potential growth in china. >> joe, what's your final trade? >> hedge against geopolitical risk, cyber. palo alto networks, ready to make another new all-time high. >> there was another positive call on that today. it seems like every day the street is weighing in. thank you, guys. see you on "closing bell." "the exchange" is now. hi, everyone. i'm kelly evans. this is "the exchange." we begin this hour with the big story since friday, when a door plug on a 737 max 9 operated by alaska airlines blew out mid-air. the pressure so intense it ripped a boy's shirt off the body and sent it flying out the hole. disaster was asserted, no casualties were involved. but almost 200 737 max 9 planes were grounded for inspections. united airlines has found loose bolts on door plugs on self-of the max 9 planes.

alaska has found more loose hardware on its planes, and an investigation into what exactly went wrong is underway. in a town hall yesterday, boeing's ceo told employees -- >> but if that's so, a lot of questions remain, especially given the past tragedies that ensued with 737 max planes, including fatal crashes in 2018 and 2019 that killed a total of 346 people. so let's get some answers. joining us live from the boeing 737 max factory in washington state, and a cnbc exclusive interview, the ceo dave calhoun with phil lebeau. phil? >> thank you, kelly. dave, i think the main question a lot of people have, in addition to what the status of the max 9 is, what was your reaction when you saw the alaska airlines blow out in the video friday night? >> devastated, emotional.

i saw the picture everybody saw in the opening, but what i really saw was the empty seat. and i spent a week with my kids and grand kids. so enough said. i imagine every human being who would see that understands the severity and the consequence. so, umm, immediately you get to work. that's what you have to do. i want to just take my hat off and our company's hat off to the alaska air team, specifically the crew that train most of their lives to handle that moment, hoping they never will, but they did. and the crew, alongside the pilots, handled it as well as it can be handled. the plane landed safely, and there are no fatalities. and then the leadership team did exactly what it needed to do. it grounded the airplanes. the faa immediately grounded the

airplanes, and the boeing team supported every step of that process, and now we're in a moment where we have nobody at risk, and our job is to understand literally everything that has happened, everything that surrounds that particular fuselage plug, and fix it and make sure it can never happen again. >> what do you think happened? >> well, what happened is exactly what you saw. a fuselage plug blew out. that's the mistake. it can never happen. we're not allowed for that to happen. and i'm not about to speculate, but i will say this, the work that our regulator, in this case the faa, has been doing to inspect the situation and create a procedure and a protocol for the airlines to go out and inspect each and every one of the airplanes, 100% of them, and

make certain there is conformance with our design, which is a proven design. i'm confident that that process will not only prevent accidents, but maybe more importantly, the data we collect from each of those inspections, the data we collect will inform all of the actions that we have to take as a company. >> your people were with the alaska engineer teams when they took off some of their panels and started doing some inspections. tell me what happened when you got the phone call, as soon as they took off the panel and said we got loose bolts here. >> so yeah, i have an engineer who is an awesome engineer, who we work right alongside the alaska airline. they inspected the first few. i asked him to call me the second he was done. yes, he used that term "loose bolt." remember, a loose bolt in an aviation application is a bolt that's undertorqued or a gap that you can see that is measured in millimeters, not

centimeters. nevertheless, it has the same implications. so yeah, i understood that from the first moment. >> so you're not surprised to hear other reports from united, as well as alaska, during further inspections? >> well, i'm -- i am always surprised at anything that doesn't confirm perfectly. on the other hand, it's a fact. i want to know all those facts, and we're going to want to know what broke down in our gauntlet of inspections, what broke down in the original work that allowed for that escape to happen. >> dave kelly has a question for you. >> mr. calhoun, what safeguards have to be missing for an incident like what happened on the alaska airplane to happen? what lapses easter in the manufacturing process or in alaska's process need to happen for this to have taken place? >> well, kelly, i very much appreciate that question.

i should mention the transportation secretary buteig, the specific actions we'll have to take to make sure it never happens again will be informed by the data we collect from the inspections. so no airplane will fly. none of the dash 9s will fly with an unsafe condition, that i can promise. all of the work that we have to do in the background and in the quality systems to ensure that it never happens again, that work is ahead of us. but we are committed to do it. >> how did an unsafe airplane fly in the first place? >> because a quality escape occurred. >> can you explain what that means? what is a quality escape?

