semis but want to do it with low beta exposure. look at the stock today ripping higher. >> ceo on the network a little earlier. dig into the auto biz. good stuff all right. see if we can hold see what happens, "the exchange" is now thank you, scott hi, everybody. i'm kelly evans. here's what's ahead. last week's smaller rate hike already didn't sit well with former fed governor larry lindsey then came the shockingly good jobs report powell needs to give the parke a slap and not just a warning, he says, larry will join us to make his case in a moment as we gear up to hear from the fed chair again in a speech tomorrow plus, a suspected spy balloon and a canceled diplomatic mission, tensions between the u.s. and china rising. we'll look at the potential economic fallout and our earnings monitor continues what you need to know ahead of reports from pinterest bp and royal caribbean

first let's start with today's markets. stocks well off the lows, the dow looks to be improving by the moment only down 63, only 0.2%. the nasdaq was down 1% that still a little heavier so flip side of what we've seen year to date year to date the nasdaq is up 15%, almost 16% while the dow is only up 2% so again a bit of a pause and profit-taking today. let's move and what is going on in bond yields a story with a head of wind, 10-year, 3.63. we saw some prints, 3.65, maybe 3.67 a big move actually bigger moves on the shorter side, two-year and five-year as markets get skittish about that jobs report. the big story on that note, continued reverberations after that blow-out jobs thumb on friday remember, we were expecting a sub200,000 print instead we got 500,000 and it wasn't just that one figure.

here's, of course, the jobs data we were looking for. less than 200k was the estimate. well over 500k what we ended up with the index of aggregate payrolls is now running 8.8% annualized in the past three months and that's been accelerating steve liesman is here with more on the fallout, steve. >> kelly, the sell-off in the bond market picking up pace today with yields up sharply since the outsized jobs report friday as markets price in lots more fed for this year, bonds rallied after wednesday's fed announcement and press conference pushing down yields, it was seen as more dovish than expected but markets gave back all those gains. you could see here what do you call that, like the hull of a ship right there and takes off to the races here with the big jobs report. raising concerns inflation won't cool if the economy doesn't cool ed writing the data depicted in an economy that has not been landing at all but remaining quite airborne and more signs of

disinflation the gap has closed dramatically before the jobs number, the futures market were at 4.34. now the market for year end is pricing 4.80 that gap had been as much as 80 basis points, now it's 34 basis points or a little over a quarter point. the conclusion among forecasters, if the job market is really that strong it's hard to imagine the economy really being that weak and without weak growth the fed is unlikely to cut and may have a worst problem for inflation, also worth pointing out if the jobs number is right and the economy is stronger than forecast, it may be that the profit outlook is brighter too and the chance of a recession at least in the very near term would be diminished. >> steve, come on over the quarter point -- >> he's been shaking his head and nodding his head the whole time >> it was the profits that set him off. >> i think only half agrees with me or maybe less. >> so last week he says that the fed should have been a little bit more severe. maybe a slap to the markets and

maybe chair powell will make adjustments in his speech tomorrow that's what everyone is afraid of let's bring in larry lindsey, president and ceo of the lindsay group and welcome, larry >> great to be here. >> i can start with why you're shaking your head about the profits piece. i don't want to get right to that point just yet. the argument which, again, i think we can make a different case, let's hear it from you why do you think the economy is so strong perhaps even picking up momentum that the fed needs to do more aggressive rate hikes right now? >> well, i think the fed needs to stick to what it said it was going to do, you know, they were talking about a terminal peak fed funds rate of, you know, 5.25 maybe a little higher. and i think that's going to have to go. they feed to get the fed funds rate positive in yield term. >> where we are now -- you know

