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tv   Closing Bell  CNBC  December 5, 2022 3:00pm-4:00pm EST

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popular in africa. that's the story of peer-to-peer crypto in africa people are brainstorming, talking about what kind of potential exists >> also others in the industry trying to distance themselves from sam bankman-fried >> if people stop believing, people who don't already believe, then the price is going to tank. you've got to be optimistic if you're holding it. >> you certainly do at this point. thanks for watching "power lunch. "closing bell" starts right now. >> thank you, kelly. great to have you back stocks under pressure to kick off the new trading week as more strong economic data raises questions about the fed's path forward. we're near session lows. this is the make-or-break hour i'm mike santoli the s&p 500 sitting on about a 2% loss. that gets it down to where the
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rally started during jay powell's public remarks last wednesday. not quite that low the nasdaq continuing to underperform bond yields up a little on more sturdy data. it's in the cyclical parts of the mark although utilities, the yield sector getting hit as well you do have things like financials particularly getting hurt as well as consumer discretionary and energy coming up, we'll talk about china's changing covid policy and the impact on the market and relations with the u.s., joined by eurasia group founder ian bremer later, jason furman says the fed may have to g higher with rate increases than people currently think. he'll join us to explain why let's take a look at today's action in the s&p. this is a very logical point for the sellers to really show up and try to get somewhat aggressive in talking about how this rally off the october low
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looks a lot like in magnitude and character what we got from june into mid august it went down the trend line from the entire year-to-date decline. it seems like the moment when it might have happened, you had the volatility index sink below 20 all these things coming together arguably, we are closer to when the fed might be slowing down if not pausing. all those things going back and forth. we're still about 1% where this rally started last wednesday however, last wednesday is the one day in the last seven when the s&p has been up. take a look at the rest of the world, the acwx versus the u.s you see global stocks catching up to the s&p 500 on a year-to-date basis the dollar coming down also, they're earlier in their reopening and revitalization period and did not have the ohios in terms of manufacturing that they're coming down from as the u.s. is right now. you can keep an eye on that. also value sectors are more
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global versus the u.s. which is still a growth centric market. let's continue the market conversation with fair lead strategies founder and managing partner katie stockton, also a cnbc contributor great to see you and have you on a day like this. how are you thinking about this pullback that we're getting today and how deep do you think it might go? >> i'm not entirely convinced this is the start of the reversal of down, but it certainly doesn't help the indicators we have short-term momentum falling off a bit in here. it's starting to impact our short-term gauges to some degree, but not on a widespread basis yet. we want to give it a couple of days and re-evaluate there are signs of upset exhaustion, very similar to what we saw in mid august so your comparison, mike torques the recent summertime relief rally is fair. the indicators are set up similarly. the declines on the back of that were very severe
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we're sort of mentally preparing for something like that. i do have a sense that perhaps this positive seasonal influences into year end might prevent that until january, but even still, the upside appears to be limited here. >> as we've been talking, the similarities to what we saw in the summer what are the differences aside from the seasonals it's anything about the nature of the rally, internal behavior, leadership or anything distinguishing it from what we did see in august with that peak >> not to any great degree in my work, except for the fact it's a more mature bear market cycle at this stage we'd like to see it mature in terms of the time frame which we're considering to be year-to-date the market internal measures have not gotten to that place where they're extreme yet. i think we are going to need to see some sort of virks rxx readg
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market breath looks great as well we saw great breadth expansion yet still at a lower high versus previous highs so the breadth measures are in the down transition. that suggests we'll see more in the next down link. >> is the pullback in energy, by far the leadership sector of the year, continuing today, still very modest in the grand scheme of things. is that something you think you should be concerned about or is it an opportunity? >> if you think about the energy concept, it down trended like crude oil prices or natural gas prices had it's remarkable how well the energy stocks have held up in light of the declines in commodities. now we're seeing natural gas down close to 10.5%, again i find it somewhat remarkable that the reaction isn't that
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terrible yet natural gas is looking over done on the downside based on the indicators and wci crude oil has good support in the $70 to $75 per barrel range i think there's a floor to this weakness and the energy stocks will be able to resume their longer term up trend of outperformance we have in the energy sector something close to 60% gain year-to-date, and i think we can trust next year won't be quite as impressive in terms of relative performance. >> katie, thanks so much, appreciate you reasoning through it all with us. >> of course, mike. >> katie stockton there. let's talk more and crude. pulling back this afternoon including an opec meeting over the weekend and implementation of a price cap mechanism on russian oil, brian sullivan joins us live from brussels with the latest what in all this should we be most focused on?
