they have not seen price increases like this. some is because of the wealth creation, and as we talked about, it's that migration of the very healthy, hedge fund, private equity, all coming here. >> it's a beautiful spot could be worth $1 billion. it could also be under water robert frank let's get over to mike and melissa on the floor >> always the optimist, david. good friday morning. i'm melissa lee alongside mike santoli live from the new york stock exchange jeff sherman as wall street's fixation with the bond market continues. investors looking to logan and bossic this hour for clues on the fed. jeff de graaf also with us, charting the s&p as it tries to claw back above 4,000. got there just now and what the breakdown of utilities has to do with that story. fidelitity's jurrien timer

says all good news is actually bad news stocks higher across the board s&p 500 reclaiming 4,000, up 0.8% the nasdaq higher by 1% and the dow up by 127 points, 0.4% taking a look at bonds, this has been actually not a real driver of this story in the conventional sense higher bond yields have not been resistance for markets. >> they haven't yet. if you go back a month, that's been the story stocks did pull back 5%, 6% on the s&p from when bond yields bottomed yesterday you didn't get relief on yields yesterday, but this morning we're getting them, backing off, even though strong ism services numbers these higher yields are drawing a lot of money into the bond market take a look at the flowings. bank of america tracking this stuff. you've seen multiple weeks of pretty heavy inflows into mostly investment grade bond funds. there has been outflow for stocks a lot is normalization because investors did get loaded up on

equities coming into this period they're kind of rebalancing around that. yet still yields going higher, even though that money is rushing to buy bonds other driver being fed policy. >> when the earnings yield on s&p 500 is about what you can get from a t-bill, a six-month t-bill, it's hard to make the case to take on that risk. >> hard to make a pure valuation case, absolutely you have to think earnings are going to be coming up in years to come. >> our next guest argues his firm's bond etf can be a counterbalance deputy chief investment officer jeff sherman jeff, where is the primary interest you're seeing from your clients in terms of where in bonds, where in credit >> yeah. i think as you mentioned, too, it's that up in quality trade at this point because as we've seen, you just showed the flow data you're also seeing weaker performance as of late in the riskier segment to the bond market i think it's just that nervousness to higher yields, higher financing costs and just,

again, the future path of the economy. but as mike point out at the top of the show here, what we've seen is really just stronger economic data. now, this is not portend we're in this new bull market, this great new regime of greater growth it's kind of a rebalancing of negativity we were seeing from the december data. if you go back and look through the december data, it's very rare you see things like retail sales, you know, go down month over month in a month like december we got scared by the services number two months ago where we got that january november off the december data that was very low. i think the bond market got a little too negative at the beginning of january because these were the holdouts of the last parts of the economy that were still performing quite well talking about the consumer, talking about just the service sector in general. so, it's not just a headline number that i saw in the services data today. but it's also the employment side of it, too. you've seen the job creation,

and although they are kind of lower in jobs, i think what you're seeing is finally getting this restocking back of the employee stock in the services sector of the market today so, if you think about what happened over the last 18 to 24 months, companies and small businesses were very reticent to be able to retire and just get back into where they were pre-pandemic i think some of this job creation we've seen is on that side now, we all know -- we all know that the labor market is the last shoe to drop, as they say, in the economic data set thus far, i think what we're seeing is a resiliency there does not mean we'll see resilience throughout the rest of the year. as you mentioned, too, bond yields are very attractive for where we are in this market today. t-bills north of 5%. you have the ten-year treasury at 10% as well these are yields we haven't seen in the bond market in over 12 or 13 years so, we think there's that natural attrition -- or the natural rotation band into the

bond market after such a rough year it comes down to bond math if you can buy bonds that are 80 cents on the dollar, can you underwrite the credit, you feel comfortable about it, they will naturally go back over maturity. this is not some rebound trade it's good old-fashioned bond work. >> jeff, i'm wondering if you are in the no landing camp the no landing camp is out there. it sounds almost ridiculous when you thinking about all of the fed rate hikes still in the pipe that have yet to take effect on the economy. or is it that we are just simply in goldilocks because they haven't fully taken effect, but we will be hit and hit hard down the line >> melissa, you stole my thunder. i think the no landing scenario is utter optimism. at this stage it's hard to say what kind of landing we have, is it soft s it hard? i think you nailed it right there. we have not really seen the effects of the fed hikes on the economy. yes, it's hit the housing