what i'm saying. the 4.4% for the core pce. come on, we're above that and are restrictive now. >> let's see so 4.75 on the most 4.4, you said well, all right. maybe, but in history the -- we've not had a significant disinflation until fed funds was positive in real terms relative to the cpi, but i'll take core pce or whatever you want to throw at me. we're not restrictive. we're probably maybe neutral but neutral doesn't cool things off. >> one more to you, larry, i want to bring steve in to debate it but it is quite unusual or maybe it's not to see the index of leading indicators as bad as it is, the yield curve inversions as bad as they are and yet the kinds of job numbers we're throwing up. do you worry that these reports are a little bit of a head fake,

that the slowdown hasn't caught up with the labor market yet and the fed could overreact to the strength in that one part of the economy? >> well, we know the labor market hasn't caught up to the economy. there is an extremely tight labor market and despite that real wages are down about 3.5% since the beginning of 2021. well, if you have declining real wages, you have to fix that before you're going to fix the labor market and higher real wages means wages go up faster than profit, prices, and who gets squeezed if wages go faster than prices? it's going to be profits you can't get there from here without profits. >> steve >> well, first of all i want to agree with larry, not even in the current circumstances, but my work, larry, suggests that the fed funds rate ought to be positive no matter what. that it's only in the weirdness of the last ten years that we've

had a neutral or negative funds rate or negative real funds rate and that if you're talking about what is restrictive, it ought to be 50 or 60 basis points depending upon what era you look at so if you want to be restrictive should be 100 over. >> wow. >> that would be restrictive now, there is a debate about which particular inflation rate you use. for example, if you use the three-month annualized rate of inflation over the last several months then you would be actually positive and positive by 100 or 200 basis points so there is that question and i think larry is being orthodox here would that be a fair way to put it but let me just ask you this question, we have seen a ton of industries that are still running below their pandemic level, a ton of industries -- in terms of employment that need to still play catch-up. why should the fed lean against that adjustment? we have tech companies shedding

workers, they overhired. other companies were still -- we may be hundreds of thousands of nurses short, kelly. >> true. >> you can't argue in this country with our aging population we need fewer nurses than we have before the pandemic so, larry, i'm just afraid, should the fed get in the way of that transition? >> well, i don't know they're getting in the way of it i think the employers may be getting in the way of it right? how do you fill vacancies? well, you fill vacancies by raising wages. and so far they feel they haven't had to do that they are going to have to do that in order for the labor market to clear. >> can you expand on that? we've seen wages go up 10% to 15% in the ago get gait in the past couple of years >> real wages by any measure are down in the last two years >> right, right, but employers will say, we're not giving real -- you know, if anyone is giving you a salary hike,

they're say nominally speaking we've given people these wage hikes and they need to go faster people listening to this from the investment side will hate what you're saying. >> of course, they're going to hate it because the reason they're going to hate it and the reason a businessman would hate it, if you raise wages faster than you raise the prices you charge on your output you're going to have a profit squeeze. >> but at the same time -- i'm sorry, larry at the same time profits have been at a hirst torically high rate in terms of the total profits to gdp isn't there not scope for them to come down in order to sort of normalize and labor gets a piece and capital gets a piece and everybody goes home happy? >> well, absolutely they have to come down, so back in the previous century which is where orthodox is from, 6% of gdp. in this average they averaged

about 9 and at the beginning of last year, they were at 12% of gdp, okay, so fair enough, i'll argue with you, let's say they have to come down to 9, steve. that sounds like a 5% cut in profit margins to me i don't think that's what your listeners want to hear but that's what's got to happen. >> larry, before -- >> can i add >> sure. >> which is that the extension of what larry is saying the price earnings multiple comes down because your future earnings are not going to be relative to the return on investment will be lower. >> absolutely. >> and so i think people get that so the p/e ratio. even if earnings stays the same it compresses in that regard. >> go ahead, larry, then one more question. >> no, i was just going to point out a number that you used and that was that 8. % number in aggregate compensation well, let's think about that how fast do we think nominal gdp is going to grow

