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 dollar drops really

do weigh on it travelers also a disappointment on earnings. we'll talk about that more and verizon, 3m and honeywell contributing to some of the downside action. tech a relatively bright spot. coming up on today's show, two key interviews on the consumer and supply chain we'll here from enrique lores about the pc market and what he's seeing out of china and later the ceo of williams sonoma weighs in on the state of the u.s. consumer and her read on inflation. let's get a look at the market and how it's situated relative to where we've been up first up couple weeks of the year really got people thinking we had a risk-on move, very broad rally in the first couple of weeks in the s&p 500. momentum triggers to the upside might have actually fired -- gotten some people thinking there's a beginning of an acceleration today really sort of sitting here right at this level had a level is that? well, we keep drawing the downtrend line from the january 3rd and 4th peak of 2022, and

we're still there, so if that were going to be another bear market rally, it probably would be stalling out right around here as they did a few times over the course of the last year certainly too soon to say one way or the other whether that's the case you have the credit markets that are also strong, and earnings, you've got a lot of pack-and-for the action, but so far coming in on average slightly better than expected take a look at cyclical areas. the consumer discretionary and equal weighted and financials as we will have outperformed the s&p 500 equal weight over the last seven months. that shows people have priced in a relativelybenign economic outlook from here. obviously, nothing is for sure, but consumer discretionary was a big underperformer until the middle of last year, and it has come back pretty well, as have financials, though not specifically the traditional banks. that's a couple of names in the news the last couple of trading days from the large banks. let's check in on that group morgan stanley, goldman sachs, both moving in opposite directions today goldman is down after posting

its worst earnings miss since 2011, but shares of morgan stanley, they are soaring after beating estimates. look at that, almost exact symmetry there will up 6.3% versus down 6.3% on the day. joining us now is ken leon from cfra to talk more and what to make of these numbers, ken specifically, when it comes to goldman sachs, it seems as if the provisions for potential credit losses in the consumer lending area as well as maybe higher expenses that went along with what we already knew about weakness in investment banking, causing some people to really kind of throw in the towel on the stock today. do you think that's a justified reaction >> so goldman disappointed, and i think looking out to 2023, do they have the right strategy or this is a management that has a work in progress, particularly with that expansive effort into consumer retail banking. that has been pulled back. they didn't take any large

write-offs, but there's questions. you know, it's tough to stay just in the investment banking space, and that will come back when we get to a risk-on environment, but that's not going to be for the next six months, so they have an investor day at the end of february, and there's going to be more information about what is goldman's strategy looking at over the intermediate or long term >> and the reaction of goldman, especially in contrast with morgan stanley is pretty dark, but morgan stanley had are brought up a pretty sizable valuation advantage other goldman meaning it obviously has a higher valuation people very much approve of the steadier wealth management orientation of morgan stanley. again, i just go back to this -- this split in terms of morgan stanley probably has never looked this expensive relative to goldman sachs, at least not in a number of years, and i wonder if you think, again, that the market is reading this correctly. >> yeah, mike. we've had these discussions

before on air, and really james gorman has put a strategy to get a higher multiple more akin to a blackrock offer charles schwab with advisable asset management for recurring revenue. that still has opportunity on the upside because it's trading below the s&p 500, and goldman is one or two steps behind there. david solomon at goldman is just going to have to grow not organically but by acquisition more assets under management and that's really the direction. you're not going to get a higher stock price for doing credit cards or retail banking. that game is really dominated by the banks that reported friday >> and do you think that the provisions that goldman took in the past quarter for in part the consumer credit card and retail banking business looks sufficient i mean, i think there's probably a sense out there that they were much higher than people were

