech overall. but first specifically you like microsoft. you like at thtesla. i want to talk microsoft because you have to discuss later who hates it partly because of exposure to small business and the possibility of a recession why aren't you worried about that >> well, i think small business and the possibility of a recession permeate probably through every business in america. and so, you know, obviously microsoft has linkedin

they have azure. they have x box and gaming they have the cloud. they have outlook. so i like all of the different verticals they have. they're a leader, along with amazon in the cloud. they're well ahead of google so i just think as a company going forward, they have great management i think he and his team have done a great job executing if you want to own a tech company, the multiple verticals you have here are solid. but if you have a recession that's not priced in, i think microsoft is the least of people's worries at this point i wouldn't be taking that downgrade with too much because i just think that would perm nate once again across all sectors in so many other companies. >> okay. so you haven't been leaning too heavily into tech in the last few months at the same time, you typically go etfs when you do get into an area how are you playing tech right now? has enough of the hype come out of the market that now is the

time to get aggressive again >> so for us in december of 2021, we reduced the cues. that had been our core exposure for tech that we had purchased in march of 2020 in december of '21, the fed told us they would raise rate in hindsight, we would have sold the whole position what we did in the summer is fully sold the qs. but we called jepq that buys the qs but sells calls against them. why that's such a great strategy is because volatility in tech is high, so selling those calls gives you an incredible amount of return from the option premium. so we don't think that we're going to have some v-shaped recovery in tech we think we could get more return from selling those calls. we think it is a better way to

play tech right now. >> right and brynn, just to go back to your microsoft call, how did you take the comments just a week or two ago when he said brace for more pain for at least the next two years, especially in tech. do you think that he's optimistic on his company, on what the markets are going to do especially i hear a lot of folks getting more and more worried about the azure business >> i think that he's definitely optimistic on microsoft and the people there long-term but i thinkthat we don't know. i mean, we don't know. this is like the most anticipated recession ever everyone is planning for it, and everyone assumes the fed is going to engineer -- is going to go too far and mess it up and cause a hard landing that's definitely a probability you have to have in your allocations. if you are going to own an individual security. i'm a long-term investor in microsoft. so i would not be looking to sell a microsoft in this

environment. if anything, if it got cheaper, i would add more just to point on the azure business, you have azure, aws and google if you look at google, google is a much cheaper stock, but 25% of google's workforce is in google cloud. yet, it's only 7% of the revenues if you look at google cloud as a whole, they're actually losing money in that space. so i think microsoft has done a good job managing azure. they're still growing. but relative to an amazon, which i think is expensive and google, which is losing money in that space, i think microsoft is where i want to be to own that cloud business plus, plus, plus the other businesses. >> finally just really broadly, we just heard from the citi ceo. she said she fears the market is wishful in its thinking after an unexpectedly good start this year. >> probably so we hit the 200-day on the s&p.

we're 5% away from the 200-day on the nasnasdaq i think the s&p will be challenged for the year. it's a nice start for the year, but i wouldn't get too anchored on having this v-shaped recovery while the fed is still in charge. >> all right thank you. after the break, disney says activist nelson phelps doesn't understand the business. elsewhere, the stock named a top pick also shares of roku downgraded this morning we'll be back. lomita feed is 101 years old this year and counting. i'm bill lockwood, current caretaker and owner. when covid hit, we had some challenges like a lot of businesses did. i heard about the payroll tax refund, it allowed us to keep the amount of people that we needed and the people that have been here taking care of us. see if your business may qualify.

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welcome back truist naming disney a top pick today. coming on the same morning that disney aggressively fires back at nelson peltz who wants a seat on the board the board saying they don't need him.

julia? >> well, disney says in giant type in its sec filing, quote, nelson peltz does not understand disney business and lacks the skills and assistance to deliver shareholder value in a rapidly shifting media ecosystem laying out its defense in its sec filing noting they are overseeing key strategic changes in the works and putting reorganizing leadership structure to put in more decision-making back in the hands of creative teams, prioritizing streaming profitability and also improvements at the park's experience disney also attacking peltz saying he has no track record, no solutions to offer for the evolving media landscape and if msg sports is his training ground, it has not been a good one also fighting back against peltz's criticism, disney noting

