with fidelity income planning, a dedicated advisor can help you grow and protect your wealth. they'll help you create a flexible strategy designed to balance growth and guaranteed income so you can enjoy the life you've created. that's the planning effect. from fidelity. all right, welcome to "power lunch. i'm tyler mathisen with kelly evans. are we about to see a wave of deals in pharma. after one of the slowest years in recent memory, pfizer, merck, others could be on the prowl for takeover targets, the panel will discuss what it means for those companies and the biotechs that could be on the shopping list.

and big news on cnbc this morning. activist nelson peltz calling off his proxy fight against disney he says the company did what he wanted, so he wishes bob iger and the board well, but will investors like what they got we'll get to all of that and more a quick check on this market as the gains this morning have quickly disappeared. dow is down about 105. >> all right, to dom chu and go through some of today's movers i see tesla on the list there. >> tesla is up as we're hitting session lows now for the stock market solidly higher on the day, not far from the best levels of the session now as you can see some of the upside today being driven by headlines with regard to a fatal crash involving a tesla model s in texas in 2021 u.s. auto safety regulators determined the accident was not, not tied to the use of that controversial auto pilot feature on some of its cars. that alongside some optimism about the stock, tesla heading into the ev makers investor day in early march are helping the

surge. at current levels now, you can see we have officially more than doubled off the lows that we saw just back in the early part of this month next up, you got shares of affirm, going in the opposite direction. the fintech company with a primary focus on that buy now, pay later consumer financing trend is losing about roughly a fifth of its value today on the heels of a disappointing earnings report. the company also announcing it is laying off roughly 19% of its workers. down 18% is off session loews for that stock we'll end on hesai this is a chinese company which makes sensors for self-driving cars and it had a highly anticipated public debut today, the company sold 10 million american depository share units for 19 bucks a piece that was the high end of the range. this is one of the more high profile china-based ipos listed in the u.s. since didi's crash a couple of years ago. watch the hesai shares, investor focus. back over to you. >> dom, thank you very much. despite recent political

tension, china does appear to be on the verge of a big comeback economically according to the financial times, global investors bought $21 billion worth of chinese stocks in a record start to the year our next guest says china's reopening is helping fuel his optimism on the global economy let's bring in jim o'neil, former goldman sachs chief economist, senior adviser to the chatham house. welcome. good to have you with us growth and inflation, let's get your ideas about both of those globally and how china and its reopening will affect both of them >> well, thank you for having me on on one level it seems to me pretty straightforward just like we saw virtually anywhere in the developed or developing world a country that came out of an aggressive lockdown had a huge cyclical recovery so whatever china's long-term problems are, obviously quite a few challenges, something else would have to go really badly

wrong in order to stop a very large bounce very quickly. from what i can see, not that i'm in the business as the same i used to be, from any bit of evidence i see it is pretty obvious china is bouncing back already. just even here in london, somewhere as distant, you can see evidence of china, it is all over the sensor at london already. you can see it in their own spending habits and all the rest of it. >> so china's comeback is certainly going to help growth globally and individual countries. is it going to hurt inflation, however, through pressure on commodity prices or oil consumption or whatever? >> that's the obvious thing one would worry about given historic role china played over the past 30 years increasingly in many commodities and, of course, everything else. but what i find absolutely

fascinating is despite this now being amonth old story, commodity prices have not risen. so either the commodity markets are being really blind or there is something else going on, and i find myself leaning towards the slightly more domestic angle of that and partly because when i did a ph.d. way back, decades, if not centuries ago, during the second oil price crisis, and what economists would call the long-term elasticities, i found out before i finished my ph.d. conventional wisdom was so wrong. and when you get a huge price shock, consumers and producers actually go through the process of responding more than people realize, and so we might well be that below the surface that's going on in the energy markets right now, and you can see

