i think it's a good name with an outsized dividend in an uncertain market >> jimmy the bull. >> another good dividend player. >> and mr. weiss >> i own chevron and i think momentum continues in energy stocks for the time being. >> some interesting calls of late on some of those energy stocks thank you, everybody i will see you in o.t., "the exchange" is now hi, everybody. i am brian sullivan in for kelly evans today, and here's what's ahead. your money once again under a little bit of pressure the latest read on labor shows that the job market is not slowing down and that means the fed likely won't, either so what comes now with your investment one of our guests says you might want to look overseas for opportunities. speaking of international, ubs out with a list of stocks poised to benefit from what chinese consumers want now how do they know they surveyed a lot of them and the analyst behind that survey is here with their picks

and here comes netflix from what to watch to out of pox, we'll get you ready for the big report after the bell. that's all coming up on the next hour let us begin with the markets and your money and a lot of little 49ers red on the screen with dom chu >> we just need a little gold to go along with it and i'll be as happy as can be with a win over the cowboys. >> to your point, brian, the markets have been down, all day long the s&p 500 currently sitting about 3898, down about 3 points. at the highs of the trading session, we were down 12 points. 12 handles for the s&p, down roughly 43 at the low. tilted a little bit more towards the low side of things the dow down, two-thirds of 1% to the downside. 1% declines for the nasdaq composite. 109 points to the downside that technology trade still kind of weighing a little bit on that so far today one thing to watch for speaking of economic data that was a more mixed picture on

the housing starts front we saw some gains in single-family homes, declines in multi-family those building permits, they are highly volatile. we will say that, but they fell at an annual rate to the lowest pace since going all the way back to may of 2020, in the wake of the virus pandemic. that's taking down names like pulte, toll brothers, lennar, and housing companies like trex and home depot as well you can see those. by the way, pulte and toll brothers both got initiated with outperform ratings at oppenheimer today. a very mixed picture, but downside for the housing stocks. and the stock of the day, you mentioned, it's netflix. keep in mind that netflix shares are lower on the day with the rest of the market, but if you look to the lows that we saw in may to over here right now, this stock has in essence doubled how much good news is priced in with a stock that's doubled off its lows in may? and by the way, brian, the options market right now is currently pricing in what could be a nine plus percent move up

or down in the stock post earnings report. and if you want to dig further, that's actually less volatile than it's been over the last eight quarters, so it could be some fireworks for netflix, brian. back over to you >> bring in the heat there, guaranteeing a 49ers victory this weekend, dom chu. that's what i heard. >> here's what i would say i'm an optimist, as a barrier native, i have to be an op optimist >> but a realist >> the cowboys are a tough team. >> dom chu, come over. we'll talk not football. i wish we would. we'll talk something else, because with the early 2023 rally losing steam, here at home our next guest says maybe now is the time that you want to look for opportunities abroad let's bring andres of zoe financial. you sent around this really interesting survey, which i was going to make at the rbi tomorrow, but you're going to be

doing the 5:00 a.m. tomorrow >> and that means you're going to be doing the 1:00 p.m.. >> i was going to make it the rbi tomorrow, because it's fascinating, which is on average, it takes about two and a half years to bring inflation under control. and research affiliates did the numbers, they went back, looked at the '70s and '80s and stuff like that, is that what you're anticipating that we could be in for sort of a fight against inflation for another two years? >> well, the question is, is this an average-type situation, right? and i don't think it is. the fed did hike interest rates at a pace that we had not seen before, but i think it is optimistic to expect inflation over the flexion, call it 6 to 12 months to go back to 2 and 3%, and we're all just going to, you know, champagne-flowing type scenario i think there's some disconnect here of what the market thinks is going to happen based on the recent trend of inflation versus where it might land, right, by the end of this year >> yeah, okay.