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>> let's give you the take dloet aways. a lot of headlines bottom line, new salvo in europe's energy crisis, as dan said, day one of the second stage, price caps, eu sanctions, russia vowed retaliation in addition to trying to cap the price of oil, it may also limit russia's access to crude oil tankers because of financing and insurance regulations which would limit the amount of oil they can sell around the world unless they start to build up what we have called russia's secret oil navy. documents obtained by cnbc showing a number of things number one, a large number of really old super tankers, some of them bound for the scrap yard most likely have been sold to undisclosed buyers my sources, they don't know exactly what that means, undisclosed, but it's likely either meaning russia or related to it. here is why. we know the other countries. here is another document that we received today about this topic.
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look at this, 52 recent sales of super tankers have gone, mike, to undisclosed buyers. you have uae, china on there as well india follows just off that list one wonders what oil naval fleet that russia may be building up now, tomorrow we'll be talking about natural gas. today was oil. tomorrow is natural gas. you heard katie stockton talking about it earlier this week -- last week rather, the ceo of spain's largest utility and gas importer made one point very clear. despite decent storage levels right now, the energy crisis here is far from over. listen >> definitely the crisis in europe is not over, but it's true we're initiating the winter season in better conditions than expected >> so today, mike, it's fair to say it's day one of the next leg.
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this year probably covered next year the very real concern, we'll hit it all day the role of u s l andg that may benefit as we're selling so much to europe because, let's hope it doesn't stay cold here cold is bad. back to you. >> for sure. kind of squeaking through so far this winter, brian i want to bring back what you were talking about in terms of the shipping maneuvers and all the rest of it, as well as what opec did or didn't really do this weekend knit it together with a 3% drop in brent crude. is it just market evaluation that supply in aggregate is not going to change that much, or are there other macro factors driving things today >> macro factors do not forget that u.s. is still selling oil from our spr, about a million barrels a day. about to wind down soon. it's been this artificial force. they're going to have to buy that back. also, with regards to super tankers, there's a lot of
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confusion out there about what kind of rules these tankers need there's been multiple reports today of basically traffic jams of tankers build up near turkey because the ships don't know the kind of documents in terms of insurance and financing proof that they might need i talked to people today and there's a thought there was a huge amount of russian oil production before the sanctions hit, so the market flooded with oil. probably why prices came down, mike if that oil sits at sea, almost like artificial storage for a while while we try to figure this out, the brent crude price forecast, the mean forecast is at 94 bucks for next month or the end of this year so we'll see if this little short-term lull lasts. not many i've spoken to believe it will. >> yeah. shadow supply there, brian great color. thanks very much >> thanks. all right. stocks are sinking in the u.s. shanghai and hong kong got a major lift as china relaxes strict covid rules
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up next we'll ask eurasia group founder ian bremer about the impact of looser covid policies. you're watching "closing bell" on cnbc. if you wake up thinking about the market
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we're just off session lows in the u.s under significant pressure as we head towards the close the dow down about 1.4%. hang seng and shanghai rallying on hopes of continuing reopening and easing of covid restrictions in china apple is looking to accelerate its shift to move production out
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of the countriment joining us, ian bremer, president of the eurasia group. ian, great to catch up with you. what's your sense about what the chinese authorities are doing here with this marginal easing of covid restrictions? is it simply a gesture in response to the public outcry or do you think it's part of a longer term relaxing of measures >> i think there's a real effort here there's a clear pivot away from focusing on lockdowns towards focusing on vaccination rates, particularly for the over 80 and those with significant pre-existing conditions. you're not going to hear the word mandate, but if you don't have a terminal disease and if you're not getting chemotherapy and those are the exemptions, they'll be working very hard in urban areas to get all those people vaccinated and boosted by the end of january that does reflect a desire,
