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♪ good afternoon welcome to "power lunch. morgan stanley, welcome, i'm tyler mathisen coming up, china's economy slowing in the fourth quarter, population shrinking, and now it's ready to really emerge from a three-year lockdown. are they ready what it all means for the global economy. >> plus, he spent 40 years leading college basketball players. now coach k, mike krzyzewski, is going to teach a master class on leadership we will talk about the lessons

for business executives. first, a check on the markets. a mixed picture this tuesday afternoon. the s&p up slightly and the dow down 318 points. >> dom chu now for a fuller detail. >> lots of news to lots of movers here. the good news, morgan stanley reporting profits and revenues at the analyst expectations, helped by record revenues in the wealth management business shares up 8% that helped offset relative weakness in key sales and trading operations along with a dropoff in investment banking revenues which has been universal across the industry. shares of goldman sachs moving in the opposite direction, down 7% now, currently the biggest percentage decliner in the dow after its biggest earnings miss since october of 2011. the bank was hit by falling revenues, higher costs and a sizable increase in the amount of money it sets aside for

potentially bad loans in the future check out insurance giant and dow component travelers also providing a huge drag after it announced preliminary quarterly results below estimates saying it expects higher ka catastroph losses a check on the u.s. listed china tech stocks. lower on data out of china showing cooling off in the economy. china's first population drop since all the way back in 1961 i know you will have much more on that coming up. >> all right thank you very much, dom. we begin with china where we are seeing a ton of headlines on both the macro and micro front treasury secretary meeting with chinese officials in dab owes. growth throwing to historic lows the cause of that slowdown of course covid on the corporate front the controversial meme stock investigator ryan cohen

reportedly building a stake in alibaba and tiktok offering a revamp plan to appease the doj and keep doing business here in the u.s. it's a full plate. china proving to be a key topic of conversation among the world's most powerful leaders and investors at davos listen in. >> the way we think about china opening up the economy is going to be positive not only for china, but for the globe q1 could be rocky as the country opens up we are going into chinese new year and so on and i think that a lot of people maybe experienced covid. but we think overall this will be very positive for the global economy, chinese economy. >> when we saw the reopening in the u.s. we saw an important surge of activity that came as a result of that it's entirely possible we could see something similar associated with china reopening because we got the benefit to that in the u.s. economy in 2021 and into 2022 we haven't really seen that same

impact from china yet. it's possible we will see that as a result of their reopening. >> all right steve liesman to talk china's economy. meg here deidre here on alibaba and swing on tiktok. there is a theme it's china steve on the slowing economic growth there steve, they haven't had 3% gdp growth in a couple of decades, as low as that, nor a decline in population since the early 1960s. what should we expect from china this year? >> that's right. this year i think it's going to be slow growth as well if you start and go short term out to long term, short term what we're seeing in the gdp data, one of the lower ones that they have put up on a quarterly basis, is essentially the effects of the zero covid policy and the shut down of the economy. you move out from the quarterly

data and go to the annual data, the annual gdp data, you see declining gdp over time. and what that is probably a reflection of is the demographic issue, and that is one of declining population growth for a country that's trying to do 5py 5% growth but the best they could do was 3. >> the population piece of the puzzle is a big one. it will be a long-term situation that plays out steve, in the meantime, given the reopening situation, i mean, we have not actually seen a major economy reopen in a linear fashion to date. so there seems to be this baked in assumption that could be the case with china and to could be inflationary for things like certain commodities. maybe not, right i mean, not if history, recent history is any indicator. >> well, before you get to the question of is china reopening inflationary, you have to ask is it even reopening?

