Closing Bell - Closing Bell: 4-Day Win Streak, Oil Rebounds & Inflation Peaking? 7/7/22

Episode Date: July 7, 2022

Stocks rallying again on Wall Street with the S&P 500 ending in the green for the 4th straight day. That's the longest winning streak of the year for the benchmark index. However, Wells Fargo's Paul Christopher recommends staying defensive despite the recent rally, but believes investors should be long-term buyers of tech stocks. World Bank President David Malpass says the U.S. may be able to avoid a recession and inflation may have peaked. NatWest Markets' Michelle Girard explains why she thinks tomorrow's June jobs report will come in stronger than expected and what that means for the economy. And Oil rebounding from this week's sharp losses. Hayman Capital Management Founder Kyle Bass correctly predicted this year's oil rally and thinks investors should still be buying oil on any dips.

Welcome to Closing Bell. Watch the S&P 500 in this final hour near the highs of this session. If it does manage to close higher, that will match its longest winning streak of the year. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we stand in the market right now. There's the S&P. It's up one and a half percent right now. Best performing sector is energy. The Nasdaq is also doing well, up two and a quarter percent. So technology continues its rebound. It's been a story all week. Yes, July around this period is usually seasonally strong, but increasing signs that inflation is easing playing into the narrative

here. Small caps are working today. They lagged yesterday up two and a half percent and the Dow up one percent. You've got big gains for names like Caterpillar, Nike, and Boeing. Let's do the sector heat map because it's not all wins across the board. I mentioned energy. Crude oil is bouncing today. It's up 4.5% after a slide earlier this week. So it's on top. Consumer discretionary is going strong as well.

You've got especially the beaten down cruises like Carnival and BorgWarner, which actually hit a 52-week low yesterday. It's higher by about 6%. So some of the beaten down cyclicals are actually working today. Technology is working, communication services. The two lagging sectors are both defensive, real estate and consumer staples. But they've been outperformers on the year. Coming up this hour, we will discuss the markets, China tariffs and oil with Hayman Capital Management founder Kyle Bass. And then the president of the World Bank, David Malpass, on growing recession fears globally.

Time, though, for today's market dashboard. To start us off, Mike Santoli is here taking a look at the role Mike's sentiment might be playing in the recent winning streak for stocks, which is interesting that they're so high today, given Treasury yields and crude oil are back rising again, which have been pain points for the market. They have been. Now, both of them well off their highs. So that's probably allowing stocks to have this follow through to the upside, this recovery.

Yes, four-day win streak. The fact that it's only the second one of those this year tells you what a rough year it's been, because that's not a particularly remarkable long streak. The two-year chart of the S&P 500 somewhat tells the story not just of the four days, but this mid-June low is the latest one that, you know, the bulls are making a bid to say that that's going to be consequential. Remember, we were up 6% just about in the S&P week before last, gave back less than half of that last week. It felt nasty last week, but we didn't really kind of backslide all the way. And right now, I think what you'd have to say is this downtrend

line is what everybody's watching. Four thousand on the S&P. A lot of stuff comes together right there. So another three percent upside. Then you can start talking about whether, in fact, this move is going to have a little more traction than the prior downtrend rallies that we've seen. Now, take a look at the sentiment picture. So this is the weekly American Association of Individual Investors bullish percentage on a 52 week average basis. Bespoke basically says over the last year, how many bulls have there been? It's rarely been this low. Right. You have a couple of times back in the late 80s after the 87 crash that left a long hangover.

And then, of course, you have it right in here. And so essentially that was in 2016, by the way, 15 into 16. You had this six, eight month period where people were very despondent. You had Brexit coming up. And so all I'm saying is this is definitely a net asset to have people be this kind of fatigued by the market. I say the opposite of love. It's not hate. It's indifference. I think a lot of investors are essentially just checking out and surrendering and saying, look, it's been too tough to play. So it's not as if they're mega bearish, but they're definitely sidelined to some degree. So now we get to the setup for earnings season.

Big banks start to roll out next week. And before this week, it looked like actually it was a good setup because a lot of the bad news was priced in. What sectors will you be watching and where are the expectations? I think you would want to be looking at the cyclical sectors, the ones where, you know, the stocks may be down quite a bit. Maybe the estimates haven't fallen quite as much. And then the big tech stocks, are they going to be sensitive to the macro slowdown or not? Or exactly how much is things like digital advertising already priced in if there's any kind of little bit of bumps in the road along that. So all that stuff matters.