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first of all, not to have major demonstrations occur again and secondly to respond to popular outcry that was not coordinated, wasn't a matter of political opposition it was two years of people having enough. we need to understand, given the efficacy of chinese vaccines and concerns of hospitals getting oechld, that reopening is going to be cautious and slow. there might be backtracking if local officials feel they have explosive caseload that's too great for them to handle. >> presumably president xi is also wanting to make sure there's not long-term damage to the economy beyond what it's already suffered and trying to get beyond this phase of retrenchment that the chinese economy has been in. >> i would absolutely say that's not the short-term priority. xi jinping in his party congress speech was not focusing on
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economic growth. he was focusing overwhelmingly on security, international security, domestic security, prioritizing political stability in the country that means that, if chinese growth has a three handle or four handle instead of five or six for the next year or two but don't have 2 million, 3 million, even 5 million chinese dying from covid, that's something they're prepared to accept this wasn't just in the run up to his getting his third term. in his private bilaterals at the g20 summit in bali, there was no sense from xi jinping that he was moving away from zero covid. he felt very confident the chinese model was the correct one and senior party officials weren't planning on moving i really think this is an incident where the population of china made a real difference in the kind of policies we're seeing out of a dictatorship that's a big deal, frankly, mike. >> for sure. if president xi is mostly
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focused on security as a top priority, where does that leave it with regard to u.s. relations? you had a little flare-up of apparent tensions over taiwan, and we have companies talking about moving production out. where does that sit? >> it can be duel use for the consumer economy as well as for the military economy those export controls from the united states in october, those aren't going away. if anything, they're going to expand so clearly that creates a level of focused decoupling between the united states and china. but the relationship i think is more stable today than it was certainly when pelosi was traveling to taiwan. that three-hour meeting between biden and xi jinping was about normalizing the relationship, finding areas where the two sides can cooperate, not areas just where there's strong
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composition. sheng is not looking for a bigger fight with the americans right now. if you look at chinese policies toward the american private sector since his third term as well as towards the german, the french, american allies around the world, it's been wanting to ensure those economic relations overall, the trade relationship remains robust i think that's -- to the extent you're seeing more pragmatism from the biden administration, it comes because it's easier to be pragmatic on chinese foreign policy as an american if it feels it's coming from a position of strength as opposed to weakness. i do think that's the way americans see it right now, both because of political instability concerns and economic challenges in china and also because of the midterm elections and recent legislative successes. >> got it. just quickly, you talk about biden and xi looking for areas where the countries might cooperate. what might that look like? >> some of it will be
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reengagement on climate. some is going to be efforts on trade that isn't decoupled this is one of the most important interdependent economic relations in the world and no one wants to see that die. so i think it's all about restarting high level negotiations and engagement between cabinet members in the united states and cabinet members in china that through the pandemic had really been frozen let's face it. these are the two most powerful countries in the world for two full years, the leaders of both countries had not met face to face despite the fact that they had a reasonably close and engaged relationship for well over a decade that's almost unprecedented in peacetime. it's good to see the back of that. >> a bit of a new steadier equilibrium. ian, great to talk to you, thank you so much. >> you, too. be good. let's check on the markets now. the dow down just about 500 points, s&p 500 down just about
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2%, around where it was in the last half hour, nasdaq underperforming and the russell down 3%. take a look at the regional banks today, sharply underperforming the market as the financials move lower, regional bank index down more than 5%. ahead we'll talk to the ceo of kbw who will join us with the bull case from the group "closing bell" will be right back
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today's stealth mover is science applications international corporation, the provider of technical, engineering and i.t. services for the u.s. government. beat revenue and earnings estimates for the third quarter. the company also raising revenue guidance for fiscal year 2023. the stock is up more than 4% today, more than 30% year-to-date part of that leading aerospace defense category after the break, former council of economic advisers chair jason furman says the economic data over the past few days could spell trouble for the fed. he'll join us next to explain