anticipating is goldman trying to sort of front load some of the pain so that it's a cleaner outlook in subsequent quarters? >> well, there were provisions, but it's not in the billions, and we're not sure because they don't disclose operating income or loss for their segments including the rollup of platform solutions which is where retail is so we just don't know that's have that investor day is a tipping point for the management and for the stock we also think, you know, when you look at goldman, you know, they are doing great in terms of being the best investment banker, you know, but we're in a risk-off environment, and actually was james gorman of morgan stanley when said when the fed stops raising rates, maybe his stock will go up or the whole group, but it will take time because we've got higher rates, higher cost to capital that means deals are more expensive >> yeah. there's no doubt about that. more broadly, ken, i mean, we've basically heard from a huge

chunk of the sector's market cap between last week and today. what are the threads you're pulling out of it? i know you seem to prefer in terms of the stocks of the more traditional commercial banks, the big ones. >> i do, and to your point, you know, financials as a sector has a chance to outperform the market this year we do need a lot of that help coming from regional banks which we like or jpmorgan, a wells fargo or a bank of america that is really the source of really where financials can outperform this year last year it was insurance and it's the kind of environment of a goldilocks. we don't want the economy too hot or too cold, and these banks are priced to perfection because they are trading at steep discounts both to their historic averages and also to the s&p 500. >> all right kept, i appreciate you being on with us. thanks very much, ken leon well, goldman sachs' ceo

david solomon will discuss the earnings live from davos tomorrow morning on "squawk box. do not want to miss that one. up next, will hp follow dell in seeking its supply chain out of china we'll discuss that more after the break. you're watching "closing bell" on cnbc.

[music - cover of blondie's “dreaming”] [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, ♪ up next, will hp follow dell ♪ dreaming is free. ♪ accenture, let there be change.

hp one of the many tech stocks taking part in last year's steep drawdown. it's also underperforming the bounce in the nasdaq so far to start this year.

sara eisen sat down with the ceo to talk about the economic slowdown. >> the big question is what's happening with the global economy. from your vantage point how do things look is this. >> we continue to see many of the challenges that we saw a few month ago when we announced our results. if we hook at the impact of the war, especially in china and inflation, we clearly see many challenges that we need to manage i think what is important for companies like us is it focus on what we can control which in our case is monetary costs while at the same time we continue to investment in our growth areas, because we don't know when the economy is going to get bet, but we know it will getter and we need to be well-positioned when this happens. >> the pc market in particular is slowing down. how sharp of a slowdown are we seeing >> the thing is in line to what we're expecting. a few weeks ago we shared our expectation. it was that we were going to see a decline of around 10% in our

fiscal year and this is mortgage what we are seeing, so it's as we were expecting, but, again, what's also important is the market is still bigger than it was before the pandemic which gives us a lot of looks at whenever the situation will get better the opportunities will continue to come. >> that's what i'm trying to figure out with so many tech companies including yours. there was so many distortion, earning and working capacity and everyone at work and working digit talley now there's a giveback and it's how to read what's going on with underlying demand. >> if you look at the time people are spending in front of their pcs or what the pcs are being used for, clearly both are into a bigger market, and this is why i think whenever the economy will recover we'll see a stlopger pc market than what we were seeing before the pandemic. >> and printers, too >> printers, too

i think the different between home and office. the usage and home continues to be above expectations that we had before the pandemic. office is clearly below because there are many employees not going to the office but one compensates the other. >> you have strong views on hybrid work. >> we have a very strong view because we think it's here to stay we think -- >> because it's good for your business >> it's good for our business and also for our employees, and what we need to do it make sure we adapt the culture of the companies and system of the company to allow flexibility while statement we spring employees at the office for those things that really require collaboration, discussion, because those things are very difficult to do when employees are remote. >> are you still seeing the same productivity levels with work at home that we saw during covid? >> working at home we haven't seen a big impact on productivity i'm more concerned about the lack of discussion and interaction that creates small issues or things that shouldn't

happen because employees are not connecting this is really what we need to fix. >> what about supply change, enrique? has it normalized? >> it's almost normalized both because the supply chain situation has improved and demand has gone down so the net effect is supply chain is not a headache anymore as it has been for last two or three years. >> what about china in particular obviously important for production what have you seen as far as coming back online >> so, from a demand perspective we're seeing demand holding, especially in our categories which was a concern that we've, but demand has been holding, and from a production standpoint, production has been very stable. we haven't seen a big impact of the reopening. we haven't seen a big impact of the change of the covid policies we're still early butty is far so good. >> up of your big competitors dell recently announced they are moving all supply out of china is that something that you're actively looking at well is.