I do think I agree with you. It was looking like we were going to go in on the lows. Now we're not. We're 7, 8 percent off the intraday lows at this point. Apple, Tesla, Alphabet, NVIDIA leading the NASDAQ again today. Really some good strength in those names this week. Mike, thank you. We'll see you in just a little bit.

Before earnings, we're getting ready for the big jobs report out tomorrow morning, expected to show a gain of more than 270,000. The Federal Reserve also keeping an eye on that number as it tries to cool the labor market and inflation. Just in the last hour, Fed Governor Christopher Waller said he is backing another 75 basis point hike at the Fed's July meeting. Joining us now, Michelle Girard from NatWest Markets and Paul Christopher from Wells Fargo Investment Institute. I think that's the big question for investors, Michelle, is whether the Fed once again will follow the markets. Maybe not in the next meeting. They'll do 75, which is the expectation. But just in terms of cooling down the rate hikes here on signs that inflation is easing.

Yeah, I think that's exactly right. The market is priced in an awful lot of Fed tightening. We're looking for a fund rate over 3%. And I think, as you said, the expectations are most likely 75 basis points in July, maybe another 50 in September. But will that be essentially it even if they do a little bit more between now and year end do we need to pre you know reprice even higher or is there a risk the fed could end up having to do more and right now as there's signs of inflation cooling is there signs of um maybe in some of the cooling in terms of the u.s economy it doesn't feel like that that that will need the market needs to worry about the Fed doing even more. And I think that that's what tomorrow's numbers will be really important. If the numbers suggest wage growth may have peaked, employment is strong, but still somewhat

cooler, then the market can get comfortable with the idea that enough is priced in for the Fed right now. And I think that would be good news. Also, both Waller and Bullard today were very confident, almost cocky in talking about a soft landing. They think they can pull it off because everybody else is saying that's going to be very, very difficult, including the Fed chair himself, Paul. So so are you are you a buyer? Do you believe in this rally that we've seen this week? Would you be putting money to work on the idea that it's been peak hawkishness and peak inflation already in the market? No, we're not buyers of that idea. And we think it's going to be extremely difficult. You know, historically, the Fed has had a lot of trouble and its batting

average is well below 50 percent in terms of engineering soft landing. So, no, we would be fading any rallies here and focusing on the opportunities to be defensive in fixed income and buy quality and go up cap of market in stocks. So when you say defensive in stocks, do you mean consumer staples real estate not working today, but have worked so far this year? Are you sticking with those kind of groups? Yeah, we upgraded staples or We upgraded utilities. We're at market weight now. We'd be focused on energy at the other side of the barbell. We also like tech here. We'd be buyers here, but looking for quality. Our colleagues have good lists of individual companies. That's not my area, but we do like energy and tech. We'd also throw healthcare in

there as a quality sector. Companies and sectors that have good cash flow, good cash to debt, and really good organic revenue growth prospects for the future. That's how we would position in equities and use this opportunity to fade rallies, get out of cyclicals. So, Michelle, I think it depends on wages, right, and the CPI report on Wednesday to determine what happens next. What are your expectations around some of these key numbers? Well, so the wage number for tomorrow, we're a little bit higher than consensus at four tenths, but that year over year number we have ticking down. And I will say, looking ahead to the CPI, we think you're going to have maybe one more bad month, but that will

be the peak. Our expectation is, is that this June number will be the peak our expectation is is that this- June number will be that the peak in your start to move lower of course. The decline in energy prices that we've seen over the last month is is very positive as well as the easing off in- in other commodity. Prices and so I

think that if we can just sort of get over this hump if the numbers don't. Surprise sharply on the upside and I don't. Even with the wage growth numbers we've got good evidence that you use you're seeing a pickup in the

labor force participation rate is more workers are coming back into the labor force. That should also help to ease some wage pressures so it feels to us like. That the peak is is in in fact and again I do think that. A longer term question

is how low will inflation go will we be able to get all the way back to two percent but that's a twenty twenty three story- not something I think that the that the fed or the markets will have to deal with near term near term I think the

trend will be moving the right direction. Agree what whether we can get back all the way down to two percent or whether the fed will be able to tolerate something higher and maybe they'll even change their target, something they've dismissed right now. But let's see. Paul, Michelle, thank you both very much.

Thank you very much. That's a conversation for another day. Up next, World Bank President David Malpass on whether central banks are doing enough right now to prevent a global recession. And remember, in January, Kyle Bass correctly predicted oil would rally well above $100 a barrel. We'll find out whether he thinks oil could head back to the highs of the year following today's rebound, but the big sell-off we've seen over recent sessions. You're watching Closing Bell. The Dow is near the highs of the session, up more than 300.