obviously with european gas prices where they're actually falling so far from the highs and we see it with evidence of the european economy too so, it might -- and the other thing that is possible is that this bounce from china isn't going to be involving the same kind of frenetic activity and thing like house building that it did in past cycles, but i'm slightly surprised i would have thought by now we would have seen a bigger influence in commodity prices and it has not happened. it is not happened yet, why isn't it happening >> or does that tell us something? it is not out of the question that the global economy could be going into recession as soon as this year. so i do wonder if that's the signal that we're getting is even with china's reopening priced in, even with that activity coming, if the u.s. is slowing sharply, you tell me what's going on in europe, but that there is -- that there is a bigger head wind out there than many realize >> well, i don't really -- there

obviously would be a possibility and that's probably what the consensus we're thinking in november, but, again, my latest -- i emphasize i'm not in the business day to day in the same kind of crazy intensity i was for 30 years, but still in my blood and so if i look at all the high frequency indicators that are pretty reliable, the evidence in europe is partly linked to the gas prices, but also because exports to china are so important the evidence coming out of europe is there is going to be a recession. i know it is my old crowd and some others are no longer forecasting a recession in europe you see the same sort of thing in other parts of the world too. so, yes, of course, the u.s. might end up going into a recession if the fed really puts the brakes on, but you guys probably spend all day, every day, debating it the markets don't really believe that the fed is going to keep doing what it said it is going to be doing.

and that's another part of why i think there is some grounds with a bit -- i'm slightly worried, i'm normally an optimist this mammoth issues structurally for this year, i think there is quite a bit of evidence that the inflation pressures are slowing more than people are talking about, including the consensus of the fed and a very famous u.s. macro investor once said to me, the only thing you know for sure about the fed is when the evidence is changing in front of their eyes, they change what they say they're going to do i think that's a wise thing. obviously i think the next inflation read, i'm not sure when you guys have got it, coming pretty soon, right? i think that's going to be a really big thing for global markets. as will be the ongoing evidence of the speed of china's recovery and what is going on in commodity prices but so far it is remarkably benign in my view. >> well, on that note, and a very positive note it is, we

thank you, jim always good to see you. >> i think i should go have a lie down. >> i think you should. take a little pressure off there. >> all right, guys have a good evening. >> all right jim o'neil and coming up, nelson peltz going from grumpy to happy the activist investor ending his battle with disney doing it very publicly here on cnbc, saying the company did what he wanted will it pay off for shareholders plus, the nasdaq up 13% so far this year. some of the last years of big losers have been the leaders this year. but have they come too far, too fast, perennial question, we'll talk valuations when "power lunch" returns with my old bank. lots of red flags. fees, penalties. so i broke up with bad banking and moved on with sofi checking and savings. now, i earn higher interest on all my money, and pay no account fees. sofi. get your money right.

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welcome back to "power lunch. it has been about a month since nelson peltz launched his proxy fight to disney. and after bob iger announced restructuring and cost cutting plans. on last night's call, peltz has already declared the fight over. here's what he had to say to our own jim cramer earlier today listen. >> this was a great win for all the shareholders management at disney now plans to do everything that we wanted them to do we wish the very best to bob, his management team, the board we will be watching. we will be rooting, and the proxy fight is over. >> the proxy fight is over

declaratively stated there for more on what's next for disney, let's bring in shawn mcnolte, contributor at the anchor welcome. did -- mr. iger achieved one goal, i assume it was one of his goals, and that was to quiet the proxy fight of mr. peltz at all. but did iger's moves add up to enough to right disney and put some juice in the stock? >> yeah, it is up 5% last night. he said all the right things, bob is a pro nelson peltz was the ghost in the room, but he directly started the call saying, it was a good deal, that was his opening three or four sentences of the call, and, look, you have to cut costs you don't need nelson peltz to tell you that, but he can come on cnbc this morning and say he listened to me, thank you so much, and i'll be on my way, which is bob had to do to get that done. the annual meeting is on april