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jason, great to have you here. there was instant revisionism about the jobs number on friday. people say, well, maybe it was weaker than it looked on the surface, a shorter average workweek and maybe the wage growth wasn't as strong. you immediately felt as if it actually did show the economy running pretty hot walk us through that >> sure. first of all, i think wage growth is the most important that's the output of labor market tightness or labor market looseness. you had the eye popping november number, 7.8% annual rate people are right to point out part of that had to do with quirks in hours and severance pay and the like but here's the thing, september and october were both revised up by 1.2 percentage points at an annual rate. that's among the biggest upward revisions we've seen that means average hourly earnings growth trend is probably about 5.5% which means
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trend inflation is probably about 4.5% and that hasn't fallen over the course of the entire year. >> so do we -- are we confident in the direct linkage between the core wage growth and how it translates into realized inflation in the coming year that's going to be key to how the federal reserve has to treat it >> am i confident? no there's larger record terms around anything. if you tell me over the next year we'll have 5.5% wage growth, i'll tell you 4.5% core inflation plus or minus something. the plus and minus aren't shuj and they're roughly symmetric at the errors around them >> where does that bring us, do you think, in terms -- it's interesting. when we talk about how likely is a soft landing, people seem to be thinking it's either a soft landing or a drop into recession relatively quickly as opposed to
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things running hot with inflation above trend and maybe the job market remaining very strong where do you think it's settling out? >> i think there's four possibilities here there's a soft landing, i think at best about a 10% chance of that really hard to bring this magnitude of inflation down without a recession. there's the hard landing that solves it. but, yeah, i agree with you, i think there's two scenarios more likely than either of those. one is continued overheating, the unemployment rate stays below 4.5, the inflation rate stays uncomfortably high i think unfortunately the most likely scenario is we have a mild recession, it brings inflation down but brings it down to something like 3.5%. so it does not solve our problem and we need to have another go at the whole thing >> a go at the whole thing, meaning the fed would have to retighten from that point on >> yeah, exactly sometimes i talk to people in markets, oh, you have a recession and then you get 2%
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inflation. no recession means lower inflation. it doesn't mean 2% inflation you might end up at the back end of a recession, maybe a mild recession with a 3.5% inflation rate, and then you have to have a whole nother tightening cycle. i don't think it's rates go up, rates go down, rates stay down we might have to deal with this more than once >> just quickly, you think 6% is reasonable to target as a fed funds rate as this unfolds >> i think it's fine for them to follow the data. i think 5.25 is the most likely. i think 6, though -- is there a 20, 25% chance of that absolutely. >> "wall street journal" suggesting today the range might get up to 5.25 next week jason, great to catch up with you. thank you so much. >> good to see you all right. here is where we stand in the markets. the s&p 500 down 1.9%, just barely off the lows of the afternoon. nasdaq continues to underperform
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as does the russell. the dow is slightly outperforming. up next, we'll talk with kbw ceo tom many shaud. you can listen to closing bell by following the closing bell podcasonout yr favorite podcast app. we'll be right back. 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.
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regional banks deep in the red today, down more than 5%, underperforming the broader market let's bring in tom michaud of kew. tom, good to see you. >> great to be here. >> as a firm you've been
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favorable toward the regionals most of this year. they have outperformed versus other banks. where does it sit now? getting hit hard today a lot of concern about macro, maybe credit stuff but deposit trends as well. >> we've been getting cautious as the second half has been unfolding. in the second half of the year we've reduced three ratings for every one we've increased. we're getting a lot more narrow in our regional banks. the krx is the one we follow, out performed the big banks by roughly 13%, 15% a good call year-to-date however, we're getting more focused on banks with strong balance sheets especially when it comes to deposits. >> some of the concern out there with the regional banks as we see them today has been, what are they going to have to pay for deposits or just deposits in an ebb tide kind of after the pandemic. >> let's start with the big picture.
