tv Closing Bell CNBC August 30, 2022 3:00pm-4:00pm EDT
a valuation concern, right when you have an environment where risk-free rates, the amount of money you can get without any risk whatsoever goes higher, it makes the return you need from tech stocks that much greater. that's the concern for valuations right now. >> thank you. >> that does it for us, thanks, dom. >> thanks for watching "power lunch. >> "closing bell" starts now the late summer pullback gaining steam today as stocks fade throughout the session. the s&p 500 falling below the 4000 mark. the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen take a look at where we stand right now. down more than 1% across the board. the s&p 500 is down about 1.3% at the moment. every sector is lower. energy is the hardest hit. big give-back in oil stocks
today. technology is not doing particularly well. materials, really it's the cyclicals, safety and tech all moving lower throughout the session. the dow is down about 360. low of the day was 450 here's a look at the biggest decliners right now in the s&p 500. you can see there are plenty of energy names and material names there as well with the sell-off of commodities we'll talk to ed morris of citigroup later on in the show. also coming up we will talk to bruce richards from marathon asset management, get his playbook amid this downturn. plus brian deese joins us to break down the latest jobs data. we got some good news on the economy with job openings and what that signals for the fed and the economy. whether it increases the odds of recession in the future. we'll kick it off with the market dashboard today senior markets commentator mike santoli. i was going to call you a correspondent. you're a commentator what have you focused on on the
selling. >> this decline has taken out some of the minor defenses this rally has built up in just today it went through 4000 that was also the 50-day average. it also cut through the halfway mark of the entire june to august rally, so basically this went up about 19%. half that amount was actually unwound with today's decline now, it doesn't necessarily say that was all a head fake higher and it's down from here, but it certainly depletes the bull case a little bit i don't think the bears are particularly concerned right now, but there is still the possibility that we gather ourselves up my personal thought is we lose a few more percent from here it looks like we retest the lows sentiment we get really ugly quickly, oversold. now, the data this morning did not help and actually put more pressure on the market in particular, the job market
tightness that was evident in the survey as well as compared to the total number of unemployed people. this is an interesting relationship obviously massive labor slack back here post the financial crisis this is obviously the pandemic spike in nemployment here we have more job openings than unemployed people that's been the case for a while. an uptick in openings. that's working against what the fed says it wants to do. jay powell said the labor market is clearly out of balance. the quit rate has gone down. there's ways to look at the jolts data to say, yes, there's some cooling under the surface of the job market but probably not enough. >> the market took it as a bad sign that the fed has to do more, go longer potentially on higher interest rates. >> yes, higher for longer. >> higher for longer stay with us, because the market reversing some earlier gains also after news that taiwan's military fired warning shots at
a chinese drone that buzzed an island controlled by taiwan near the chinese coast. it marked the first time warning shots have been fired in such an incident let's bring in michael o'hamlin. michael, how seriously do we take this? >> hi, sara. well, given the tepgs rightensi right now, everything has the potential to blow up i feel okay now that it's over however, china is angry enough with the pelosi visit and everything else that's been happening that i wouldn't be surprised if they don't just keep creating small instance departments to see how taiwan reacts and maybe if taiwan overreacts, to give them a pretext for aggression of some kind. probably not all-out war i don't think they're looking at that at this juncture but i don't think they'd mind spooking the taiwan markets, making the people of taiwan worry that he can't just elect political
leaders that seem to move towards independence and get away with it i think china wants us all to be anxious. they'll look to do things that create some degree of risk if the risk is controlled, if people keep their nerves, it shouldn't do a whole lot it may sometimes affect the stock market in taiwan or what have you but it shouldn't lead to war if the next drone is shot down or an airplane is shot down, then you get into some really tense moments. >> yeah, well, we know investors are paying close attention to all these developments we're talking about the world's two biggest economies with the u.s. and china that. does bring the question to the u.s. and what the posture is here there's a report in politico that the biden administration will ask for more than a billion dollars worth of arms package for taiwan, which i'm sure would not make china very happy. where does it go the relationship >> the relationship is not going