3rd. that's one thing off the list now. >> where are the cost cuts going to come from >> marketing marketing, marketing, marketing. $1.25 billion in marketing costs are the first order of business. and layoffs as you have reported, 7,000 layoffs, so labor and marketing are two first main sources of cuts $3 billion in content. no deadline put on that. and sports is excluded from that so, you know, that's -- that could be the hulu deal they may not do, that could be cutbacks at 20th century fox studios. he said general entertainment. what is that not marvel, "star wars," animation, pixar. so you're talking there could be abc network, that could be freeform, that could be fx we're waiting on that. you're going to see marketing cuts several times on that call. he clearly came in and said you guys are spending too much on marketing, you don't have to

that's $1.25 billion and the labor costs, $750 million, by the end of fiscal year, fall or end of year, tyler. >> so, a couple of -- you mentioned several of the properties including pixar and marvel and a couple of others that -- "star wars," that seem to have gotten a pass on this round. is that likely to persist or could they ultimately be on -- under a scalpel's knife? >> i said they're spending too much on those things and you can interpret that as you may. does that mean fewer series or the budget is going down he wasn't clear on that. so it wasn't unscathed, but he said he focused on general entertainment as his first area and the main area of those $3 billion of content cuts. so it is not -- look, nothing is safe in 2023, the media business, but you're not going to cut back on "star wars" and "star wars" quite frankly, he has to get that going again. there are no "star wars" movies in the pipeline right now. that's priority number one

avengers has a five-year plan. i doubt he's going to cut that back so i don't think there is too many cost savings to get from those franchises, maybe a little bit animation, things like that, but not a lot he can cut because he's a franchise guy he's not going to look there for the main cuts to start >> kind of said it is general entertainment where he doesn't want to sort of compete. and what do you think is the significance of breaking off espn into its own unit laura martin suggested that maybe he would look for a co-investor down the line, raise some cash, maybe that co-investor could be a league itself or another media company. what are your thoughts >> yeah, he said he didn't want to sell it, he didn't say he didn't want another investor you're exactly right, kelly. he's very vague about it it is not going to be a separate line until later this year maybe not until fiscal year quarter four in the fall so a little bit more on that, you know it is honestly -- it is also to recognize how important sports is at the company. if you're looking at the future

of broadcast, what is everybody saying, news and sports. maybe he's planting a flag saying sports is a pillar of the disney company going forward, much like netflix and gaming is a third pillar of their company. it could be prepping for what is the future of entertainment, it is not in broadcast tv, not in cable tv, sports will survive that, and he wants to maybe give that, you know, its due course to the company. >> when you make a move like he'sproposing here, which is t sort of separate espn as its own business, it makes that business more conspicuous, doesn't it and potentially in a good way, potentially not in a good way, and if you were living it at espn one thing he didn't say in terms of cost cuts was didn't talk about cost cuts at espn, for rights fees or other things. >> yeah. a lot of that deals are done he can't go back on a deal the deal is out there is the

nba. as he said on the call, the nba is very, very important to espn. is it the same tdeal they have now? maybe not. they're cutting back, but the nba is going to want to double their fees but the nba also doesn't want to go to streaming directly they need that wide audience up at abc, and still potent cable networks at espn for viewership. that's the thing to watch, the nba deal or he can't touch sports the deals are done there is not much he can do about it. >> there is a lot going on in the nba today, trade deadline, 3:00 sean mcnulty, thank you, my friend. further ahead, new york rents are near record highs. what's keeping them up people keep paying them. january seeing a big uptick in signed leases. we'll have more on that. first, the semiconductor etf jumping 20% to start the year despite announcing some layoffs that sector holding strong

compared to broader tech we have more coming up on "power lunch. at these payroll forms... my business' payroll taxes will calculate themselves. right? uhh...nope. intuit quickbooks helps you manage your payroll taxes, cheers! with 100% accurate tax calculations guaranteed.