and when you look at that question, there is not a country that's had a major outbreak that has, you know, gotten through unscathed. i talked to carl weinberg, chief global economist at hfe. he told me he thinks abtenancyism is a big issue, supply chain issues will happen. he called the lunar new year one of the biggest superspreader events of all time and so he doesn't think china is through the worst. he thinks the idea of playing the china reopening is premature at best. >> what do you make of indications that china and xi jinping has or is about to loosen restrictions on the tech sector in china? in other words, that sector has been under a lot of pressure for a couple of years and there are signals now that maybe the worst of that, from the point of view of tech sector, is over? >> i am going to leave reading the chinese leadership to our great colleague eunice yoon,

tyler. i will say this. i hope it means that they are reading the writing on the wall that china as a super -- as an economic superpower does not exist in isolation and that the moves that xi has made have been those that have essentially isolated china, taken it out of global commerce and made it into less of an economic superpower and, hopefully, is learning what his predecessors learn, that integration is the way towards economic prosperity, not disintegration. >> thank you. >> well, now let's bring in meg tirrell. there are a lot of concerns about how this reopening will go from a health standpoint meg, this is not a country that has been very forthright where with the data, to say the least. certainly investors i have spoken to said they are tracking satellite imagery and crematorium data to get a sense of how this reopening is going so far

what can you tell us >> it's really bleak we are hearing the same thing from public health experts it's absolutely horrible i think what steve said is what i'm hearing from the public health community, which is they are probably not going to get through unscathed in terms of a productivity standpoint because there is so of disease spreading there. the numbers that we are hearing from china are not believed by anybody outside of china the most recent number they gave in terms of deaths was about 60,000 from when they reopened to a few days ago and the expectations are that that is probably a lot higher. he mentioned the expectation that the upcoming lunar new year celebrations could be the large largest superspreader event of all time it could take a lot of this spread from city centers out into rural communities where the health care systems are less, even less able to cope with this and i think one of the biggest concerns, as you you see so many

people infected aside from the stress on the healthcare system, the severe disease and death, the more people who have covid, the more opportunity for the virus to mutate and the public health community is very concerned we will see perhaps a new variant arise out of this spread thatposes more of a ris than what we are seeing. >> that's what i wanted to drill down on. to your point on the numbers china until saturday reported 5,000 deaths since the beginning of the pandemic. b.s. would be a kind way to put that now they are admitting 60,000 deaths since they began opening up the earn can to me is, with this mutatable virus that coming out of the reopening of china could come yet another or many other strains of this disease that the world may not be prepared for. what are you hearing what do you think? >> just a lot of concern both that that will happen and that also the surveillance systems are not in place to catch it quickly if it does happen.

the w.h.o. is essentially in its polite offhanded sort of way imploring china to share as many sequences as possible so the global community can keep tabs on what is happening with the virus there. there is a major concern we will not see it quickly because we are not getting that data. the faster we know about something, the faster governments can respond. even if a lot of the public health community think things like testing requirements are shutting down travel is not that helpful, but we could be better prepared if we know what's happening. >> thanks very much. one man betting on china's reopening is ryan cohen. said now to be building a stake in alibaba what are you hearing about this and specifically alibaba is a different size and scale than bed bath & beyond or gamestop. so what benefitted him there, namel namely triggering a short

squeeze will be hard to replicate at alibaba if that indeed is his play. >> well, first of all, i am hearing a good deal of skepticism for those reasons that you alluded to, tyler alibaba is not bed bath & beyond it is not gamestop it is a $300 billion plus company accompanied with chinese characteristics. i mean that in the sense that it already has an activist and that would be the chinese communist party. this is a very difficult company to get into for the average investor because it operates differently. there is something known as chinese shares which essentially allows beijing to take a small stake in the company but gives it special rates like veto power, nominating directors, essentially ensuring that the chinese communist party can have control over sectors for the long term. anything that ryan cohen hopes to achieve will have to come in opposition to that what he is arguing for are more buybacks alibaba is already doing a good deal of buybacks

they have the cash to do more. i have a feeling it's not going to be ryan cohen that will push them to do that. it raises the question, you know, why is he getting into this maybe it's a chance to get retail investors interested in the stock, that's not working. take a look. the stock is down nearly 1.5%. certainly not what typically happens at other companies that he has targeted. much smaller, as you said. >> i was going to point out the same thing the fact that the stock is under pressure the u.s. listed shares of alibaba under pressure to a point that tyler raised earlier in the show though, is it safe to say can we say this at this point yet that the tech crackdown, the scrutiny, especially where alibaba in particular is concerned and everything we though that played over with jack ma, and irential ant financial is the focus, but alibaba and chinese tech is concerned, has the worst of this crackdown happened do we still really not know? >> there does seem to be this