well, as you're well aware and i think this will be one more issue that makes china react. but china is somewhat accustomed to arms sales. you know, we've been doing them for decades. taiwan needs stuff they're way behind china china has a $250 million military budget and taiwan's is $15 billion plus or minus. taiwan will have to buy the right stuff from the best weapons manufacturers in the world. and so i think that china always objects, but it has accepted a certain amount of ongoing u.s. weapons sales. when it gets to be a billion dollars, that's a big one. you combine that with everything else, and yes, there is the potential for china to feel it has to do something else by way of reaction. so it's the combination that bothers me here more than the weapons sales itself. >> michael san totoli, how doese
market begin to price something like this. >> i don't think in any way just yet. clearly wary of it the market did sort of back off it seemed. in bear markets it seems like there's yet another thing to worry about, but you don't really start to price it in until you have to. so i think to me it would be more about any other signs that china is having these geopolitical priorities overtake its interest in good economic relationships or withdrawing that much more from the kind of entire economic kind of ecosystem as we've done now. we've seep what's happened with the chinese currency >> it's weakening but the dollar is strengthening, so that is a pull everywhere. michael o'hanlon, how do we think about the economic stakes here we're watching the semi conductors what other industries should we be watching? >> just to back up michael's
point when he says the market won't price this in until it has to, i agree. because what is this this is u.s./china war, and there's no way to price that in. then we'll be worried about the survival of our planet and i'm not just being melodramatic if there is potential that china does aggressive military exercises that leads to a weeks disruption of cargo shipments, that's something the market could price in how do you know it's going to be a week and stop there? i agree with michael's point because if and when this starts to get worse, there's no telling where it stops and therefore there's no real way to quantify the risks or the dangers, because they could be almost infinite china is looking to make us all talk about this, worry about this they especially want lawmakers in the united states and leaders in taiwan to be nervous enough about a process that could get out of control that we stop
doing things like speaker of the house vests to taiwan or the taiwan leaders pushing for more autonomy on the international stage. i'm not sure china is going to succeed, but that's what they're trying to achieve. >> it's a good discussion. one i'm sure we'll be having in the weeks and months to come after the break, bruce richards from marathon asset management says he does expect the market to retest the lows, but his long-term view is decidedly more bullish he'll join us with his playbook next you are watching "closing bell" on cnbc. the only dow stock that's positive right now is nike
show you where we stand. the dow is down 229 points or so, so we are off the lows but every sector is lower. the s&p is down a little less than half a -- excuse me, 1.5% for the week i'm looking at the month too because we're coming up at the end of the month of august, down 3.3% joining us now is bruce richards, the founder of marathon asset management. bruce, you have been saying we're heading into recession in the u.s. >> yes. >> do you think the stock market is underpricing it >> what's also underpriced is the credit markets if the credit markets and equity markets aren't pricing in recession, which i don't believe they are, then there's further and significant downside from here so 3650 on s&p 500
i think it will have to test that, which is down another 8% from here and out 100 basis points from here in high-yield bonds which is where we'll get to but i think we'll get to 10% on high-yield bonds yes, i think we're underpricing recession. given the yield curve, you can set your clock forward about nine months from today and i think that's when they will designate this being a recession. >> why is the market not pricing this it's very telegraphed with the yield curve and what the fed is saying >> s&p earnings right now for this calendar year is $214, $215 per share is what we're on pace for. if you look at what's expected next year, it's $245, $250 i think that's a pipe dream at this point because i think earnings will contract in every recession, earnings reextracts about 20% but that's a nominal number. there's inflation so it will be
less than that, maybe 7% so it takes earnings down to 205 maybe, 207, from 215 today, as opposed to to 25, 240. so there's a lot of downside from here yet. >> where do you think we are in the tightening cycle, early stages, middle stages or the end? >> it's not so much where we are in the tightening cycle. i think there's more tightening to go and i think we'll be 3.5, 4% probably before it's all over the point, though, and the more relevant point, inflation as it trends down from 9% to 6%, and we're on that trend now, will settle in around 4% throughout all of next calendar year. that takes away the fed put and the markets haven't priced that in yet if you keep rates higher for longer, it means the recession won't be v-shaped because it will not be easing into a