big tech in the spotlight as firms lay off workers in order to cut growing costs what about job cuts in the semiconductor industry that's the leading indicator of all this, isn't it

kristina partsinevelos is here to discuss. >> would you say it is a leading indicator, given the attention to big tech and job cuts and we wonder is that indicative of how the market is, but when you compare to semiconductors, the cuts are a little smaller and not as deep. we know -- >> deeper relatively than semiconductors. >> not as deep like high level jobs, for example, there is western digital, they had over 200 cuts in the role of technologist and principal engineer, the number one jobs cut so a lot of maybe at the ph.d. level and the reason for that, and this is based off of the experts and all the analyst reports that i've spoken to is that semiconductors are in a unique spot when compared to big tech, especially here in the united states. they need to downstream their business they are no longer just going to be designers on american soil that outsource all of their chips to tsmc and wherever instead, they're going to bring that manufacturing here, that's what makes it so difficult for them, is to change that dynamic, that business dynamic going from

having all the ph.d.s to designing it to now hiring the workers, the builders to build in the united states >> it raises the question, so, is what's going on with big tech, you know, unto itself? in other words, this is where we saw the biggest blow i can't stop thinking about google and what is going on this week and the drama over the botched ai rollout and you figure this company has how many thousands of employees and is it even relevant for what is now going to be the next kind of generation of tech there is bloat but maybe in semis to your point, maybe not as much or the hammer hasn't dropped yet. >> we can't predict the future we could see a lot of cuts coming, especially with the capex spending decreasing across the board. we see the weakness in industrials in semiconductors. overall the cuts have didn't massive with the exception of micron, laying off quite a bit, 1300 globally. and intel keeps revising their

numbers. overall, you expect it to be a little bit worse if you're going through this downturn. part of that could be because of the optics a lot of the semiconductor firms are expected to receive funding in the next few months through the government $53 billion in funding that will be spread out over several years and imagine how that looks, getting taxpayer dollars when you're laying off employees at the same time. but, i got to say, we reached out to micron, what do you think of this? you're going to apply for funding and they said, i'm paraphrasing, a lot of it is the short-term pain for this long-term gain so they can become more nimble, let's cut a few of the peripheral jobs and so i'm going to be doing a story tomorrow, but a lot of the tech workers are finding jobs within eight weeks. they're not necessarily as bad as we might expect, but that's why there is a little bit of a difference now in what is going on in the -- >> from big companies to smaller companies, the tech workers? this is for tomorrow

>> there is a focus on defense but every. and some of them are getting -- i don't want to reveal -- >> we'll hold it there kristina, thanks let's get to frank holland now for a cnbc news update >> here's what's happening at this hour. three days after massive earthquake struck turkey and syria, more than 20,000 people are dead and at least 75,000 are injured. rescue crews are still looking for survivors. a 6-year-old boy was freed after spending 80 hours buried in the rubble. a large number of school kids dropped out during the pandemic and never returned. an analysis by the associated press and stanford found 240,000 students across 21 states who are no longer enrolled in school for the very first time, sales of spirits surpassed those of beer in the u.s the spirits trade group says hard liquor's market share has gone up for 13 years in a row and edged out beer

but beer is still technically number one there is a growing popularity of cocktails including premade concoctions and you contributed to this with your mckalyn purchases. >> i have. frank holland, thanks, my friend. ahead on "power lunch," too far, too fast. the nasdaq higher today two days left in the 2022 cnbc stock draft thanks to netflix, ryan reynolds, the mountain goats hold the lead there you see it, up 38% we'll talk to the winner monday after the super bowl wel rhtac 'lbeig bk. power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market with powerful, easy-to-use tools