sentiment or this belief among many investors that china is at the end of that kroun. you have senior chinese officials saying so in certain publications you never really know. while we may be at the end of this, beijing took aim at online brokerages the other week. so there could be more to come you never know with chinese stocks what's happening behind the scenes this started with jack ma taking aim at chinese aregulators before that you thought this would be the biggest ipo ever. so things can and do change on a dime in china. i think that risk is still there even if the rest of the market is optimistic and you have seen these shares, not just alibaba, by the way, but many names in the kye etf rally. >> the u.s. it's really personalities where the tech sectors is concerned

in china, policies, right? thank you. now let's bring in julia boorstein. tiktok tries to find a way to stay in the u.s. market amid increasing pressure. julia, it has been increasing. just last month the fed government banned tiktok in federal devices. is this going to be enough to calm legislators and other other national security hawks where this particular social media company is concerned >> look, the stakes are high here for tiktok. bytedance wants to make sure that tiktok can continue to operate in the u.s. and they have been in talks with regulators specifically part of the treasury department for years now. my understanding is that they came to an agreement in august about the fundamental principles about what it would take for tiktok to continue to operate here in the u.s. part of that is what tiktok calls project texas. they have spent about $1.5 billion to invest in bringing all of the, say,

sensitive data, personal data about tiktok's users on to u.s. soil they are working with oracle what i'm hearing is that they have not moved forward with this plan they haven't taken it to the higher powers to the president for final approval and so what's happening right now is tiktok is moving forward with this deal that they agreed to in principle with sifis and they are working on sort of creating these systems and making sure that they are going to be in compliance with the u.s. government the frustration i think is that it hasn't been announced yet what tiktok is doing is that they are working create the -- tiktok u.s. data security, a division that would oversee all u.s. tiktok operations that have anything to do with personal data it will report to sifis and a board created by them. the problem that until this deal is announced, this whole plan cannot be fully actualize.

so the stakes are high and i think tiktok is waiting for the official word from the u.s. government for quite some time now. >> and i am sure all of the other social media platforms are watching this very, very closely right now as well. julia, thank you. >> all right a news alert on microsoft. steve has the story. >> sky news is reporting that microsoft plans to lay off about 5% of its staff of 220,000 global employees that would equate to 11,000 employees. now, of course, this is just the latest the big tech companies that went threw laughyoffs lastw months nothing from alphabet and apple yet. this also comes at the same time that guggenheim has downgraded microsoft on fears that i.t. spending is slowing down and also this foreign exchange headwinds we have been hearing executives say would be a headwind to growth.

coming up, natural gas higher today, down 60 f% from te record high. we will talk to a guest, bill perkins, about why the worst fears about energy prices haven't been realized. we are talking leadership with one of the great leaders of all tyke, mike krzyzewski. what is his advice for business executives leading their companies through prickly social issues coach k joins us live coming up on "power lunch. 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™.

welcome back to "power lunch. although up 5% today, natural gas prices have been declining down nearly 40% the last few months, trading at a level not seen since june of 2021. warmer than expected weather is weighing on prices now to talk about what is ahead, bill perkins, founder and head trader at skyler capital management great to have you back on the show before i dive deep into the nat gas market, which is always volatile in the best of times, first i want to talk about sci-fi this app you have created using satellite imagery to track things like, for example, data that could be valuable to nat gas. >> we are democratizing it, making it trivial for anyone to control the satellite whether it be an optical image, radar image to get data in order to, you

know, trade. i look at counts and it's particularly bearish to natural gas. other people may look at other ports, agriculture, you name it. your views ers would have more s cases once the data is available to them. >> we are showing images of freeport, texas. we know in the middle of last year freeport, that big facility, that permanent went offline. the reopening has been delayed whether it's the warmer than expected one of the hottest, i think, on record januarys right now, that's playing out, or the fact that you had supply come offline and notable able to export to places like europe last year, does that account for a very dramatic fall in nat gas prices as of late and do you expect that to continue this year >> that accounts for it. there is one more thing. the rig count is relentless. the producers are very good in