recession as we always do. but the fed will maintain the higher rates as you're in a recession in order to bring inflation down they're going to do that and they said they're going to do that it's all about powell's plan that he talked about at jackson hole. >> he told us to expect pain. >> expect pain for consumers and businesses so you take a survey of consumer confidence and ceo confidence. the ceos have real good insight. 81% of the ceos think there's a recession coming next year that's a record high number. so expect a recession. expect earnings to be weaker and spreads to blow out. the pain is about higher rates, wider credit spreads and lower equity markets. >> they want tighter conditions. >> weakened conditions which will weaken demand when you weaken demand, you can bring prices back down but prices can't really come
down much because you have a sploi supply chain issue, both with energy, actually with labor, energy, food, labor. structural things. and we're going from globalization to what i call regionalization as you move the supply chain back to regionalized areas, which is really good for the u.s. i love that long term. but in the short term it's expensive. >> i guess the question now becomes how deep of a recession and prolonged? >> prolonged, yes, but shallow in 2008, 2009, it was an economic contraction you saw something similar in 20 but it was even more v-shaped because of the $5 trillion of stim money and quantitative easing happened. this time the fed can't ease when the recession hits because of high levels of inflation. so it's going to be longer but very shallow that's going to hit a lot of different industries across the
board. energy will probably do well, pharma will do well, utilities will do well, but there are a lot of sectors like retailers and the home builders and other segments of the marketplace that will be rather hard hit when it comes to earnings. >> it's a pretty bearish view at leaf in the short term that you're laying out. how are you at marathon positioned for this? >> positioned defensively so we're letting cash build with high yield and leverage loans and the bonds you can buy in the marketplace yield 6% and we can be in alternatives that are private credit earnings, say 10%, that's a really nice alpha pickup when those high-yield bonds are down ten% and we're still making 10% in alternative private credit, then imagine you're an allocator and you are the cio of a pension plan and endowment foundation you're going to say to your
staff i want to allocate less to the public credit markets and more to the private credit markets. that's not only true of institutions but of retail so the rias around the country who cover households who have built up wealth, they're finding more and more interesting opportunities in private credit and private equity than they are in the public markets. we're seeing that shift. that shift is a multi-year and multi trillion shift. >> when we talked before the show, you said you're bullish in the long term which didn't really come through yet. explain what you mean and where that opportunity lies. >> as globalization evolves into regionalization, then supply chains and manufacturing capabilities and plants will come back to the united states the united states is energy independent, which europe isn't. and so we're in a very favorable
position with not only having the brightest minds in the world and a capitalist system, but we also have a lot of manufacturing coming back to thestates these are global manufacturers that want to be in our marketplace in addition to domestic manufacturers in the intermediate run i'm very, very bullish in the short run we have to get through the fed tightening cycle, this recession that's coming. >> when do you turn and buy? >> i think i can safely buy when high yield is back at 10% -- >> and the s&p is 36 >> i think maybe $305 a share times 16 might get you down to 32, 3400 so i think there's more downside than 3650. i'm not saying we're going to get there, but i know we'll at least have a high confident level. we'll test the lows, and the low is 3.45 on 10-year notes and a
3650 left on the s&p. >> you're more specific on your targets that the equity strategists. great to have you here and get your world view from marathon asset empty. the market is down 254 on the dow. s&p giving back 1% what's holding up better today, financials, higher yields. that's certainly helping health care also doing a little better ubs raising the red flag about the economy today saying there is now a 60% chance of recession in the u.s. in the next year we'll discuss the outlook with jobs, inflation and more with brian deese. he joins us from the white house. as we head to break, check out some of the top search tickers 10-year yield regains its top spot bruce richards says 3.45 is going to be the high you've got tesla in there, bed, bath and beyond which was higher on the day earlier
it's now down 11.3%. still higher for the week. you've got crowd oil, best buy, which is surging off better than expected wker earesults. we'll talk about that later. we'll be right back. wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect.