oh, let's be generous. let's say it's 4% inflation and 2% real. that means compensation is growing 2.8% faster than any plausible gdp. well, where is that 2.8% got to come from? it's got to come out of the employers. you know, that's a big, big number and the other piece how can you slow gdp when you have 8.8% more wages going out the door it's pretty hard. >> i guess maybe also what steve is saying is why can't you just let that adjustment happen why does the fed need to then continue to raise rates and i'll ask that as also a curtain ra raiser to tomorrow, what do you think the fed chairman is likely to say >> the fed chair and i mean this as nicely as i can say it had the most counterproductive press conference i can ever remember last wednesday now, his words were okay and, in

fact, i called my clients and read all of the analysis and they said it was his demeanor. equities went up before he started speaking as soon as he walked in the door, and i think what he's got to do tomorrow because i'm sure he didn't mean for that reaction to occur he's got to, you know, recalibrate. he's got to recant he's got to say, look, folks, we have to have higher real interest rates, it's as simple as that and the fed is going to keep doing it. >> larry, i'll differ just a little bit guys, in the back if you have that full screen i pulled up earlier of the gap between the market and the fed, what happened, larry, is the data came in stronger and the market adjusted the market understands powell is my belief, so what was a 4.34 year end forecast for the funds rate is now 4.80 today so really the market and the fed only differ by 30 basis points

now, unless you're saying that the fed ought to raise its terminal forecast for 2023, that's different but i'm just saying that powell, i don't know that he failed in the sense that the market had its take, the fed had its take the data came in stronger and the market moved to the fed. i think it's okay. >> steve, after the presser, the two-year was 4.09. >> right. >> now, that's pretty much driven by fed funds rate expectations. >> fair enough. >> 4.09. are you kidding me, right? they're already above that what, so how much they have to cut even without raising just to get to a 4.09? no, i -- you know, maybe the -- i can understand why the market is exuberant look, we've had a fed put in place now for two decades. we have had the biggest monetary and fiscal policy party in the

history of mankind and i know, you know, that sounds grandiose but it's actually true quantitatively why should we expect the biggest party in history to end with a single year of bad inflation >> and that's what the market is hoping and larry says, not so fast. >> i thought why should we let it end without a whopping hangover and air terrible headache >> that's the implication. that's what he thinks. he says, they'll interpret it as a bit of warning for investors into tomorrow and maybe even into the months ahead. thanks so much. >> my pleasure and thank you and congratulations, by the way. >> thank you, larry lindsey and steve liesman. don't miss our interview with neel kashkari. 6:30 a.m. on "squawk box." now this huge rally in international stocks so far this year the emerging market etf, eem

jumping 6% so far. thanks mostly to china on that end the mch itf is up 9% but india is different lower after that hindenburg short seller report that led to a collapse and in fact seema mody is here with more on how investors are more selective. >> it's playing out just this year, kelly. india in itself has gone from the worst -- the best performing market in 2022 to one of the worst in 2023. analysts writing it is prone to a correction goldman sachs' head of strategies telling cnbc the micro issues surfacing in india are coming at an inopportune time given the pivot of market focus towards the emerging world and overweight china, korea on the re-opening story while neutral on india and that theme seems to be playing out with china and it's up 12%. i doubt he tried once again to appease investors prepaying

$1.1 billion of loans ahead of the 2024 maturity date but shares continue to slide a professor writing that even with a 60% drop in adani enterprises it is expensive enshould trade 40% lower than current levels now, if you do want to invest in the emerging world and india in general there are ways to play it and also avoid investing in a dying stock. the wisdom tree etf, epi, its exposure is roughly seven to eight times less than the india one. that is what fund managers are looking for getting expose sure and limiting their exposure to what is becoming a big story. >> clever pair trade i'm impressed aswat came up with a valuation in relatively quick order. that itself unraveling this sort of structure seems to be confusing everybody. >> yes exactly. i think given he's seen as the