bob iger's return in his first term from 2005 to 2020 is almost double that of the s&p, growing disney's market cap by 5x and returning $89 billion of capital to shareholders. now, we're waiting to hear what peltz has to say about disney east blunt rejections of his criticisms. >> it depends on where you start the clock. but it seems to me disney's board isn't exactly stacked with just media experts i see cars i see databases on here, not just media. >> nike, yes in this filing here, they point to carolyn eberson who came from a long tenure at facebook. then facebook, now meta, pointing to her experience in the multimedia digital advertising space. what disney is saying is we built this board and it is diverse. i'm noting, of course, they have

these people from the different fields that that is an advantage and really taking aim at msg group saying if that's his experience in media, it does not count. it's not going to help him with disney so fascinating stuff here. certainly a war of words, as we call it, john. >> making clear that it is not a perfect track record very fascinating to watch the back and forth which i'm sure will continue. thank you. coming up, we are heading back to dabos is tech and cyber security spending still safe amid a downturn we will discuss. and we keep an eye on tesla this morning. jury selection continuing for a trial brought by tesla shareholders against elon musk after he tweeted in 2018 that he could take tesla private at $4.20 a share. you all remember that tweet. we'll be back in two

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welcome back to "tech check. let's get a check on the markets. the dow is weighed down by shares of goldman sachs. while goldman is lagging, morgan stanley is among the top performers today beating fourth quarter earnings and reporting a revenue beat, a bright spot for the firm roblox shares getting a nice bump, including daily active users up 18% year over year and hours engaged up 21% year over

year snap moving lower after getting downgraded to market perform at jpm securities the firm says time spent on that platform is declining. >> let's go to news update bertha >> here's what's happening at this hour. it is sort of a tale of two different banks, morgan stanley and goldman sachs. surging 6% revenue from its wealth management business hit a record as deal making continued goldman sachs posting a loss and its stock the first loss in two years. investment banking fees were cut in half, even as operating expenses rose. and the federal reserve says business activity in new york state has pulled back sharply to

the lowest level since the middle of 2020 the empire index saying to negative 30.9. that is the fifth worst reading in the history new orders and shipments fell. inventories rose and employment growth stagnated that looks like a very different picture than what we're hearing from a lot of these ceos who say they see a shallow recession ahead. >> that's true we will continue to hear from them this week thank you. let's turn to the state of m and a. we heart from blackstone in dabos saying the companies don't know their worth until it is too late have a listen. >> it takes a year to a year and a half to reprice assets what happens is at the beginning, let's make pretend you had something worth a hundred and your stock goes down

to 70. you keep thinking about 100. and after about a year and a half, you're used to 70. you don't like it, but you're used to it and if somebody offers you 80 or 85, that becomes a relatively good day >> so if ceos are now thinking about their stock at lower levels, it may be a good setup for a robust buying environment this year. there is more than $5 trillion. it is a great place to start i'm also thinking about alex on squawk this morning, too he was telling the team that he didn't think they were worth as much at their peak, but he doesn't think they're worth as little at their trough where do they come in and start being more amenable to more consol

consolidation? >> great to see you again. thanks again for having me so a couple of key things there. first of all, as we look at the m and a market, the market was down a little over 35% but that's down from an all time record in '21 where we did $6 trillion of m and a. still a good market. fourth or fifth best market ever our team thinks going forward, you will have another robust market it hits on the comments there a little bit when you think about valuation and digesting the multiples. what you see is that when you were in covid, you had multiples of thin tech, internet, software going to the high teens or so. pre-covid revenue multiples were seven, eight times revenues. now you have them pull back to below that it takes a good year or so to digest now you have had that time now we think you will see boards come together and start thinking about the new valuation

parameters and what's best for the target companies. >> right so you hear a lot about valuations going back to pre-pandemic levels. what i wonder, bob, is that the right level? we had a decade of easy money when technology has been able to reach higher and higher peaks. so do you need to go back further, which is what some bears could argue. >> yeah. i mean, we looked back at the multiple going all the way back to 2010. what you saw was very strong multiples there. that four or five times revenue which is where we are now. it is going to obviously have to relate to the underlyes performance of the company how fast is revenue growing? what is the margin structure how does the balance sheet look. you have got over $3.5 trillion of strategic capital of dry powder on the sidelines looking at targets you have over $2 trillion in private equity both of those constituents want to put that to use and capture some of that value

