♪ good afternoon, everyone welcome to "power lunch. with contessa brewer, i'm tyler mathisen we have big tech and fed speak google is bringing back its founders, like many other companies. netflix soaring on strong subscriber numbers, and the ripple effects of apple trying to do more in-house. plus, we heard from fed governor christopher waller. we'll get live reaction from his comments, what they mean for the markets. let's get a check on the markets. stocks are higher right now, though all three averages in the red for the week the dow with a 3% loss for the week up half a percent on the dow s&p 500 up 1.25% nasdaq is up 1.98% you have the russell 2000 up a percent, as well >> all righty. we've got google and netflix

stronger higher at this point. that's helping to lift the nasdaq 100, as we mentioned. we begin with the major tectonic shifts reverberating across the market huge headlines across silicon valley and the tech space. google's ceo notifying employees the company will lay off 12,000 workers. this comes after amazon and microsoft laid off a combined 28,000 employees netflix blowing away subscriber expeck takation expectations thanks to streaming hits and reid hastings will step down if that's not enough, apple's suppliers could be at risk as the company shifts ever more toward producing components in-house we start with the alphabet and google layoffs joining us to break it all down is cnbc.com tech reporter jennifer alias and laura welcome, glad to have you with

us laura martin of needham. jen, let's begin with you. tell us about the layoffs and what they hope to accomplish by doing it laura, i'm going to follow up with a rather pointed question for you. >> yeah, so, tyler, this is the company conducting a trim of the workforce. as you mentioned, 12,000, roughly 6% of the employee base. really, when you look at the context of the numbers, while the number looks big, comparatively to how it's been hiring over the last couple of years, this is not much compared to what it's hired, even over the course of a quarter. so this is the company definitely making a trim i think what they hope to accomplish with this is what ceo said they overhired during the pandemic like other tech companies. he did take some responsibility for that

and they grew head count a huge percent. last quarter, they reported almost over 20% year-over-year, head count increase. >> unmistakenly true, the companies overhired in the middle of the pandemic where are most of these cuts, jen, likely to come? are they in engineers? are they office people what >> yeah. so far, we're seeing across the board. we're still trying to pinpoint where the cuts are happening because it is only being sent to direct employees they're not notifying teams as much but we are seeing lower level employees, managers, engineers, develop er advocates it's across the board so far from what we can see sales and marketing. >> jen, i'm interested, too, that it is not just the cuts that are happening, but also delays now in bonus checks

is there a reason why they're delaying them? >> yeah, so the company, we found, changed the timeline for how it evaluates employees they decided to start that this year told employees over the last few months, but some didn't get the memo because they are used to getting theirs at a certain time we had reported that, you know, those were -- and so with the growing anxiety with employees wondering if, you know, they'll be next in the tech layoff, there was some concern over whether that was related to pushing off some of the costs. google has denied that but we are listening to our sources, and they seem to think that could be part of it. >> and let me ask you about this report that larry page and sergey brin might be called back in why and for what purpose >> right you're referring to "the new york times" report it said larry and sergey had

been brought in to basically weigh in on the company's a.i. roadmap for its artificial intelligence and products. as we saw with open a.i., the san francisco start-up that came out with chat gt, very popular over the last few months, this chatbot, the company has been looking to respond we've reported they've been telling employees internally, hey, we're working on this this is something we have to think about. but there are more things we have to take into account as a large company if we are going to come out with something competitive around chat gpt. supposedly, it's similarly in line with what they plan on doing as a response to that. the company hasn't confirmed with us yet. the report has come out this morning, but it's possible that, you know, sergey and larry have no interest in coming back in a role of ceo or president they have no interest in the common core advertising business or search business but they are definitely still

involved in some of the more experimental projects, yeah. >> laura -- jen, thank you very much for joining us. thanks for sharing your reporting. jen elias. let's bring in laura needham good to talk to you. first of all, your reaction to these cuts, the cost-saving measures that are coming at a time when we're also seeing ad spending plummeting, as well >> i think this is a really positive development they said, we don't care we're running a long-term business we're going to keep growing cost, which is not what the market wants to hear the market wants free cash flow. i think wall street doesn't want them to cut search employees we don't want them to cut youtube employees. we want them to shut moonshots it means it'll pay off someday after the metaverse pays off shut down those employees and businesses they need to be running a