We'll be right back. Check out today's stealth mover. It's Helen of Troy, which is a big loser on Wall Street, down almost 9%. The housewares and beauty products maker beating earnings estimates, but the stock is under pressure because the company slashed its full-year outlook, both revenues and profits, blaming inflation and macro issues for a slowdown in consumer demand. Meantime, global growth expected to slow as well to 2.9%, and that is down

from 5.7 percent growth that was expected last year. That's according to a report from the World Bank. And it expects that slower growth to stick near that rate for the next two years. Joining us now in an exclusive interview is the president of the World Bank, David Malpass. President Malpass, always good to have you back on. What are you guys thinking as far as the world economy and how it looks into the end of the year and into next? Hello, Sarah. These are hard adjustments. One is on the energy side. There was dependence on Russia and that the world is trying to adjust to that and to realign. But that takes time. That takes a lot of new production in other parts of

the world. And then on the monetary policy side, the interest rates were near zero in quite a few of the advanced economies. And so they need to normalize. And that applies to bond yields as well. So these are hard adjustments for the world to make. Developing countries in particular are under a lot of pressure. What about the U.S.? What are the odds of recession, do you think, at this point? You know, odds are there's always some chance of a recession. They're higher now. We've seen the first quarter weak and some of the forecasts are for second quarter weakness. So, you know, it's possible that that's happening. I'm encouraged by some of the trends on the U.S. side, but

I think we also have to look at the weakness in Europe, in Japan, and in China as being contributing factors for the global slowdown that's underway. So even if the U.S. can stabilize or even pull off a soft landing, that still leaves quite a bit of the world in danger. And what's interesting about your forecast is you do not see a sharp or quick bounce back. You expect these lower growth rates to stay. Why? This has to do with the investment weakness of investment over the this year and the last couple of years, but also this energy realignment I mentioned, that is a big challenge for the world to make that kind of adjustment. And that's penetrating, you know, into the fertilizer markets, the food markets,

and that really slows down developing countries. So if you think about the global population, billions of people are in a prolonged slowdown related to the adjustment in energy and also the adjustment in interest rates that was probably needed even before the crisis. Do you think we've seen the peak levels on inflation around the world? We may have seen the peak in advanced economies, you know, and in developing countries, many of them have done already several rate hikes from their central banks. So from on a month on a month over month basis, we may be getting we're probably at the peak. But that still leaves inflation too high for central

banks to be comfortable. And also, you know, their portfolios are challenging. You see that in Europe. They're struggling to buy enough of the government bonds to keep bond yields down in the weaker economies. And in Japan, they're struggling to keep their cap on bond yields. These are dramatically different monetary policies than pre-2008. And there's a lot of adjustment that has to be done to get used to that. Well, just look at the currency market, David. Again, the dollar is strengthening. We've seen 24-year highs against the yen. We're almost at parity against the euro. Emerging markets currencies now in the last six months have gotten crushed. You guys at the World Bank and the IMF follow these sorts of things and the

disruptions that they have. How problematic do you think this is? Exactly right. It's hard to think that we're stabilizing because of those moves in the major currencies are still ongoing. And that means there's probably quite a few more rate hikes in the prospect outside the U.S. And the U.S., we know, is likely to have more. That puts pressure on the debt in developing countries. So that's the reason for thinking of this as a prolonged, difficult period for the world over the next three years. And that's on top of there being shortages of natural gas in particular. And that factors into the fertilizer and food markets. You know, it's a direct chain.

And I want to come back to this issue that the massive bond portfolios held by the central banks are part of this challenge. How do you begin to unwind that maturity mismatch that resides in the central banks. No, the QT experiment will be interesting. David, I also have to ask you about news of the day with Boris Johnson stepping down. This is a country that has 9 percent inflation rate, rapidly slowing growth here and now political crisis. What do you see ahead for the world's fifth biggest economy? Political uncertainty, yes. But from the standpoint of their ability to create markets

and to innovate, to have financial services, to have innovation through their business climate, you know, they went through Brexit and people said that was going to be a catastrophe. Well, it's been a challenge for them. But countries tend to bounce back if they're given a chance. So that that's my outlook for the UK. And I would say for most countries, if we give them a chance with policies, they can bounce back after these travails. Not so bearish. David Malpass, thank you. Always good to talk to you about what's happening in the world. President of the World Bank. Let's give you a check here on where we are in the markets. We're nicely more than 380 on the Dow. The S&P is up 1.7 percent. We're building on the gains for the week and on the day at session highs of two and a half percent.