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welcome back to "power lunch. a big reversal for markets today, the nasdaq had been up more than 1% at the high of the day. and now it is down about two-thirds of a percent. pepsi shares are higher as it increased its dividend.r are cug purchases but still buying

treats msg entertainment jumping 15% today, the company that owns the nknicks in basketball, the rangers in hockey. the christmas spectacular, the rockettes in it, brought in big dollars during the holiday quarter thanks to higher ticket prices go, rockettes. let's get to rick santelli for our bond report. rick >> well, tyler, we had a very nasty 30-year bond option. i gave it a d-minus in terms of grade for demand two-year note, skyrocketing and steepening its ascent higher after 1:00 eastern that played negatively to the charts you showed for the nasdaq and the other equity indices if you look at the 30-year, the antagonist in this case, you can clearly see how it moved higher. it ignited the entire long end of the treasury curve, yields to go higher, it took away some of

the inversions 2s versus 10s on its way to minus 87 and has reversed, hovering around minus 82 any close of 82.5 basis points or more negative will be a fresh for decade inversion fed fund futures, the fulcrum from june, july, august, now september. the further out it goes, the more fed it is bringing and the way the markets are pushing these things, so right now you could see all the prices going down, every month until you reach september and stop going down let's use that chart this is year to date it is hovering at 94.87. it has never closed lower than that the lower it goes, the more fed we're bringing into the equation finally, my surprise chart, when i traded bonds in the '80s, every thursday at 2:30 eastern, they released money supply it used to be the biggest variable moving interest rates those days are long gone and m2 isn't as famous as it

used to be but i would throw this chart up. this chart goes back four decades. m2 year over year percentage changes turn negative and here is a good reason to consider the notion that we may be looking at a recession and less inflation down the road. tyler, back to you. >> very interesting. that's a measure of liquidity there. thank you, rick. rick santelli. the oil market is closing for the day. guess who is here? pippa stevens. >> hello oil is lower, seventh straight week of inventory builds nat gas is higher after we saw a draw day, making back some of yesterday's losses i wanted to point out shares of uranium company camaco jumping after the company reported results. they gave upbeat guidance, increasing production. i think most importantly was last night they announced a 12-year agreement with ukraine's state-owned nuclear facility and so they will be supplying all of that uranium which comes after president zelenskyy on sunday said he is sanctioning

the russian uranium industry and so now the utilities will have to compete for the remaining uranium on the market. so that's also boosting the ura and the urnm today. >> great point to go back to oil, seventh straight week of losses? >> of building inventory. >> building inventory. that's why we have seen such pressure on the prices jim o'neil is scratching his head to say, why if this is all pointing toward more economic activity, more global demand, why aren't these prices responding higher? and this is what ed moore said, prices are going to fall there will be a ton of inventory build. we know split the supply piece t first. >> we're still waiting on the china numbers and to see what happens there. that's a huge catalyst pushed to the back half. keeps getting delayed people aren't driving as much. also interestingly, 18% of the slowdown in fuel last year was because of more efficient vehicles

so that's playing a little bit of a role. once you add up all these smaller things, it chips away at the demand side. >> efficient vehicles, electric vehicles, all the people staying home more. >> yeah. that's what jim was saying too, that as he goes back over the decades, the response to oil price shocks is bigger than people realize and i think you're right on the electrification piece of the last year. >> pippa, thanks. stocks unable to hold on to the gains today, but off to a nice start for the year. for the nasdaq, up 13% a bunch of strategists are questioning valuations if they have gotten ahead of themselves for some of the riskier growth names. let's bring in richard bernstein, the ceo and chief i've been looking forward to talking to you for weeks, literally. welcome. i'm glad i remember on this show last year in the summer you perfectly called what was going to happen in the back half what do you think is going to happen now >> well, thank you, kelly. i think you cursed me for 2023

with that accolade thank you so much. look, i think we should be very careful in extrapolating january's rally. the markets are really trying to anticipate what they believe will be once again cheap and abundant liquidity from the federal reserve. i think that's a mistake i think the world has changed. i don't think we're going back to where we were and i think that people who are speculating, investors speculating in some of these more questionable investments, i think are going to be disappointed this year >> you look -- we saw from rick santelli that m2 money supply has gone negative for the first time in quite some time. you saw a spike from 2020 a couple of years ago when a ton of liquidity was coming into the market what are the implications of there not being that flood of liquidity. >> well, tyler, it is not just the fed. if you look around the world, and you look at, say, the percentage of yield curves