business, which is a return on capital. not quasi-governmental r&d that may pay off or not 15 years from now. they shouldn't be public and do that that should be a private enterprise funded by not public shareholders i'd like all the employees be taken out of moonshots. >> is it chat gpt and the a.i. chatbot? what do you consider moonshots >> yeah, they're moving billions of dollars gpt is -- i mean, what's shameful about the chat gpt is these guys, google was way ahead on a.i. for many, many years so i'm a little confused they spent tens of billions of dollars doing r&d on a.i i'm confused as to how a little start-upbeat them to the punch admittedly, chat gpt gives a lot of wrong answers google can't do that with google search, they have to give right answers but it will help google if chat gpt goes to a subscription revenue source that will be search free, so

that will be -- google is supported by ads it'd save google but i'm very surprised google isn't in front of this a.i stuff and they're playing catchup to the start-up. >> one stray thought, then a question the stray thought is this, with so many of these big tech companies laying off tens of thousands of workers, i wonder whether they're each sort of giving cover to one another, to take those kinds of cuts fair point, fair observation >> yeah. i think so i think google, so long as meta and microsoft and apple are saying, we're not laying people off, google is saying that, too. now, they have high cover from almost every other tech company, they're like, yeah, we'll lay off people, too. i mean, a little bit because of covid. the inmates are running the prison here. >> then the other point is, you know, look at what happened at twitter. much larger percentage of workers went away there, and

that operation still seems to be operating. let me ask you this, let me cut to the martin chase here you think google is worth more broken up than it is as a whole. do you anticipate that happening in any scenario that you can foresee? >> so, you know, we have the n needham 25th annual growth conference last week i think there is a non-zero probability they actually decide google is too big and needs to be broken up which would be great for the share price in my opinion. by the way, you'd really have to shut down these other moonshots they fund. >> laura, thanks very much you can never get too much laura martin, and we're going to prove it you'll come back later in the show to discuss netflix earnings see you then all righty coming up, part two of our tech-a-palooza netflix soaring on numbers

up 55% in the past six months. the big netflix move put ryan reynolds' mountain goats into first place in our stock draft with three weeks to go his eammate, mark douglas, wil join us to discuss netflix and who keeps the trophy if they hold on to win first, comments from fed governor christopher waller on cnbc last hour we'll break down what it means for the markets and interest rates. stay with us, please we all have a purpose in life - a “why.” no matter your purpose, at pnc private bank we will work with you every step of the way to help you achieve it.

so let us focus on the how. just tell us - what's your why?

welcome back to "power lunch. while the fed is making progress in the battle with inflation, so it seems, many officials are hinting the work is not done and rates will not drop any time soon in the last hour, we heard from christopher waller, who thinks the markets think inflation will melt away, and the fed doesn't think it'll happen ron insana says the solution to inflation is more workers. joining us now is ron insana, senior analyst for cnbc. who is leaving >> david wessel was there, not he is not. he's like, we're going to start with ron, fine, i'm out of here. >> i didn't mention david wessel's name, and he got up and left out. >> trying to adjust my lighting to cnbc standards. >> thank you. >> well, good. you're beautiful let me say this, david, you are lit. david weller is the senior fellow in economic studies at the brookings institute.

david, how much does the kerr t kerfuffle over raising the debt ceiling stay the hand of the fed or complicate what the fed is doing? >> i think it's a big threat to the fed. for a couple reasons if i were on fomc, god forbid, i would be working really hard to get all my rate increases done this spring so that when the -- when the treasury actually runs out of money, they're not forced to be pumping money into the system at the same time as they're raising rates. the second problem they have is, let's say congress doesn't raise the dead ceiling let's say the treasury runs out of cash. what does the fed do then? on one hand, they don't want to interfere in the political dispute. on the other hand, they have the responsibility to maintain financial stability. this is exactly the conundrum the bank of england faced a few months ago, and it's not pleasant. >> ron, react to what david just said. >> i agree wholeheartedly.