>> i think that's the description of what people are finding in their inspections. anything that could potentially contribute to an accident. >> but something that escaped from the manufacturing process? sorry, go ahead. >> again, kelly, it's very important that we look at the data that we collect from all of these airplanes, and we are literally going to collect them from all of the airplanes. when we look at that data, engineers from the faa, engineers from the ntsb, engineers from boeing, engineers from our suppliers, we will have all the answers to all of those questions, and i'm happy to come back and report every step of the way to the people who want to know. >> kelly's question highlights the bigger question that's out there. people look at the max and they say, it's been a steady stream of nonconformance issues or other manufacturing issues. why can't boeing -- why can't it

get the max going without these issues? >> let me start with this issue is on a discrete set of airplanes with a very discrete plug. we don't do it on any other airplane. so that is the population of airplanes we're looking at. nonconformances in our world, as we have been on this path since the beginning of the introduction, we have asked everybody who touches our processes, to volunteer information that might cite nonkn nonconformance. then we do everything to verify that those nonconformances are now conforming and resume our production. it's been very frustrating for our people and investors. but we have been very willing to do that, and we are getting ahead and ahead and ahead. we have not had safety related.

this one is. this one is. and it's very important that we understand that. >> you know the ceo of spirit systems. he was here at boeing for a number of years. does he realize the situation in terms of what's happening? and we're not saying that spirit is responsible for this fuselage plug. we don't know. the investigation still needs to be done there. but does he understand the severity of the situation when it comes to the lack of quality control at spirits? >> yes. i am -- i'm confident in pat. he was here with us. at our invitation, he readily accepted in the war room, listening to all of what we are trying to collect in the production process, taking it back to his team, interrogating their processes, alongside of our people. we're right next to him doing it. we're not going to point fingers there. yes, escaped their factory, but escaped ours, too.

so we're all in this together. we have to figure this one out. i do have confidence in pat. i know pat knows the implications, and i know that pat knows the seriousness. i also know he knows how to interrogate a manufacturing process. >> does this potentially slow down the certification of the max 10, and the max 7? >> that's -- they're very much unrelated. and there's no reason for me to want to comment on those things. the faa is in control of all of it, so right now, my job is to focus on this issue. >> you've talked with the ceos of united and alaska. what have they told you? >> umm, it's serious, serious. it's a safety incident, and nobody is going to live with that, period. so we're all going to be certain, all of us, that the airplanes that fly will never have a safety incident like this again. secondly, of course, they want to get their planes back in

service, so that they can satisfy their flights. i want to be very clear, the need to do that will not, will not rush the process to do this the right way. it will not rush that. >> you have talked -- we have done many interviews over the last several years. you have talked about improving quality control. >> yeah. >> and improving safety here. some people look at this and say, how can they say they're doing a better job when this happens? what do you say to those people? >> we build really large, sophisticated equipment with unbelievable tolerance and precision every step of the way. the post max crisis, we went to work on it. we have been tackling nonconformances here and there. again, unrelated to safety, but we tackle them one at a time. that's how you build a quality management system. you engineer the answers. you don't culture the answers, you engineer them. then the culture goes with it. and that's what we have been doing. any way, this one, this one is a

horrible escape. a horrible escape. we will tackle this one the same way. we will engineer answers and be certain it can never happen again. and whatever information we get, we will look everywhere around the max, around the spirit factories, our inspection processes, and we'll make sure that we take steps to ensure that it never happens again. >> i know you're in a quiet period, so you can't talk about guidance in terms of max production. but you have a steady kay cadano do this. >> this is not the time to talk about what i can and can't hit with respect to deliveries. my focus is on getting the safety issue understood and fixed, and production will take care of itself. >> dave call calhoun, ceo of bo. kelly, back to you. >> thank you very much. let's get some reaction now