bringing supply to market. and they have been planning for the long term. so in the short term, we have freeport off and we are monitoring with satellite data their repairs and when they will come on. we have estimates about that we have a growing supply that we are ready to feed the world, right, with europe, asia, with lng. it's staying home. so we're mismatched on infrastructure right now which we are monitoring with skyfi >> why is it staying home? >> because freeport blew up. it takes a while to repair these things it's not only the repairs and the infrastructure and steel and the welding, it's the testing and the regulatory process lng is one of the most regulated businesses there are when there is an explosion it takes a while for you to get approval to start up even after you repaired the facility. >> if i were to take a look at some of those images that we just showed there and i'm an ordinary layman, what can i

derive, infer from what i'm seeing that would help me be a better, smarter, richer trader, investor >> i tell you what i look at car counts i look at pipe equipment, new equipment brought in i look at whether these cars are leaving to see if their job is done. >> railcars or repair cars >> we are looking at the equipment, when it arrives, when it doesn't arrives, when it leaves, change detection to see where they are in the repair process. that informs our estimate on when they will be back online. guessing when the government will give them approvals and stop slapping them on the wrist and they have met the new procedures, that's more difficult. but tracking the equipment, that's easy for us to do. >> so just to wrap this up right now, bill, the fact that you are continuing to be bearish on nat

gas prices into this year, the fact we saw europe build up supplies, although supplies of russian gas, which are not going to be available to europe later this year, do you think producers will have to shut in their production, their output if so, what does that mean at a time we have seen energy stocks some of the biggest ralliers despite the bear market? >> well, remember some of these large energy stocks don't just produce natural gas. they produce crude oil the permian producers, natural gas, they give it away free. some of the gassier producers where we have so much supply in the south central and not a way out, storage is running high and it's getting higher. in europe that's a blessing, right. they pray to the weather gods. it's been extremely warm and prices have gone down. despite the risk and so here in the usa we don't have the storage capacity for what i forecast to be the

flowing gas that needs to go in the ground so wa rate issue or containment issue here in the summer >> okay. bill perkins, thanks for joining us >> thanks for having me. appreciate it. still to come, we will take another look at another sector that one strategist says could provide growth for investors plus check out shares of domino's morgan stanley upgrading the pizza chain to overweight saying it is onofheewam rdye t f nesea to weather a slowdown. we will discuss in today's three stock lunch. no spring chicken♪ ♪ i know what's right for me. ♪ ♪ i've got a plan to which i'm sticking. ♪ ♪ my doc wrote me the script. ♪ ♪ box came by mail. ♪ ♪ showed up on friday. ♪ ♪ i screened with cologuard and did it my way! ♪ cologuard is a one-of-a kind way to screen for colon cancer that's effective and non-invasive. it's for people 45 plus at average risk, not high risk. false positive and negative results may occur. ask your provider for cologuard. ♪ (group) i did it my way! ♪

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. welcome back to "power lunch. here is your cnbc news update. the white house says it will respond in good faith to inquiries from the house oversight committee over classified documents found in president biden's home and a think tank office. the biden administration also criticized house republicans for pursuing the issue only for partisan gain. a former russian mercenary commander has defected to norway and is psyching asylum anton medvedev claims he fled

his unit after witnessing the killing and mistreatment of former prisoners who were recruited for the war and sent to the front lines. and 2022 was a record year for guns turning up at airport security checks. the tsa says it confiscated over 6,500 firearms last year 10% increase from the previous record set in 2021 about seven of eight of the guns found last year were loaded. yikes. morgan. >> that's a little scary. >> who doesn't know that you don't put a loaded gun in your carry-on ahead, a master class on leadership more than ever, corporate america is under the spotlight whether it's ceo pay, response to social issues, workers' rights now famed former duke basketball coach mike kwoek krzyzewski is

offering his advise on how to lead in tumultuous times that's coming up next. a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning. learn your way. not theirs. td ameritrade. where smart investors get smarter℠. (♪ ♪) lhow do we demonstrate our. unmovable strength? (eagle call) nope. how do we show that we'll stand tall through the storms? nah. (thunder) how do we make our clients feel secure and- ugh... not lions. (lion rumbles) we do it with our people. people who've been looking after people for over 170 years.