you know, if i were -- look, for other reasons, i would not continue raising rates at this juncture if i were the federal reserve. there's enough data to suggest inflation is running over meaningfully, and other aspects of it, wage inflation and the like, are probably peaking raising debts into a debt ceiling crisis, assuming there is one, wouldn't be the most productive thing for the federal reserve to do. granted, there's several months between now and when, you know, we really have a problem with respect to the debt limit. somewhere around june that push comes to shove and we could default on some obligations. still, the amount of uncertainty that would be engendered by raising rates and grappling wit the debt ceiling may be too much for the markets to bear. >> waller may be trying to communicate to the markets, you guys that are factoring in any pivot are getting it wrong he basically said there's not going to be any rate cuts in 2023 i'm just curious, to hear him talk, david, about the fact

that, look, we were watching inflation. we watched it decline, decline, decline, and then, suddenly, this big turnaround and spike, it could happen again. even though we're seeing all the signs that we're getting a handle on inflation, we're worried about another spike coming down the road do you think that that makes sense for them to still be hitting the brakes >> well, i think what he said was, we're going to raise rates another 75 basis points. we are not going to cut them unless we're really sure that inflation is dead. i think the difference between governor waller and the markets is really one about an economic forecast if inflation is still coming down three months from now, and if the unemployment rate has gone up a lot, and i suspect the fed will begin to pivot. but he's made quite clear, and i think jay powell has said the same thing, if you want to know what risk am i willing to take, i'd rather take the risk of

doing too much than doing too little governor waller is clearly in that camp. >> ron, you say the labor market, which the fed is focused on, is not tight because the economy is so strong, but it is tight because there simply aren't enough people to fill the jobs that are out there. you cite a variety of factors that play into that. covid related deaths, long covid, early retirements and so forth. but isn't it also the case that lots of workers don't want the jobs that are out there waiting to be filled or needing people or that the workforce doesn't have the skills to fill the jobs that are out there >> well, that's an interesting damned if you do, damned if you don't proposition you outlined, with respect to that, tyler. look, number one, the unemployment rate is extremely low. arguing that there are people not taking jobs is an impossibility. we're at the lowest unemployment rate in four decades at least.

there are some jobs, obviously, going wanting, some jobs people won't take that is true generally speaking, we're looking at the lowest unemployment rate in 40 or 50 years. so we're short people. we are literally missing about 5 million people in the labor force. again, you cited, you know, some of the reasons why, whether it's those who passed from covid, you know, and jay powell himself identified this not too listening ago. we've lost about a half million people who would otherwise be in the labor force. 2.5 million people retired early with no intention of coming back many women left the labor force initially to take care of their kids during the pandemic, but with the cost of child care having gone up, there's no benefit to them going back it is a break even proposition from my perspective, we should be opening the floodgates on the immigration front, which is not something currently being debated. this is a missed opportunity no matter where people come from, to restock the labor force our birthrate has fallen substantially.

1.6 children per family. that's below the 2.1 child replacement rate i think we have some structural issues that, if these go unacknowledged, are going to be a problem down the road. fed policy simply won't cure this problem. >> it is almost as though congress is so focused on whatever soap opera is developing in washington, d.c., day of, that it is not handling these big picture, you know, 30,000 feet view that's needed to solve the problem one is immigration and the lack of skilled labor coming in, but the other one, ron, and david, i want to hear your thoughts on this, is the fact that the debt ceiling just keeps being this issue that they come back. they like to trot it out with that, make headlines off of it but there's a real economic impact, don't you think? >> yes so i think ron is right. we have a long-term labor force problem. some of it is labor force

participation. some of it is immigration. these are things that policy can't cure, but policy can help with so the whole debt ceiling debate is a complete political theater with no upside the republicans like to argue that, oh, we're going to use the debt ceiling to put the federal spending and taxes on the sustainable course, but that's really not what's going to happen we're going to have a lot of arguing, and that prevents you from having the conversations that we need to have about a debt that's rising faster than we can afford. and how to think about how to reshape spending and taxes to deal with it so it's really discouraging. i think it erodes public confidence in the government they're doing this instead of dealing with the real problem. >> ron, last word. >> i use simpson bowls as a blueprint for future spending and other expenditures by the federal government to bring things in line at least in the short run. >> ron insana, david wessel,