Look at the Nasdaq. As far as the strength, every sector has turned green. Even some of the defensive that we're lagging like real estate and consumer staples, just turned positive on the session. Energy stocks are zooming. They're up 4%, which makes them down only 2% for the week. Boeing's a big Dow winner today, despite a warning from the aerospace giant's CEO. We'll share the details of that straight ahead. And as we take a break here, as we head out to break, check out some of the top search tickers on CNBC.com. Ten-year Treasury takes the top spot again. And the 10-year Treasury note yield is actually higher today, passing 3% again. So a little bit of selling of bonds. Crude oil is back rebounding after a big slide, still down for the week. Tesla, a lot of the big cap tech names are higher and

driving the Nasdaq. Tesla, Apple, and Nvidia are the top three. S& 500. And there's Apple up two and a half percent. We'll be right back. Boeing, big factor helping out today's rally, despite some cautious comments from the company's CEO, Phil LeBeau with the details. Phil. Sarah, these are significant comments from Dave Calhoun, CEO of Boeing, and it has to do with whether or not the company potentially scraps plans to build the stretch version of the 737 MAX. That's the 737 MAX-10. That is in development right now. It has not been certified, and that's why these comments are relevant. He says they could cancel the program if it does not receive a waiver requiring a certification by December 20th. You might be saying, why December 20th?

Well, back in 2020, Congress passed the Aircraft Certification Safety Act. This was in the wake of the 737 MAX crashes. One of the requirements, a new crew alert system. Again, this goes into effect for aircraft certified after December 21st. But here's an important point. Congress could issue a waiver exempting the MAX 10 from having to put those crew alert systems in these aircraft. Dave Calhoun says the significance of this is that that system would require more training for companies that order the aircraft. He says, I think our case is persuasive enough. This, meaning the potential canceling of the program, is a risk I'm willing to take. If I lose the fight, I, the important thing to keep in mind is if they are required to put this new crew alert system in

and they can't get this plane certified before December, which is looking unlikely, well, then potentially a lot of their customers could sit there and say, wait a second, we've got to go through all new training for our pilots who are in the Dash 10 versus the other 737 Maxes. That potentially could mean fewer orders. It's a costlier road to go down, not only for Boeing, but for their customers as well. This is going to be an interesting discussion on Capitol Hill over the next several months. It is also interesting that it's not having an impact. Boeing up 3 percent, adding 27 points. It's down 30 percent this year, I guess, to your point.

Yeah, we're a long ways from this being decided, Sarah. That's why. Got it. OK, Phil, thanks. Phil LeBeau. Wall Street analysts issuing a slew of inflation related stock calls today, even as inflation is showing some signs of cooling off. Up next, the buzz on whether Wall Street is late to the party and what it means for investors. And then later, Hayman Capital founder Kyle Bass on how inflation and the market could be impacted if President Biden does decide to roll back tariffs on Chinese goods. We'll be right back. What is Wall Street buzzing about? Inflation.

Well, some equity analysts are just starting to get the memo, perhaps better late than never. Take some of the research calls out today. Bank of America, for instance, cutting its price target on Nordstrom, citing inflation concerns. Also downgrading Kohl's to underperform because of weaker demand due to inflation. That analyst cut her price target nearly in half to $26 on the squeeze we're seeing in rising prices. And then Kellogg gets a downgrade by UBS because of inflation costs. The company is going to experience a significant amount, according to the analyst behind the note, and won't be able to pass it all on. But here's the thing. At this point, we are actually starting to see signs inflation is

really coming down. JP Morgan actually out with the note today saying food inflation has gone from a boil to a simmer. Energy prices have plung. And Patrick DeHaan of GasBuddy tweeting that he's counted more than 2,500 gas stations with gas costing $3.99 per gallon or less. We have yet to see whether the inflation relief is more than just transitory. The big CPI report comes out next Wednesday. So does the parade of earnings. The question is, is the inflation impact already in these stock prices, which have sold off sharply this year? And some of these analysts just

catching up. That will be a key theme and a question in earnings season. Here's where we stand right now in the markets. Near session highs. We're going strong, up 2.4 percent on the Nasdaq, up one and a half percent on the S&P. And now every sector, as I mentioned, has gone green. Energy's in the lead. Real estate is lagging, up 1.5% on the S&P. And now every sector, as I mentioned, has gone green. Energy's in the lead. Real estate is lagging, but it's higher. Started the hour lower. Consumer discretionary is also doing really well.