market we have seen some challenges in some floating rate sectors like bank loans are starting to see a bit more challenges. if you think about how corporate america refinanced over the last three years, the eq bonds are low. the interest coverage is relatively high. so, typically in a fed hiking regime, if it's prolonged, instead of being so short and high that we've seen the rate hikes being so rapid, it takes -- that usually kind of leaks into the economy but if you think about the debt markets, a lot of people haven't had to refi at these higher levels same portends for the consumer as well. i think right now we're in this area where the data is okay. it's surprising to the upside and people are saying, this is great, it's the next bull market what i think it is, we still haven't seen that. i think these effects are going to come to the back half of the year that's why we've been in the camp that the fed will still hike, although they should not be hiking and they should wait for these hikes to kind of trickle into the system. unfortunately, the data set they're looking at means they're

going to hike at least another 50 to 75 basis points. i don't think that matters in the short term, but we'll have to see what the effects are as we go into the back half of this year and early next year and i think that's where you'll start to see the challenges. so, the reason that we're advocating for investors to think about bond portfolios that have higher quality, have things that can perform in a down market, things like treasuries, things that do perform well when the economy slows is that you don't buy insurance in the middle of the storm, you buy it beforehand so, we think the recession is being pushed out a little bit this year. it probably is something that could materialize early next year, but we think at this point, having some of the insurance is very important. >> where does that leave you, jeff, with regard to these big pools within fixed income like mortgage-backed securities, like these other areas that maybe look pretty attractive on a current yield basis? you have the fed obviously reducing its balance sheet, talking about big spreads of mortgages relative to treasuries but maybe that's just the new

environment and not an opportunity. >> no, there is an opportunity, mike i don't want to get into the weeds of the mortgage market, too, but there are very interesting pockets out there where you don't have to -- you don't have to take this prepayment risk and things that you can see in the marketplace so, there -- what is attractive is what the fed does not own in the mortgage market. they kind of pushed the price of those assets up. so, the agency mortgage market that is the one that's guaranteed by the u.s. government, so you will get your money back investing in securities, does look the most attractive it has in years some of the stuff we don't like is the newer issue because those are more susceptible to the refinance risk if you buy some legacy assets that were originated maybe a year or two ago, think where those coupons are. those people would have to see like a 250 to 300-basis-point rally in the mortgage rates in order to refinance so, what that means is you can kind of get a better certainty

around that, which means the optionality is good. therefore, you can get a better type of return so, we're seeing that in the mortgage market. the bad thing about mortgages is that they tend to be related to volatility and interest rates. so, some of that excess spread you see is because of the volatility coming back in the rates market that said, over a longer term, these are very attractive opportunities. back in january when we saw some of the rally risk assets, that's we did double. we were buying more treasuries, lengthening that interest rate exposure and also buying more agency mortgages because they looked very attractive on a valuation basis. and they don't have the risk of the housing market within them because, again, they are supported by the u.s. government. >> yeah. jeff, great to speak with you. thanks jeff sherman, doubleline up next, trading the technicals we're charting the s&p after the break with renaissance macro chairman and shares of p&g are up a bit

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has been tracking sector trends across the s&p saying he sees cyclical working at the expense

of defensives, staples, utility and health care breaking down on a relative basis with us renaissance macro chief, jeff de graaf. good to see you. you've been saying for a bit now you see the overall market as being back in an uptrend, where you would want to be buying pullbacks and things like that it's not necessarily the prevailing call out there. what are you basing it on? >> really i'm pacing it on a couple things, mike. and thanks for having us first, it is trends. the trends, the path of least resistance for the s&p is higher when we get oversold, those oversold conditions are holding. that's are good news and is indicative of an uptrend. i think the most important thing, which you touched on, is just the characteristics of the rally. cyclicals are leading this rally at the dismay of an awful lot of bears out there. they just can't possibly come to understand how that could be the case

and we're kind of relieved by that, frankly. as you noted in the last week, we've lost a relative leadership, deterioration, bo bottom quartile of pharma and staples. those aren't really the characteristics you expect if we're going into recession or some excuses of the inverted yield curve and all these things i'm concerned with, but the market's message is distinctly different from that. and, you know, we think it's important you listen to what the market is saying not try to force the nairrrative on the market itself. >> the question is, have we had head fakes of a similar magnitude? and is there a way you can say maybe the market is sort of overplaying a certain hand in this regard? i know you're obviously looking every day and seeing whether the kind of supply/demand holds up in the right sectors it, but how do you necessarily stress test this call?