dean of valuation he views those types of metrics to look at adani's eight listed companies and figure out where they should be trading at. the biggest, the parent, adani interprices and even with a massive drop we've seen in the stock the $100 billion in net worth that he has lost, he still sees the stock moving even lower from here. >> the bad news he sees 40% more downside the good news, that's the limit to downside for some people who are worried about the whole thing collapsing seema, thanks. coming up, what's the recipe for a sustained stock market rally? five criteria needed to keep it going from the vix and the fed will reveal them ahead first, halfway through earnings season and plenty of companies we have yet to hear from will the rest of the bunch perk up the numbers or confirm a slowdown is setting in three cross sector names about to report a quick check on the markets dow down 50, about 200 off the session lows the russell 2000 small caps by

the way the worst performer down 1. % the ten-year yield under 3.64. we're back after this. >> announcer: is iths "the exchange" on cnbc. 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.” 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?

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welcome back to "the exchange." now officially past the halfway

point of earnings season but another big week with a fifth of the super bowl reporting the trade on three of them pinterest, shares up 14% and have surged double digits. but after mixed signals on the state of the digital ad market what will pinterest tell us? let's ask julia boris ten. she has the story and jeff killborg is here welcome to both. julia, how is it looking for pinterest? >> well, kelly, pinterest shares have fared better. as investors stay hopeful about user growth, turning around, continuing to turn around and also a new focus on e-commerce they're expected to grow around 7 million. the company added 12 million last quarter though even with those protected additions pinterest would still be below its pandemic high in terms of users now, analysts are expecting revenue to increase by 5% in the fourth quarter and for the

company to guide to 7% revenue growth in the first quarter. now, this is a very different story than what we heard from meta, it reported a 4% decline in revenue for the fourth quarter. a lot of optimism when it comes to driving e-commerce through the platform. >> also, by the way, julia, you will have the ceo on, ceo bill ready after these results. we'll turn to you, jeff. what's your expectation with the stock? what would you do with it? >> i don't want to pull out my pin and poke it but the optimism is certainly interesting to see after earnings we'll find out if they did lose ad revenue meta did a great job of stealing it $29 level. i want to see it pull back so i want to be a seller. 22.50, the 200-day moving average. >> we'll move to bp.

beyond petroleum maybe turning the clock back and reporting overnight in a time when global oil prices hovering near 52-week lows, 52-week lows for oil places while equities remain near 52-week highs and pippa stevens has more on this. >> the first thing i think, of course, kelly, shareholder return program if there's been a theme of energy earnings so far it's that these companies are making a lot of money but we have seen a slight divergence in what they're choosing to do with their cash chevron and shell increased their buyback programs while ex-amazon notably did not and maybe investors had thought they would and so what direction is bp going to go in? then, of course, the company's outlook on oil and gas prices has a pretty robust refining and marketing division, meaning it's not quite as leveraged to commodity prices as some of its peers but last week bp said they think that the peak of oil demand -- sorry, oil and gas demand will come sooner than

previously expected thanks to russia's invasion of ukraine and that that will hasten the transition away to renewables. with that longer term forecast how are they thinking about the short and near term production policies finally how are they thinking about renewable energy investments, bp along with its european majors have really accelerated those investments more so than their american counterparts but just last week "the wall street journal" reported that ceo bernard looney is questioning some of those investments, they cited familiar with the conversation saying that maybe they'll dial back some of that spending for renewables so how do they think about that within the context of declining oil and gas demand >> p./e, 5 1/2 times i think people have been really surprised how weak oil prices are behaving and that's got to have energy investors concerned. >> it does, kelly, but i'm not going to walk away from the energy sector. the energy sector has been a theme that was 2022 favorite and

will persist in 2023 what's fascinate it's the little brother to chevron and exxon as the youngest of throw boys i'm the little brother so i know we have insider buying which has promoted some enthusiasm but, of course, we saw some buying in tesla and that drove tesla lower so maybe there's an opposite effect here and i want to be a buyer lower and lean on tech. >> i know like you're saying, you don't want to throw in the towel yet on it but it does seem like we've gone from having shortages to almost having gluts. we see it in nat gas and inventory build numbers on the oil side and price of crude even off friday's jobs report if it's not trading well after all of that then doesn't that tell you something is wrong? >> it does and it doesn't. let's look through the prospective, this has dragged so long to chevron and exxon maybe there is a mean reversion. a one-year, three-year, it's