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the big picture is covid happens, the government response both from fiscal policy and monetary policy is to flood the economy with support so we believe that roughly $3.2 trillion of excess deposits made their way to the banking system and now we're unwinding that we think that number is now down to 2.5 trillion. banks are seeing deposits starting to flow out of the system as they look for higher rates. that's okay if you're a bank with plenty of deposits. if you're a bank that has a very high loan-to-deposit ratio, it's changing the dynamic pour you. we think the character of each bank balance sheet is a little bit different. we think you'll see a slowdown in growth over the coming quarters on banks who don't have the same degree of core deposits. >> where does that take you in terms of the better-positioned banks right now? >> if i wanted to boil it down to what makes the most sense, there are outstanding regional banks around the country that trade at seven times nextier's
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earnings, they've got really good dividend yields, always done well on credit in the past. i think of companies like old national, webster, east-west bank those are some of the core names we've been recommending. so we like that group. we've also now been going back the other way. earlier this year we upgraded both goldman and morgan stanley because our view is there's a rolling recession going through financials the mortgage business and the investment banking business today feel like they're already in hard landing recession. our view is what are the stocks telling you? we upgraded goldman and morgan when they were out of favor. they've been working well. our view is sooner or later the capital markets are going to open when they do, we'll see really robust results out of the banking sector we started reversing the call we had at the beginning of 2022. >> does that apply you're not concerned about the quality.
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>> we're expecting higher credit costs, expecting inflation to kick in. we haven't expected a hard landing as far as credit goes. i'll tell you, we're paying a lot of attention to the shadow banking industry we've been talking about it the last two weeks it's notable there have been no hiccups in the banking industry, yet we've had severe stress in bankruptcies in the shadow banking which is that crypto world. >> sure. >> there's going to be i think on the for instance, the greater risk-taking balance sheets we think are the ones we're staying away from. yet we think the companies that have done well in prior turns are the ones that we like the most now >> tom, thanks very much. >> mike, good to be with you. up next, analyst dan ives will join us to talk about the report that's sending tesla shares lower today that story plus salesforce sinking and reads el tfehe heat when we take you inside the market zone.
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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 ali mccartney from ubs is breaking down the crucial moments of the day dan ives on tesla's pull back and deirdre bosa on salesforce ali, about a 2% gut check in the s&p 500. maybe no big deal after we got this rally of as much as 17% it seems to show how delicate the path is perhaps to a favorable economic outcome we've got two days of relief when we think the fed is going
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the pause. a couple days of pretty sturdy economic numbers now we're worried again. where does that leave you with your stance on the markets and discussions with clients >> there's a lot in there, mike. the last week has been a series of days of whiplash. ultimately we have this seesaw where trading activity price action is whip sawing between which is going to go down further and farther, inflation or growth. so you have a day? which china feels like it's going to reopen. you get good inflation news, and then that dominates. i'm thrilled that we've had the recovery that we have. i think, as all your guests have seen, we've certainly seen more medium and near-term risks than we do upside largely because because, if you think about where we are and what the expectations are for earnings, for growth, for
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inflation, for the path of interest rates in 2023 and then you contrast that to a market that is trading from a multiple perspective above its historical high, that just doesn't jive so i think from a markets perspective, december, we're not expecting a lot of new news, but we are expecting some tax laws harvesting selling, and we're expecting a lot of institutional money to probably stay on the sidelines and wait for the january reset. so this is a time to be thoughtful about how you're positioned, how much cash you have, where you want to be going into next year and what the expectations are, probably not to take additional risks or be too cute. >> what about this rally we've seen in bonds? a lot of folks seem to have listened to the observations people have been making. relatively safe yield to lock in where do bonds sit right now in terms of the risk reward
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>> i think for the first time in, gosh, 14 years, it's pretty high up on the scale for people like me and my clients, the ability to be able to incorporate something into a diversified portfolio beyond equities is definitely pretty exciting we have taken some short-term high-grade credit on the table, but we're still a little early i think to really completely lean into that trade and a little too uncomfortable with what's ahead of us to get truly into upper tier high yield. but i think the exciting part of 2023, even if we have a rocky first or second quarter which we are expecting is that for the first time since i ran a derivative desk during the financial crisis, we're going to have the ability to invest in bonds in certain parts of the equity market and in many parts
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of the private market in a really fundamental way once the story gets back to fundamentals and not just technical price action that's pretty exciting >> it's certainly a big tidal shift in terms of there being a bit of a cushion to the markets from bonds let's talk about salesforce, at the bottom of the dow today, dealing with another executive departure. stewart butterfield who is leaving around a year and a half after the acquisition of slack by salesforce closed last year co-ceo bret taylor stepped down deirdre, tease out exactly what seems to be plaguing the stock at the moment. >> it's that top line growth they have actually been improving the bottom line, their operating margins. this is a company that has been known for 20-percent-plus.
