tv Closing Bell CNBC May 16, 2022 3:00pm-4:00pm EDT
thinking they could put any price on it and the debt just ran up we see a lot of these houses now coming on the market even in a relatively strong market the l.a. market is strong, but these prices were based more on hope than reality. >> the l.a. market still strong, yes or no? >> clearly not as strong as it used to be. >> julia, it's great to have you here thanks for watching "power lunch," everybody. "closing bell" starts right now. >> thank you, tyler and julia. stocks mostly higher in another volatile session the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen we've swung higher for the market after a little morning sell-off this morning. s&p 500 up about a third of 1% we had a very strong rally on friday, but we're coming off of six down weeks for the s&p 500 the nasdaq is underperforming today. it's down a third of 1%. the nasdaq 100 which has a lot of mega cap tech names down a quarter of 1%.
most everything else is higher treasury yields are lower. here's a look at some of the most actively traded names here at the new york stock exchange right now. nio continues to be on the list and it's having a little surge today, up almost 4%. roblox hammered off earnings last week and then a turn-around. ford, which also continues to be among the most active and palantir ivy zelman said april marked an inflection point in the real estate market. she'll join us. plus check out the move in wheat prices, adding to huge gains on the year as india banned exports on the weekend. we'll talk to helima croft let's get to our top story, though is a recession coming? that's the question cnbc's andrew ross sorkin asked former fed chair ben bernanke earlier this morning on "squawk box. listen to what he said. >> the economy is pretty strong.
we're not going into recession as often is the case with a troubled economy in fact, the underlying economy as we recover from the pandemic is quite strong. >> and for two major wall street analysts, the fears of recession are overblown. david costin saying his baseline forecast assumes no recession. jpmorgan's marko kolanovic says equity markets are pricing in too much recession risk. but lloyd blankfein said recession is a very high risk factor joining us now, peter huber and david rosenburg. peter, you're not necessarily not in the recession camp. i think you expect it, just not for a long time, is that right >> well, sara, thanks for having me yes, about a month and a half ago we came out with a call there would be a recession beginning the second half of next year. you know, it's pretty rare that you have this kind of advance warning for a recession.
any time the fed is going to have to step on the brakes substantially, it's a very high probability down the road. >> david, why do you see it happening sooner >> well, look, i think that you can build a case that the recession has already started. you know, when you consider that 80% of the economy otherwise known as real personal disposable income has already contracted four quarters in a row. it was minus 2% and now the annual rate in the first quarter, minus 6 in the fourth quarter last year. as sure as night follows day, consumer spending will follow the trending and real personal disposable income. the only times in the past when you've had four quarters in a row of negative prints on real pdi, the economy has been in recession. and the only thing i'll say with all deference to peter and ben bernanke and ben bernanke also told us that the problems at subprime will remain contained and home prices wouldn't go down
nationwide the stock market peaked at the beginning of the year and the lead time between the peak and the market cycle and the peak andthe economic cycle is not 1 months or two years. it's usually three to six months actually the markets are handing it to you on a silver platter. >> peter, there is increasing concern if you look at the market and what's been working, the defensive sectors, and how the equity sell-off has been relentless now, almost 20% lower. how do you respond to that is the market overpricing a recession risk or does it have it right >> sara, no question the risks have increased substantially here but i'll grant david a good sector recession, something we've been expecting as the consumer rotates from goods, way overspending on goods to getting back to spending on services that's been in the works and that's going to continue the stock market is down because it's pretty heavily concentrated
in the goods sector. now, i think going forward, it is going to be a consumer that is going to be benefitting from real incomes which have been falling lately with high inflation overtaking wage inflation. but we do see some easing of inflation ahead with wages picking up further so by later this year, we expect to see real incomes actually rising again and it's going to be the fed getting into action, getting rates up substantially further that finally pushes us into recession by the end of next year. but i will grant you one significant risk there as i've said earlier, rarely have we had some kind of advanced warning and it is altogether possible that the market could telescope some of this forward. >> so it all comes down to the consumer, david. walmart earnings are coming out tomorrow and we'll hear all this week from home depot and lowe's and target and it will be really interesting. but so far we really have yet to
hear any warning from any consumer companies, including the credit card companies, that the consumer is weakening. and i know you think that it's going to happen. but really all we keep hearing is the consumer is in great shape and consumer balance sheets are strong and they have a lot of savings and all that. so why are you more pessimistic about consumer spending? >> look, if you're bullish on the consumer, you want them to take that strong balance sheet and weaken it by reducing their savings and increasing their spending that's just an assumption that a lot of people are making the strong balance sheet is equivalent to the fact that people are cautious and they're going to be maintaining high precautionary savings balances you're talking about the consumer and you're talking about what companies are saying. sara, companies report in nominal dollars. the recession is not a nominal dollar concept it's about real dollars. nominal gdp never went negative in the 1970s we had three recessions.