so what does that mean for our markets? what does it mean for overseas markets? because, by the way, inflation, not just here. uk's got worse inflation than we do europe is worse inflation in most countries than we do. so where are we looking around the world that maybe a better deal than the good old u.s. of a. >> i'll caveat first this doesn't mean sell all u.s. stocks if you're a u.s. investor and own dollars, you're going to own u.s. stocks. but if you're looking for that next incremental investment, i think emerging market stocks do look appealing, specifically now with the reopening of china, right? especially asian stocks are going to be leveraged as far as that kind of reignition of growth you'll get some inflation, but you'll also get some growth. >> what's interesting about this, andres brings up a great point with regard to some of the outside opportunities. if you look at a chart of some of the etfs that track some of those emerging market stocks,

the eem is one that a lot of folks use out there -- >> which is most asia, though. >> it is, but i guess the macro trend that you have to look at is what's happened with dollar strength that has abated a lot over the course of the last several months if you take a look at the eem chart versus a dollar index chart, what you'll see is that the move higher on the right-hand side of the screen for those emerging market stocks has coincides with a decline in the value of the u.s. dollar as you talk about whether or not there's dollar strength or dollar weakness, emerging market stocks or not, you have to look at mof the macro pictures with rates and the value of the dollar as opposed to what's happening domestically here in the u.s. >> that's the tricky part about investing overseas it's one thing if you buy a stock in the country with the currency where it is you buy the local l'oreal shares in paris versus buying the adr, which then might have currency

impact, because you're buying it in a non-native currency to that company. >> that's absolutely true. and i think you are making a bet, not only on the stocks, but on the currency. i think that's dead-on >> which is hard that's the most liquid market in the world? history is littered with people who have gotten their faces ripped off trying to predict currency moves >> i would also say that history shows that the dollar doesn't go on forever and it's been in a pretty good run for the last six or seven years. by the way, one of the biggest factors that drives a dollar is relative economic growth so if u.s. economic growth is decelerating and you're going to see the rest of the world's growth reaccelerating, that could be bad news for the dollar, right? which would give you a double whammy and potential opportunity for emerging market stocks >> i think the other thing you have to look at, emerging markets to andres' point is a great place to look, but if you want to take a look at the relative performance, there's a view out there that europe is

positioned for better growth than the u.s. on a relative basis. that might mean that developed market economies in europe might have better markets, as well, than the u.s. here or not >> dominick, what's the name of the quarterback of the 49ers >> brock purdy, man. >> all i'm saying is you need a purdy in your portfolio. >> i see what -- see what he did there? >> i like it >> i like this by the way, you must have read my predictions one is that europe outperforms the united states, even with all of their problems. >> let's just hope the weather holds up >> the weather has been everything >> that's been a big part of that story >> ironically, warmer weather probably brought on by climate change is saving europe from their energy disaster that we've been talking about >> i'm not going to go down that road >> that's a whole different show, man. whole different segment. andres, thank you very much. dom, thank you that's a very nice tie, by the way. >> and i like yours. >> you're really missing out and you're on the radio and can't see the tie. from one international opportunity to another with

china's reopening underway, ubs surveyed consumers in china on their travel plans get this, 85%, that's like almost all the percent, plan to travel outside of china within one year i mean, you blame them, after nearly three years of lockdowns? anyway, if this is true, it is good news for travel and leisure stocks, which you're lalready seeing, nice gains over the last month. let's get a closer look at some of the names that you might benefit the most, leisure and lodging analyst at ubs robin, how many people did you survey for this? more than two. >> our evidence lab, which is part of ubs, surveyed about 1,000 consumers in china to ask them about their travel plans, now that it's reopening. so a thousand is a pretty good number to have talked to >> yeah, okay, we just gave the macro headline 85% want to travel where are they going where do they want to spend

their money? are they coming back to the states who's going to win >> although you said over 80% will travel in the next year, only 13% are going to do that immediately, right it's going to take a little time before that benefit comes to the u.s. first, it's going to be domestic travel within china, and then europe, then the u.s. is probably after that. so there will be a little bit of time for that recovery to pick up i will say if you look at hotel companies like marriott or hilton, marriott had 9 or 10% of their earnings in china before the pandemic so they will benefit from the domestic travel within china, even before travelers come to the u.s. h hilton was about 5%. things under construction in china are planned to be built and 30% for hilton there's immediate benefit even from the domestic travel there, and then obviously, the longer term growth. >> what about the casinos?