from a former airline exec save and aviation safety expert. oscar munoz joins us now. alongside former faa and ntsb investigator jeff guzetti. oscar, is he approaching the situation in the right manner? >> i think having been in these situations before, it's a difficult job and a difficult process. the concept of ownership, transparency and communication, and then a plan, an operating plan to fix what is clearly has gone wrong, i think are all important points, and i think he touched on all of them. safety is the most paramount thing in our industry, so there is not a laggard in the group that has an issue with this. so yeah, he touched most of the points for sure. >> jeff, i heard a plan for a plan. i'm not sure i heard any new information about what might have specifically gone wrong here. i believe the term he used was a

manufacturing escape, something like that. which tells me, and he admitted as much, it sounds like they basically have no idea how this really happened. >> kelly, i think it's just the opposite. i think he knows a lot more than he's allowed to say. you have to remember that bowing is a party to this ntsb investigation, and there cannot be more than one official voice of the investigation, which is the ntsb. so just having him say there was a quality escape is kind of on the edge of what he would be permitted to say. he did a great job in trying to answer these very tough, probing questions. and so i think he might know a lot more. i know the ntsb knows a lot more. he's on the inside circle. the ntsb needs boeing's expertise, but he's not -- should not be the one that provides these details to the public. >> oscar, you have pointed that the airlines now, boeing has submitted these guidelines to the faa, the faa has yet to

approve them. so there are some delays here in terms of what the airlines are learning as they try to figure out their next moves. >> there was something done over the weekend that felt like it was going to be a good week to get a lot of fix and repairs in, but that was rescinded. again, there's more clarity. so as quickly as that can be expedited in my experience, lots of conversations between the company and the faa folks that govern that, so that process would be really helpful to, you know, i know united has about a 240, 270 flights a day that are affected by this aircraft. so they're scrambling, finding customers to different places. but of course, the sooner we can do that, we can get everybody back and flying. >> jeff, amazing that these are not the only issues. there were these pressurization

lights going off flying over land instead of water. how does that relate back to some of these other issues with loose bolts, potentially with hardware manufacturing, and just with this aircraft class more broadly, people still have about using them? >> kelly, i think pressurization issue was addressed by the ntsb. they don't see any evidence of that, that had anything to do with any relationship with this door. it was an automated pressure warning light -- >> isn't that worse? if it didn't have anything to do with this door, there was a separate reason planes were flying over land instead of water just to be safe? >> no, no. these types of gripes, what they call in the aviation industry, these warning lights, they happen every day, all the time. aviation is about managing risk. and so alaska had a good handle on what these pressurization lights were about. they were probably related to sensor problems, and automated

systems that really had nothing to do. even if they did fail, the pilots had manual control of the cabin pressurization. so i don't think that's related. to your question about other things, you know, bolts and production problems, that can be looked at together as a wholistic aspect with not only the 737 line, but the 787 line and other production lines that boeing has. >> but also -- >> there's a quality escape -- >> i didn't mean to interrupt. oscar, the other wrinkle here is that the faa was already in the midst of grounding -- not grounding but inspecting all 737 max aircraft going back to december for loose bolts. that predated what happened here, so are those issues unrelated as well, or are there just a lot of different ways in which this loose bolt situation is manifesting itself across a

series of aircraft in recent weeks? >> i think dave and jeff know even better, but i think that's the conversation they are trying to project. there is something inherent in that quality process that's been missed. it could be as simple as the torque on the torque wrench, and maybe it is a tightening the bolts issue. we'll know more about that specifically. but with regards to that particular issue that you mentioned being tied to the bolts and the door, i don't think there's any specific design connection. it may be more of a workmanship from my perspective. >> we have the latest update from alaska airlines. they said we made the decision to cancel all flights on 737-9 max aircraft through saturday, january 13th, while we conduct inspections and prepare fully to return to service. that equates between 110 to 150 flights per day. jeff, final word here. >> i think that boeing is doing all it can.

it's participating in the ntsb investigation. oscar is correct, there is a bigger question regarding manufacturing processes. there could be a relation, but we don't know yet. i think eventually we'll find out and find out soon. >> oscar, anything you would add? >> just to all the viewing public, you see the expertise and oversight that these airline manufacturers and airlines have. again, the prime importance is keeping everybody safe. you saw one announcement of canceled flights, i expect others will follow. so for the flying public, check with your airline, because there is going to be some impact for this week and maybe further. >> gentlemen, thank you very much for your time today. we appreciate it. we'll continue to monitor that story and bring you more headlines. in the meantime, ric k santelli is tracking the ten-year auction. >> we're adding to an issue from a month ago.