check out today's stealth mover. it's a stealthy one. bowlero, which is scoring a strike for investors jpmorgan initiating coverage of the bowling center operator with an overweight rating, a $17 price target and upside of roughly 50%. fighting rising demand in a post-pandemic world. shares of that company, which is the world's largest bowling center owner with more than 300 locations are up already about 30% so far this year a defensive play, i guess. up next, national economic council director brian deese on how fast he thinks inflation could come down from these current levels the dow is down 260. we'll be right back.
♪ (don't stop me now) ♪ ♪♪ ♪ (don't stop me) ♪ ♪ 'cause i'm having a good time ♪ ♪ having a good time ♪ ♪ i'm a shooting star leaping through the sky like a tiger ♪ ♪ defying the laws of gravity ♪ ♪ (don't stop me now) ♪ ♪ 'cause i'm having a good time ♪ ♪ i don't wanna stop at all, yeah ♪ ♪ ah, da, da, da, da da, da, ah, ah ♪ new jobs data you the today. july job openings topping estimates, 11.2 million. that is nearly double the total amount of available workers and nearly a million more openings than what was expected i spoke with brian deese and
began by asking for his read on today's data and how it jibes with some of the other mentioned signals we've seen about the economy. >> certainly there was some encouraging signs in today's data we try to look at perspective out a couple of months what you've seen the last four months or so is some cooling in the level of openings in the economy, but still in the context of a very strong hlabor market of course unemployment is now 3.5%, which ties a 50-year low of course we saw very strong job growth in july one thing i would note is we have been saying a couple of months that certainly we expect and anticipate the rate of job growth to cool in months ahead that would be consistent with the unemployment rate we have and the strength of this labor market but all signs continue to point to a labor market that is continuing to deliver for american families and that is good news. >> so what are your expectations then for the august report,
which we'll get on friday? >> well, we're close to that report i think the consensus is that your viewers probably know in the range of 250,000, 300,000. but even as we see some expected cooling in the rate of monthly job growth, what would be historically consistent with a 3.5% unemployment rate, we still have strong job growth and a strong labor market. independent of any one month that continues to be true and that's important for not only the opportunities that workers are seeing in this economy but also household balance sheets and the resilience of the american consumer. >> no, it's great news for the economy that the labor market stays strong, but the market is taking it as bad news, indicative that the fed has to do more or will do more when it comes to tighter policy, higher interest rates for longer. that it could be inflationary. is that your read as well? >> well,as i said, we are in a
transition and we certainly anticipate that as part of that transition we will see some cooling in the rate of job growth across time i think we have started to see that, although the labor market continues to be very strong. and it's our expectation that we'll continue to see that as well but any time that americans have more job opportunities to get good jobs with higher wages, that's good news we just have to work through this transition in a way where we can get to a stable, steady source of growth for american workers and for the economy without having to give up the economic gains that we've done certainly we believe that that's possible and we also think that the policy we're pursuing and legislation we passed recently will help contribute to that. >> how fast do you think inflation comes down from here we are starting to see signs everywhere, from shipping rates to commodity prices to supply chains that that's really happening? >> certainly we're seeing some positive trends on those indicators