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for the current quarter it's expected to grow just 9% this is the big step down and the departure of butterfield and tableau ceo mark nelson who also left suddenly. that's raising questions about who is going to lead the company next after benioff bret taylor was the second co-ceo that didn't work out. there's other people at the company. people on the street love people like taylor and butterfield because they created their own companies. so who is remaining in salesforce that's one of the key questions to lead it and who wants to lead salesforce if it's going into a slower growth period where it's maybe already established. >> a slower growth period perhaps, and i guess, also, it seems to also fit in the category of a lot of large companies that were enjoying such long-term tail winds in terms of top line growth, secular growth in the categories and now maybe find themselves overstaffed or not as productive
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as they'd like to be in some areas. i guess is the founder, marc benioff, the person to try to steam line things? >> we know marc benioff is a sales and marketing machine, so highly regarded in the bay area. the key question is who will be in charge of that next generation technology, continue that growth from that pandemic bump there's a few candidates there people know sarah franklin, cmo, also brian millen -- excuse me, sarah franklin is cmo. also a guy under the radar, steve fisher, he rejoined the company two years ago, seen as the architect of genie there are people who could do it attracting that engineering talent, bret taylor was seen as key to that because he was so well regarded. at a time when they're heading into slower growth and they need to continue that sort of pandemic run or maybe become a
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little more leaner, who is going to pick up the slack >> it's a really interesting moment for the company meanwhile, after being cut in half, the stock looks a whole lot less expensive than it almost ever has if you believe the cash flows now projected dee, thanks very much. great color on salesforce. tesla also under pressure today. the company refuting a report from this morning that the ev maker is planning to cut production of the model y at the shanghai plant shares are down more than 6%, one of the worst s&p performers. let's bring in dan ives. a $250 price target on tesla dan, whatever the specifics of production cuts, not so much as reported or what from tesla in shanghai, it seems a general sense out there that china is not really firing right now as a growth driver. where does that leave the stock? >> china is the hearts and lungs of the tesla story
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i think it did come off a strong month in november. competition is increasing. i still believe -- they're going to battle through some of these recessionary headwinds in china. the long-term story is there i think the company will do over 2 million deliveries overall in 2023 the stock reacting because -- i say gut punch perception in terms of the tesla story i do believe this is more of just a near tsh term patch, not the start of a longer-term trend. >> there was a time, dan, where most of the last several years when a report like this wouldn't really hit the stock because you had those people who were so focused on the big picture and what tesla was going to be doing to change the industry and the world down the road. now you have a stock that's half off its highs. it seems like it lost the benefit of the doubt where you have elon musk preoccupied with twitter or whatever the other reasons are, it would seem
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>> look, it was a cinderella story for three to four years. they hit definitely a significant i think sort of headwind, not just in terms of china, but from perception especially when it comes to the musk-twitter overhang. they're battling through that. i think you've seen a stock that is a glass half empty from a wall street perspective. you're seeing a lot of jittery investors. any news like this, you see a knee-jerk reaction, especially with china in my opinion the long-term trend with tesla is unchanged, but clearly they're going through what i view as sort of a fork in the road situation in china. >> are clients in theory worried just in general about expensive consumer goods if people are starting to brace for some kind of an economic recession >> i think the bigger worry, and i heard this morning from clients is competition in terms of ev in china
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you've got byd, neo and others they could cut another 4%, 5%. but i do believe there's a massive opportunity in china in ev that could be what is a trillion dollar market opportunity in terms of the industry. i think that's a bigger worry, is that almost a game of thrones in the ev race in china. >> alli, how would you think -- this is like the marquis busted momentum stock that's taken its medicine to some degree. >> i think the last question you asked is the one i would ask do you want to be anywhere in consumer discretionary right now. it's a really hard place to be when you have both cyclical headwinds and you have all the specific and esoteric issues around the stock and its leadership, and you've had such amazing price performance over the last number of years, is this the place you want to be for the now?