>> we're always looking at improving the resiliency of our supply chain, and this is something that we've been working on for some time china is a very important part of our spy chain and will continue to be for the foreseeable future. >> you're not making that break necessarily? >> no. >> wanted to hit the just 100 list which revealed with just capital. you did well 47 i think was the overall number for a company -- my question was you get high marks when it comes to making pledges to hire a number of diverse applicants, gender pay equity. are those things harder to achieve when you're in a period of belt-tightening and layoffs as you've been at? >> it is harder to achieve, but they continue to be important so they need to continue to be a big part of our focus. of course, it's harder because we don't hire as many people changing percentages it's going to be more difficult, but we look at where the company needs to go long term, we need to continue to increase the diversity of our teams, especially at the executive

level and the organization has continued to do that in the future. >> what is the environment like? you announced 4,000 to 6,000 layoffs. is there more coming is there more belt-tightening? >> we are executing the plan that we announced so at this point no changes from what we announced. our case had three-year plan really linked to significant changes that we're going to be doing in key processes of the company adopting more digital, trans forming of the development processes, so we'll execute that when people will and some of our employees will be impacted in any case, we've shown we can manage that with respect for the employees and this is what we've done land continue to do. >> finally on acquisitions, i'm curious how you're thinking about it now that we've seen tech valuations come down so much do you think there's more pain, or are you looking >> we have said that we think that m & a needs to be part of our plan to continue to invest in the growth areas, and, therefore, we continue to look,

but also we did a major position early two quarters ago so we're working to continue the integration and complete the integration, but, of course, we're going to be looking because if there are good opportunities for structurally for our growth and create value for our shareholders we'll do it. >> in the growth area gaming is one of them? >> game willing and hybrid work. we continue to see a lot of demand for our customers, workforce solutions. where we see areas to grow, we'll continue to do that. just this year, our growth businesses represented $11 bill crop, growing double digits, that's a big number, even in a difficult economic situation >> sara also sat down with williams sonoma ceo laura alber. we'll have thapt view later in the show the dow down 33 at the moment and the s&p 500 holding steady under the flat line, just under

the 4000 mark that was hit on friday the nasdaq deposit holding steady ryan cohen on target's new latest acquisition campaigns next. as we head to break, the ten-year yield is in the top spot, followed by tesla, goldman sachs, morgan stanley and apple on the top-searched tickers. we'll be right back.

another busy day? of course, you're a cio in 2023. but you're ready. 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™.

what is wall street buzzing about? ryan cohen's latest target, the activist has taken a stake in chinese e-commerce giant al baba he's pushing for the company to boost the share repurchase program according to "the wall street journal." cohen who made his future with online pet retailer chewy became a people stock king when he used his stake in gamestop to push out executives and become chairman he also took an activist stake in bed bath & beyond earlier this year pushing for changes to

the board of that company as well he sold his stake in bed, bath in august. other stocks in his portfolio include citi group and netflix deirdre bosa joins us with more on the alibaba stake and what, if anything, it means for that company. >> reporter: well, judging by the share price it doesn't mean a whole lot. you saw the market really shrug this off alibaba shares other on the day, to close that way because alibaba is not a bed bath & beyond it's not a gamestop. this is a company with a market cap of over $300 million it is not subject to those same kind of short-squeezedynamics as the previous targets that ryan cohen has gone after. another really, really important component of the story, and that is the chinese communist party called them sort of the activists in alibaba and many other chinese tech companies they have even issued what's called golden shares which allows chinese government parties or bodies, i should say,