macao, las vegas sands, wynn, contessa brewer talks about them all the time >> yes, clear benefit to the operators in macao as those orders open up we think it will take some time, but we raised estimates this morning for orders in macao. we've been saying before now that mass market revenues in macao would recover by 2024. now it looks like it's going to happen the rate of recovery in 2023 will be a little bit higher. we prefer lvs to win there, because lvs has the biggest mas market footprint in macao. even though the vip business is not going to recoverthere, tha was only about 7% of ebitda for lvs. wynn repsorts was 25%. the mass market, we expect to be fully recovered by 2024 and lvs could be the biggest beneficiary there. >> maybe the biggest ben beneficiary, marriott and hilton, because there's only so much airline capacity, and probably airfares are going to

go just insane for the first year and then cool off robin farley, ubs, great stuff really appreciate it >> thank you >> thank you >> all right marriott, hilton, lvs. all right, on deck, netflix and ill. sales seeing grown at a snail's pace, but does that mean you have to avoid the stock? we'll tie the two together but first, the texas bond king one of our favorite guests, gilbert garcia joins us on the fed, rates, and more as "the exchange" rolls on right after this lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network.

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all right. welcome back dow is down 183. meantime, federal reserve vice chair lael brainerd is speaking now on the economy steve liesman has the headlines. steve? >> thanks, brian lael brainerd, the fed vice chair says that inflation has declined in the last months, but despite the moderation, rates need to be sufficient until some time a slower pace of rate increases will give the fed the time it

needs to assess the data more closely. inflation has declined and it will get time to get down to the 2% goal. significant weakening in manufacturing. further moderation also in consumer spending. also one of the fed officials to really take note of the lousy data we got yesterday. she says the drag on growth and jobs for monetary policy is increase this year temporary workers suggests the labor market is cooling and labor supply appears likely to remain constrained wages are not driving inflation and there are tentative signs indeed that wage growth is moderating housing inflation she expects to cool in the third quarter of this year. and then in a way that is a potentially pushback on some of

the ideas out there among other fed officials, including the fed chair, she says bringing down wages are not the only way to cure that problem of high core service inflation. there are other ways to do it, including with a broader decline of other aspects of inflation, that could bring down the part that the fed chair powell is so concerned about, core service costs. continued moderation in demand could cool the labor market without significant job losses brian, this is, i've got to say, it starts off as a very dovish speech and has a lot of dovish stuff in there that makes you think she's going to conclude with a more dovish outlook on policy she doesn't really have that in there, but she's one of the first fed speakers in recent days to take account of the bad data we've had recently, and also to be looking at inflation on a three-month annualized basis, which as you know, has come down quite considerably she doesn't mention 5% or higher in there the way other fed

officials have and i don't know if this characterizes any kind of change on the part of the fed t she is one of the three core fed officials, brainerd and powell and the new york fed president, john williams are the kind of troika there, the three people we watch the most closely of all, but she's definitely on the dovish side of things, and the question is whether or not this means a more dovish policy, not specifically indicated in this speech >> yesterday, i tweeted out something about inflation, forgot to put the word "rate" after "inflation," i got some crud on the internet, i put it out basically like, just because people say inflation is coming down, when you buy stuff, it doesn't look like it to the average person so can you explain the disconnect between, because a lot of our viewers like, i'm not seeing inflation coming down eggs are six bucks used cars maybe down a touch but

still hot. can you explain the difference between the data and the real world? >> there's two things. the first is what you want to call the marquise items. and i think gas prices, nobody knows better than you, brian, are one of those marquise items that dramatically color our view of prices. i think eggs have recently been one of those marquise items which has been driven up, especially by what's happening with the avian flu and those price increases have been dramatic. in addition, people are thinking about what prices used to be last year, and they still see them higher. and indeed, they are higher. what we're talking about here, brian, and the reason why there's a disconnect, is because it's this wonky notion of a second derivative. what we're looking at, what fed policy members are looking at, what the street is looking at is the rate of change of the rate of change. is inflation now 5% or is it 3%? so prices are still going up,