dragged both of those. so that's the prism, the perspective i want to look at but want to buy it lower >> all right fair enough. pippa, thank you. we turn to royal caribbean expected to report a loss tomorrow morning but the shares are still up 40% this year and occupancy rates are expected to be near 95%. let's turn to seema mody for more of the story. seema. >> kelly, what a start to the year, royal caribbean, carnival and norwegian on pace for their best start to the year on record up 40% now trading at 11 times earnings that's above prepandemic levels on this expectation that this is the year that cruising will come back however, a new channel check survey from morgan stanley suggests they're seeing pricing softness so that's why this earnings report will provide a very crucial read on what exactly royal caribbean is seeing not just over the last three months but going into 2023 can they achieve that level of profitable they set out for in september of last year the question on china, it was

fall last year when jason liberty told us they are leading china because of the ongoing lockdowns, concerns around when they could get back to it. here we are with the story of the china re-opening when are the cruise lines expected to re-enter that market that's played a role. >> great point if they mention china or ai they're sure to she a rally. do you like it >> if you want exposure in this space, yes, i want to be a buyer. this is the second largest cruise company obviously secondary to carnival. so if you look at the two in comparison the big focusis the net losses they were profitable in q3, 2022 now back to a $355 million expected loss. if you match that up with the service of debt, they have a debt service of $352 million because their balance sheet has swollen. $23 billion. so want to have exposure, i think there's move -- there's an opportunity to move higher because revenue is nearly gone up 200% to 2.6 billion so i do

like it here be cautious again. this is a small beta low, $17 billion market cap so there will be higher beta with this low of a market cap. >> sure, seema, final word it does seem other than mentions china and ai, if any of these talk about deleveraging balance sheet cleanup working through that process that's sure to win favor. >> any sector that needs to talk about deleveraging it is the cruise lines they had to take on so much debt during the pandemic to make ends meet how quickly can they remove some of that debt off their balance sheet and take advantage of lower rates or this expectation that rates will be a little bit lower than what we thought back in october of last year, kelly, that will be absolutely a part of the conference call. >> they're probably watching that window closely drying to figure out how to time it. we appreciate it seema moda and jeff kilburg. jason liberty tomorrow after their earnings report 1:00 p.m. eastern tomorrow looking forward to it.

still ahead, one china watcher says that suspected 1350i balloon could have far reaching implications for investors. he'll join me to explain. as we head to break here's a look at the dow heat map even though declines are only 40%, 2-1 decliners versus advancers, intel mcdonald's, travelers and caterpillar all up nicely today. we're back after this. ♪ i've got a plan to which i'm sticking. ♪ ♪ my doc wrote me the script. ♪ ♪ box came by mail. ♪ ♪ showed up on friday. ♪ ♪ i screened with cologuard and did it my way! ♪ cologuard is a one-of-a kind way to screen for colon cancer that's effective and non-invasive. it's for people 45 plus at average risk, not high risk. false positive and negative results may occur. ask your provider for cologuard. ♪ (group) i did it my way! ♪

welcome back to "the exchange." the dow currently down 44, nasdaq the worst down 1% and megacap tech let's check after the earnings mess last week.

red arrows today alphabet down 2%, amazon worst performers chatgpt bills, they released a new enterprise search product that led to the 22% spike in shares and had only six down days, a 3% gain and the ceo will join mike santoli at 3:00 p.m. with more on the stock move. rh formerly restoration hardware down after announcing its guidance will come in at the low end of its range and they'll restate results for the last three quarters due to an accountable error. tesla up more than 2% right now after ceo elon musk defeated that shareholder lawsuit about the famous take private tweet. the company raising the price of its model y on some tax rebate changes. over to tyler mathisen for a cnbc news update. >> here's what's news at this hour new york city is ending its covid vaccine mandate for municipal workers.