why? because real economic activity, including real consumer spending, deteriorated real consumer spending, by the way, has completely flattened from october to march. over the past six months there's been no growth when you include services and goods together, the consumer has flattened in real terms. so maybe the next time you get a ceo on, ask him, tell us what your volumes have been doing because we know they have been jacking up their prices so things look really great in nominal growth. >> i've seen volumes rising with price hikes, yes >> no, no, sara. volumes, volumes, volumes -- when you look at the monthly data flow, consumer spending volumes have been flat since october. >> so overall you're saying that there's no movement? peter, last word is the consumer in good shape or not? >> this labor market is going
gangbusters. we have two job openings for every unemployed worker. jobs look good i think wages are coming back later this year. i still think the consumer can hold up. no question the risks are rising, but this is an issue for the second half of 2023 after the fed gets rates up quite a bit more >> it's a good debate. gentlemen, thank you it's good to have you both here. david rosenberg, peter hooper. it has been a brutal year for the home builders in particular look at the xhb. there are a number of macro factors pointing to a worsening real estate picture. she'll join us next to explain you're watching "closing bell" on cnbc. the dow is up about 250.
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turning to housing, our next guest says demand may be finally weakening in the red-hot market that has seen incredible price appreciation the past two years. joining us is ivy zelman it's good to have you back on, ivy. i know you've been expecting to see a turn for a while now in the housing market what are you seeing? >> well, thank you for having me, sara it's great to be back on our april home building survey really showed an inflection point of demand starting to moderate we've had significant affordability pressures. the monthly payment for a new
home is up slightly over 40% and i think the surge in rates is now finally giving people pause. some of it is related to just hesitancy that they don't want to be buying at the top. but i think more than anything, it's about affordability our survey did see a pick up in cancellation rates admittedly we didn't expect much and it's well below normal, but i think there's been so much embedded equity so we didn't expect a lot of cancellations. but it did tick higher we did see a tick up in incentives some of the cancellations, pby the way, we've heard some of the hotter markets were private investors. so i think you're seeing a pause now. admittedly it's mixed. there's markets that remain red hot. so we're seeing an inflection point. >> we keep hearing that it might be -- might not be the same this time as far as the fed raising interest rates and trying to
crush the housing market just because of supply issues and the fact that it's been so hard to match supply with demand that there might be even years of shortages in housing ahead is that something that you see colliding with this weaker demand >> well, let's just talk about inventories right now in existing homes inventories which are at historic record lows. we are starting to see sequentially inventories rising, and they have been rising, sara, but they didn't stay in the market long enough to actually show up at the month end but i'd say you're probably going to see inventories declining less than they have and actually flattening out as more people are attempting to monetize, given all the appreciation but when you look at the new construction market, backlog is if you include all of development, including multi-family and single family, which also is inclusive. we're currently at the highest
levels that we've been since 1973 an those levels are going to -- at some point that backlog is going to get converted in the single family market, a lot of that backlog, a good third of it, is speculative. builders didn't want to commit to writing contracts and getting caught with inflation. so if we see the supply chain loosen, i even had a comment from one of my private builders that for the first time in colorado they're actually seeing inventory -- standing inventory that they haven't seen again, wait lists are thinning out. there's definitely a slowing in certain cities i think when supply chains loosen, it becomes more problematic, if they do. >> so how -- i'm hearing from my colleague, diana olick, who i know you know well how will it affect the build to rent trade, which you said you were bullish on that. >> i think build for rent is a great option for the consumer that can't afford the down payment. i think it's giving consumers
flexibility. i do thinkthat many of the build for rent developers are in the same tertiary markets developing product that's not really affordable. it's very homogeneous and looks like the for sale home so i think that we need affordable housing there is a deficit for affordable housing, but the prices for rents have surged as well and land prices have surged. there's just a magnitude of inflation, whether we're talking the actual home price, the rents, the development costs, all the input costs, labor costs. it's tough for some of these build for rent operators to pencil the returns, so it could be that we just see disappointing returns. as the fed is so hawkish that they're really trying to lower inflation, slow home price inflation, as they continue to push on higher rates and, therefore, higher cost of