around the world that are inverted, it is signaling that there is a coordinated effort here among central banks around the world to tighten liquidity tremendously so, you know, one of the founding principles of speculation is you need liquidity. so, i think that we have global liquidity contracting, and that's really not a good environment to be speculating on. >> what does that -- segregate it for me. what does that mean for markets? what does that mean for economies? >> right, so, i think for the markets, what you got an environment right now where people are trying to decide are we seeing some kind of fundamental shift from value to growth or is this speculation i obviously fall on the side that says it is speculation. why? because cryptocurrencies are rallying tremendously too and there is no fundamental basis to cryptocurrencies that anybody can ever point to. it clearly has to be a speculative rally. what does it mean for economys

we think it ultimately means that we're going to see a very gradual 5, 10, 15, 20-year shift. i know nobody cares about that but away from the speculative assets to real productive as assets, assets that really help the economy provide value added. >> so, rich, one of the things i recall from speaking last year was talking about sector rotation and you started to hint at this with maybedon't chase growth right now can you explain what inning are we in here, what -- where should people think about being positioned and where should they avoid? >> so, kelly, i think one of the real opportunities here that people are missing is to look outside the united states. i realize nobody cares about that either, but in 2022, 70% of non-u.s. markets outperform the u.s. in dollar terms

it is just incredible. and the reason why is because the united states is dominated by tech, by consumer, by communications, and the rest of the world is not so, you know -- >> even if things are slow, rich i take your point, but is it something that can take for six or nine months because can the u.s. slow substantially without dragging the rest of the world lower as well >> fair point. but i think what people have to remember, kelly, is that -- we always think of non-u.s. markets in terms of countries. there is a huge sector effect now in non-u.s. investing. if you look in europe what are the two biggest sectors in europe, energy and consumer stables, right what outperformed last year, energy and consumer staples. there is a big sector effect in non-u.s. investing that is more important than a country effect. you would want to err on the more defensive secureds. >> even with their exposure to energy, for instance

>> it is an interesting question you talked about china, you mentioned china. i think we haven't really yet felt the full effects of china reopening. and remember you're going to see activity first, and prices will follow second. we're starting to see the activity in china. i think one should expect some of the commodity prices to react. that would be the next step. that would be the logical next step. >> all right so much more we could ask, but we'll leave it there, rich, thank you so much. great to have you on today we appreciate it. >> kelly, thank you for your kind comment. still to come, new york rents not budging. many expected prices to drop, inventory shortages and strong jobs market keeping activity high we'll take that one apart for you next ugh covid-19? and being overweight makes it more risky. i'm calling my doctor. if it's covid, paxlovid. authorized for emergency use, paxlovid is an oral treatment for people 12 and up...

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welcome back, everybody. new york rents hitting their third highest level ever in january. the median rent now topping $4,000 robert frank here to discuss $4,000 is the median >> that's the median the average. >> what size apartment >> well, that's the average apartment. the average for a one bedroom is over $4,200. the average citywide is over

$5,000 what is interesting about january is we had these record highs in october, november, but everyone said, well, come january, things will come down because nationally things are coming down. new york is not budging. and in fact we had the highest median rents in january of any january on record. seasonally, this is supposed to be a very weak time. and in fact we had a large increase not just in rents, but in the number of people signing new leases that was way up, not just over december, but way up year over year and so the question is, where are all these people coming from new york did increase its population since the pandemic. so more people live here today than prepandemic you wouldn't know that by reading the headlines. maybe return to office, now that people have to be back in the office, they want to live in the city the real issue is supply a lot of -- we see a lot of new construction in new york, but a lot of it is brand-new condominiums that sell for very