thank you for getting up, fixing your own light, being a one-man band the things we've all learned to do during the pandemic, right? >> yes. >> thank you up next, some big money pouring out of the industrial space this week. the industrial etf, the xli down nearly 4% in a week. we're going to take a look at those moves next technologists in india, and customers all on different systems. you need to pull it together. so you call in ibm and red hat to create an open hybrid cloud platform. now data is available anywhere, securely. and your digital transformation is helping find new ways to unlock energy around the world. [music - cover of blondie's “dreaming”] and your digital tran[music playing]elping ♪ imagine something of your very own. ♪

♪ something you can have and hold. ♪ ♪ i'd build a road in gold just to have some dreaming, ♪ ♪ dreaming is free. ♪ accenture, let there be change. we all have a purpose in life - a “why.” no matter your purpose, at pnc private bank we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why?

time now for our weekly etf tracker. this week, we're looking at industrials. those funds seeing outflows of $300 million this week according to our partners at track insight. some of the big stocks in the group are getting hit hard this week a drop in industrial production led to increased recession fear. you have honeywell, 3m, deere and caterpillar down deere down almost 7% the etfs in the space, the sector spider, vanguard, fidelity, all down 3% or 4%. if you want more information on that, check out the ft wilshire etf hub. >> yes, you can. ahead on "power lunch," our tech rundown continues after the break, netflix's eventful earnings report the company making the comeback from its earning missteps in 2022 but this subscriber step forward

comes as reid hastings takes a step back. "power lunch" will be right back we all have a purpose in life - a “why.” no matter your purpose, at pnc private bank we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why? this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight.

(vo) the fully electric audi e-tron family is here. with models that fit any lifestyle. ♪ and innovative ways to make your e-tron your own. through elegant design and progressive technology. all the exhilaration, none of the compromise. the audi e-tron family. progress that moves you.

welcome back to "power lunch. abortion opponents by the

thousands are in washington for the march for life they're celebrating the supreme court dismantling rights to abortion it comes days before the 50th anniversary of roe v. wade which established abortion rights. ron desantis does not have to give a top state attorney his job back desantis fired warren for pledging not to enforce state an anti-abortion laws. and prime minister sunak has been fined for not wearing his seatbelt for filming a social media video in a moving car. the prime minister acknowledged it was a mistake and says he will comply with the police fine being britain, you can see, con contessa, the steering wheel is on the other side of the car he was not driving still, always belt up. >> even in the backseat, you should selt. a and he is the prime minister and sets an example for everybody

else if you do the crime, pay the fine. >> thanks. >> brian, thank you. 90 minutes left in the trading day. let's catch you on the markets stocks, bonds and commodities, plus the gain in netflix bob pisani gets us kicked off with green across the board. bob. >> it's looking good here. we are ending the week on a positive note. we're down for the week but up almost 3% for the month. just take a look at the bounceback we've had after some poor earnings yesterday. the s&p leaderboard, si yncrony financial, capital one, capex, they were all down they're bouncing back. key corp disappointed a bit on its earnings report the other day, and it, too, is bouncing back so disappointing earnings down one day, bouncing back the market wantsto move up a little bit nvidia also on the board amongst the leaders.

the laggards today, it is a strange group. goldman sachs was doing well, then we had reports the federal reserve was investigating goldman's consumer business to determine whether the bank has safeguards in place as it ramped up lending eli lilly was down after the fda rejected a pharma drug a lot are down 4%, 5%, 6%. lilly is down 6% look at smucker's, conagra consumer names are having a hard time smucker's is down 7% for this year people want growth look at the s&p 100. down for the week but up about 3% it's the growth stuff. semiconductors are up 11% in the last three weeks most big cap tech stocks with the single exception of microsoft also traded for the upside communication services stronger.