capital, maybe some of these build for rent operators will not be as successful and a lot of the for sale builders are actually selling directly to the single family rental operators or the build for rent guys, so there's overlap. >> so, ivy, what as an investor do you do in this space? we've seen the home builders get shellacked off their recent highs on what the fed is doing and what you're starting to see in the demand picture. is that priced in? do you see interesting opportunities or more pain >> i've been doing this for 30 years, sara, and the fed is at the beginning of their tightening cycle so it's tough to say i want to jump in right now. it's tough to see bear market rallies. the stocks are really cheap. if incentives and pricing come under pressure, i think investors will sell and ask questions later. so it's about time horizon
there probably will be some builders that walk away from some options that they underwrote i think it's a little premature to say let's just jump in. but at some point we'll wanting to buy them and we'll be much more bullish because it gets silly and stupid but they're not at silly and stupid valuations from the way we analyze them. >> do you still like the refurbishing trade do you like names like sherwin-williams and people that are still upgrading their homes and renovating >> i do like that part of the market and i was wrong, sara, i always admit when i'm wrong we thought that a 4% mortgage rate would slow down the housing market because people would just stay in their homes because two-thirds or 70% of homeowners have a rate below 4. 91% of homeowners have a rate below 5. and i believe that's going to disincentivize people to move and they have had so much appreciation so i do think that we'll see more of the big projects that
will continue. and that has a long lag. but we are seeing weakness at pos at retail at the home centers. i think when you pump trillions of dollars into the economy and people have nothing to do during covid, you basically give them projects with other people's money, i think we're seeing some payback from that now. but the home improvement with an aging stock and so much embedded equitycould keep that tail sustainable longer and we do like companies like sherwin-williams and fortune brands our number one pick in building products is carlisle, which is really tied more to the nonresidency market. >> interesting all right, thanks for throwing out a few names there. i'm just looking at sherwin-williams it's had a good run but since december has come off of its highs. ivy, thank you ivy zelman. the dow remains higher it's lost a little steam just in the last few moments or so but still up 125 points.
look at the s&p, it's given back its gains. another up-and-down day here on wall street. down about a tenth of 1% the strength today is in energy for one, oil prices higher, and also the defensive group health care, staples and utilities. those are your outperformers again. technology is not having a particularly great day tesla is weak, microsoft strong. after the break, mike santoli is looking at how far multiples have come down already amid the selling pressure this year and the difference between large and small cap valuations we'll be right back. a comprehen for your full financial picture. with the right balance of risk and reward. so you can enjoy more of...this. this is the planning effect. flexshares are carefully constructed. to go beyond ordinary etfs. and strengthen client confidence in you. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.
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drama heating up at twitter again. some headlines just crossing from bloomberg news saying that musk says the twitter deal is, quote, not out of the question but at a lower price, adding that he's questioning the truth and accuracy of twitter's public filings. we know that he has questioned the amount of bots on the program, for instance. let's bring in dan ives on the news line who follows tesla but
has been following this whole saga of course this comes, dan, after musk has tweeted he's gone back and forth with the ceo of twitter who defended their practices against bots he tweeted back a poop emoji at one time where is all this going as twitter shares are down. >> musk is trying to get out of the deal he's either trying to get out of the deal, and of course it's a billion dollar break-up fee which is still pretty small for musk, or negotiating a lower price. look, i continue to think this is really him getting cold feet. the bot issue is really an excuse or a scapegoat. playing out the way it is, obviously very frustrating for twitter holders, twitter employees as this continues to be really a carnival or almost a circus now. >> have you guys done any work on what price he could get it at, he could get the board to agree if they do renegotiate
>> look, the board is between a rock and a hard place because ultimately now, there was an agreed-to price. there's diligence, which every deal is ultimately subject to. and that's their doing but for the board then to go about and say, okay, it's mid-40s or it's low 40s. you know, that becomes i think a tight rope because ultimately if they decide to not ultimately do the deal and walk away without a deal, this is stock that could obviously go below 30. and that continues to be i think right now what the street is trying to figure out, is it a lower price or does he walk? and right now i'd say it's more than a 50% chance in terms of the street's signing that he walks. >> is that good for tesla? >> for tesla it's a positive it's been overhang let's be clear, this is all a black eye for musk, the way he's handled it
i think many for it as an embarrassment. >> well, that's why i mentioned the poop emoji pretty untraditional stuff dan, thank you dan ives of wedbush. stocks now mixed after the s&p 500 posted its sixth straight weekly loss last week mike santoli is looking at how the recent sell-off has affected valuations of stocks and their market caps. >> yeah, there's been this undertow of valuation drag that's been going on in the markets for about six months now, mostly affecting the smaller stocks here you have it broken down here's the s&p 500 got under 17 times forward earnings the equal weighted s&p is a couple of points below that. look at small and midcap stocks. those indexes are now basically where they traded, you know, back toward the 2020 low obviously that was just a snapshot moment but it shows you that the smaller stocks seen as less able to withstand inflationary pressures, less