high prices. what is happening now is that they're languishing in the market as are the buyers. you have two new groups of renters. one is the wealthy people who normally would buy are sitting on the sidelines -- >> i'll rent until the prices come down on the new condo i like in hudson yards or wherever. >> exactly they're renting. also this new cohort, people who have moved to florida for tax reasons, but still want a place in new york, so they would otherwise be owners here, they're living in florida, but they still want to rent in new york city. is that's priced out everyone. what we saw in november, december, rents were too high, nobody was renting leases went down what is surprising is the prices are high, and people are paying them because we had a big increase in the leases so this means that prices are in the going to come down in manhattan. at least for the next few months. >> amazing how things have changed from three years ago in the spring, when people were leaving manhattan, rents were

cratering, and now they are back at or above all time highs for january at least. >> yeah. and this has a big implication for the cpi, we know that rents are important for cpi housing costs. and manhattan, new york city, is the largest housing rental market with over 2 million rental units so, this means that at least that housing component of cpi is going to still have that upward pressure from new york from keeping it down. >> interesting thought, yeah. >> make life worse for everybody else because manhattan doesn't have enough apartments. >> get another reason to hate high prices in manhattan >> robert, thanks. robert frank. still to come on "power lunch," biotech looking for a booster shot big drugmakers aiming to add products to their pipelines in order to boost sales we have the latest. as we head to break, during february we're celebrating black heritage through the stories of some of our cnbc teammates, contributors and leaders in business here is jon fortt. >> couple of years ago, around

the time george floyd was killed, i created a course called the black experience in america. originally designed for our two sons, ended up opening it up to a broader audience by putting it online and creating an interactiveexperience. 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, you can chart a more positive way forward. technology is a key part of that because it really expands the audience and intensifies the experience this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. [music - cover of blondie's “dreaming”] [music playing] ♪ imagine something of your very own. ♪

♪ something you can have and hold. ♪ ♪ i'd build a road in gold just to have some dreaming, ♪ ♪ dreaming is free. ♪ accenture, let there be change. ♪♪ 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? ♪♪

welcome back cnbc.com breaking down a list of stocks in the biotech etf which have potential upside. their average target price is indicated 35% or more upside, and all of these stocks have a market cap of $2 billion or more we're looking at names like denali, insmed, arrowhead therapeutics executives at major firms like pfizer, novartis and merck are hunting for deals hoping to add

promising drugs to their pipelines. here to discuss is the author of that piece, jared hopkins with our very own meg tirrell great to have you both here. jared, i'll start with you how close do you think we are to big pharma pulling the trigger here >> well, we could be close a lot of these here >> we could be close, a lot of these big companies are sitting on big piles of cash pfizer has about $36 billion in cash because of its product sales and sales from its covid vaccine and its covid thera therapeutics and these companies, pfizer, novartis, merck, they have big holes to fill in the coming years from top selling drugs that are going to come off patent and going to need to be replaced. >> meg, where would you say the clock is ticking most loudly i guess? which companies face the biggest patent cliffs? >> oh, that's a great question

so merck, of course, has its giant cancer drug keytruda which is expected to start losing patent protection probably in 2028 that's going to be massive abbvie is already starting to lose patent protection on hu humira, and competition come into the marketplace there jared reported in his story today that abbvie has lifted that $2 billion self-imposed cap on deal making pfizer, as jared was just talking about, they've got all that revenue from their covid products they've got a massive dropoff because covid isn't generating as much money for them they have made this pledge to add a ton of revenue by 2030 through m&a. i think it's $25 billion in revenue and they're about 40% of the way there. they're going to be doing more the challenge, of course, is are the right targets out there for the right prices. >> jared, if i looked at pfizer, novartis and merck, what one at a time are they looking to fill?

what are they looking to fit into their lineups >> well, novartis has a big hole to fill coming from its heart drug intresto. they could be looking for a cardiovascular drug, they're looking for neurological drugs and some various pipeline fills there. pfizer is looking for what's called early to mid stage drugs, these are drugs that are earlier in development that haven't been approved just yet. they have recently done some deals for approved drugs these came through the acquisitions of global blood and from biohaven, which is a migraine drug. yet, because they have said that, hey, sort of the profile of businesses that have this mix of approved or late stage drugs might not be out there that fits within the company where they could add value. they're looking earlier stage now. if you take a company like merck, they're looking to fill a hole of oncology pipeline.