consumer discretionary what this looks like, 2021 to me all the consumer, defensive names not doing much, and the growth stocks are rallying in the first three weeks. back to you. >> bob, thank you very much. have a great weekend. now we go to the bond market a big jump in yields today take a look at the ten-year note, close to 3.5%. we did get some hawkish comments from fed governor waller in the last hour. that's certainly contributing there. yield on the note, 3.482%. oil closing for the day. pippa stevens with the numbers. >> up more than 1% wrapping up the fifth positive week in the last six u.s. oil is hovering right around 81.40 and is approaching a key level, as this chart shows. wti is bumping up against its 100-day moving average the key level to watch here is $82.50, which provided tough

resistance in november topping that level would also mean a breaking above the down trend we've seen over the last six months ultimately, he said this would be bullish for crude and energy stocks broadly although a change in trend won't be confirmed until oil tops $93. meantime, energy stocks higher on the week. we did hear from slb today, reporting the highest eps since 2015 the company also raised its dividend and is resuming its share buyback program. recession fears might be rising, but slb's management said they think thinke backdrop is compelling. >> thank you very much, pippa stevens. next in the tech rundown, netflix is the second best s&p performer after crushing subscriber estimates and announcing a succession plan for its leadership team. let's bring in mark douglas, ceo of mountain, and needham's senior analyst laura martin returning with us once again great to see you laura, let me begin with you

because they gave this incredibly optimistic view on what they were able to do signing up new subscribers, did it persuade you that now might be a good time to get into netflix? >> it didn't we think it is too early they said their ad revenue will not be meaningful in 2023. more importantly, they took a price increase last year first quarter. this year, the form of the price increase they're taking is they're going to basically disconnect any of your sub subscribers that are out of your home they call those borrowers. they're going to try to get rid of password sharing, which is a form of price increase unfortunately, what that forces consumers to do, like me who pays $20 because i have kids all over the college, you know, using it, it forces us to reevaluate and downgrade to the $9 service, right? then my kids have to subscribe separately i think that's really bad for

inertia. inertia is why we have linear subscribers. they shouldn't be asking me to reevaluate down trading my tiers. i might turn it off completely. >> might be inertia and might also be that once a year, there's a program on traditional television that the family wants to watch then what are you supposed to do i digress. mark, you and ryan reynolds picked netflix for your cnbc stock draft. you're winning because of it congratulations. if the draft were held today, would you still pick netflix >> well, certainly the stock price a year ago was a lot more attractive than it is now. i think what you're seeing is netflix traditionally has led in the media business like a lot of the innovations you've seen in streaming have come from netflix. i think, now, you're seeing with the management change they're making, they're gearing up to lead some more yeah, i would. i would invest in the management

team at netflix for them to navigate the ad business, for them to navigate the password sharing, and they're essentially generating more growth so i think any investor looking at netflix now, that it's a good time. >> given the ad landscape right now, where we're seeing so many companies worried about what's coming down the pike, and, in fact, laura and i were talking earlier about that happening with google and what's happening with youtube and the search ads and all of that. is now a good time for netflix to be launching the ad part of this business? >> well, i think -- is that for me >> yeah, yeah, mark. i want you to answer that. >> yeah. i think they have no choice. i mean, in terms of is it the best time? in some ways, it's not the reason for that is you have a lot of supply coming into the market from netflix, from disney plus, but you're seeing demand pulled back on the behalf of especially large brand advertisers. so it's big brand advertisers

responding to macro economic conditions just generally definitely not increasing their spend, and in a lot of cases, they're decreasing it that classically sets up for a price war. a decrease in prices it is not an ideal time, but i think people, these advertisers are really excited about netflix at the right price netflix will still navigate that. >> laura, i take your point, that netflix has a lot of moving parts to deal with ads, password sharing, pricing and the like, which all lead you to say this is not time to get into netflix what would change your opinion what would you like to see that would make you go, this stock, even after its run-up, is investable to me >> on this year, it's had sub growth deceleration. it was 4% in the most recent to get to double digit growth, you must have price increases of 8% every single year i don't think that can happen.