but they're going up two percentage points less and it's very hard to go to the supermarket and look at your bill and say, oh, it's up two percentage points less than it was last month >> the point you just made is the point i tried to make unsuccessfully, so then i tried to remake it, which is, you know what i'm saying, of course, it's the internet, so take it for what it's worth, but the idea that the inflation data is coming down, but that doesn't mean prices are falling. it simply means the rate of increase is coming down. for most things. >> exactly and you make a great point, brian. because the question becomes whether or not we actually have some deflation, some correction on some of these things. and i want to point out, one of the relevant aspects to this for investors is something that brainerd points out in her speech today, which is this notion of profit margins she notes that retail markups have been a part of what's been driving inflation.

and she expects some of those retail markups to come down. when an investor hears retail markups coming down, they probably hear profit margins declining. and it is an interesting question for the future for the level of earnings, for the amount of earnings, for the rate of earnings, for profit margins as to whether or not those profit margins come down and whether or not prices actually fall it is a big part of the department that bob pisani is talking about, that we're talking about more broadly here on cnbc for the future here, is what is the story here in terms of bringing down profit margins and what prices actually fall rather than just the rate of change of prices falling >> there's a big swath of people out there who believe that almost all inflation is caused by corporate greed they might have a point, we'll see. steve liesman, good stuff. thank you. >> sure, thank you >> let's bring in governing partner of garcia hamilton associates and a cnbc contributor listening in i probably should have kept steve around for this, he knows

more about it. but you get my point, gilbert. i don't want to throw stones politically, but there are some high-level politicians who come out on twitter or whatever and say, prices are coming down, inflation's coming down. prices aren't coming down. the rate of increase is coming down and the fed has got to be looking at that and trying to figure out what to do. what would you do? >> sure. first, there's two different things one is, inflation means prices are rising, but remember, that means prices are rising. deflation means prices are declining. so we are still in an inflationary environment, but the amount of inflation is rising at a slower pace. that's the key so going back, what would i do, i think the fed is making a terrible mistake i think they should already stop raising rates and they should give the economy a glide path to let all of these big rate increases filter into the economy. we've raised rates in very big chunks in a very short period of time and by focusing on labor and

wages, those are more lagging indicators and they should be looking at forward indicators, whether it's money supply, whether it's leading indicators, and if they did that, they would recognize that they need to take their foot off the raising rate peddle >> i love the magic of tv. i said, we probably should have kept steve around, and guess what, he reappears on the giant monitor. it's like, pay no attention to the ban behind the curtain steve, jump in on this there's a lot of people that are in gilbert's camp, which is, would it kill them to wait a couple of meetings and just see how things shake out because if you kill inflation by destroying the economy, is that a win? >> no, it's not. i don't think it's the intention of the federal reserve you know, gilbert can talk in ways that i don't necessarily talk as a reporter, i will point out that i have noted quite a bit in my reporting that the federal reserve has not taken account of the change in the

data we've had a series of really lousy data points. ism services were terrible, ism manufacturing was down, yesterday's manufacturing report, yesterday's retail sales report all should have made you, if you're a fed official, sort of sit up a little bit taller in your chair and take a look around and say, maybe i don't have this exactly right. the fed is not purposefully trying to tank the economy, but it sees moderation and economic activity as a key way to bring down inflation and what's been notable to me is the fed has not taken into account until this brainard speech, and that's why i think the brainard speech is important. it's the first one that says to me that they're aware of the very things that gilbert's talking about. what brainard does not do is take that extra step that gilbert just did and said, that should change my monetary policy and if you will very quickly, brian, take a look at the spread of officials and their 2023 rate forecast 17 of 19 are above 5%.