>> well, you know, it's about sort of confirmation so, one piece of evidence isn't enough, but, you know, honestly, i sat down with my team at the beginning of the week and said, you know, find me something that's bearish in the charts give me something that's out there that the market's telling us is a concern. and it's really hard to do, to be honest with you one of the things that's underappreciate is just how strong the goebl markets are if you put the s&p on a relative basis to the world index, we're in the bottom third. you know, europe looks better. not only just europe, but european discretionary names european banks, which people for the last 15 years have thought were a graveyard those banks are making 52-week highs. there's just a lot of grains of sand adding up to a more bullish outlook as we see it >> you mentioned some international, you know, ways to play this bullish sort of outlook, jeff. i'm wondering as you talk to clients, what chart are you the

most bullish on? you mentioned european banks you mentioned all these different places what is the best looking chart on the market right now? >> i think just thematically, i think it's cyclicality we know in this part of our market cycle, as we measure it, cyclicality usually does well. i would say anything from aerospace and defense to the big industrials, you're starting to see improvement finally in this reopening trade with some of the hotels, but if you just sort of think about it from a cyclical perspective, those things benefit from a firm economy, those really are the best. and i think that's the easiest way to encapsulate what we're seeing certainly that's playing itself out globally i think that's a really important message from the markets that this is not a u.s. centric rally. this is actually a rally that's being led by europe, if anything and that to us historically is pretty good news >> tech in your view looks good, jeff i ask you this in the subcategory of cyclicals

also because if you take a look at apple, the chart of apple has not been great it's right now below its 200-day moving average for a couple of days i'm just wondering, can tech overall be strong if apple is weak or maybe you think apple looks fine >> no, honestly, the faangs don't look that interesting. if there's one that stands out, it would probably be netflix that was a little more interesting. but i think moving away from the faang names is going to be in most people's best interest here but within tech, you know, even sort of parsing out the sectors doing well and what's happening within that, within tech we're seeing the strength in semiconductors, which has more of that cyclical element to it from a software side, it's more of a mixed bag there's a few decent looking names, but it's not as ubiquitous what we're seeing in semiconductors, with the exception of intel, still look really good. even as we go through and look at the sectors and break them

down by industry groups, we're see this skewed towards cyclicality and skewed towards a firm economy and growth six months from now. >> i know in your work, yields as they have risen have been a bit of a headwind gets stocks and perhaps couldn't go too much higher in a hurry and still have the stock market take it where does the yield position look to you right now? we're getting a little pullback in things like the ten-year after a really good run. >> well, we look at it in a bunch of different ways. i think the most interesting right here is what's happening to real yields if you look at real yields today, there's a lot of value in bonds. it says that the upside to those yields, if the inflation expectations are correct, the upside in those yields is probably limited so, as we get yields above 4%, i think bonds are actually really attractive if there's one thing, you know, that i do worry about longer term, it's sort of that value proposition between fixed income and equities we look at that cash flow

differential, there's still a lot of value left in bonds versus equities. i think that's probably something that we're going to have to deal with as we look out for the next several quarters that we're not going to have that rip roaring kind of market but something that's more trending to the upside as these cash flows start to come in. but, yeah, the yields as far as we're concerned from a nominal perspective because of what we're seeing in real yields and the value there, i don't think you'll get the ten-year much above 425. i think that's the cap for it in this cycle >> jeff, great to catch up with you. thanks so much >> thanks for having me. after the break, meta and broadcom near the tom of the s&p. plus, retail's recession playbook with costco and nordstrom on the move after earnings more "squawk on the street" is next go. go scientist. go software. go cure. go production. go faster and safer. emerson automation software helps breakthrough medicines get to market at warp speed.