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i would argue there are other more defensive and quality names to be in that have much less hair on them >> that would seem to be the way the market is leaning at the moment our thanks to dan ives, appreciate it, dan let's talk sl green. this stock tumbling, manhattan's largest landlord on pace for its worst day since september, cut its dividend by more than 13%. let's bring in diana olick to discuss. in addition to this cut today, also seeing problems with apartment and industrial reooet >> they're looking at the work from home issue. on top of that seeing tech cuts because of the inflationary environment, lay-offs at tech companies. that's sl green. then you move into the apartment and the industrial sector, and we saw news this week from two very large non-traded reits.
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they announced they're limiting redemptions by investors because they reached their limit they're nervous about the markets, concerned about the rising rate environment, concerned about the economy overall and how that's going to be hitting rents we're seeing rents which were sky high starting to weaken a bit, which hits apartments if you have a recessionary economy, that's going to hit warehouse because people aren't buying as much we're seeing the publicly-traded apartment reits, udr, equity residential and camden getting slammed, down over 30% year-to-date some of the fundamentals are pretty good. if you look at the coastal markets for rents, those are weakening a bit. camden is in the sunbelt area which is still quite strong. they're still getting slammed along with the whole reit bucket that investors are truly nervous about. >> no doubt about it it does seem as if you have to
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separate the sub trends that are going on i guess the bigger question, you mentioned the blackstone situation. that was a private portfolio where they can kind of market their assets as they wish, whereas the public markets seem like they've taken a lot of that pain. >> you're seeing this very, very wide gap between what those private funds are saying and what the public markets are saying that's where things get a little more interesting because you don't know as much about those as you do in the public market i think that's what we have to watch, the divide between those two over the next couple months. >> no doubt. diana, thank you so much alli, what about this idea of reits? obviously people went there for income now you can get similar yields out of many areas of bonds do you think there's any value in office reits or any parts of the reits space at this point? >> i would separate the discussion we all know that no real estate -- not all real estate is
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created equal. that's never been more true than it is now. i would say you want to lean in in areas where the demographic supports you for all the reasons diana just highlighted, that's probably not in offices given this systemic change that we have seen, but there are certain both geographic areas and areas of sort of the economic structure that i think are still supported. now, when the public versus private conversation, those are different, too, because you have the price action of a lot of the public reits, whether they're good, bad or indifferent, largely being informed by the interest rate movement during the day and as a duration of interest rate sensitive vehicle as opposed to fundamentally saying is this an undersupplied or oversupplied area, what are the demographics are they helping or hurting? so office is an area i would stay away from industrial and warehouse seems a
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lot more interesting i've heard a lot of anecdotal news that you wouldn't expect around retail shopping centers getting more traction and having higher -- having lower vacancy rates than they have in much time i think you really need to dissect where you're investing and why you're investing there and what your thematic reasons are for doing so. >> probably not the time for the broad real estate sector etf at the moment alli, thank you so much for the time really appreciate it. let's take a look under the surface of the market. a pretty broad selloff for most of the day the new york stock exchange is running with just about 90% downside volume. i do want to take a look at the two-year note yield. it did perk up as well you have services data as well as the "wall street journal" report about the fed maybe going higher for longer. now we're up 4.4%. the s&p 500 has seemed to coalesce around that 4,000 mark to close
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we've gone back toward thursday to wednesday levels of last week, of not giving up the entire pop we got on wednesday when jay powell did speak about the possibility of slowing down the pace of rate hikes the volatility index up above 20 again after one day close below the level. that will do it for "closing bell." we'll send it over to "over time" is scott wapner. >> welcome to "overtime. we're getting started in a little bit i'll speak to schwab's liz anson ders we begin with our talk on the take soft landing scenario, is it becoming more likely even in the face or mof fed tightening dan greenhouse is here with me onset. is that part of the conversation now? soft landing is more possible than


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