there's only one party, to take small stakes in companies like alibaba. it gives them special voting rights that can allow them to veto important decisions or nominate certain directors, so it's hard to see, mike, how ryan cohen is going to enact change when he's asking for, like you said, which is upping bye backs. alibaba has been doing that at a pretty quick pace and they have the cash to up it if they don't with a i don't know if it's thanks to him. up investor on the ground in china says what's driving alibaba is that positive momentum. >> right it would seem -- i mean, the entire market has had a pretty good snapback. they did, i guess, reload their some buyback program just a few months ago all of that is in place. you know, there's always the chance, too, let's remember ryan cohen, you know, he bought into gamestop when it was very depressed. it didn't seem as if any of th managerial strategic changes had manifested very much he got a crowd following him in, and the stock flew bed, bath, he got in and out of

that that company is not doing necessarily well he hasn't made his fortune or really his name as a public company investor so maybe he saw value there, a depressed situation and whether it's lucky or smart, maybe it works >> i think you're exactly right, and as you said other retail investors followed him into names like bed bath & beyond, and it's probably -- they are probably remembering how they were left to hold the bag. you mentioned that surprise sale of his stake in bed bath & beyond last suggest. that burned a lot of retail investors, so, like i said, you're not seeing that bump up in alibaba shares that you might have seen with gamestop and bed bath & beyond. it's a dynamic that is at play, the positive momentum. remember, alibaba used to be an $850 billion company so it has seep a lot of value disruption over the last few years. he's not 9 only one who sees value and has been riding that momentum on the upside >> that's for sure of course, charlie munger, warren buffett's partner in alibaba for a long time.

didn't get the stock moving from its highs either thanks very much talk to you soon. up next, the ceo of williams sonoma gives her latest read on consumer spending and when -- and on inflation when "closing bell" returns.

thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh

business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

. we have a news alert on

microsoft. steve kovac has the story. hey, steve. >> reporter: hey there, mike microsoft is going to announce tomorrow 5% layoffs. that's going to be about 11,000 people based on its global employee count that's according to bloomberg backing up what we heard from sky news earlier today that this is going to be the next of the big mega cap tech companies, the third with significant lay yfs microsoft has not responded to comment, but it sounds like based on these reports we'll hear about some significant job cuts at microsoft tomorrow this. comes as we get that downgrade today from guggenheim, mike, on the fear of lower i.t. spend and all those foreign exchange headwinds that have been hurting the stock lately. >> absolutely, and after, you know, lots of hiring in prior years, that's a big number. >> that, too. >> 5%. >> 11,000 employees. >> steve, thank you. shares of williams-sonoma meantime having a strong start to the year, up double digits. sara eisen talked with ceo laura alber today this davos sara started by asking about the u.s. consumer.

>> the whole world is here in davos, and one of the questions for 2023 that everyone wants to know is what's going on with the u.s. consumer and how long can they hold up you've got a good read. >> well, i think they are a little nervous, and, you know, rightly so it's a lot of change, and they don't know what the fed is going to do and people are reading about lose jobs. every time you open your phone, you see another news story about layoffs, so i think people are just standing still waiting to see what's going to happen next. the consumer definitely is still shopping, and they love products that are great value, quality products that last, and i'm very pleased, you know, because we're in a business that is more resilient because people love their homes. i mean, people shopped a lot in the pandemic we've been talking about that, but the truth is their homes

their big et asset and so many people started a project that has not been completed, and usually, you know, you start a project, you finish a project and then you furnish the house, so there's resilience in the customer in our business because of the business that we're in and the products that we sell. >> it's surprising to me because furniture has been one of the weaker categoriesed in some of the retail and consumer data because we all spent a lot on our homes during covid so you're saying there's till a tailwind. >> now after covid everybody was so excited to go out and don't we love to go out and go to restaurants and go to travel, but the truth is when you get that bill, it's really expensive, and so i think now that people are more conscious about their budget at all levels the reality is that the home, being your home is the best deal you can have your friends over you get a lot of satisfaction about redoing a room and so the home continues to be an important place for people