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morgan stanley and barclay's naming it as a top pick and ai play >> that's right, mike. meta shares are up 5% on the thesis that the tech giant could benefit, poised to benefit from genretive ai to improve the user experience and also monetization efforts, saying, quote, our checks suggest meta has big genretive ai initiatives in the works for both organic and advertising side of the business, and likely a chatbot-like service for its messaging apps morgan stanley calling ai a $6 trillion opportunity that will benefit meta and google as the next key enabler to drive more ai spend online. writing, quote, ai-driven improvements to its recommendation engine should drive increased engagement,

leading to higher ad impressions. beyond that genretive ai can make content even more content and engaging, further increasing time spent now, all this focus on ai comes as meta slashes prices on its vr headsets, cutting $500 from the cost of its meta quest pro that now costs $1,000. while the quest 2 is $70 less, so for $430. meta's big bet on the metaverse may end up having less near-term appeal to analysts and investors than the ai opportunity does melissa? >> julia, thank you. bertha coombs with a news update >> thanks very much. here's what's happening. the european union says it condemns belarus in the strongest possible terms for the ten-year sentence imposed today on nobel peace prize winner in what the eu calls a sham trial the human rights activist was

convicted of providing financial support to the huge 2020 street protests against the country's authoritarian leader, who has supported russia's war in ukraine. german chancellor olaf scholz will be coming to the white house later today to talk about the ukraine war with president biden. amid indications, public support for military assistance is beginning to crack in both countries. and king charles will be going to germany and france later this month for his first state visits since becoming the uk's monarch buckingham palace says he'll be trying to repair relations strained by brexit melissa, back over to you. >> bertha, thank you bertha coombs. up next, beijing's blueprint for 2023, what to expect from the national people's congress this weekend and why u.s. investors eagerly await ing.

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two hours into trading as we close out a choppy but now positive week of trading with consumer earnings, activist activity and fed speak dom chu has a look at the week's biggest movers to the up and downside >> mike, as you take a look at overall, some of the big movers have been in solar alternative energy, due in large part to

first solar, good earnings reports, a lot of fundamental news out there first solar up about 4% for the week one to watch there, carrying a lot of that alternative energy trade, at least on the solar side with it with regard to technology, cyber security and/or cloud, if you take a look at okta, crowdstrike and zscaler, and zscaler came out with its results yesterday you can see the drop off, down 7% nonetheless, okta, crowdstrike up 8% and 6.5% respectively. the dynamic also in automobiles, speaking of that more kind of consumer trade you have a more traditional automaker with bigger ev ambitions versus the ev giant in tesla. general motors we'll throw in as well those car stocks generally performing very well on the traditional side those with ev ambitions in ford and general motors, up 4.5%. tesla just about 5% on the week so far

some saying a disappointing call tesla shares trying to kind of see if they can hold onto some momentum banks stocks big given what's happening with interest rates. we've seen a generally more negative trade over the course of the week for banks overall down about 2%. we're up on the day on the s&p 500 bank etf and on the consumer side of things, staples wise, hormel shares, take a look at those some interesting news there with regard to kind of the pricing power dynamic that's happening with consumers and whether or not some of these big brand names can keep up with it. shares are down about 9% over the course of the week, down another 2.5% today back over to you. >> dom, thanks. china's highly anticipated gdp target is coming out on sunday with the wall street consensus widely above 5%. se seema mody with more >> lockdowns and covid heavily weighed on growth last year

which slowed to 3% wall street is optimistic that the leadership will unveil ambitious gdp targets. citi the most bullish with 5.7% forecast for the year. equally important for wall street is the speech that follows the gdp unveil where the new prime minister will address how the country is addressing structural issues such as aging demographics, the debt and big tech, that's been a big headwind for names that sold off in the month of february but still up 40% from their respective lows with no resurgence in covid following the lunar new year and rebound in manufacturing, evercore strategist says do not be in panic if a stimulus package is not unveiled. expectations are high. we're looking at the kweg china

etf for first upside this has been a market-moving event. goldman sachs examined the china etf from 2011 to 2020 and found that one month after the national people's congress, the index tends to have positive gains. we'll see if history repeats itself. >> seema mody, thanks. this year's national people's congress meeting set against a back drop of rising tensions between china and u.s what can we expect for china/u.s. relations ahead and how should investors navigate this volatility? joining us james mcgregor. great to have you with us. seema was mentioning stimulus. for investors here, the thought of stimulus would provide some more catalyst, more fuel to the bull case behind china i'm wondering if you think, you know, unveiling the gdp target will give us any insight as to how big a stimulus could be or