i think that we spent a lot of time looking at the transportation logistics system with all the work we've done on the nation's ports and you're certainly seeing more fluidity and costs coming down there. of course on gas prices continuing over two months of daily declines and gas prices down more than $1.20 at this point. but what i can tell you is that we are continuing to look at every policy lever we can to try to encourage that process and the economy while providing real, tangible relief for consumers which is why our focus is coming towards implementing the inflation reduction act which has some very powerful tools to do that, both on health care costs that families are facing but energy costs that they're facing as well. >> but if you're looking at every possible lever to bring down inflation, why go ahead with the student loan forgiveness which is estimated to cost hundreds of billions of dollars and potentially boost demand, all of which could be inflationary >> well, i think the president spoke to the logic of that
he believes it's well justified and those borrowers will benefit from that relief in terms of the inflation impact, i think a lot of independent analysts have looked at this and it's appropriate economically to look at the impact of not only the debt cancellation, but also the restart of payments. right now nobody is making student loan payments or a small share of borrowers are making student loan payments because there's been a pause because of the pandemic what the president announced and we will implement is a restart of payments at the end of the year alongside the cancellation. i think those who have looked at that, including goldman sachs and others say basically the inflation impact in the short term is neglible. >> not helping the mood today is a report that taiwan has fired a warning shot on a chinese drone. i know this is outside your specific area, but clearly if it impacts the markets and the global economy, the consequences could be severe. what are you bracing for here? what is at stake if we do continue to see an escalation
between china and taiwan >> look, we're monitoring all those developments very carefully. i think you've seen in the united states' posture over the last couple of weeks our effort and our resolve to not have that happen while also operating consistent with our long-standing policies and long-standing practices. look, economically speaking if we lift up and look at where we are in the global economy, one of the things that's important is that the united states is in a better position economically than almost any other country to navigate through these global challenges and also that we're taking steps to build resilience in our own supply chaeins so we are not as vulnerable as a country for economic and security reasons to some of the economic challenges in the region certainly the significant decade investment we're going to make in semi conductors is a big part of that but much more broadly it's why we put the resilience
on the supply chain that we have. >> i asked about the odds of a recession and he didn't go there and continued to point to some of the resilience data in the u.s. like the consumer balance sheets and showing that the u.s. is in a better spot than the rest of the world and our markets have outperformed as well. here's where we stand, down about 300 on the dow it is a broad sell-off nothing too extreme. at the bottom of the pack today energy down 3.4% materials and industrials are also getting hit particularly hard financials and health care holding up better but everyone is down. the nasdaq is down 1.3% or so. all the tech players are lower the unprofitable tech names, some of the mega caps as well like apple, meta, alphabet all lower today. up next, mark mahaney will be here to weigh in on the tech sell-off a reminder, you can listen to "closing bell" on the go by following the "closing bell" podcast on your favorite podcast
app. down 309 on the dow. we'll be right back. ten. like jack. he wanted a streamlined version he could access anywhere, no download necessary. and kim. she wanted to execute a pre-set trade strategy in seconds. so we gave 'em thinkorswim® web. because platforms this innovative aren't just made for traders -they're made by them. thinkorswim® by td ameritrade power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market.
tech leading the slide today. it's a pretty broad-based sell-off but technology in particular getting pretty hard hit. nasdaq 100 down 1%, now down 4% on the month losers include biview, lucid motors, which is issuing more stock, tesla, nvidia, apple, microsoft, amazon, meta, all weighing pretty heavily on the index as well. joining us is mark mahaney can you invest in these names with treasury yields moving up the 10-year is back above 3% and all this volatility around higher interest rates?