i think in our conversations with boards, you are much more seeing a coming of the meeting of minds than you ever did nine months ago. >> bob, we just had jane frazier on saying she's starting to see people cautiously testing out global markets my question is what kind we have seen pe remain very active here and very opportunistic. at the same time, i see some late stage startups waiting for the market to get better before they look at doing ipos. so what kind of m and a will we see? people taking deals they have to take or companies that feel pretty strong and actually deciding to come out and do ipos or even m anda selling out fro a position of strength. >> yeah. it is a great question we sort of put these companies in three different buckets, which i will touch base on if you look at the base we're coming off of, we only had 28 ipos in 2022 half raised $100 million, so a

small amount this is down 90% or so from the big year of 2021 as we look at the class of 2023 that is coming, we look at green chutes over 40 s-1s this alone will be bigger than the 28 we had. the types of companies, to your question, john, there are three buckets we see one is a company that's fully funded, no need for capital but wants to have go public to have that currency. and they could pick and choose they could be middle of 2023 here to come out and sort of open the market. but they will go when they want to the second bucket is ones with strong fundamentals but do have a funding gap need here. they take a growth ramp that have $300 billion of capital on the sidelines, or do they end up going with an ipo. maybe that's the back half of '23 into '24 the last is that m and a bucket where you have long-term profitability and they need to make that decision can they come out now in the ipo

market probably not in 2023 but maybe in '24 or so but maybe m and a is the best way to go. >> great insights as always. thanks for being with us. >> thanks so much for having me. and up after the break, taking microsoft to sell the only firm on the street making that call the analyst joinusexs nt.

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welcome back the meme kaing is taking on beijing and pushing for more stock buybacks the move raising a question what can an american investor accomplish at a chinese tech company. the last few years made it clear that beijing might be the ultimate activist investor, halting a subsidiary and taking so-called golden shares that allow the chinese government to gain board representation, even veto rights for business decisions, ensuring that long-term cold cohen does see ball here in baba and other chinese adrs are down this morning retail traders, john, are not betting on cohen here because there is little prospect of that short squeezed dynamic that played a key part of his other targets. that is because alibaba has a $300 billion market cap. john, it is an interesting play

here you are probably jumping on the bandwagon. chinese stocks, as we have been reporting, have seen a massive rally for a year now they have been yutoutperforming. >> yeah. i'm not sure he is going against it it sounds like he's been building this position for months he's probably already well into the green with it. we saw what he did with bed bath he dumped out of it after hyping it up. that company certainly isn't fixed by his involvement in it so maybe investors should be a bit careful about following ryan cohen because it's a lot easier to follow him in than it is to follow him out. >> right well, still to come on the show, we will head back to dabos the ceo of splunk is with us we will take a look at stocks. the nasdaq right around the flat line we'll be right back. ♪♪ choosing miracle-ear was a great decision.

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make a sound decision. call 1-800 miracle now, [music playing] ♪ imagine something of your very own. ♪ ♪ something you can have and hold. ♪ ♪ i'd build a road in gold just to have some dreaming, ♪ ♪ dreaming is free. ♪ accenture, let there be change. the new york manufacturing survey out this morning. while the headline number was bleak, there was a small bright spot capital spending plans fell marginally but rose for tech spending by five points, the

best since june. which leaves the corporation will corporations continue to spend on tech even in a downturn splunk ceo gary steele joins us from dabos so discuss what he's saying when it comes to splunk, been declining net arr over the past few quarters i wonder what enterprise demand looks like from your perspective given there has been this tilt toward more consumption-based models. >> yeah. what we have seen is continued demand and use cases to drive more value with splunk so that's been great where we did see slowdown and choppiness and we cited this in the second quarter was we saw the cloud migrations slow down somewhat but what we're really pleased by is the fact we have continued to see growth on the platform. >> how do you win in that environment where there is a slowdown in the kind of can wait

migrations there are some things that have to do now, particularly when they have to do with security. about what percentage of the business is that and how much can you accelerate it >> you know, great question. so over half of our business is security today and we do see great resilience in cyber spending. >> hey, gary it's deidre. thanks for being with us. >> thank you. >> revealed a 5% stake in splunk since then, the stock is up significantly. but one thing they took issue with is poor forecasting under the previous management, they had these ambitious targets only to bring them down a few months later how are you working with starboard, and do you think there is room to bring targets back up? >> so when i joined the company, and it's been nine months now, we put in place a very balanced approach to how we think about growth and profitability

and through a lot of hard work on the team, what we have demonstrated is great results in driving improvements on operating profit and operating margin so we're really pleased with that and from a starboard perspective, they have given us very valuable feedback we listened to to that feedback and i think our shareholders are seeing the results in what we've done over the last couple of quarters >> okay, in terms of your costs and efficiency, how are you looking at that in the year ahead whether that be hiring, cloud costs yourself or other ways you can get more lean >> we've bip focused on efficiency we've been talking about this in our q3 earnings. we continue to hire and being judicious about this mostly focused on adding sales