top of their mind, even if they are going to spend a little bit less than they did last year. >> are you baking in a recession? is that what you see from the consumer >> who knows because everybody is talking about it, i wonder is that really what's going to happen? i tend to try to see something else in the future i don't -- i'm not an economist. i don't know, but i know that there is definitely some fear, and there's a pullback right now. when you talk to anybody here in davos, that's what's on everyone's mind, so, of course, that's going to have an effect on spending you. >> mentioned inflation, so the inflation is in the services part of the economy right now. what's happening in the furniture category is it deflation, disinflation? >> well, let's start with the cost side. so the good news is that costs are coming down. the bad news is there's still the big costs from last year still moving through the supply chain and moving through the balance sheets, higher costs of product and those costs are coming down and companies should start to see relief at the end of this year, next year.

>> promotional environment though as you try to unload inventory is. >> promotional environment has always been wicked and it depends on which customer is serving where your brand is. there's a lot of people running sitewide deals all the way through, and then there's people like us that have decided that we're going to run markdowns on products where we're overstocked, but on our best-sellers, you know, we can command the price because of the value and design and quality relation >> what about the supply chain is it still stuck, presenting challenges or is it a lot better >> it's really better of the last year was really difficult there's still some residual things, but people are mostly back in stock now. it's just getting the right balance of inventory across product and across geos. >> what about china because you do have production there >> china is a great place to do business but tariffs made doing business really expensive. we moved a lot out when that

happened, and we sort of stayed in the same place with that percent to total you know, we've worked on really diversifying not just away from china but everywhere so we're not overly reliant in one place. >> so that's an ongoing process? >> yes. >> and china is still a good place to do business >> the ups and downs and you real really empathetic for what's happened over there with the people, but the -- the quality of the product in the places that we do business is amazing. >> how else have consumers changed in terms of their behaviors and habits post-covid that you've noticed? >> that's a really good question and hard to say. you know, i think consumers have shifted more online. they had to. there weren't stores open for a while, so, you know, when you learn how to shop online, you don't forget there's a lot of consumers who never did that before. they weren't confident they didn't even -- they weren't confident in shopping online, and they stayed shopping online

through. now we're also seeing it's great to have retail stores. i mean, our retail stores are thriving, and customers like to get out and see things and touch things and certainly in the home furnishings business it's good to touch and sit on the soa and make sure it's comfortable, so we are very fortunate to have a really good mix of both. >> if we go into a broader consumer discretionary slowdown, a recession, which of your brands, because you have very distinct brands, which one is typically more resilient >> that's a hard question. it depends on where the slowdown is you know, we're a life stage business as well as a home business when you think about it i mean, people are going to buy cribs for their babies, you know. >> monogrammed baby chairs >> exactly it's great that we have a portfolio of brand it definitely gives us more resistance and we do serve a wider range of customers than a lot of people with a single brand. >> sara will have two more big interviews from davos tomorrow don't miss her one-on-ones with

pepsico ceo ramon laguarta and service now ceo bill mcdermott the market is down more than 350, well over 100 points from the downside of goldman sachs. the s&p very small giveback that have 4% gain in the past couple of weeks nasdaq still outperforming, the russell 2000 virtually flat. catastrophic losses from winter storms leading to a catastrophic day for shares of insurance giant travelers which is a big drag on the dow as well. details coming up. ♪ ♪ a cyber-attack can grind everything to a halt.

cisco security keeps your company moving forward. because if it's connected, it's protected. cisco. this tiny payment thing- because if it's connected, it's protected. is a giant pain! hi ladies! alex from u.s. bank! can she help? how about a comprehensive point of sale system... that can track inventory, manage schedules- and customize orders? that's what u.s. bank business essentials is for. (oven explosion) what about a new oven, can u.s. bank help us there? we can serve loans in as fast as 12 minutes. that would be a big help! huge! jumbo! ginormous! woo! -woo! finding ways to make your business boom. that's what u.s. bank is for. we'll get there together.

♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq is it. let's check out today's

stealth mover. roblox, and it's game on for the stock, the company rallying after reporting revenue jumped by as much as 20% last month as consumers spent big bucks on its currency robux apple solidly in the green today. the analyst behind the california next. plus, travelers tumbling in a rough day for the banks when we take you inside the market zone this is ge vernova, helping generate and move the energy that our world needs. ♪♪

welcome to a new era of energy. 92% still active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. start a 30-day home trial today. terms apply.

power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades

and stay on top of the market. ♪ we are now in the "closing bell" market zone. aerials, head of the investment group is here to break down these crucial moments of the trading day and evercourse isi's bullish call on apple, and contessa brewer on traveler. welcome to you all charlie, starting on the markets here i know you're going to take a longer term perspective typically, but what have the first couple weeks said to you, if anything, about the opportunity to avert a recession, what the fed is up to, the whole value and growth proposition which actually is very stark last career in favor of value >> it does show that people are

finally looking on the bright side, that maybe some of the data around inflation is obviously in the as bad as people had feared, and if that happens then the fed won't be as bad as people feared, and if that happens then the economy won't be as bad as people feared, and that all leads to cyclical names, economically sensitive names, consumer discretionary doing pretty well. that's what we've had, some of those names that we believe are trading at a big discount to intrinsic value get off to a great start this career. >> are you operating on the premise that in fact we'll not have a recession, you know, let's say in the next several months, or are you investing, you know, regardless of what the outlook is >> i'm investing under the proposition that nobody is very good at predicting these things. there are times when the market gets way too optimistic, way too pessimistic. right now i would say the market is getting it about right in terms of the economy odds are, the expression don't fight the fed is powerful because it's been true when the fed wants to bring on a

recession or bring pressure on the labor market they can do it. i think they are intent on doing that right now i think that that's a mistake, but i think that's more than a 50% chance of happening, and i think that's what the market things we're taking a long-term approach i have to admit that the next three to six months you've got to be cautious because you hate to fight the fed. >> sure. just quickly, do you think if the fed does what most people believe it's going to do which is one or two more small hikes, that itself will be overdoing it >> it would be overdoing it because we're already past peak inflation. the federal is under the mistaken opinion that inflation got hot because of an overheated labor market this is a false analysis of the situation. wages were never up as much as inflation. wages were, if anything, a drag on inflation inflation exploded because of a 0% increase on the money supply which the fed was responsible for, so any of these increases are unnecessary. the money supply is already

coming down. it would be a mistake, but fortunately it looks like it's going to be a series of small mistakes rather than a catastrophic stuff we were staring at three months ago. >> all right well, we do have that going for us potentially then. two banks, two very different earnings stories goldman sachs, the biggest drag on the dow after reporting its largest earnings miss in a decade because of a plunge in investment banking revenue and jump in operating expenses morgan stanley experiencing a slowdown in investment banking but was able to beat wall street earnings estimates thanks to big revenue estimates in its wealth management and trading businesses meanwhile, citi group show telling sara eisen in davos that she sees a potential for m & a rebound. >> we have very strong m & a dialog we're seeing a lot of trans formational ideas from different ceos pursuing them, and this is on the back of healthy balance sheets and lower prices, and i do -- i do see the risk rewards

in the market. we're sewing both investors and issuers starting to get their arms around what that means, and so i think we'll see some people cautiously testing out the capital markets. >> charlie, it would be tough with deal activity to get any more depressed than it was in the latter part of last year you're involved in goldman as well as kkr in the past. what's your outlook for that business and when whether in fact we can expect the capital markets to get busier in. >> when investment banks have a lousy backlog of m & a deals they talk about all the conversations they are having right now as you heard from citi backlogs are down from very high levels, so i think the next three to six months will be a challenge from an m & a backlog activity you're right, mike, it can't get a lot worse, because it was awfully flow in the fourth quarter and people are adjusting to higher rates. in fact, we've backed up a bit of rates rates have come down almost 100 basis points from where they were, so i'm looking for a lower