pricing power, also sectors skew that too it does show you that the overall market might not look very cheap but below the surface there's a lot that's starting to. >> but is it recessionary? >> well, you see the market get in front of that recessionary possibility for sure i'm not suggesting if there was a garden variety recession it's priced in yet but it shows you the divergence of bets here based on market cap stocks. wheat prices hitting the highest level in more than two months amid a new export ban by india and the war in ukraine. and helima croft on whether there is any end in sight to the boom that we're seeing in ag and energy prices. we'll be right back.
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time for today's big picture. the global food crisis is about to get worse look at wheat prices today they're soaring again, hitting near the highs that we saw in the days following russia's invasion of ukraine. this weekend india surprised the world, banning exports of wheat. it's trying to manage its own food security after a heat wave cut harvest expectations there india was expected to be the eighth biggest exporter of wheat this year. it's not too major, but with war
crippling ukraine and russian exports, it's only exacerbating the strained supply that has been leading to record highs for global food prices in the u.s. we grow a lot of wheat, so there's less concern about shortages here, but we are seeing prices skyrocketing on the global shortage. in april, for instance, prices for cereal and other baked goods shot up 10.3% from the year before joining us for more on this and the energy story is helima croft. the question, there's clearly no quick resolution to this war in ukraine. how much longer are we going to see these sky-high prices? >> sara, the clear concern is we have india banning exports are other major exporters going to follow india's lead because they're concerned about their own domestic economic situation. the situation with ukraine is obviously a grave concern to anyone who's concerned about global food security you had the german foreign
minister out this weekend saying 50 million people in the middle east and africa are facing hunger if we cannot unlock the grain supplies out of ukraine. r russia is not allowing ukraine to export through southern ports. there are ports that they have mined the harbor as well there's real concern that if we cannot move ukraine's cargo, this food situation is going to get much worse. >> and prices are just going to stay elevated, keep going higher what's your forecast >> the thing to watch, i say this on energy as well what happens in this war if we were to get some type of resolution, if the russians were to agree to allow exports to flow through the ports, that would certainly bring prices down but there's no indication that we're looking at a situation of an off-ramp. it looks like a protracted stalemate right now, so that's going to continue to put pressure on food prices, on energy prices. and the grave concern really would be russia is the world's largest wheat exporter
what if russia started selectively cutting off supplies. >> yeah. is that priced in at all at this point? >> i don't think a russian export cutoff is necessarily priced in, but that would be, again, the really big concern. russia benefits financially now because ukraine is essentially shut in. you have india moving to restrict their exports the economic beneficiary of that is russia at this point. >> yeah. no, the protectionism is interesting. i think indonesia banned palm oil exports as we continue to see these shortages. so what about crude oil, which is up another 3% we're almost at 114 again for wti crude. >> yeah, the thing to watch, sara, is what happens with the potential european 'em barring oh that's 2.2 million barrels that could be potentially locked out of that market what other countries like india be able to absorb that much additional supply? india has really ramped up their import of russian oil and is selling at a significant
discounting and that raises a question of are we going to see also at some point secondary sanctions, iran-style sanctions which would make it difficult for india, for turkey, to continue to absorb that many additional russian barrels certainly the market is looking at what the europeans do this week. >> what about demand, though, helima we just had a debate at the top of the program about whether we're going into a recession clearly things are going to slow down that's what the fed wants. how does that factor in? could that put pressure on these prices here of energy and agriculture if there's just less demand china is still in shutdown mode. >> i think the story with china and lockdowns has been what has basically put a cap on oil prices certainly if these lockdowns persist over the summer, i think that will be one of the factors that means we don't necessarily retrace the highs that we saw earlier this year. but if we were to see a lifting of lockdown restrictions in
china, chinese demand was already very muted if we were to see any lockdown restrictions removed, i think that would be a catalyst to move higher we're in single decision-maker dynamics in terms of this chinese lockdown so i'd pay attention to the trajectory of those measures. >> energy stocks amazing, up 50% this year, helima croft, thank you. >> thank you for having me. take a look at where we standing we've got the dow higher but it is losing a lot of its gains it doesn't feel as volatile as we've seen in the last few sessions, though we have been swinging between gains and losses the s&p is down 0.4 of 1%. you've got consumer discretionary at the bottom of the pack along with financials and technology the nasdaq is down now 1%. tesla shares are having a rough ride today find out why the stock is a big drag on the nasdaq, coming up.