what i would want to see is, not only the ability to raise price, which apparently they can, i would want to see yuser or sub-growth since they say advertisers aren't going to be meaningful, i don't know how many users they're getting in the ad tier not sure i'd like both user growth and pricing growth d-- >> do they have to have mega-hits to drive subscriber growth, like and meghan, "glass onion." >> they're not annuity streams. >> right >> mark, we've seen other streamers decide they're going to poll out big hits episode by episode and make you wait a week i'm assuming it is because they don't want people binge watching it and cancelling the service after one month. is netflix going to be able to continue to allow people to binge watch these big hits that may drive new subscriber growth. >> yeah. i always think of netflix as

they're the service you watch when there are no big hits on any place else they have their own hits when you turn on the tv and are looking for something to watch, you generally, from my perspective, you go to netflix that's why they've been households' number one choice for streaming. i don't think it's the core reason you get netflix, so they can continue to show all the shows at one time. i want to add on to laura's comment on the previous question i agree with laura that driving subscriber growth to get to those numbers is going to be difficult, but i also think netflix is sandbagging expectations in terms of ad business jeremy gorman and the team there were at snap, they were at disney, hulu they know how to build multi-billion dollar ad

businesses i think you'll see that develop faster than netflix is setting expectations for it. >> mark douglas, laura martin, great to talk to both of you thank you very much. you know what i'm noticing, tyler? we have these setups here. i look like i'm looking at mark, i look like i'm looking at laura, but they can't see that you have to say somebody's name. mark is like, is that for me >> they can't see you. >> right now, everyone who is listening on sirius is saying, what are you talking about? this is how it works i love the new reality. let's move on to the busy week for the markets fed officials way weighing in on the future of the keconomy. how to position your portfolio ahead of the meeting we're back if two minutes.

get refunds.com powered by innovation refunds can help your business get a payroll tax refund, even if you got ppp and it only takes eight minutes to qualify. i went on their website, uploaded everything, and i was blown away by what they could do. getrefunds.com has helped businesses get over a billion dollars and we can help your business too. qualify your business for a big refund in eight minutes. go to getrefunds.com to get started. powered by innovation refunds.

this is the planning effect. if rayna's thinking about retirement, she'll get some help from fidelity to envision what's possible. fidelity can help her prioritize her goals by looking at her full financial picture. plus they'll help her pick an investment strategy, one she's comfortable with. and with a clear plan to get to retirement, rayna can enjoy wherever she's headed next. that's the planning effect, from fidelity. meet jessica moore. jessica was born to care. she always had your back... like the time she spotted the neighbor kid, an approaching car, a puddle, and knew there was going to be a situation. ♪ ♪

ms. hogan's class? yeah, it's atlantis. nice. i don't think they had camels in atlantis. really? today she's a teammate at truist, the bank that starts with care when you start with care, you get a different kind of bank. session highs right now. nasdaq poked into positive territory for the week still negative on the s&p 500 and dow, however the market's focus clearly on the fed. earnings will be coming in hot and heavy the next couple weeks, as well. let's bring in david wagner, portfolio manager. david, we're three weeks basically into the new year. what is the stock market trying

to tell us about itself and about the economy? >> yeah, so, you know, i would probably start off by stating that i would probably fade this rally. it's been a dash to trash all year long. i mean, just look. high beta has been outperforming 15% year-to-date the worst performers of last year are the best of this year bitcoin, unprofitable tech, the high and short interest. we're theme people here. our theme heading into this year was from "o brother where art thou?" investors will be navigating a market in constant sorrow. >> what does that mean >> you know, i'm not saying that, you know, we could be, you know, last year's low water mark of the s&p 500 by 18%. it means i think investors are underestimating the duration of a low return environment moving forward. i think our minds as investors are calibrated to think in

v-shape recovery i just don't really see that happening here right now >> so you think we're going to stay roughly where we are or maybe move lower i want to tease out your sort of bottom line me here. >> i definitely think we're going to continue to see an oscillating market that's definitely something we have seen really back since may of last year so i'd be favoring some overriding strategies, understanding that given where we are in the debt ceiling and some type of inflation to growth frustration environment, that, you know, we'll continue seeing a higher volatility. i'd be overriding right now if i had a strategy to choose. >> and you're really looking for yield then where are you looking? >> yeah, contessa, like i said, we're big theme people here. at aptus, that's our highest conviction our theme is the year of the yield. that's both across the equity market and the fixed income market i think you could probably make that year of the yield plural or to the tune of decade of the yield. we know that yield can come --