only two or below. so even if brainard is a dove, she's still among that group that could only be in the 490 and higher for all of 2023 or for ending 2023. that's the doviest person that could be on the -- i'm not saying that, with i don't know it, but if she is a dove, all she is 490 so there's nobody on the fed that is in gilbert's camp here, and this idea that, hey, maybe we should be rethinking how far we go. >> gilbert, jump in. >> and the other thing, too, steve is i really think that they're losing some of the basic fundamentals of looking at money supply growth. if you look at money supply growth, it is growing at a negative rate. whether it's year over year, high frequence, three month over three month. and we haven't seen these sorts of numbers since really the depression and i really think that they should be focusing on that and realizing that the correlation between money supply growth and about 12 months or so, the economy, is so tight and so

high, that they should realize, we immediate to take our foot off the gas pedal now, stop raising rates, because if they do, and i know we didn't use this term, but if they do wreck the economy, i'm just being an alarmist here, if they do that, it will take so long to recover if businesses go out of business, if people lose jobs, and people getting retrained they need to be very, very careful and they should stop raising rates now. >> and i'm going to -- steve, thank you, gilbert steve, i'll make a final comment to you and you can comment on my comment, which is, we talk about inflation as a producer prices, consumer prices, used cars, underwear, whatever it is,ther is an underlying inflationary aspect to higher interest rates. if i've got $10,000 on a credit card at 0 percent from a balance transfer and suddenly now it's 22%, or my mortgage is an arm and it goes up, is any of the interest rate impact in any of

the inflationary data, steve did that question make any sense at all >> well, are you talking about the interest income that is earned by people >> no, it's the amount -- >> -- inflationary impact? >> no, the amount of -- let's say your gasoline bill goes down $100 a month because gas prices have come down, that's great, but your interest payments have gone up $300 >> so therefore, you pass along higher prices? >> therefore, there's an inflationary aspect to the economy that is hurting consumers, but i don't think that's captured in the cpi or the ppi. the interest charge of the higher living costs. >> yes, yes, that's definitely out there. that is incorporated, i believe, in the housing data. but i want to get to one other point here, which is, i don't know if you have my, in the back there, my fed market gap here, which is, there's a lot of people, in fact, the whole market is priced in a way that agrees with gilbert garcia and

when i look at this number here, the gap is 73 basis points, 72 right now, we update this frequently look across the top there, brian. the fed is at 5.3% the futures market is at 441 now. that's three-quarter point hike disagreement, not for next year, which is the story in december, but that's this year, brian. and there's broad agreement on gilbert that the fed -- and the real issue here to me is the fed made a mistake by being all on one side of the boat last year on the transitory side, and it appears as if group think or i worry that group think has once again taken over the federal reserve. and what is striking to me having covered the fed for 20-plus years is the absence of opinion about the outlook. >> go ahead. quickly, gilbert very quickly my producer's going to have my hide >> i'm at a conference in philadelphia, thank you for

having us. i think the other shoe to drop that's going to make people start waking up and saying, my goodness they need to cut rates is housing because housing is starting to roll over, starting to slow down rapidly, prices are declining. it's because of the affordability is not there anymore, because prices went up too far, too fast and incomes did not keep up, and that's going to be the next thing that's going to be hitting the news and the headlines >> that's a lot bigger than the stock market let's hope you're wrong. you're probably not. but, hey, gas prices are down a buck, so everything's fine what's eating gilbert garcia, we know.liesman, thank you very much all right, on deck, we're talking a different kind of debt, the national debt. why we may be in for a big-time fight and could we really wail default? on the u.s. debt? ylan mui up next with that

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welcome back to "the exchange." i'm tyler mathisen with your cnbc news update across france, hundreds of thousands of people are protesting against government plans to raise the retirement age there from 62 to 64. nationwide strikes are also hitting transport, schools, other public services. president macron says that reforms needed to save the p pension system. alec baldwin's lawyer says the manslaughter charge against his client for a death on the set of the movie "rust" represents a, quote, terrible miscarriage of justice a weapons specialist on the movie was also charged her lawyer says the charges were the result of a flawed investigation. and remember the new jersey deli whose parent company briefly had a $100 million market valuation, had annual sales of just $40,000. well, stock manipulation charges were filed against three people involved, shockingly

two were arrested last september. the third was just taken into custody in thailand. peter cocker jr. was believed to be on the lam in hong kong before the fbi and thai officials tracked him down in a thai resort hotel. so much for a deli worth hundreds of millions >> i went there. >> you did >> stopped in. i was the some person there. good sub >> was it worth the $100 million? >> no, i got the stink eye, too, because that's when cnbc started poking around. which is why i went. all right, still ahead, netflix on deck. the stock up double digits in the past month, down a little bit right now. what can we expect with their numbers tonight? will we have ever seen stranger things we're back after this.