just look around. this digital age we're living in, it's pretty unbelievable. problem is, not everyone's fully living in it.

nobody should have to take a class or fill out a medical form on public wifi with a screen the size of your hand. home internet shouldn't be a luxury. everyone should have it and now a lot more people can. so let's go. the digital age is waiting. welcome back to "power lunch. at a time when companies are

facing precious from all dreb,s never more important to have a strong leader. how can individuals develop skills to develop into strong leaders? let's ask someone with a track record to share his thoughts former duke basketball coach mike krzyzewski and the newest master class instructor, his class online focuses on values-driven leadership coach k, welcome delighted to have you with us. the master class is live online. it's dropped as the saying goes. i can find out about values-driven leadership in a phrase are to two, describe to me what value-driven leadership means and then i want to follow up >> well, to me effective leadership has to be based on values to me, that's the foundation of developing relationships with the people that you have an honor to lead and it creates common ground for everyone who is on that team. and so how do you do that

individually and collectively, and for me leadership is most exciting profession in the world. it transcends every industry every industry needs leadership. every church group, every sports group, and there is really no degree in leadership it's something that you are constantly learning about. i'm still learning about it at the age of 75. and the class is just about things that i have learned i am not trying to start -- or some anything like that maybe some of the concepts that we go through can help people be more effective leaders. >> when you lead with your values, inevitably at some point along the way society may intervene. there may be a george floyd kind of incident that strikes your values as a leader at what point do you, as a value-driven leader, feel that you need to step in and say something, take a stand for

something and how do you then discriminate, maybe a bad word choice there, but discriminate against those times where you just sit on the sidelines and don't get involved, you don't say what your values might lead you to say otherwise >> well, i think that a word that's really appropriate here in these situations is discretion in other words, you have to make -- you make a decision based on whether you can help a situation by coming forward or if it's best not to come forward t at that time because you can mess up a situation, too for me though it gives, when you are in situations like that, it gives you a chance to punctuate a value or values that you have really become yours and your unit's or your company's and help drive it forward to maybe

give some clarity to the solution of the situation or your support of somebody who is trying to make those decisions >> you talked about doing this, how you do this both individually and collectively. how are those two things different? i guess are there specific examples you could give to us from your own storied career >> yes, certainly. really the show is not long enough we could give thousands of examples i have been coaching for 47 years, head coach and 11 years with the u.s. team so, one, you know, it's important to find common ground, not just a common goal how do you get a group of people to use their talents together to achieve a goal and then doing it in a manner in which they would want to do it again with that group. to me that's one of the things that's missing a lot in leadership

individually, for me i always try to coach my best player the hardest because if i could get that message across to him, an example of how he worked and how we interacted sets the stage for other people to do that. and also it sets the stage for him or her in whatever situation you are in to help the others on the team, where they know that, yeah, if i'm coaching the best guy that hard, that's good and that gives him a chance to be a leader, too. so, in a moment you might say something to a team before a big moment in a game, or to the guy who you know the ball is going to go to and say, look, i believe in you, man. it's our shot. go for it. and i got your back. and to put them in a position where they have a better -- they

have a chance to do it better boos they are not alone. that's a key thing not to what your team, any individual feel like they are alone, that we have their back. >> i have always hoped that i would have a chance to speak with you i am delighted that i have this opportunity. it's a real gift of what i do. i have had in my mind maybe the title of a fwook called "sustainable excellence. it would speak to a lot of what your master class speaks to, value-driven leadership. i look at executives, whether it's tim cook at apple, whether it's lorne michaels at "saturday night live" who has created almost as long as you 40-some-plus years at the helm there, whether it's nick saban or you how do you create that sustainability of excellence over generations where your team is different year to year,