we know it can come from three sources. it'll be yield, it'll be earnings growth, and it'll be valuation expansion and contraction. where current valuations are now and the expectation from my end of restrictive policy throughout the entire year, i don't think valuation is going to be a reliable source of return moving forward into the future. not only that, earnings growth probably seems a little too optimistic right now, specifically on the operating margin side of the picture so it is really tough for me to believe we're going to be increasing earnings by 5% in '23. 14% from 2024. again, another unreliable source of return. that's why we're so gung-ho about dead end yield it's the burdened hand than the tune the bush of valuation and earnings growth. >> two specific stocks broad broadcom which you say has yield and american tower. >> let's start with a.mt probably my most recent purchase in the high conviction portfolio. it's in the real estate sector

that is a yield-rich sector. but i'd be honest with you, con contessa, it's been brutally battered the last year the valuation has really come in, as it's been inversely correlated with rising interest rates. this isn't a play on rates are coming down, but i think they probably moderate in the interim. i think that could really get this stock going overall, it's a long-term holding. you know, i don't mind buying it right now, even though i do think estimates are a touch higher than -- >> quick on broadcom >> yeah, you know, regarding the yield, they've been increasing the dividend yield by 12% over the last three years on annualized basis 3.5% dividend yield. i think you get 8% to 9% growth here definitely over our watermark for orewnership. >> david wagner, thank you appreciate that. after the break here, our final piece of today's tech-powered puzzle. apple suppliers are struggling as the company shifts more of its component production in-house more on that straight ahead.

[music playing] ♪ imagine something of your very own. ♪ ♪ something you can have and hold. ♪ ♪ i'd build a road in gold just to have some dreaming, ♪ ♪ dreaming is free. ♪ accenture, let there be change. 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.

welcome back the last step on this tech train ride, we talked google layoffs, netflix earnings, now apple, shall we the company releasing several new products this week, demonstrating it is increasing

reliance on in-house components rather than third party supplier steve kovac joins us what probably is going to be good for apple, i would think, would be a death nail for other suppliers. >> it could be con contessa, we're seeing this to a degree a couple years ago, they said, look, we're eventually going to phase out to phase out qualcomm modems as our main modem inside the iphone. then we got a report last week saying they're thinking about doing the same thing for the wi-fi chips made by broadcom there's another symtock that tok a hit. broadcom 20% revenue exposure to apple so that's big. then there are just a slew of other more minor names, maybe not common household names, qorvo, lumentum, they make the face i.d. scanner in the front all of these companies, sony, samsung, sharp, they all have significant revenue exposure one thing to watch for is apple thinks they can start bringing more of these components in

house, these are the names to watch as these reports to be clear, there are no reports that many of these are locked in. >> where are these houses? does apple have huge big chip fabs i don't know. >> there's a difference between where they're fabbed and made. qualcomm's backyard, they bought intel's old modem business for a billion bucks. moved to san diego, we're tired of paying qualcomm a few bucks for every iphone we sell they're going to do it in house. now it sounds like that report we gotlast week saying they're going to do the same thing with wi-fi chips. >> does it make it easier for them to poach the talent >> absolutely. speaking of talent, we've got a lot of headlines about these other tech giants laying off people, big layoffs. >> tens of thousands. >> 12,000 google today 10,000 microsoft. >> what about apple?

what's apple doing on th scenario to what we've seen is that the shareholders seem to like it? >> the first thing you've got to look at is how much did they hire in the pandemic compared to their rivals not as much. i think it was during the three years, end of 2019 through the beginning, something like they only grew 20%. we have a chart of this. the others grew, amazon grew 100% during the pandemic they didn't grow as rapidly and hired more deliberately unlike some of their rivals when macro conditions started getting worse last year, they scared back on how aggressively they're hiring even more than they normally do they don't have as much fat to cut as some of the rivals do. >> so let's go back to sort of item number 1 for apple. they want to cut their dependence on these other supply es ers, got it, do they want to cut their dependence on chinese manufacturing, and when are they going to be brave enough to actually say that? >> yeah, they can't right now.