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welcome back let's talk netflix shares down a little bit today, down about 1.25% all ahead, though, the earnings tonight after the bell shares really have made quite the turnaround since their may low, nearly doubling in price off that low made not quite a year ago the street will be keeping an eye on user numbers overall, but this is the first quarter that

we will get any kind of read on netflix' ad-supported tier let's dive in further with ben swinburne, morgan stanley managing director ahead of u.s. media research how much will that ad-supported tier matter to this quarter or is this the just kind of a curious sideshow >> maybe it's somewhere in between, brian i think it will have an impact, but probably not dramatic. i think the bigger factor in what we expect to be a strong quarter relative to their guidance is actually the content strength they had during the fourth quarter, particularly along some of their bigger english language titles. the ads here is more about the next 12, 24 months than q4 >> and what kind of subscriber number would morgan stanley be happy with, what kind of subscriber number do you think the market will be happy with? >> well, they guided to $4.5 million net ads, and if you look at the analysis, at least, that we've been able to do around some of the hours consumed on certain shows, particularly

"wednesday," "emily in paris" season 3, certainly suggests they had a very strong engagement quarter, and engagement correlates strongly with churn better churn means better net ads, through in some benefit from the ads, my guess is people are expecting them to beat guidance by a million or so net adds, in the 5 to 6 million range. >> you have an equal weight, your target is at 300, the stock is at 322. if your clients own it, are they just sitting on it right now, but not adding more? they're not selling, are they? >> yeah, the way we look at netflix is the risk/reward is pretty balanced here, hence the equal weight we're at 30 times forward earnings one of the things that's maybe a little less exciting to talk about, but worth highlighting to investors is the impact of currency you know, most of netflix's revenue come from outside the u.s., and the majority of their expenses are in the u.s. so currency was a huge headwind last year, but if you look at when the dollar peaked sort of

late september to today, netflix stock is up 30% versus the s&p up five. that's played a big role in the recovery we worry that a lot of success is already priced in here, which is why we're a little bit more cautious as we look out over the next 12 to 24 months >> ben swinburne, those numbers out after the bell, appreciate it take care. thank you. >> sure. >> let's stick with netflix, but turn to some of the action in options. that would be a good name for a show, "options action. all right, your next guest says that you're implying an undersized movement, at least for netflix after the bell, meaning their expectations of lower risk, perhaps, if next is released, for more on where the tech sector overall may be headed is chris harvey, and i know you don't individual names, but earlier, dom chu saying there was an implied 9% move either way on netflix. that doesn't sound small to me 9% either way! >> no, it's not a small move, but really, what we want to talk about is not so much the one

individual reaction, but the real reaction over time. and what we've seen over time is a much more traditional reaction to earnings. what we're seeing is beats if you have a beat, they are reacting positively. when you have a miss, they are reacting pretty negatively that wasn't true last quarter about this time. and so, what we're seeing is a more rational approach to earnings at this point we've seen a lot of fearmongering coming into earnings people expecting margins to come down greatly, numbers being slashed, so on and so forth. we do think that margins are going to be compressed we do think numbers are going to come down, but we think there's been too much fearmongering, and people are expecting too much, too soon so once again, what we think we're going to get by the end of this earnings season a situation where things aren't as bad as feared they're not great, but not as bad as feared. >> you just heard us talk about the target price, 300, and said,

listen, there's not much we can do with the stock right now. yours wells fargo's s&p 500 estimate is 4020 that's about 3% from where we are now. so, if that's the case, it sounds like you guys are kind of saying that most of the gains for the year may have already been made. and it's like january 18th >> yeah, again, i don't particularly comment, being the head of equity strategy, i don't comment on an individual stock i leave that to our fundamental analyst -- >> i'm sorry, i meant the s&p 500. your target on the s&p 500 is 4,020, but the s&p 500 is at 3,900, it's only 3% move so i'm just moving, are most of the gains for the year already baked in what are we going to do for the next 11 months, chris! >> i think there's a little bit of miscommunication. what we've been saying is in the short-term, we think fair value for the s&p 500 is in and around