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check out today's stealth mover. it is nucor, the steel producer. it acquired garage door maker chi overhead doors from kkr with a $3 billion deal. the deal helps nucor continue to expand into more lucrative steel products and infrastructure plays. market not loving it, down 3.5%. cloud stocks getting hammered today datadog at the bottom of the nasdaq 100
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as a main street bank, pnc has helped over 7 million kids develop their passion for learning. and now we're providing 88 billion dollars to support underserved communities... ...helping us all move forward financially. pnc bank: see how we can make a difference for you. welcome back we are now in the "closing bell" market zone. mike santoli here to break down these crucial moments of the trading day. plus our phil lebeau is here with the latest details of jetblue's hostile auoffer for spirit and darrell crunk. first off, the nasdaq and s&p 500 under pressure right now while the dow is still in the green. we're all watching the nasdaq
after a pretty strong bounce, i would say, and very broad rally that we saw on friday. you might have come in today thinking that you'd see follow-through, right? especially from these oversold levels not so much. it's names like tesla and apple in particular which i noticed was down again, even though microsoft and facebook are a little bit higher. ben ammons was showing me a correlation between apple and bitcoin, not that apple is in the bitcoin services as all. but they're the new barometers on tech and the overall markets and risk appetite. >> bitcoin has a very lock-step relationship with the nasdaq 100. apple is the biggest stock in the nasdaq 100 the nasdaq was up 3.7% on friday you're giving back a third of that i see it as a largely tesla story today, down 6% it's about a third of the net decline in the s&p 500 more or less is tesla. beyond that, i do think the market is quite indecisive we had a good bounce a lot of people are allowing for
a little more upside at today's highs we were 5% above last thursday's low. so that shows you how quick you pop higher i think the bigger story is the narrow range you're in today in the s&p 500. you want to see the drama drain out of this market to maybe get more of that systematic plunge back into equities. >> even the nasdaq only down 1.25%. we've been seeing declines of 3, 4% lately. zero in on tech because cloud stocks are among the biggest losers on wall street today. frank holland joins us the yield on the 10-yearis now below 3% and continues to move south. what are you hearing about why so much pressure >> yeah, you know, i just got off the phone with dan ives from wedbush. he said there's concerns about an i.t. spending slowdown. you showed twilio and datadog, top of the stack names, the most sensitive. investor concerns. coming up in the next two weeks we have three really big
reports. cisco, which represents hardware and networking names then al owe alto networks and then workday a major high-growth top of the stack name their commentary, their guidance especially is going to give investors a lot of insight about the strength of i.t. spending coming up in the second half of the year. >> are you hearing anything yet, frank, from some of these companies about slowdowns in spending >> i haven't heard anything from these companies about slowdowns in spending but i have spoken to me from one of the big p.e. gi firms and they believe spending is strong. they think going to cloud is deflationary and are expecting to see increased costs in other areas but moving more of their workloads to the cloud could actually reduce costs. >> mike, first it was fears over higher valuations and higher interest rates, and now as we've decided to focus from inflation on slowdown, it is on the spending cycle and what we could
see for those i.t. budgets and tech weighing on these names. >> just the sense of general retrenchment in the startup economy. you're hearing about the layoff story but that basically reflects a general kind of budget consciousness and cloud providers clearly are beneficiaries of vc money being thrown all over the place. it's going into their exact services so i see it as being laumg cal on that front. on the other hand, these things traded like lottery tickets people were grabbing for last week at the low. so they're still caught up, they're beaten down tremendously there's not a lot of sponsorship there. people are wondering whether they're trading stocks at the moment. >> datadog is down 11% off no news and off 50% for the year. shares of sofi are jumping after getting an upgrade to overweight from neutral. the firm saying the combination of rapid growth in deposits and