it's just physically impossible and financially impossible for them to do it. over a decade ago they set up the supply chain such that they're reliant, the iphone city where we saw all these protests last fall, that's the core -- >> that's it >> it's not it, but it's almost it, yeah that's why they're likely going to sell fewer iphones than they thought they were going to sell last year because they had all their eggs in that one basket. we're seeing little ways that they are, you know, trying to alleviate that pressure, but again, it's china, china, china, and they're stuck at the whims of whatever the covid policy might be, whatever the worker policy might be, and they're learning that lesson the hard way over the last year and a half >> steve, thanks very much have a great weekend. >> you too, guys. >> good to see you. still to come to round out this big tech rundown, our three stock lunch trad werill tell us whether she is buying alphabet ask a couple of others we'll be right back. catch the market zone today

and every weekday on "closing bell" sponsored by e-trade help you find and unlock opportunities in the market with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity 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.

♪♪ we all have a purpose in life - a “why.” maybe it's perfecting that special place that you want to keep in the family... ...or passing down the family business... ...or giving back to the places that inspire you. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why? ♪♪ ah, these bills are crazy. she

has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. this is the moment we've been waiting for three stock lunch. we're tracking some of the big movers of the day, alphabet higher on news that it is laying off 6% of its global work force, 12,000 employees w wayfair also announcing job cuts to about 10% of its staff as part of cost saving plans, and svp financial higher despite reporting a fourth quarter miss and rising operating costs here to trade us -- or trade

them i hope i'm not getting traded here ava otto, chief investment strategist at er shares. it's great to talk to you. let's start with alphabet here what do you make of the layoffs and how it affects your view of the stock? >> actually, we're even more optimistic now it's actually one of our favorite mega cap stocks, if not the favorite, especially from a valuation perspective. when it comes to their enterprise value for future revenue, that's one-half to one-third. it's also one of the few companies in the tech category, which is primarily focused on the bottom line. so we see their net income margin, that's ten times its peers, and in fact, we see their profits that have doubled in the last two years, and the revenue growth is well above their peers. this action today with cosc cutting also drives home the fact that they're cutting costs, they're maintaining and keeping

their margins constant if not increasing them. we're especially optimistic. it's a buy. >> number two, which is wayfair, it's laying off workers too, 1750 workers, what do you think? >> another buy i think their earnings today is a good signal for their viability and their future growth let's not forget that covid darling, the revenues went up 50% during the covid era, and as a result their sg&a skyrocketed, and so they now have an imbalance. sg&a costs are 50% above pre-covid levels while their revenues are only 30% above pre pre-covid levels they're recalibrating, they're resetting the balance. together with their prior cost cutting announcement this summer, they are cutting 1.5 billion in costs they're on their way to profitability. that's the key news today for

wayfair. >> final name is svb financial, missed on earnings how is it possibled for the long-term? >> that's a hold i like the fact that in the tough era for tech stocks in the last couple of years when vcs and private equity firms scaled back on their investments when it came to tech especially, silicon valley took -- filled in that vacuum, so they benefitted opportunistically, so that's reflected today on their margins, on their earnings announcements and so the reason why it's a hold and not a buy is that they're off 26% year-to-date so a lot of optimism, a lot of the upside potential has already been realized, and their p/e ratio is 50% above their peers i would encourage advisers in the future to add to their positions. however, it's just a hold for now. >> look at that price performance there up 15% ava ados, thank you so much for joining us today and giving us

your perspective. there's the dow up 222 points near the highs of the day. for the month so far, curiously, the dow is basically flat up a quarter of a percent, similar gains for other markets as well. there you see it on your screen right there. you know what this is? this is the 30th anniversary of the inauguration of bill clinton. how about that >> how can i be that old >> thanks for watching "power lunch," everybody. >> "closing bell" starts now stocks rebounding in friday trading, gaining steam throughout the session with the nasdaq on the verge of turning positive for the week. this is the make or break hour for your money welcome to "closing bell." i'm mike santoli in for sara eisen. here's where things stand in the markets. they have levitated throughout the day. all the indexes have s&p 500 up about a percent and a half it's down a little more than a percent, percent and a half for the week at this point nasdaq there the outperformer, obviously strong