decade to decade >> well, i'm smiling when you say all those people because the one kmoen thing is that we're all working with talent. and we get talent that stays there for a while. some talent stays there for only a little bit but how do you use that talent and talent brings out the best in a teacher and so the sustainability occurs because you are excited about what you are doing all the time. you are not necessarily doing it with the same people all the time, but in my profession your goal is the same, and that is to win the national championship. win the olympic gold medal win the world championship and it's exciting because you get a chance to do it with different people, different talents. the single biggest thing that has to happen to sustain excellence like in the five decades i coached at duke, we were number one in the country

in each of those decades, in 21 of our 42 seasons, we were number one at some time. i'm proud of that because that shows sustained excellence but to get that group to do it is exhilarating, you know. it's the best. and it's always changing that's the thing you have to -- you know what like for me, i'm 75 years old. i kept getting older and my team stayed the same age. >> that's true. >> how do you communicate along the time i probably had to change 20 different times in how i communicated because society keeps changing and you have to kind of dress the part, too. so i'm glad i got a good nike contract where i got some good clothes where i look a little bit younger than i am, at least to them.

but really like in today's world, i found in the last few years you couldn't talk to kids for too long so get your message across quicker or have different voices, my assistants might hav to interject more. getting eye to eye contact and things like that just fundamental things that yo have to keep changing and the fact that we didn't have them that long. i used to have them for four years. now i had them for one year. what changes do you have to do what do you have to change instead of saying this is how we used to do it. that's good. it's good how you used to do it. now how are you going to do it how are you going to do it now that's the cool thing. >> speaking of kids and the talent pipeline and some of those changes in college basketball, name, image likeness rule, that change, how it's -- and i realize it plays out differently across different states to a certain degree, too. but i guess just your insights

what this means for a $14 billion industry now >> it's an industry that needs amazing leadership and structure, which right now i don't think we have. and so like in the name image and likeness thing, i think it's good obviously, the concept is great. an athlete in any sport can benefit from their name, image and likeness how is it regulated? how do we make sure that it adds to the new structure, the new thing in college sports, but it is not taking away from it and right now it's really up in the air, to be quite frank with you. i worry about hunger i think the single biggest thing that a great athlete has, if they want to achieve their potential, is that they have to be hungry about that

if you're -- you've got to be careful if you are getting compensated before you really have done that or learned how to do it. you might never have it. and so that's one of the things i am concerned about i am not saying i'm against it what i'm saying, when anything new occurs, it has consequences that you know about and then it has unintended consequences. and i think dealing with those right now. that's why you need strong leadership and a great structure from a parent company, which is the ncaa, which i don't think we have that right now. in fact, i know we don't have it and i think we're looking for government to handle that aspect of it. and if we do, that might be great. but if you let government in for that one thing, government is going to want to be in for other things

and is that good so, again, unintended consequences in order to solve a problem that we have right now it's very complicated. >> yes and i suspect as you are suggesting there are be lots more regulation down the road of it as we begin to understand it and its unintended consequences a little bit better. coach, it's been a wonderful conversation i hope you come back and join us again as the master class evofls and matures. i waent to the university of virginia i spent many nights suffering as your blue devils applied weapons to my -- >> yes >> great to have you with us, coach. thank you. >> it's my honor thank you for having me on. >> you are very welcome. up next, more on today's market action. an hour left in the trading day, what you can see is a mixed picture with the dow under pressure the s&p at the flat line

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a news alert from the

justice department eamon javers has the story. >> the department of justice announcing new rules to the criminal enforcement policy, the policy around which they prosecute companies for corporate wrongdoing these new rules are all about incentivizing companies to disclose themselves any kind of wrongdoing that happened inside. assistant attorney general is speaking right now at george down law center, unveiling the new rules before law students there. part of this is the idea that companies need to come forward immediately to the department of justice whenever they have seen any sikind of illegal activity if they do, they could be available for a decision by the doj not to prosecute that case there are three conditions though to that he is saying that the company will have to demonstrate its met three criteria it was made immediately upon the company becoming ware of the allegation two, at the time the company had

an effective compliance program in place and the third is that the company has to provide what they call extraordinary cooperation to the department of justice's investigation here you have to come forward immediately. you have to provide extraordinary cooperation with the doj, and you have to have a compliance program in place at the time of the disclosure if you check all those boxes, you might be able to get out of a prosecution as a company, but what the doj is saying here today is they want companies to come forward immediately upon discovering any kind of wrongdoing inside the corporate offices. tyler? >> thank you very much eamon javers reporting from washington we've got more "power lunch" coming up next [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, ♪