how moderate it could be >> well, china's got a lot of debt problems. in fact, local governments are in real trouble because of all the money spent on covid testing, et cetera people are not foreseeing a big stimulus i really don't think stimulus is a main issue i think it's going to be policy. it's going to be the government reassuring the entrepreneurs and the private business people that they're going to -- that this recent trend on saying we're open and the market will determine where we go and we will not be a planned economy, all the things said at davos, whether that's a long-term trend or just a pivot because the economy's in such bad shape. they want to appeal to foreign investors and also appeal to local investors and local entrepreneurs. a lot remains to be seen >> but in terms of the guest list, you can sort of read between the lines in terms of

which kinds of entra prepreneur. in years past we've seen the internet entrepreneurs showcased at national people's congress. we're not seeing those same people there this year we're not expecting them we're seeing the hardware makers showcase there does that give you a glimpse into how they're going to approach the sector in terms of, you know, building out that sector versus the u.s. >> oh, yeah. very much so he disciplined the internet platforms and others, the games, et cetera, you know, last time around many of those people actually resign from their companies or have taken lower positions yes, this is all part of hardening the economy. xi jinping sees long-term hostility with the west so he has this dual economic model which is basically to make china less dependent on the outside

world, less dependent on foreign technology coming in over a quarter, less dependent on supply chains coming in over a border and less dependent on export earnings. he wants that all in house in china. and he also wants to make the world more dependent on china selectively. that means the leading tech companies, the leading high-end manufacturing companies from outside. he wants them to have more market share in china, so that actually it will give him some political control. actually help improve his economy and the skills in china. >> james, we of course over here hear so much about companies trying to diversify their supply chains and reshoring and reduce dependence on china's manufacturing base is that something that at this point is material in terms of how, you know, the ruling authorities in china are viewing it is it seen as a real threat or is it around the edges at this point? >> even the chinese companies

are offshoring you know, for manufacturing for the globe, because of the tariffs and the sanctions and the covid and the various supply chains, a lot of that is moving offshore a lot of companies with too many eggs in the china basket and china became very expensive a long time ago for manufacturing compared to mexico and other places however, companies are doubling down in china in many cases on bringing in supply chains for their in-china, for-china business what they're manufacturing and selling in china that's often some of america's largest tech companies and manufacturers, especially out of europe so, it's going a couple ways one other thing that is really top line for foreign companies and american companies these days is, they got -- they'll be watching the people's congress, but they've got -- they're looking behind their back to see what's going on in washington

because it's become very difficult for them in washington they used to considered a bridge during the reform era to helping china become more pluralistic and more market-oriented now they're the battleground business and technology is a battleground between china and the u.s. so, american companies are just getting their head around this and trying to figure out where they go. >> they're also watching what's going on with taiwan the back drop of the people's congress this year, james, as you know is the u.s. just having approved new weapons sales to taiwan what's your perception as to whether or not this becomes an issue at the national people's congress, if they directly address this because increased china/taiwan relations also are causing u.s. businesses to think twice. >> yeah, i was in taiwan a few months ago what's going on now, i think that what happened to ukraine kind of woke up xi jinping that an invasion may not be the best way to go.

the repercussions would be devastating for the chinese economy and the world. also the plans he had, are in no way working. he's now apparently going to sign his -- basically his ideology czar to come up with a new strategy for getting together with taiwan and i think that will be announced at this congress, that he'll have that role let's see what he can come up with >> james, thanks james mcgregor >> happy to be here. up next, the retail recession playbook, what walmart and target are doing to win more wallets. fidelity jurrien timer, a marketosinim lt lbo 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

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costco, the big ers laggard on the s&p as investors get a bigger picture, several retailers warning of a potential recession and severe slowdown in spending >> we're starting to get a clearer picture of how retailers are responding to a potential recession, or at least a likely slowdown in sales. along with sharing cautious outlooks, retailers have touted their playbooks for getting shoppers to spend and especially to spring for higher margin discretionary goods in a tougher

environment. target stocked up on groceries and household items that drive foot traffic and ordered less of the clothing, home goods and other items people are skipping over it also plans to offer more items at lower price points, including three, five and $10 and $15. macy's, best buy and walmart are trying to win more of their customers' wallets and loyalty and membership programs. some programs such as walmart plus are also new revenue streams. retailers including american eagle and target spoke about their strong focus on rolling out new, trendy and eye-catch willing items. target it said will launch or expand more than ten exclusive brands in the coming year. best buy ceo cory barry told me vin vendors will debut consumer electronics that inspire shoppers to upgrade their tech in the back half of the year and macy's ceo said the company is more strategic about promotions, using dynamic pricing like airlines and offering personalized deals to customers rather than just