mayor eric adams says it saves lives and helped get 96% of workers vaccinated but the mandate was one of the strictest in the nation and led to the firing of hundreds of employees who refused to get their shots two people have been arrested for plotting a racially motivated attack on baltimore's electrical grid. federal prosecutors say one is nationally known neo-nazi leader brandon russell and the other, a maryland woman who wanted to disable power stations as part of a plan to, quote, completely destroy this whole city. in a chicago suburb smoke from a warehouse fire could be seen for miles nearby roads were closed as the building was engulfed in flames. crews from multiple fire departments working to bring the blaze under control. kelly, back to you. >> yike, tyler, see you soon thanks so much. still ahead my next guest says for the markets to go higher there are five things that need to happen. looks like we could be in trouble on four of them.

we'll break it down and what he's buying. during february cnbc is celebrating black teaheritage through our leaders in business. here's jon fortt >> a couple of years ago around the time george floyd was killed i created a course called the black experience in america. originally design ied it for ou two sons and put it online and created an interactive experience and really the goal is to chart out the people, the topics, the ideas that have brought us to where we are now and i think by looking back at that, we can chart a more positive way forward technology is a key part of that because it really expands the audience and intensifies the experience

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welcome back to "the exchange." markets are trading anxiously as away powell's speech tomorrow after that blockbuster jobs report my next guest says stocks can continue to rally from here if they meet his five criteria.

already one of his marks is being missed joining me is david harden founder of summit global investments. good to see you again, david welcome. >> good to be back on your show and see you again. >> these five criteria fed must stay quiet. we'll have a problem with that one in about 24 hours' time. inflation rollover earnings must expand geopolitical risks don't re-emerge and vix. you want the vix to spike or stay where it is >> it's been the case that the vix is actually spiked above 40. in this case with the vix down around 18, so it really says there's been -- there hasn't been any capitulation. for the market to really run and to have a continual thing looking out three, five, et cetera, more years, we wanted the vix to spike we did not get that and now here we are with the market running and with inflation coming under control for the time being and that's the key. >> it's so interesting you say that because to those of us who remember the financial crisis it's like, you know, rebounds

aren't this easy feels more like the six months before the financial crisis than the six months after but the response to that, well, kelly, there's a lot of different downturns. talk me through this from kind of what does history tell us about the way the market is behaving right now >> i think that's a great question and you're right. there is a lot of different downturns and so easy we'd make a lot more money for people, right? the reality is is that the market when it does have rallies within down markets sometimes it's a policy mistake. go back to arthur burns and 1974 we had a big down market i in '72/'73, what happened? they cut rates they cut rates early, and the market rallied over 50%. now, the '70s are known for not very much return and really there wasn't anything after that rally. so it was definitely -- inflation came back. we had the volker situation in the late '70s. are we having the same situation now? are we getting ahead of ourselves?

the market clearly wants powell to cut rates this year and so the reality is, if he does that too soon the market's gonna rally but are we just -- i apologize on the etf conference. >> hopefully they won't summon you. >> are we darned if we do, darned if we don't in the sense that if powell is accommodative, watch out, if he's too hawkish, watch out? is there an opportunity at all for equity investors here? >> i think so. i think what we want to hear from powell tomorrow you want him to turn more hawkish. he needs to talk more than he did last week. last week he caved he was very dovish and whether that's a tweet from elon musk or whether it's just in general he wanted to be a little more dovish, but we need a little bit more hawkish from him and a little more talk so the market doesn't run, it's over 10% and some are over 50% to 70%, that's too much we know that will create more inflation, we know that's going to come back and rear its head