the grade, c plus, charlie plus. the yield, on 37 billion reopen tens, 4.024%. and c plus, well, that might be a little bit generous, and i'll tell you why. all the metrics are really solid. if you look at the bid to cover, 2.56, we had one other one, but you have to go back to february. so pretty solid. but the marks coming off this auction based on pricing. 4.024 was the yield at the auction, but 4.019 is where the one issue market finished. so we have a higher yield, which means a lower price. the government is the seller, that's never a good thing. hence, the c plus. if it wasn't for the pricey nature of half a basis point tail, it probably would have been a b or b plus auction. here's another auction. spain, the uk, there's been a lot of european and uk auctions

already for 2024. they are hot, hot, hot. we had a spanish auction that had a bid to cover of 9.2 today. the highest bid to cover i can remember on a ten-year was from 2012, and it was about 3.6. just for comparison. which means that spain had 9.2 times more than they were going to sell to the public in terms of bids. why do i bring this up? because we are seeing the globe play rate cut roulette. ecb, the mpc of the uk, arfed, all investors think right now they will be lowering rates. so they're jumping on board the auctions. but here's the rub -- 2.1 trillion, 2.1, 12 zeros, is what the u.s., uk, yeuro zone and japan are going to be selling in

2024 in terms of debt. ponder that number. >> strong global debt auction. the ten-year above 4%. rick, thank you very much. rick santelli. tomorrow, we get the newest cpi figures that could offer clues about the timing of the fed's first rate cut. my next guests say it could be fast and furious when it begins if history is any indication. joining me now is michael shoemaker from wells fargo and david harden from summit global investments. michael, that sounds like you, you think we could be headed down a steep slope here soon. >> yeah, it's a good possibility. when a central bank, whether it's the fed or ecb or some other central bank eases, it goes rapidly. generally speaking, about 200 basis points in a year, so it's a pretty quick move. i think it's interesting to consider the inflation backdrop as well. inflation has moderated but it's

not low yet, so it's come off quite a bit. that's going to dictate a lot of timing for the fed. we think it is pretty quick when it does happen. >> when do you think it's going to happen? >> around the middle of the year. so whether it's may, june, july, doesn't make that big a difference. sometime in that general ballpark. so the fed's got a lot of variables to consider. what it wants is a few more good inflation prints. maybe it gets one tomorrow and a few more that will increase the comfort that inflation is not just down, but maybe it's out for a while. then the fed can come in. that's what we think it's coming for. >> you think their reaction function hinges on cpi, to some extent cpe. you think that throws their timeline a few months further into question? >> it makes it less comfortable for the fed. it's interesting, when you talk to clients out there and look at various forecasts, people are very much clustered thinking

about core cpi. either it's plus 22 or plus 23 for december. no one says 0 .4. if you get an upside surprise, that would be a shock. so i suspect you would have the policymakersed a the fed saying maybe we have to think about this going forward. the market would price for a much longer period in that event. the fed may not change its tune too much. there have been so many countercurrents to deal with the fed. >> david, what about you? are you a little uncomfortable with the fact that we have had yields back up, stocks are off to a sloppy start? >> i think it makes sense given the santa claus rally that happened in many different asset classes. so taking some pressure off of the valuations is probably a good thing. in respect to the fed and to the inflation, we do expect that inflation will be in line or a little lower. so i think it will go to this narrative of rate cuts. i think that everybody expects that a little bit with the fed.

and if the markets have some geopolitical event, they can also help out with qe instead of qt. so we'll see some tightening continue to wind down and go into this rate cut environment. >> again, we're talking on the one hand about how the rate cuts might not start imminently, but you're talking about how they will be necessary to support the stock market's performance. there are specific stocks that you're a fan of, but if we have to push out rate cuts, does that make you nevrvous at all? >> for me, yes. we have to manage risk for our clients, right? so every time there is something on the table, we need to analyze it and get our arms around every detail. that's really important for investors to understand, and to realize that risk is still on the table, though there's no sign of it in the vix. there's no sign of it out there. the reality is, it's there. so we have to understand that for sure. but i'm not really nervous about the rate cuts coming or not. if they do come, that's because

it's a good scenario in the sense inflation is coming down. if they come because the market does something that causes these rate cuts to come, quantitative easing to come, the fed right now is the driver and they're still behind moving the market up. >> gentlemen, thank you. we appreciate it today. big morning tomorrow with that print at 8:30 eastern time. coming up, after a down start to the year, are stocks still set for the usual election year boost? our guest thinks so. he'll tell us why and whether the fed could become one of the bigger issues on the trail. back on "the exchange" right after this.