the expiration of that student loan moratorium should lead to earnings momentum for sofi in 2023 and 2024. the stock, though, is down about 70% in the past six months piper sandler's kevin barker joined cnbc earlier to defend his decision to upgrade right now. >> we got a ton of pushback on the call at investors who look at rising funding costs. but at the same time, there's a reason why if you were buying this stock a year ago and the growth that the company has been able to produce combined with what i think has changed quite a bit is there's a deposit base now, which improves the funding base better than most other banks we see out there today. >> this is a bullish call that we hear on sofi and what makes it different, that ithas a banking license. >> which is slightly iironic the reason that you were paying
up for them before was the nio part, not the bank part. but yeah, i guess if you want to be kind of valued like a bank, then the book value does matter. what you're actually earning matters. people continue to use this adjusted ebitda model. i think there's a big gulf between the way financial investors look at a stock like this and the way, you know, technology folks do. it is only a 6.3 billion dollar market cap if you think that the brand is going to be a net winner in this world, maybe that still seems like a low number, but it's going to be subject to what anybody thinks about the credit environment for sure. >> and a lot of people see that turning. look at the airlines spirit shares taking off, you could say, after jetblue launched a hostile bid for the company. phil lebeau joins us with the highlights phil, you said this morning you were waiting to hear from him
and you did. what was your takeaway. >> my takeaway is that they are not happy with jetblue not only because there's a hostile takeover that's separate from the fact as part of that takeover bid, jetblue alleged that spirit's board did not do its due diligence, did not do its work in considering the two previous offers from jetblue. those allegations vehemently denied by spirit's ceo within the last hour. here's what he had to say. >> we're a little surprised and frustrated that they're spreading that misinformation. our board invested considerable time and effort in reviewing their proposal and determined it was not superior. >> all of this sets up an interesting two and a half weeks to come. on june 10th, that is when spirit shareholders will be voting on the merger proposal between spirit and frontier. there's also a campaign that jetblue has launched as part of its tender offer urging spirit shareholders to reject that deal we'll see how this all shakes out the next couple of weeks.
>> stocks have been weak, as we've been showing phil, i wanted to hit with you tesla shares they are under pressure today and there's a report saying they are delaying the plan to bring shanghai back to full production what do we know about this and how big of a deal is it? >> what we're getting is media reports out of china so you don't have the complete picture here tesla is not commenting on what production is or is not doing over at the chinese plant, the shanghai plant look, the ultimate concern here if you're a tesla investor is if it's an extended lockdown, lack of production. and by extended, i'm talking about four, five, six weeks. then you may have have adjust the full-year production numbers. so far most believe they can make up that production through the remainder of this year but at some point it will have an impact. >> and i feel like also on the last earnings call that tesla played down the risk there was some nervousness going in about the shanghai lockdown and how much they would be
impacted and they played that down i wonder how much it's buffeted around by twitter and will he or won't he >> yeah, there's some of that. there's some of that and, look, it's a bit of a black hole you don't know exactly what's happening with production in china. you have a pretty good sense based on local media reports of what's happening there, but nobody is entirely sure. and so, you know, we could have a couple of weeks here where people will say one day they're firing it back up and the next day maybe not and that's why you'll see impact on the stock moving around a little bit in regards to that. >> mike, how does it look to you, down 5.6%, tesla that is, so about 40% off the highs, 41. >> yeah, it's not too far above where it has bottomed a couple of times one time it went to 700 a share. the irony today is when we get a day when the twitter acquisition by elon musk looks less likely
or he might want to renegotiating or back out, normally that helps twitter shares but today it's going the other direction. it seems as if the production reports or the general sense that there's a situation in disarray here is kind of weighing on tesla. >> yeah. a lot of news coming out of this so-called tech conference that he's speaking at that bloomberg is putting on the wires, including comments on biden and the recession that he thinks we're in we'll leave it there, phil lebeau. stocks are pretty mixed here the nasdaq is down a little over 1% the dow is holding on to its gains, about 49 points darrell cronk joins us are we due for a real bounce here something that can last more than a day >> well, six weeks in a row, it's hard to call this a bull market we haven't officially touched bear market territory yet.