>> yes, you can. but you have to have hard money longs rather than easy money longs. the companies that weren't going to be profitable materially for a few more years, maybe the shopifys or rokus are much harder to buy in this environment. so you need companies with free cash flow yields there are names like that. google, meta, names like that, and booking, ebay. there are names that are more defensive and can work in this environment. it's clearly challenging for growth equities, no question about it. >> at the same time, the dollar keeps getting stronger we have seen what a headwind that is for tech and some of the problems that are bigger in other places like europe, with energy rationing in the uk and the global growth concerns i would think -- >> '22 is turning out to be an
extremely challenging year fx, recession, and tie into that slowdown in advertising spend. so it's really good. the kitchen zsink is being thron against -- and then rising interest rates again, interest and long duration assets. so this is turning out to be -- there's a latin expression for it, but a horrible year or very challenging year for equities. we'll have to start thinking ahead to '23 can you find cases where you'll have material revenue growth and margin expansion the big setup here is we had dramatic derating across tech and multiples come down materially as they probably should have as they got way overrated. easy to say in hindsight but they did during the latter part of the covid crisis. as they have come down now, the risk with these stocks is more estimates rather than multiples. when the estimates cuts become more balanced, there's real
opportunity for wins in some of these stocks so i'm going to stick with the highest quality assets with free cash flow positions. ooepg there are names like that. i think meta is one of them, amazon is, i think google is too. >> all right well, you're consistent on that front. mark, i have to ask you about twitter with the new developments today that musk is using the whistleblower as a new reason to back out of the deal does it change your view about what happens and what to do with the stock? >> i'm more confused than ever, but i will point out this. the whistleblower does say that twitter's accounting for the daus -- monetizable daus was probably pretty good, which was musk's major complaint and major reason to back out of the deal now, the whistleblower is bringing up other things, like potential noncompliance with the s.e.c. those are very serious assertions if you're musk's legal teams of course you file a motion based
on this new whistleblower information. but it does seem to undermine the original argument. which it creates other viable arguments to stop the deal is out of my league, i don't know i'm sure we'll have more of these news days between now and when the trial begins in the middle of october. >> but you're not touching the stock at 39.24 >> no. it's an event stock. i'd much rather look for good fundamentally sound companies that i think are dislocated. twitter right now, you've got to be a legal jen u.s. to invest in and to trade twitter and i'm not. >> mark mahaney, thank you very much. look at the energy stocks, the worst performing ones. up next, a top analyst on whether the energy sell-off is creating a buying opportunity. best buy is rallying when we take you inside the market zone. the dow is down about 270. we'll be right back.
do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. we thought we had planned carefully for our retirement. but we quickly realized we needed a way to supplement our income. if you have $100,000 or more of life insurance, you may qualify to sell your policy. don't cancel or let your policy lapse without finding out what it's worth. visit coventrydirect.com to find out if your policy qualifies. or call the number on your screen. coventry direct, redefining insurance.
(ted) after talking and texting for years, we got married... for the family plan. (jane) and then we really expanded our family... for the wireless savings. (ted) it seemed like the responsible thing to do. (jane) and then, just yesterday, my sister told me about visible. (sister) yeah, get unlimited data for just $30/mo. no family needed. (vo) family plan savings without the family. visible. single-line wireless with unlimited data for $30/mo all in... ...plus a plan with 5g ultra wideband and global calling. power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders
so you won't miss an opportunity we are now in the "closing bell" market zone. mike santoli is here as always to break down the crucial moments of the trading day mike, haven't really gotten a bounce since the big sell-off we had last week and mainly on friday post jackson hole what does that tell you? >> well, it tells us the buyers are definitely on the defensive and they see no hurry to step in, at least just yet, basically because the charts keep weakening a little bit i don't think anybody has a clinching argument yet it's not like those who said it was a bear market rally can say i told you so. today's economic numbers have suggested some resilience in the