so want to be careful. i think there is a line to walk here there is hope for equity investors. you want to be in this market. you just i think want to be more cautiously optimistic than just throw everything at the wind >> yeah. listen, i think i'm the only person on the planet who didn't think the press conference was dovish last week i don't understand the first thing he did was march out there and read a statement that says we take inflation seriously and we're tackling the problem and the fact that he said the disinflation process is starting is just a fact. i mean, it's odd to me -- i'm not even persuaded this has anything to do with powell or the mood the markets are in, david. >> i think there's no doubt about that people -- there was a lot of short coverings so far year to date and seeing a lot of big junk rallies and had short interest really high and rallying the most and, again, i apologize for what's around me hopefully that's the last announcement but the reality is so far year to date that's what it's been. quality is not done well quality earnings have knot done

well the most volume tiff stocks are the one that performed well. usually that trade ends around this time. so we got to be cautious here and i would agree. to some he wasn't as dovish as they wanted but compared to what he has been he was more dovish and i think that's the key there, kelly. >> all right, i want to give people a couple of names here. you are saying -- look, names, intuit, nvr. those would be a buy you think people can hold xel in the u "till"s -- the avoid list is easier. why do you think intuit and nvr deserve a lock >> last year intuit had a tough quarter and you had the big tech down turn and it's only performed 7% to 10% year to date i think they'll have good numbers coming out so they have a very high quality earnings story. it's a story that's resistant over recession so if you be in

tech this is a name you need to hold and with nvr, the fed has signaled in some respects that this raise in interest rates is going to end whether this year or next year, it's higher for longer or starts in may. the reality is that's in favor of nvr and so i think that they're very much tied but their high profitability as well good momentum up about 15% year -- over the last month and they were up 20 so they're down about 5 from that. i think this is a good buying opportunity looking at an interest rate play here. >> all right, david harden, please report to the ballroom. you handled that so gracefully if i were a client i'd be like this is why this guy does what he does. thanks for your time appreciate it. david harden joining me. the fda approved owe central pick to treat diabetes more than five years ago but it's making headlines for its offlabel weight loss use. we'll hear from novo nordisk

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central pick, drugs making headlines for their off label wet loss use we're here with the highlights everyone is talking about this, meg. >> ozempic is approved for type 2 diabetes prescriptions rising for both medicines. and the company says they're focused on the medical use of these drugs, what they're actually indicated for though we know there's been a lot of interest in them for people who are not necessarily on that fda label. you can see choppiness in the prescription data. there have been manufacturing shortages of these medicines and so that is exacerbated problems for people indicated for the drugs in accessing them sometimes. we spoke with novemo's ceo. here's what he said. >> we are investing $3.6 billion

in 2023 to really ramp up capacity so a strong commitment to sustaining growth and making sure that patients can get the medicines they really expect to get their hands on >> now, there are other barriers for patients to accessing these drugs including insurance reimbursement particularly for obesity. so novo has a study reading out in the middle of this year which will show whether this big weight loss result actually can be protective against things like heart attack, you also have eli lilly in the market expecting an approval for its obesity drug perhaps by the end of the year and this is a market that jeffries estimates could be $80 billion at its peak worldwide so this is something that wall street as well as everybody else is watching very closely, kelly. >> meg, you know, the reason why we're curious from the ceo if they can make enough supply available it sounds like the demand is there and people just aren't sure if it's fair for weight loss users to be taking supply away from those who need it for diabetes.

>> yeah, absolutely. i mean this is a health condition that people have been prescribed a drug from their doctors to use in order to keep their blood sugar in check and if you can't get the medicine because perhaps somebody who is not medically indicated for the drug is using it for cosmetic purposes i think that's causing a lot of frustration among the diabetes patients. >> does it sound to you from the company that those days are soon going to be over or not? >> it does at least from the company. they expect that these shortages should stop. eli lilly has had a similar situation. we spoke with their ceo last week similar thing there. they're investing in making sure the manufacturing is up. it's just kind of amazing to see these drugs launch so quickly and to have so much attention being paid to them that the company just didn't make enough. >> totally. >> of course, they had some of the manufacturing issues. >> no, it's kind of a spice problem to have. we didn't pour a ton of money into advertising and this is organic demand raises other questions as to whether these are legit and get

into that once supply is fully available. meg, we appreciate it. coming up, the u.s. shooting down that china balloon over the weekend and as congress works out a budget, the controversy could have big implications for defense spending one analyst writing never let a crisis go to waste what he thinks this will mean for your money is next can help you open those doors. by working with you on a retirement-income plan designed to balance growth and guaranteed income. because doors were meant to be opened.