level of investment banking activity, certainly in the first quarter. that's one of the reasons why goldman had such a tough quarter. >> yeah, for sure. evercore isi is out with a new note today on apple adding the tech giant to its tactical outperform list saying there's a compelling buying opportunity ahead of the december quarter earnings which should serve as a positive catalyst. more about that now. i guess the call here is that the iphone -- disappointing iphone sales in the december quarter are not gone forever and that we're going to see evidence that they are coming back? >> yeah. actually, you know, i think there's a myth that it's fully embedded in expectation already. again, the call would be this is more a production issue than demand issue and there's 658 million iphone units that did not get shipped in december.

would you argue that's not the destruction of demand. march guidance is going to be much better because i think the units will catch up in the march quarter. estimates to me are going to go higher, not lower, and if that happens, the stock keeps going higher from here. >> now, i guess the bigger question, in addition to the pace of iphone sales has just been exactly what we should be paying for apple, as steady as it is, as high quality as it is in terms of the balance sheet and shareholder return and capital and all of the rest of it, are we paying 20 times earnings is that a routine level as we're looking at a bit of a global slowdown >> it's a great question what i would say is i think a s&l a whole lot more to a consumer staple company than a tech can you look at the way most folks use their apple product, it's more a consumer staple than a tech company the utilization is fairly high

if that's the case and it's a staple asset, they do extend the trade into the low 20 pe range that's a way to look at apple. >> we have seen some reports about some details tailgs on a new mac model, things like that. is that part of the business material, you know, to the immediate outlook? >> not ipad, it's been a pretty good growth driver for them during the pandemic, but the reality is i would argue all day long is actual iphone is still the number one kpi in regards to what happens to apple. >> sure. you know, is it the time in the product launch cycle for a toll actually start doing okay? i'm trying to remember, you know, the cadence of once we've had a launch of a new iphone what tends to happen in the following year, or are we beyond

those patterns now because it has been smoothed out so much? >> my hope and expectation is that it's been smoothed out so much, but, you know, the cycle from apple traditionally, the number was not so good and i think with iphone production issues have had have been pushed out from the channel-filled dynamics by a quarter or so. so look for apple beyond iphones if you think about '23 one is gross margins all of the semiconductor pain that you're seeing from a supply perspective has to be a gain for someone. i think apple will be the big beneficiaries from gross margins that supply chains normalize, and the second one is new product launches this is the year that we talked about it that you get a new ar/vr. there tends to be a lot of positivity around new product launches when it comes to apple. >> and also a long history thinking that new products were going to be kind of irrelevant

and then like airpods, they become kind of a big business at some point down the road so we'll see how that goes. amit, thank you very much. a great. >> thank you. >> travelers, one of the biggest drags on the dow after pre-announcing weaker than expected fourth-quarter results due to catastrophic losses from winter storms and weakness in auto insurance contessa brewer joins us with more details thanks, contessa >> the winter storms took a really brutal toll on buffalo and other u.s. cities, but especially for travelers it's the bottom line here they pre-announced catastrophe results of $459 million. that's nearly double consensus estimates. now its commercial auto insurance line, that's driving full speed ahead, but it's the personal auto insurance still suffering under continued crippling claims costs, and when we think about why you hurt charlie talking about inflation there, look, you still have new autos up, and we just got the

cpi numbers last week, year over year 5.8%. used auto prices have been declining month over month for the last few months, but that's only after rising double digits in the first part of the year, and then you have auto parts and labor. that inflation is still going up quite a lot, according to cpi. accident frequency and severity, how bad the accidents are and how many of them there are still a significant headwind for anybody who is in personal auto, so you would want to take a look at alstate, too. by the way, mike, travelers got a lift in its fixed income investments but certainly the stock market performance is taking a toll on its return on equity, and they have previewed fourth-quarter earnings per share here of $3.40. wells fargo analyst elise greenspan followed suit and lowered her target eps to 340 from 427 she says though that she really believes travelers stands to benefit from what they call a