labor market, good consumer confidence or better than expected shows us we're on the defensive for a fed that seems more hawkish until we get more confirmation that inflation is coming down. so it's a defensive type posture but not an urgent exit from the markets, at least not yet. >> major averages on track to close lower for the third straight day, but off the worst levels of the session. energy is by far the worst performing sector. what do you see in the energy stocks relative to the price of oil which is declining the white house seems to be celebrating these lower gas prices. >> the stocks had actually had a period where they were outperforming crude oil and part of that is because natural gas was so strong and because crude staying near these levels is quite profitable for them. i do think it's an interesting moment for the crude look as well it broke this downtrend from the highs. it seemed like it was about to gather up another run higher and
then it hasn't really convincingly done so oil bulls are saying, hey, but look at the weather. we could get some hurricanes and it's just the spr release that's keeping inventories low in other words, that story about supply was so tight prices could go nothing but up a few months ago has been altered and at least that tells me that the bullish case has been widely adopted. it may be coming into a little bit of friction. >> hovering just around the 92 level. we were just below there a moment ago let's bring in ed morris ed, you've been bearish, i think on oil for a long time, even with the big run-up we saw this year so are you expecting that we've seen the highs >> it's hard to know whether we've seen the highs you just mentioned the weather and, yes, the hurricane season could be a very big surprise but there are very big lumpy uncertainties in the next few weeks and maybe beyond that that are keeping people out of the
market the amount of participation in the market by financial players is extremely low i'd say they are dominated by machines we have the possibility of a ram coming back and on the other hand the possibility of a rat going out or the hurricanes season so it's a crap shoot at the moment. >> so driving it right now is what all those factors? do you have technical coming in as well? >> i think the technicals are driving it and the algorithmic traders are driving it clearly there are weakness in certain parts of the market. undoubtedly gasoline prices are down 11 weeks in a row diesel a little bit up, but the thrust is certainly downward demand is unbelievably weak and could get a lot weaker if the slowdown in economic growth turns into a more global recession which has a good 50% likelihood so there's uncertainty and i'd say from our perspective right now the probabilities are higher for lower prices than they are for higher prices but the certainty is not really
there to the degree that you can say this is a 60 or 70% probability. >> the bulls would say that demand has held up better, especially in the face of china going through its covid lockdowns and that semi iupply s really the issue here. you've got such a global supply crunch that it's hard not to be long oil why do you disagree with that? >> i think they're wishful thinking mostly in terms of the supply being dominant. they're looking at the amount of dollars being spent in upstream investments rather than the efficiency of capital, which has increased dramatically and if you look at the demand side, it's not just china, it's the united states and europe u.s. demand is down below where it was a year ago by a large chunk. it's flirting with being down the lowest it's been in ten years. so i don't see where the demand is coming from yes, there are a lot of uncertainties about supply, but
there are as many on the upside as there are on the downside we have upside potential not just from the u.s. but from canada, from brazil, from colombia, from argentina, from you name it in the non-opec world as well as the opec world. this is sustainable at a time where demand is falling. >> ed morse sticking to the bearish view on oil prices thank you for joining us from citigroup. >> thanks for having me. i want to bring a news alert on snap and layoffs. leslie picker has the details. >> hi, yes, sara this comes on a report from the verge citing people familiar with the matter, but the report says that snap plans to lay off 20% of its employees it has about 6,400 employees plans to lay off about 20% of them the article goes on to say that they have been planning this for several weeks. they will begin on wednesday and hit some groups harder than others the article cites the t
team working on ways for developers to build mini apps and games inside snapchat, they expect that to be severely impacted are the words that the article uses and also its hardware division, which is responsible for spectacles and the pixie camera drone that was recently cancelled. snap declining to comment to cnbc on this reporting, but 20% of snap's workforce is expected to be laid off according to people familiar with the matter that spoke with the verge, sara. >> leslie picker, thank you very much of course we'll bring you any more information as we get it. i guess not too shocking for a stock that's down 80% or so from the highs. what's interesting is it's just the latest in a trickle of tech companies that had seen their stock prices suffer like robinhood and others that we haven't seen get into the macro data yet.