they're looking at neurological. they're looking to fill where they have a vaccine business too. so these companies are all sort of looking a little bit running the gamut. >> true. meg, so from the investors' point of view, if it sounds like these deals are imminent, and you know, some of these biotech companies historically aren't cheap, do investors typically reward these deals do they have to make these investments in the hopes of that next big hit, but what's the reality of how well they do typically? >> yeah, that's also a good question i think that generally the perception is that these massive deals, these mega mergers, which we haven't seen in a really long ti time, we haven't seen those things happen. pfizer tried to make that bid for allergan years back. that didn't happen those probably aren't liked as well what the street and the management teams are signaling

they're trying to do and the street is looking for is deals that will add sort of near-term revenue. if they're going earlier stage they might be doing licensing deals. they don't move the needle i think what's going to be fascinating to watch also from the valuations perspective for biotechs is do some of these mid to larger cap biotech companies that have been perennial takeover target names like bio marin, these are 20 billion plus market cap companist if those start to get acquired that's going to move valuations for the biotech sector in general. we'll leave it there thank you both very much today atred hopkins, meg tirrell on wh could be a big year. consumers are taking the market to heart under a microscope next >> announcer: catch the market zone today and every weekday on

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the beatles sang "can't buy me love. jennifer lopez says "love dos can't a thing. they're both wrong dom chu looking at that one under a microscope. >> they're wrong in certain ways what we're looking at specifically under the microscope is the rising cost of va

valentine's day. we've been talking a lot about inflation. valentine's day will cost a lot more that's leading many americans to contemplate whether it's worth it to spend that discretionary income or not. according to a recent trust pilot survey, a whopping 66% or roughly two-thirds of americans surveyed said that they are going to spend less this year on valentine's day because of the effects of inflation things cost so much more like gas, fuel, electricity, utilities of all the different sorts. because of that they're going to cut back on spending for valentine's day. what's interesting is where you are seeing the notable price increases with regard to goods on valentine's day if you take a look at some of the data, chocolate bars now cost roughly 12% more today than they did at the same time last year the other place to keep a close eye on what's happening is dining out up 8%. we know that food costs are going higher we can talk about the maybe recent dropoff in certain commodities like eggs and milk

and whatnot. still, it's generally higher than they were last year the place where you are seeing notable price decreases, though, a dozen roses for your significant other, whether you stop at the way home, you'll pay a little bit less for that this year, roughly 5% i guess what it comes down to, it depends on discretionary. when we say discretionary, you pick and choose what you want to spend on some folks out there are feeling a little bit less apt to spend on that. by the way, this is scary, around 41% of respondents said that they're probably just not going to do anything at all for valentine's day. >> that's not scary. that's called normal. >> that's normal my wife said if you want to really show me you love me, get me a dozen eggs. >> that's a dozen rose this is year my wife is probably watching right now, like i'm sure your husband is and wife are right now thinking to themselves, wait a second, are they going to skimp on valentine's day this year, and i'm going to say kelly

says it's real life. >> yes, it's fine, everybody we are busy people but tyler has the real wisdom, should we skimp or not skimp do we make the most of these days >> don't skimp. >> especially not on the flowers? >> i'm not a big flower guy. i like flowers, but i'm not a roses guy. i like to get arrangements >> this is wisdom right here. >> the roses are all inflated on valentine's day. we've got to say good-bye. thanks for watching "power lunch." "closing bell" starts right now. >> stocks giving up an early boost as investors weigh mixed earnings and a still muddled economic picture 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 market at the highs, the s&p 500 this morning was up almost 1% it now has declined to basically the lows for the week. we hit these levels back in the early part of the week monday and tuesday. nasdaq still the outperformer but was up more than 1% a little