welcome back to "the exchange." keeping abeye on stocks here, dow is up about 55. dom chu has a closer look. >> just towards those session highs right now, at 4770 for the s&p 500. at those session highs, we were at 4775, and 4756 at the low. so, again, trending towards the higher levels. still, up one quarter of 1%, kind of towards the middle of the range. the dow up about 0.2 of 1%. 37,579. and the nasdaq up 75 points to 14,932. a key part of that market to watch right now and what's driving some of the outperformance is still that mega cap technology trade. nvidia shares up 2%. alphabet up 1%. and 4% gains for meta platforms. i will say this, it's another day and another record high for

nvidia. plus, these two stocks, alphabet and meta are trading in 52-week highs. big story for that mega cap trade. if you are looking for a mover, stay with technology. check out cybersecurity. palo alto networks up about 4.5% at this stage right now. this is due in large part to a call out of morgan stanley, making it their top pick. they like some of the tailwinds and generative ai, as well for palo alto, more platform adoption trends in place. so we'll watch those shares, kelly. right now, palo alto, the second best performer in the s&p 500. >> dom, thank you very much. our dominic chu. over to tyler mathisen now for the cnbc news update. tyler? >> thank you very much. the u.n. security council is scheduled to vote today on a resolution condemning the houthi rebel attacks in the red sea on commercial shipping and demanding an end to those attacks. this comes as u.s. and british naval forces shot down 21 drones

and missiles fired toward merchant ships by the rebels in what is thought to be the largest attack yet. donald trump won't be able to make his own closing arguments after all. the judge in his business fraud case trial just denied permission to do so. in a letter, the judge wrote by not responding to his conditions for trump to speak in court, that it was assumed he didn't agree to the terms. and because of that, the request was denied. after 20 years with the trading card company upper deck, lebron james has signed a new deal with fanatics collectibles. the deal projected to be more than $5 million a year. he needs the money, after all. the first card to roll out features the autographs of the nba legend and his son, bronny. it will beon sale january 19th, a scant nine days from now. kelly, back to you. got a news alert on meta.

>> executives at match.com and walmart complained to officials that the social media company meta that their advertisements were appearing next to inappropriate content related to children according to a court filing. this comes in a lawsuit brought by the attorney general of new mexico in december, accusing meta of knowingly exposing children to the danger of sexual exploitation. the filings reveal that a match executive wrote to meta in november complaining that "we have also become aware that our ads are showing up on facebook next to gruesome content in a group titled "only women are slaughtered" showing films of women being murdered." we are aware this account has been reported twice and not taken down. the executive wrote to meta, we need to figure out how to stop this from happening on your platforms. according to the complaint, a

meta official responded that it removed the facebook group only women are slaughtered and that the safety of the content on our platforms remains a core priority and focus area. the complaint also said that match's ceo reached out directly to meta's ceo mark zuckerberg but receive d in response. a walmart executive complained in november that its ads were ap appearing, saying you shared accountability here, but to us, it feels like all of the onus and work sits with walmart. and no matter how we do that, we run the risk of running alongside inappropriate content. the complaints said that walmart does not believe our concerns are being adequately addressed. a meta spokesperson today said --