4, 4,000. our year-end price target is 4,200 and we think at some point, we'll get down to 3,400 we think the year is going to end on a positive note, but we'll have a lot of volatility between here and there and what we're saying is between the here and the now, we got to 4,000, looks like the market needs to take a breather you had rates go down pretty aggressively here. you've had risks being well bought, you've had a lot of short covering and now we think before we have the blackout with the fed, you'll get a little bit more hawkish rhetoric. we'll have a lot of volatility before year end, but ultimately we think it's higher >> could trade down to 3,400 help me out, i'm a little bit of a ding dong. what's the difference between fair value at 4020 and price target of 4,200? >> yeah, so, our fair value is just based on where we see interest rates right now, based on where we see credit spreads

right now, based on where we see the risk premium, what do we think that the equity markets should trade in the short-term short-term meaning the next couple of weeks, next month or so, not so much a 12-month price target, right? and typically, what happens is, as rates go down, credit spreads tighten, that fair value goes up and vice versa we start to see credit spreads widen. then that fair value goes down and it's just something that we use with a lot of our traders and some of our short-term players to say where we think the market is from a trading point of view. not so much that long-term 12-month point of view >> got it. because we could trade down to 3,400. that's maybe the takeaway. and maybe, by the way, good if you're playing in the options market chris harvey, really appreciate your views thank you. all right, coming up, it is official the united states, folks, we've officially hit our debt limit. the treasury has already started its, quote, extraordinary measures we'll have the latest on the spending showdown and whether or

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welcome back the treasure's so-called extraordinary measures are underway secretary janet yellen sending the speaker of the house kevin mccarthy a letter outlining the u.s.' first move to avoid a debt default. ylan mui joining us now with that extraordinary ylan, extraordinary times call for extraordinary measures where do we stand right now? >> that's right, brian secretary yellen told congress that the deadline for raising the debt limit is a moving target the letter states, quote, the period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting the payments and receipts of the u.s. government months into the future yellen had previously projected that treasury could keep paying the bills at least through early june notably in today's letter, she did not provide a time frame, but urged congress to act quickly.

still, republicans and democrats continue to point fingers at each other today gop representative scott perry tweeted, enough is enough. we must use every opportunity to reign in out-of-control spending the debt ceiling fight is that opportunity. meanwhile in kentucky, top senate republican mitch mcconnell tried toturndown the temperature and predicted lawmakers would eventually reach a deal >> in the end, i think the important thing to remember is that america must never default on its debt. it never has and never will. but we'll end up in some kind of negotiation with the administration over what the circumstances or conditions under which the debt ceiling be raised >> brian, we're hearing very different messages from republicans in the house and in the senate, which suggest there's still a long way to go before compromise. back to you. >> what's the way out here is there an exit strategy for this give us some good news, milan. >> folks are talking about a lot of different possible escape hatches. one of those, senator joe

manchin mentioned earlier today or speaking to cnbc in davos, and he referenced something called the trust act, which would set up these rescue committees that would look at government trust funds in order to revamp the way that they work and re-look at spending. that's something that republicans and democrats might be able to get onboard with to say that they're taking america's spending problems seriously. there's also another bipartisan proposal that would give the president the power to raise the debt ceiling and allow congress to just veto that or allow congress to disapprove of that there's a lot of different ways that this could go but the problem is that all of those ways are really complicated. and when you're up against a deadline, complicated is not your friends >> it's like kids, you did it, no, you did it they both did it neither party is innocent in this debt fight. ylan, thank you very much. coming up, the energy sector more than doubling in the past two years and dan pickering says this could be a three-peat type of year, but you've got to change up some of the players.

we'll be joined by regena sin out of energy aspects. that is next i know some consultants with great ideas. can they help us improve our digital experience? absolutely. they've invested over $2 billion in tech. that could really help us manage inventory. and save us a ton of dough. then let's take back our market share. checkmate, chess heads. girls, i said “bedtime”! lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.