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all right. welcome back as the markets continue to focus on the fed's next move, a little wobbly today, down 324 on the dow, our next guest says we've reached peak hawkishness when it comes to the fed and have seen peak inflation as well let's bring in the president and chief investment manager of walls, asset management. you say better days are ahead or is that because the worst days are behind us? >> better days are ahead for the markets in 2023. >> couldn't get much worse. >> we've reached peak inflation. >> absolutely and as a result certain sectors of the stock market should benefit from the recovery about to take place because the worst is behind us with respect to the rate height cycle. however, i can't say that for the economy as i believe that there's going to be more

difficulties ahead for the economy thanks in large part to the 425 basis points in rate hikes we saw last year from the federal reserve. >> if the economy goes into recession, history would show that the valuation, the multiples on the s&p need to come down further, no? >> yes and no. it depends on what areas of the market we're talking about. >> okay? one area that i like during recessionary periods is health care one area of the market that i like during economic slowdowns and stock market recoveries is also health care, but two different ways to access the health care sector one is lieu your traditional larger cap pharmaceutical stocks like a merck and the other is through small-cap biotech stocks such as rocket pharmaceuticals, about $1.8 billion in market cap focused on developing a pipeline of genetic therapeutics for rare pediatric diseases i think that's a real opportunity for growth here. >> you said a moment ago that

certain sectors of the market are going to do better, and you just mentioned one at least that you think will. >> yes. >> that implies that there are other sectors that you don't think will do that well. what are they? >> for the first half of the career when i believe the economy will slip into recession, how long and how deep that goes is a by-product of what the federal reserve does or doesn't do, i'd be a little reticent to go into technology right now, especially the debt-laden tech companies. consumer discretionary will experience difficulty in the first half but they could do better in the second half of the year when and if the fed stops up until then, the quality stocks and health care space and consumer staple space, even the industrial space. >> have rates peaked >> rates have not peaked just yet. we've got another 50 to 75 basis points of hikes coming from the federal reserve in the first half of 2023. >> are bonds investable again, and specifically i'm going to ask about munis? >> i would argue bonds have always been investable particularly for income-oriented

investors. investors invest in municipal bonds in the high free tax bracket. that didn't change last year, and the pullback we saw on prices because yields went up creates an attractive entry point. >> you can get yield, whether it's a muni or whether it's a treasury or cry-bold bond you can actually get yield. >> flow is coming back into muni bonds as a result and that continues through the new year. >> overall m & a activity, we know there's been a dearth of it affecting the bank earnings that he eve had to kick off this season as well does that jump start in the second half of the year, too >> we actually saw a pickup in m & a activity in the second half of last career in the biotech space, and we see large-cap pharmaceutical caps flush in cash. their profit margins are being squeezed, and their stock prices have gone up even through last year and as a result they might be more inquisitive using stock

or using cash to buy the small-cap biotech companies. >> we shall see. ketch, great to have you. >> always a pleasure to see you. >> all right kevin mahn all right, folks, the dow down 350 points right now good to be with you, morgan. >> great to be with you. what a great hour. >> and nice to be with you all thanks for watching "power lunch." >> "closing bell" starts right now. it is a mixed session for the major averages as the nasdaq moves higher while goldman sachs weighs heavily on the dow. this is the make or break hour for your money welcome to "closing bell." i'm mike santoli sara eisen is at the world economic forum in davos, switzerland. here's where things stand in the market the s&p 500 fighting its way back towards the 4000 mark, but you do see the weakness there in the dow all day. it's been the underperformer under the weight of a couple of big financial components look at the worst performers so far today in the dow goldman sachs leading to the downside remember, this is a price-weighted index, big individual dolla