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remnants of the chinese balloon shot down over coast of carolina over the weekend defense stocks higher, and perhaps could be a catalyst congress needs to fend off defense cuts maybe even raise spending as our next analyst says never let a crisis go to waste. bring in roman schweizer and here what it could mean with increa increasingly tense chinese relations.lications for th companies you follow >> look, the overhang on the defense group now is the budgetary debate in washington and commitment by house republicans to try and enact a deficit-reducing budget and talked putting defense cuts on the table. investors taken note of that despite a backdrop that features geopolitical risk around the globe, significant defense spending over the last two years increasing foreign sales and

inreesing aid to ukraine primary concern is how the budget gets resolved for the next fiscal year with all the drama we'll see. >> do you think that, i guess focus goes on the republican side here. what's the move, do you think? they seem upset about the balloon. >> they do i think what this really represents is a longer-term challenge. strategic competition that both republican and democrat lawmakers have discussed really you have the house trying to commission, which is a strongly bipartisan panel, most of the legislation about china passed via strong bipartisan votes. defense is one portion the growing or continuing china threat has been one of the reasons why the defense budget has grown and will probably continue to do so. i'm not suggesting that the congress is going to fund billions of dollars or balloon defenses but this is one example

of -- >> yeah. just needs missiles. was going to say and a safe place to shoot it down and representative hawkish this morning as often is the case what does that tell you as minds are focused whether we're banning tiktok, trying to think of retaliatory action for what we just saw and how is that likely to affect u.s./china policy. >> kelly, a lot going on here in washington prior to this balloon surveillance mission, and this will certainly heighten tension, but i'm still trying to gather, kelly, why china would launch a mission like this with so much to lose. they stepped on their own diplomatic message over the last two months, kelly, china has been trying to counter the u.s. narrative china is increasingly rogue, increasingly volatile surveillance state and then launch this mission, and to your point. right in the middle of a debate

about tiktok and outbound investment screening and increasing export control on high-end chips bizarre why they would do that and also tells us there's a high tolerance for risk, if xi jinping approved this mission, went up to the central military commission and approved by him and that should concern us all he was willing to risk it all for a mission that, quite frankly harks negligible intelligence value given we were likely able to jam the signal and conduct a counterintelligence mission on the asset. >> true. there's now the second balloon over latin america, same explanation given by the chinese. ro roman, you hear what was just said, again, does it lend to the idea defense spending won't be effective? a dbold statement with a new congress wants to pick a fight maybe this does change things? >> i do have to admit, and i don't want to -- left my tinfoil

hat in my other office, but i do have a nagging concern in the pit of my stomach that when the navy salvage divers bring up all of those electronics they are in fact military intelligence payloads and perhaps not something snooping on green house gases and climate change-related stuff china said this was a civilian mission and to the point of concern, why would they launch such a mission when they're trying to change the narrative a really bad look to shot down something that does not campaign intelligence gathering equipment. but to your broader point, look, this idea of a competition with china, via technology, disentanglement or decoupling unfortunately an issue for a long time to come, and i do think it will be a budget driver in some regards and, again, it is a bipartisan issue.

lawmakers in both parties voted to increase defense spending there parochial reasons to do that. >> mindful of the u.s./china situation. leave it there thank you both. beyond meat may be struggling to stay relevant. the meat trend here to stay. find it on the seafood counter soon a peek into big money behind fish and there's tyler mathisen getting ready. too bad we can't do a taste test i'll join him on the other side of this quick break.

hi, everybody. welcome to "power lunch" along side kelly evans i'm tyler mathisen who's right about inflation? markets rally because markets th