commercial hard market that's what insurers call it when they raise rates, so we'll wait and see what travelers has to say about that in earnings next week. >> yeah. bad news typically eventually turns into good news for the insurers see if they can grab some of that pricing it has been a very strong subsector of financials recently as well. contessa, thank you so much. charlie, we have backed off here a little more in the market. s&p 500 down a quarter of a percent at this point. you are seeing some relatively stark reactions to some of the earnings out there i wonder if you think that expectations for the quarter have been lowered enough you see things like mohawk industries, housing-related, a disappointment and a guide down. that stock took a hit, so how do you think the market has figured out, or not, how earnings are going to come in >> yeah. this, mike, is traditional time of the year when managements get analysts in line for the upcoming year, and if the market and analysts are too high, this is the time when they tend to make those changes i think we are seeing a couple

areas of sensitivity housing as you mentioned with mohawk would be number up on my list of concerns higher interest rates have a disproportionate impact on housing, both remodeling and rebuild so the market things we'll have softness n.fairness a lot of the housing stocks were already down from a year ago, but that could be where you see a real slowdown, and then you see it in the disparate results. morgan stanley being up today and goldman sachs being down that's the kind of thing that shows you that we're getting a readjustment at this point of the year and what the year is going to look like i think people underestimate in banking the importance of the yield curve. people think that higher rates are good for banks which really true is a sloped yield curve is good for banks and right now we've got a funny yield curve with six month rates higher than ten-year rates which could be hard on banks. >> if you think cyclical stocks is where there's value, as you mentioned earlier, if you're kind of looking through the immediate term, and you think

the banks are kind of stuck with an inverted yield curve, housing-related looks like it's a bit treacherous, where does that leave you what areas of cyclicals seem like they might be better positioned >> it leaves me short term cautious and long term bullish the market is nervous about a short-term recession in the near term, and i don't think they are paranoid to feel that way. the market tends to be oversensitive about the near-term outlook. nobody likes to buy stocks before a recession is verified, and i think that's where we stand right now, so absolutely, you know, consumer staples are dependable and everybody flocks to them and that's why apple is trading at 23 times earnings, but apple is not cheap at 23 times earnings, so i think long term, if you want to do well in this market, you have to own names that are going to be fine in the long run and accept the volatility that we'll have in the short run because we are going to have some volatility. >> yeah. i guess look long term and keep

expectations in check is not a bad way to go about it charlie, thank you so much we'll talk to you again soon. we just got a little over a minute left to go in the trading day. you see the s&p 500 is down by about .2 of 1% remember, it was up almost 4% in the first two trading weeks of the year the bredst slightly positive that's been a positive more stocks going up than down and more volume in advancing stocks versus declining stocks the doug, as we've been mentioning, mostly weighed down by the big declines on earnings and warnings from goldman sachs as well as travelers the nasdaq composite getting a bounce, and tesla is a big part of that. that's also rebounding today also, firming up oil prices. oil up about 1.6%. take a look, too, and trans ports versus utilities on a career-to-date basis this is the cyclicality of the basis. money flowing towards more of the economically sensitive areas, and the volatility index

was a big story last week. kind of made a new low for -- on a 12-month basis going into the weekend. it has bounced just slightly over the course of the day but still relatively subdued as the overall s&p 500 index cruises in really just below the flat line. the 4000 level is right above the market level right now that does it for "closing bell." "overtime" is right now with wopner. >> welcome to "overtime. i'm wober in you just heard the bells we're getting started from post nine here at the new york stock exchange, and in just a little bit i'll speak to cantor's eric johnson about whether he's still so negative on stocks and when would cause him to change his mind we begin though with our talk of the tape the market at a pivotal point as earnings season gets ready to rev up stocks have shown pretty impressive resiliency with the dow down nearly 400 points can we