but it is very normal to get kind of a bear market rally. bear market rallies are often vicious and they come up very quickly, very strongly if you go back in history, bear market rallies typically last one to two months and average about a 10% rebound before ultimately a lot of times they fail we still have big resistance we're 160 s&p points away from a 20-day moving average. so we've done an inordinate amount of damage here that has to get repaired. at best we may get a little bit of a bear market rally and consolidate. but we still think defense is the order of the day right now play defense. >> that's what i was going to ask you. if we do get a bear market rally, darrell, how do you best take advantage of that what is the strategy >> i think you have to be probably underweight equities to your longer term strategic proposal or allocations. but the reality is i think on the sector side you want to be
barbelled between defensives on one side, energy on the other. energy is the only thing that continues to work and i think you can still stay long energy, but it's no different than what we see today, leadership from health care, staples, utilities and energy that probably continues. we haven't seen anything to put in a durable bottom yet. there's been no capitulation level. we haven't seen the vix spike over 40. we haven't seen a put/call ratio that exceeds 125, 130. we haven't seen volumes to hit that capitulation moment and i would just say there's really strong resistance at 3800, 3850 on the s&p. if that can hold, we can consolidate here if it doesn't and we breach that, you're probably down to around 3600. >> fundamentally, darrell, what do we have to see to look for signs that this pressure may be over or that we've seen some sort of bottom a lot of people make the point we're still early in the hiking cycle and the fed wants to go
very aggressively right now to deal with inflation and that's going to hurt the economy. so what do you think would correspond news-wise with capitulation or is it just technical at this point? >> i think it's largely driven by technical we've lowered the price earnings multiple down to 17, 17 1/2, but we think the e is still wrong on the pe ratio the census street estimates are too high from a capitulation moment, it's hard to say. i would watch kind of a credit event. so in other words, keep close eyes on credit spreads, liquidity metrics. those have been very well behaved. the vix, you still have implied volatility which is not usually a sign that you're stressing the engine at that point it could come from a russia sovereign debt scare later this month as we deal with the may 25th date on resetting whether those payments can be made in
ruble or dollar metrics. it could come from a nato scare with sweden and finland. something like that could create a capitulation moment to put in a more durable bottom. >> or, mike, it could come from the fed, i don't know, getting scared, getting worried potentially about recessionary impact of some of its policies what are you eyeing? >> well, it could in theory. i think that's unlikely to come very soon. we are going to hear from jay powell tomorrow. he's got a speaking appearance maybe the market is idling today ahead of that. but i think what's weighing on the market psychologically is the next two 50 basis point hikes seem baked in. but it's interesting the market is not saying the short rates will go much beyond 3% at this point. >> darrell cronk, thank you very much mike, what are you seeing at the close. >> very mixed. the index is taoggling above an
below the flat line. crude oil interestingly never really gave back a lot during the china slowdowns. even if you didn't know what was going on in the news, if you looked at this chart you'd say it looks kind of bullish it's pretty well set up. there's higher lows all the way out. if you look at the volatility, you are seeing an easing of pressure that's a net positive for stocks and if that can bleed lower into the low 20s, it would mean that the market is on somewhat more stable footing. >> we're seeing a weaker dollar an lower treasury yields so those are easing the tensions that we have seen in the markets lately, but still pressure onesque wilts remain as we head into the close. energy, health kacare, staples n utilities. as for what's weaker, a 2% decline in consumer discretionary and that is largely tesla. concerns about the shanghai planting but you've also got weakness in some of the names as well.
the nasdaq is down 1.25% another day of selling it is brought lower by tesla, apple, amazon, nvidia and google there is strejtngth in facebook for instance there is the close small caps lower that does it for me on "closing bell." now into "overtime" with scott all right, sara, thanks so much welcome to "overtime." i'm scott wapner we are just getting started here at post 9. in just a few minutes i'll speak to marc lasry on where the best opportunities are in these highly unsettled w d markets. we'll also do some whale w5 watching today we begin with our talk of the tape the bear bounce and whether a significant one is coming and if so how long it might last. we'll