>> a walmart spokesman told me earlier today, we take brand safety issuing seriously, and protecting our communities and customer also be a top priority. a spokesperson from match declined to comment today. back over to you. >> but the precedent, which has been set by x, with the antisemitic content, if it's unacceptable for the algorithms to surface these messages next to what companies are or advertisers want to be associated with, that they leave the platform. so should we expect then a wave of companies, maybe specifically match or walmart or others, to say, you know, we're leaving the platform, because we haven't heard that yet, specifically with regard to meta. >> clearly what you see in these

messages back and forth between the companies and meta is real frustration on the part of the companies, and meta dealing with this kind of inbound apngst fro its own advertisers. that gives you a peek how these companies interact with each other. whether or not any companies will make an additional move away from those platforms remains to be seen. but obviously each company has to make its own decisions about how significant this is to them. you can imagine that the social media companies are playing whack-a-whole here. millions of people creating millions of posts every day. some stuff you would imagine is going to get through, and they seem to be suggesting back to the companies, look, we're doing everything we can here. both sides are not satisfied. >> i would just say what happened with x came when musk himself triggered people looking into antisemitic content. this was started by the companies themselves, who had found this organically and were furious about it. and went directly to zuckerberg

himself with complaints, and it sounds like those complaints were not addressed. >> that's what it does sound like. "the wall street journal" has done coverage on these issues going back months, a series of big stories on this in "the wall street journal." what we have here today is a new filing overnight last night, which details some of the content of this communication back and forth. as i say, it gives you that peek of how these companies sort of yell at each other in private about these issues and try to work through what are just difficult social issues across the board. >> instagram in particular has been the focus here. for now, thank you very much for bringing this to us. coming up, we have had many mixed messages about the consumer post pandemic, and it's about to get murkier thanks to deflation. mbs our team is crunching the nuerand we have results on what's going on with the data, next. constant contact's advanced automation lets you send the right message at the right time, every time.

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welcome back to "the exchange." we have new data on consumer spending habits with a new problem to make it hard to figure out how strong the consumer is. steve liesman is here with that story. steve? >> hey, kelly. yeah, the cnbc national retail

federation retail monitor for december, it shows retailers chalking up some decent gains in the final month of the holiday season. but the true state of spending may be clouded by a new factor, deflation. i'll get to that in a second. retail sales, up 0.4%, down from a strong november, which was up 0.8%. the headline up 3.1 for the year. some giveback from the strong november was inevitable and economists expect the economy to cool in the fourth quarter. but retail has been hampered by a slow down in the housing industry. all three of the biggest negative categories, electronics, appliances, bu building supplies and furniture are all housing related. but categories linked to holiday

shopping did better, including general merchandise and non-store sales, that's internet. it was a good month for restaurant and bars. deflation, saw the sharpest price declines in november. combines november and december, holiday sales were pretty good. but tomorrow's cp ireport is going to give an indication of what that inflation is on an adjusted basis. we've been subtracting inflation for months and months from the top line. now we have to add it back in when it's deflation. >> incredible to be at this point, steve. thank you very much. our steve liesman. you know who has the pulse of the consumer better than almost anyone? my next guest, at least when it comes to the younger generations. she can weigh in on everything from footwear to beauty to dating. and yes, the famous stanley cup. so what is in and out for 2024? let's ask casey lewis.

casey, great to have you here. welcome. >> thank you for having me. >> let me just start, do i start with dating, do i start with the stanley cup? let me just pick up on where steve left off. what do you think is going on with the consumer overall, are they in good shape, bad shape? >> based on the amount of stuff they got for christmas according to their tiktok christmas hauls, the economy is doing pretty good. they got a lot of stuff. >> i agree. i was able to kind of realize that not much has changed. people are still at the malls shopping with brands i grew up with. i feel like all is well with the world. some places where we are seeing more change, i want to talk about dating in particular. we keep hearing, and from yourself and others, that people respect using these dating apps and websites like they once did, and we're seeing some activist activity with match and so forth. what can you tell us about that? >> i've been talking to a lot of people about this. i'm a millennial. i met my husband on tinder back

when it was still good. they're telling me that the alga riting are much worse. they're coming up against bots and all these dating apps are trying to monetize, so they're keeping the elite people hidden from the vast majority of the users. and i think that young people are just sick of it. i don't think that they are anti-dating app as a concept. i think they're anti-dating apps that exist in the market right now. >> that's not a line i heard before, but it makes total sense. ben thompson has been talking about this, that ai is eating the internet, and we'll all have to go back to living in the real world because online stuff is no longer trustworthy. but people would stick with the dating sites if they were more trust trustworthy. i'm not sure how companies will solve that. >> i've been hearing a lot about people going to speed dating, irl. we've seen the headlines is

linked in the new dating site? i don't think that is necessarily true, but it speaks to how desperate these people are to find partners because tinder and bumbl aren't doing it. >> lulu is still big. what about uggs? any new disrun fors? what about crocs? >> so crocs did not come up, i must say, in many christmas hauls. that's more a seasonality thing. uggs, their strong hold on young people is wild. last year, it was all about the ugg tag. i think the next big one will be the tall ugg, because it's a y2k trend. >> are you kidding me? >> that's my prediction. young people are just -- they can't get enough of these nostalgic, early 2000s trends.