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oil. up 7% the past month the oil services stocks, remember, energy overall was the best performer in the past two years in a row are we poised for a three-peat we're joined by dan pickering. pickering energy partners and co-founder and head of research at energy aspects. i'm going to start with you. big shoutout from some folks and ceos and ole companies they all love your work and reading what you write to thank you for coming on the show >> thank you. >> oil is big lately quietly where is the next directional move for oil >> directionally, should continue to head higher for the simple reason that china is reopening. and the asset class, we've been talking about this as well, continues to move higher somehow people -- the oil creators forgot about it it is time for them to move higher now i'm not saying it's going to be a straight line still concerns about u.s. recession and, of course, you

put chinese right now but in general, how much they can grow by and, you know, already as you have seen, big declines in european demand. still has global demand growing by 1.3 million barrels per day there is a lot of upside to that number oil prices should be well above $100 this year the question is timing with it we still have a line down. we have refinery mate tennance seasonally, it's against us. but still directionally, it's up >> i was looking at slb and halliburton and some of the margins just keep growing. i mean, they seem like they're pretty money you think there could be better opportunities. the smaller cap names, two of them -- one is diamond off shore i know pr i don't know. can you tell white house permian resources is and you like them >> sure. this is a permian producer, not

an oil field services company. a $6 billion market cap company. they formed with a combination of a private company and big private equity companies lots of inventory in the basin in the states. the permian basin. permian resources the name of the company. so we got a company here at $6 billion that is big enough for someone else to buy. it's thrown off a loss of cash the ball ansance sheet is repaid it's theen't great places to be they will be i just think there is probably n there has been in some of the smaller names. >> okay. i go back to -- before i go back, i push back a little bit what i hear is they can't grow the companies can't get capital or people or truck drivers, photographer it is so why would the stocks keep growing if the companies are struggling not to say they won't grow.

>> sure. i think that the industry doesn't want to grow in this environment. they just came out of a terrible down turn. we haven't needed a lot of it over the laugh couple years. can they grow? absolutely the question is when will they respond to a price signal they probably will. and so why do you like the stocks they're throwing off 10% free cash yields at 70 or 80. if we go to 100 that, numbers goes higher. so they can grow right now they're giving us the money. that's just fine >> and i hope to see you again in austria maybe the next meeting in june for opec what are they going to do? i mean, you think opec is happy with current brent prices at 86? 87 seems about right. >> i mean giving the f fundmentals, there is a line to work through i think current prices are

headed in the right direction. they are headed up i think opec will be very, very happy with their decision. back last year when they cut production and everybody else was surprised by it, right and that was back in october so come june, i think it's going to be a pivotal point. a lot will depend on exactly where china is in their reopening phase. on our balances, we actually have poeopec winning back becau they tighten that doesn't mean opec will do that they will probably replain cautious they send to remain, you know, they tend to be reactive i do think that is going to be a very, very important opec meeting. if they don't turn back on the volumes, the market could really be overtightened >> and prices will soar? >> absolutely. >> dan pickering, really

appreciate it. interesting commentary, there folks. the thing you have to remember about oil and demand is we don't know what is going to happen with china china could add a million or two to three million that's going to be probably the big variable for the price of oil. but that does it for us. maybe we'll keep talking about it tomorrow. i'll be here again we'll see you then don't go anywhere. "power lunch" is coming up next withyl a ctea. terndonss i count on personalized financial advice from my ameriprise advisor. she knows my goals and can help me reach them with confidence. the markets may fluctuate but you're still on track. more than 9 out of 10 clients are likely to recommend us. ameriprise financial. back when i had a working circulatory system, you had to give your right arm to find great talent. but with upwork, there's highly skilled talent from all over the globe right at your fingertips. it's where businesses meet great remote talent and remote talent meets great opportunity. ♪♪

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all right. welcome to "power lunch. along with contessa brewer, i'm tyler mathisen glad you could join us coming up, everybody watching netflix, the streaming giant out with results today after the bell a high flying stock recently will the pass word crack down and add tier platform slow the company's growth >> plus, amazon is losing the smile. doing away with the popular service that donates a portion of sales to charity. amazon says it wasn't effective.