cutting the price of a shirt or a pair of pants at every store one of the major goals is squeezing the most profit out of every sale compressed margins have become a major challenge and retailers are under pressure from wall street to change that. mike >> melissa, certainly are. and as we wrap up that big week for retail earnings and some ceo warnings of a pressured consumer, what's ahead for the market our next guest says he expects 2023 to be a year of stock market limbo, adding this cycle seems to be meandering without a clear sign of inflection joining us, fidelity investments director of global macro, jurrien timmer it seems that captures things. coming into this year, it felt like the strongest opinions were held by those either who said, we're headed for a soft landing, stocks can do well in that environment, and then those who said, a recession is imminent and, therefore, you should be risk-off well, we got a stronger economy to start the year. more fed hawkishness

the market held in check for the last month where does that leave us, do you think, in terms of the market's risk return from here? >> good morning, mike. it is tempting to just be kind of binary, right bullish or bearish sometimes it's neither i think we can -- at least i'm willing to conclude the october lows were the lows, but i'm not yet willing to embrace a notion that a new cyclical bull market's under way because i don't think the ingredients are there yet. and so i think, you know, i have been thinking that 2023 is going to be a year of limbo where both bulls and bears are going to be equally frustrated certainly the bears were frustrated in january. maybe it's now the bulls' turn the way i think about it, they're like chapters in a book. last year we, of course, had a 28% decline. 33% drawdown in the pe ratio the narrative for that decline is the fed is tightening, the

cost of capital is going up. that lowers to present value of all future cash flows, including bond, stocks, crypto, you name it at the same time earnings were still growing. the growth rate was slowing but they were still rising so, you had one of the two pillars working and the other one not. and then from the october low, we had kind of the opposite. earnings started to inflect down, but there was that promise of a fed pivot, of course, you know, from close to 5 all the way below 3. and, of course, now that narrative has been reset and i think that the message is that the market can look through an earnings decline provided that it's not a catastrophic one. as long as there's the promise of better liquidity ahead. that has been kind of the thing that the market has been running on since october and that is being put to the test because the fed is now going to be higher longer, later and that pushes out that liquidity promise that the fed

needs -- that the market needs to look at in order to get past the earnings decline that is now under way. >> yeah. i mean, without a doubt, the process seems to be elongated, this cycle seems to have been stretched out a little bit you talk about a year of limbo the s&p right now is just about where it first got to two years ago, thereabouts so, in other words, we've been sort of chopping sideways. as you say, we can deal with another year of not much progress in either direction if it promises to give way to something better so, what are the chances that we can avoid a more damaging downturn later this year or next year, you know, given what the fed has to do. i guess the fear s the longer the process goes on, the more chance for the fed to overshoot or something to break along the way. >> yeah. i mean, we have, of course, the yield curve and it's a notoriously frustrating indicator because we know that the batting average is perfect, but we don't know, you know, how long it takes and how long it will last and how deep the

recession that presumably would come will be we have -- we've had somewhat of a rolling recession already. you look at housing, that speaks for itself you look at the pmi down to 47 there have been pockets of weakness rolling through the economy. and, of course, the consumer spending side, you know, has not been weak yet and that's what's driving wages, which is what's driving the fed. of course, the longer the fed goes up north of 5 and the longer it stays there, the more risk that we need to think about about eventually getting into recession. at this point, you know, china is reopening, so that provides somewhat of a tailwind, maybe not for the u.s. economy, but for global earnings, which, of course, ultimately is what drives stock prices. >> sure. it's been a real push/pull between china reopening and repricing the risk of the fed. i'm curious, you sounded pretty confident in declaring that october was marked lows for the market i'm wondering what you're thinking in terms of if we've

seen the bottom, if the ten-year yield exceeds the high we saw in october, which is approximately 4.25%. does that go -- does the call of the october bottom being the bottom, does that go out the window >> so, when we look at valuation and, again, i think valuation is really what we need to look at more so than just price, so the bottom was around 3500 on the s&p. the pe at that level was around 15 the e in that pe is obviously under some pressure now. from my -- from what i can see, maybe we'll have a down 10% earnings year. not necessarily a price year so, the interest rate goes into the denominator of the discounted cash flow model when i stress test that model for, let's say, 20% earnings decline, which i'm not expecting, but let's say it's 20% earnings decline, which would be a significant decline, that's worth 500, 600 points on the s&p which would get us back