we have seen it with low-rise jeans, butterfly clips, like what's next? it's the tall ugg. >> there's hope for me. i don't think the camera a angle -- i'm wearing the tall one. they came back in style. we talked to an analyst last week about the stanley cup who thinks that -- this could be a real risk. if tall uggs can make a comeback, can yeti make a comeback? what is the next big drink thing? >> it is my belief the stanley cup cannot maintain this popularity. you're seeing the my lineal moms fighting over the last limited edition one at target. you're seeing tween girls cry over stanley cups over christmas. the early adopters have moved on to something else. it's pronounced i believe awala. it's the new sort of it bottle. i believe that stanley is more comparable to a beanie baby on

this one. it's something that people are collecting. >> maybe yeti can breathe a sigh of relief. beauty is so big, we've all been hearing about this. any beauty companies that are old news or ones to watch? >> so i think beauty -- i think lip as a category, whether it's lip balm, lip oil, everyone is buying lip products. not so much lipstick, but i do think it speaks to the general lipstick effect. people want these small luxuries. summer fridays, tons of big bra this space. we're seeing emerging category leaders, and i think in 2024, we're going to see even more entries into this space. >> amazing. casey, this has been fun. let's do it more often. >> let's do it. thank you so much. >> casey lewis, after school. subscribe to her newsletter. we're seeing a wave of tech

layoffs. twitch and unity among the latest, and twilio and match are shaking up their c suites. what do all these changes have in common? let's ask diedra bosa. >> there is another headline this morning too. s salesforce is pausing all hiring. there were these hopes, but recent developments like management changes and layoffs suggest that instead of a recovery, we might be seeing a new normal in software. the wall street wisdom is that the 2022 software very much was driven by the fed and interest rates. there are deep fundamental issues at play within the sector at large. this chart shows the revenue rate for a basket of software names, including adobe, snowflake and a bunch of others. it peaked around 2021 at 50%. it's not expected to break 20% in the foreseeable futcher the

next few years. so this all suggests this could be more permanent and the mega caps, this is a trend we have followed it for a while, are doing it cheaper and at scale and good enough. and when companies are trying to save dollars, that sometimes works just as well. on the positive side, the software reset may be providing new opportunities in m&a and new listings. the hpg juniper, about two legacy companies combining to create a better ai offering. and when the ipo market reopens, we're likely to get another wave of investable software names. this time with ai features, and business model, but it feels like the software sort of peaked that we saw a few years ago. that may be gone. >> that's really interesting, especially that collides with some larger trends coming out of the ai space.

coming up, low employment and 2% inflation, those are the two fed priorities. but will rate cuts in an election year jeopardize the fed's political independence? at nt. ♪ ♪ every day, businesses everywhere are asking: is it possible? with comcast business... it is. is it possible to help keep our online platform safe from cyberthreats? absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening.

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welcome back to the exchange. we are now six days out from the iowa caucus, nine days from the government shutdown deadline and through than 300 from the general election. my next guest points out stocks in election years with the sitting president outperform election years by 13 percentage points, 2024 is off to a rough start. who to discuss is dan clifton, head of policy research. i don't know what happens when you mix election-year with january barometer, what kind -- i don't know if those two indicators can coexist. >> i don't know if they can coexist either or even in an election year where everything is starting to slow, those are things we have to consider. i think this is very important. the s&p 500 has not declined in