capacity and obviously trying to reduce or overall real estate. we saw our operating expenses decline quarter over quarter q3. so we've made good progress in a short period of time >> finally, give us your take on how much of the business really is tied to the macro versus how much of it has such relative small share it can go in a constrained environment. in the extent you're charging things per a customer basis even if they continue to use you, but not every line of business is going to be penetrate today that extent, so how do you see it >> yeah, real interesting. so our pricing models, it's really how do customers derive value using splunk

unlike a lot of the other cyber companies, frankly, where they're tight the head count, we don't have that issue. >> all right, that might be helpful. >> and up next one is a lonely number we will speak to the analyst who took microsoft to a sell today, the only sell on the street as we mentioned plus don't forget to follow and subscribe to our podcast listen anytime, anywhere, wherer yevou download podcasts tech check is back in just a moment td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back.

a near bear call for microsoft. our next guest just became the only analyst with a sell price target of $200, that's an 11% drop from where microsoft is today. john, good morning to you. lay out what you see that the rest of the street doesn't right now. >> good morning. i'm not sure i see anything the rest of the street doesn't see what we do see is a prolonged macro downturn so that's a premise to all our calls, not just microsoft. and by the way let me start by

saying it's a great company. software companies are generally very good companies. it's a grit business model and microsoft is one of those big ones that has a lot going on what we do see is when we look at each one of their businesses is trouble ahead maybe the only thing he's said that's been wrong since he's been at the helm is that the pc is seeing a renaissance, which implied it was going to have staying power on the back of covid seeing pc shipments jump well, pc shipments are not good. windows is only 12% of microsoft's revenue, but it's more than 20% of its profit. when you put on top of that -- >> right >> i'm sorry, and there's a couple other things. azure real quickly, azure has disappointed the last two quarters >> i want to press you a little bit because you say you're not

sure you're seeing it any differently than the rest of the street what brings microsoft down it may have good management, a great enterprise customer base, but what brings down what are you so bearish on >> i think if you do see the windows business underperform and that starts to affect the bottom line and cash flow, which it will, that brings it down the other thing that really drives microsoft stock is the azure business the azure business has disappointed the last two quarters and guidance was much lower for this quarter, so i think the perception is they're going to do better than that this quarter but if they don't do a lot better which we don't think they might, that would drive the stock down also. >> john, tell us about your

thinking behind the sell because the sell it's like a black squirrel or clean raccoon. you put a sell on salesforce, workday, i believe back in august that turns out to be pretty right. how do you feel about the enterprise category overall? and how does this microsoft sell fit into that context? >> john, you brought up august if we triple the number of sells here and everyone thought, wow, he's really cautious by the way, we love software if i could invest in anything, i'd invest over the long-term in software but there are times you don't want to be there, and we think this is one of those times they went down through our price targets. so, listen, we're -- by the way, putting a sell on microsoft just quickly, we've had a sell on microsoft before we've been all along with that

sell, and we've been dead wrong. we don't want to be wrong. i got a lot of e-mails today saying, okay, time to back up the truck. we understand that but if the stock goes down to 212, 210, it's a good company. and by the way, this isn't going to be something that gets better next quarter or the quarter after that or maybe not this year and in techinvesting a year is a really long time >> so chances are you go straight from a sell to a buy you think? >> i'm not saying that we've got to see how the stock reacts one of the things i'll say, too, listen, i've been on the buy side so for a few years doesn't make me any smarter than anybody else, just makes me have that experience and i understand what our clients have to go through, what they're dealing with, they have to be nimble and we're trying to be a little bit of that. >> it's not that often we get annalist with a sell especially

in tech. so thank you by the way, we are mixed on the averages, nasdaq up about 0.10%, and we've got netflix this week. so tech earnings will kick off in full. >> i love it when someone takes a clear position even two, two clear positions. >> i'm with you. it was refreshing, wasn't it we'll hope for more of that. let's get to the judge and the half >> welcome everybody to the half time report. front and center this hour the question many investors are asking these days, is it time to be less bearish stocks given the strong start of the year we debate that with the investment committee everybody to the table good to see all of you and you as well. let's check the markets. the nasdaq is the story of late. as you know it's trying for seven days up, that'd be the best streak sinc