>> not quite claims have gone up a little bit, but there's definitely this theme running through mostly tech where everyone cared about chasing growth keep in mind snap is a big, successful company yet it doesn't really have a path to genuine bottom line profit at this point, at least not in the next year or two so all this stuff gets in the mix. a lot of ceos have expressed a ton of frustration about productivity levels in their forces probably overhired in a moment of labor scarcity and this is the result so we're talking about 12, 1,300 people would be about 20% of snap's workforce. >> it's interesting that the stock is lower sometimes the stock perversely rallies on this news because cost cutting is a good thing and so is financial discipline, mike, but not happening right now. >> no, it's not. who knows exactly why that might be unless it's indicative that maybe the numbers in terms of
revenue trends, advertising volumes, that's another shoe to drop and we're just hearing about the layoffs beforehand. >> let's get back to the broader market before we head into the close because we are seeing a broad sell-off today joining us is barbara doran. you've been pretty constructive and i know you've been buying in the summertime as we've seen this summer rally. what are you doing now and how are you feeling post jackson hole >> well, i am not buying anything right now i'm just watching and monitoring even though in my view the fed did not say anything new, he did put stronger language. to me it's almost a replay of what we saw coming into the second quarter earnings where the market got very oversold that's because this weren't sure and we still aren't sure what the time and duration of inflation will be. so i think we have potential to get more oversold on the downside when you look at what's happening, inflation is coming down we saw that in the pc number
last week. surveys are showing consumers are continuing to think inflation will come down you've still got very strong employment you mentioned the jolts number this morning some investors are interpreting that negatively. you've got consumer confidence that's bounced up six points to 103. so i think we'll continue to see inflation come down and we could be setting up for a positive surprise in the fall but in the short term given how investors are looking at this and worrying about earnings, and i think they could be discounting even dire earnings that i don't think are likely to happen given the scenario i just described, so i'm just waiting and watching a bit through labor day. you know, we've got private adp numbers tomorrow, the jobs tomorrow friday and in two weeks the cpi number there's a lot that could happen that could be positive, so we'll see. >> which sector or what types of stocks would you be looking to buy on your pretty rosy outlook
for the fall, which you don't hear too often. >> as always you look at some of the technology mark just mentioned whether it's the googles, the amazons, the lone duration assets, i think you can wait a bit launch because it looks as if growth could be scarce as the fed continues to raise rates continuing to look there and also some of the oversold retailers who have one-time inventory dislocations as everybody tries to figure out as demand and supply normalize, which is happening pretty independently of the fed. >> retail holding up a little better best buy is having a good day despite reporting comps down double digits. it was less bad than expected. barb, thank you. good to get your take. we've got two minutes to go in the trading day. mike, what are you seeing in the internals today? 1% down on the s&p and volumes as well, because we're still at the end of august. >> overall volumes are really
not impressive there's definitely a heavy skew to the downside if you look at the volume split it's been 80, 85% downside volume all day when you have energy plus tech down, a lot of times not an easy place to hide. look at the 2-year note yield. we did get the job openings number at 10:00. it twitched higher to just about 3.5% it's basically at the cycle highs right now. this is the highest since 2007 the 1, 2, 3, 4 and 5-year note yields are basically all raround the same volatility index ticks higher. we have a higher low mid-20s showing concern but not real outright panic yet, sara, as we try to hold right around the 50-day moving average on the s&p. let's take a look and where we stand the dow is down 288 points first of all, we started off positive as you can see. didn't hold that way for long. lows of the day down 450 points.
we're kind of below that right now, down 300 points or so nike has been the outperformer on the dow all day, one of the few dow stocks higher. with the bell you've got the nasdaq down 1%, the s&p down 1%. every sector in the red, energy at the bottom along with materials. that's it for me and "closing bell." see you tomorrow, everyone we'll send it into "overtime" with scott wapner. welcome, everybody, to "overtime. i'm scott wapner crowdstrike earnings are imminent we'll get you those numbers, the stock move that follows and everything you need. we'll also hear from dan ives on what elon musk's latest move means for his deal and the future of twitter. that drama taking a new turn today. we again with our talk of the tape, the fight over stocks. it's a battle that begins and ends with the fed and whether it will follow through on chair powell's promise to crush inflation or to back off