a presidential election year since 1940. so you are talking about 13 consecutive presidential election years in a row and as you alluded to in your opening, there is a white outperformance between reelection years and open election years. what that tells us is that presidents have a lot of lovers available to them to be able to influence the economy because they like getting reelected, and this president clearly wants to get reelected. you're likely going to see a lot of those tools used this year especially in a year where the election is likely going to be close and there are extra variables outside that are going to be able to weigh on how this election goes. it is going to be a wild year, a fun year, i think. >> yes. we just showed your chart that shows the outperformance in the market in incumbent election years but what is the difference when an incumbent gets reelected versus a change of party. >> it is the same thing, when you get a very good s&p 500,

when the president gets reelected, and we think what happens is the investors can figure that out by the end of the convention season in july and august and then it is off to the races in september in the market worries about something else. when the opponent loses, or when the opponent wins, you tend to get a big selloff in september and october as there is more uncertainty about a new president coming into office. what is going to be that person's tax policies or trade policies but those tend to be temporary. you do still get an increasing stock market on average even when a challenger wins the election so some of these are more dips than anything else but largely it is about navigating this and as we get deeper into the election it will have a bigger impact on sectors in the overall s&p 500. >> you're always so good at diving into that so i don't know if my last question should be about the sectors, about the fact you say the market often sells off about super tuesday,

march 5th. the third prong of this would be do we need to pay attention to this potential government shutdown? i guess, next friday? >> absolutely, we are talking about a partial government shutdown next friday and i don't think it will have a big macro effect when we actually go through that partial government set down these into the noise is wrapping up from washington. you will have the iowa caucuses on monday and then a potential government shutdown on friday. the market is going to have to digest a lot of these what i would call political noise and it is ramping up, something we did not see in 2023. why this is important as well to start getting into the election, how the fed is moving forward on monetary policy, how the treasury is financing the deficit, those are going to be important factors about whether we are going to be able to digest a lot of this political news but if you start to get liquidity being drained from the financial markets while you have those political moves, there could be rough roads in the stock market until he gets resolved. >> we tease the fed, how does it fit into all of this and do we play the second or third

level just where they say they would cut but they don't want to look like they are politically compromised so they will be less likely? >> i believe the fed will do what they have to do for the economy. the real funds rate is starting to go up because inflation is growing at three, the fed funds rate at five, the longer they go on without cutting, that means monetary policy is tightening. they are confident inflation is coming down so i would anticipate that you are going to see rate cuts in election year, we usually see rate cuts in election year but i think the big variable that is changing here is the talk about the quantitative tightening in 23 four at the reverse start to get trained and the bills cannot start to be used as much, the federal open of the capacity for the treasury for long-term debt. the way to do that is by getting rid of quantitative tightening. i would anticipate the baton being passed from the treasury secretary to the fed chairman ensuring financial conditions are pretty loose here so we

don't have a recession in 2024. >> lori logan talked about that of the weekend about her concerns that we need to wind down qe because of what she is hearing from banks and so forth. in other words, they are not saying they're going to restart quantitative easing but if they have to get the balance sheet the same size that make them a buyer of treasuries, that sort of helps with the debt, doesn't it? >> it absolutely does, that is a big issue. we got the december data last night for the budget deficit, we are running at a $2.1 trillion budget deficit with 4% employment rate. the unemployment rate should be ate at the level of the deficit we are running right now. to be able to continually do that will be difficult and you're going to need to have some of the sequencing between treasury and the fed. i tend to believe recessions are caused by three factors, a high real fed funds rate and low liquidity. right now we have an inverted yield curve come the feds fund rate is starting to go up so preserving that liquidity is really the key to being able to

preserve the soft landing everybody seems to be helping for right now. >> that is how i always feel willing to our interviews, you do a great job of getting ahead of these things. thanks for the time. dan clifton. that is it fork the exchange. next, we are going to talk about gas prices snapping a six- day win streak but are still on iertial iide. anntnaonnvestor tells us what is next for the sector and the names two by now. tyler is getting ready, i will see you on the other side of this break. ♪ (captivating music) ♪ (♪♪)

the first law of thermodynamics states that energy cannot be created or destroyed. (♪♪) but it can be passed on to the next generation. (♪♪)

good afternoon, everybody. welcome to power lunch. big interview in the last hour, the ceo of boeing. we will talk to a shareholder and brand expert about what dave calhoun said and what he needs to do now o reassure customers and investors. natural gas has been jumping , up 10% to start the year as the united states becomes the biggest exporter of liquefied natural gas.