to the low again, that's not a prediction that's how i think about what would it -- what would it take to go actually to a new low? it would take a pretty big decline in earnings or, as you point out, melissa, a really big rise in yields from 4 to where we are now to 4.3, i don't think will get us there. the bigger risk is that the fed just, you know, maybe it goes to 6% instead of 5.4% it's a moving target that has been a moving target really throughout this whole period of stock market revaluation or devaluation. >> yeah. jurrien, thanks for running through it all with us the cycle in front of your cycle. >> poetic. >> yeah. morgan stanley saying the apple stock could rally 20%. what we learned from marvel tech and broadcom.

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i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck. welcome back i'm deirdre bosa time for "tech check." the comeback in tech stocks hasn't been a loved one. the speculative, unprofitable names with little fundamentals to back it up. then the chips space, moving higher on the notion inventory levels will bottom and recovery or at least a stabilization can

begin in the second half plus chips are, of course, as you've heard by now, a key part of the hot new ai chatgpt story generative ai is creating excitement for nvidia and gpus the etf is up nearly 20% versus the nasdaq's 10% gain. nvidia up 60%. the latest earnings, though, do tell more of a mixed story, marvel shares lower on a weaker outlook. the street asks, does that guide suggests the worst is now behind it not yet at least as you can see shares down nearly 9%. broadcom moving higher they expect to see a, quote, exponential rise in demand for networking chips this year as the cloud giants look to have more generative an i in their systems. >> i think it's still early innings on ai but we are

indicating we are seeing a very strong sense of urgency among our customers especially in the hyper scale environment to not miss out, to not be late in this trend. >> and we have seen a lot of urgency and excitement this week so as that continues around chatgpt and more companies jump on the bandwagon, you coul argue the market will be looking for more of these ancillary winners and semis are hoping to hold up the tech space in an otherwise tough year i would say. back to you. >> deirdre, we learned this last hour amazon is further rat rationalizing the real estate spend? >> you asked me if they own that land, they do. they bought it in virginia for around $200 million a few years ago. i also -- there you're looking at a shot at it.

they are pausing construction on a certain phase that is expected to still go ahead. i want to point out something moving in the market on the back of this news and that is jbg smith properties when that announcement came out and they confirmed to us they're pausing, this is a stock, the developer on the project that you're looking at right now, fell some 6.5% has come back, guys, because, as we've clarified, this isn't a total stock of that construction but it is a pause as amazon figures out the real estate footprint and how it will work with the hybrid work strategy. there you have it, 5%, jbg smith, the developers. >> it's amazing to think back a few years to the different world in which that headquarters was identified >> the frenzy, right, to look for hq2. >> thanks so much. talk to you soon we are live in palm beach after the break. at least one of us is, in the

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expensive real estate markets keeps getting richer with so-called mansion flipping now the hottest trend. robert frank is live at a listing that could be the most expensive estate ever sold in florida. robert >> reporter: melissa, this is literally an island of strength right now in this weak national real estate market we're seeing the number of millionaires move to palm beach over the past decade doubling, and that has led to a shortage of these big homes inventory in palm beach right now about half of the normal levels a home just sold here for $4,000 a square foot. that could be a record >> there are no signs of anything slowing down on palm beach island record sales have happened this week, off market sales just shattered records we've never seen before, and that just all points in the same direction, continuation and upward. >> reporter: and this property will be the biggest test

it's just coming on the market now for $218 million it has 25,000 square feet of living space, 11 bathrooms, 22 -- 11 bedrooms, 22 bathrooms, and is the only private island in palm beach. we'll see what they sell it for. melissa? >> all right, thanks so much, robert frank and that will do it for us here on "squawk on the street." over to scott and "the halftime report." mel, thank you so much welcome to "the halftime report." i'm scott wapner front and center from post 9 more green for stocks, the s&p stays on pace to end its three-week losing streak rates, meantime, taking a breather today after pushing the multimonth highs we'll discuss and debate what all of that means to your money. and joining me for the hour right here post 9 shannon saccocia, rob sechan, jim lebenthal and steve weiss.