And some of the big winners there include Carnival, Ford, BorgWarner, Royal Caribbean, and Bath & Body Works. Up next, Hayman Capital founder Kyle Bass on whether oil prices will be able to rally back to new highs following the big snapback we've seen in recent sessions. We'll be right back. We know President Biden is considering rolling back some of those U.S. tariffs that we imposed on Chinese goods in an effort to tamp down inflation. Treasury Secretary Janet Yellen, a critic of the tariffs, raised the issue during a call with China's vice premier earlier this week. Joining us now is Kyle Bass of Hayman Capital Management. And Kyle, we know you're your longtime hawk on China.

I assume you think this would be a big mistake, even though Wall Street's really been cheering it on as a way to juice growth and put some pressure on inflation. Well, hi, Sarah. It's a good thing Wall Street is in charge with U.S. national security. This would be one of the biggest mistakes that the Biden administration would make from a policy perspective. If you think about it, Sarah, the reason we put these tariffs on had nothing to do with, quote, a trade war with China, which is kind of how it's described in the media. What's important to note is China can act in uneconomic ways in certain sectors to ruin certain sectors of our economy and i.e. make us more dependent upon them. For instance, in the aluminum business, they were giving the aluminum smelters in China free

electricity and they were selling aluminum far below where we could sell it here in America or make it in America. And they took our capacity utilization from the high 80s to the low 70s, meaning bankrupting our entire aluminum business. Well, imagine if we had to rely on China for our strategic and military aluminum. So that happened in steel, that happened in aluminum. And what we're talking about is saving like eight basis points on inflation to make a giant policy blunder from a national security perspective. It has to be one of the dumbest things that this administration's ever thought about.

Well, I do think there's a tension in the administration. I don't I'm not sure the U.S. trade rep tie is very is in favor of this. And I think it's why it's so delayed in terms of announcing any kind of decision on this. Are we getting anything out of it, though, Kyle? Because the Trump administration wanted to get that. They did that trade deal, and China hasn't fulfilled its end of the bargain in terms of buying U.S. products, and everything's kind of gone haywire anyway

because of what's happening with global growth and inflation. Yeah, you know, the deal that we announced, the, quote, big trade deal that President Trump announced with China was something that he actually tried to defend his entire presidency. In the end, do you know what percentage of China's end of the bargain they held up? Not even 18 percent of the bargain. So what are we getting from it?

Well, look, I think the administration is trying to desperately tamp down inflation, Sarah. And I think anything that they can push forward helps. And you have to realize that the Chinese Communist Party pays a lot of lobbying firms and they pay. They have a lot of advocates in U.S. corporate business to push the president to try to reduce tariffs because it's what the Chinese Communist Party wants. Right. They use, right? They use our media, they use our system against us. And it's important for us to realize kind of what we'd be giving up from a national security perspective for eight basis points of inflation. It's like taking a morphine shot for, you know, a cancer problem. It's ridiculous.

OK, well, speaking of national security issues, I got enlightened on the chips issue last week at the Aspen Ideas Festival, did a panel with the Intel CEO and with Senator Rob Portman about the dire need for building semiconductor plants in this country and getting that chips act passed from a national security perspective. I don't know if you've been following the ASML, the pride and joy of the Netherlands, big semi manufacturing. So the U.S. government now, according to reports, wants to prevent it from selling to China. And then China in response has accused the U.S. of technological terrorism. And I'm just curious, Kyle, as someone who watches this very closely, where you think this goes on semis? So, Sarah, if you look back, you remember the Broadcom deal that we actually blocked from a CFIUS perspective and we're blocking this. And heretofore, we've been able to work together with the Dutch government to keep the most advanced chip making technology away from the Chinese and away from their ability to even see it or steal it or buy it. And in this case, ASML makes, as you know,

probably the single most important photolithographic process that enables chips to be printed via light. And so far, we've been able to keep this technology away from the malign activities of the Communist Party. And I hope we're able to keep doing so going forward. I think it's a very smart thing to do. And Sarah, you know, listen to the joint press release or press conference between FBI Director Wray and the MI5 director. And you see

that we're opening a new case on Chinese IP theft or malign activities every 12 hours in the united states think about this we're opening 700 chinese cases a year and yet wall street can't wait for another chinese deal to go through and we can't wait to invest more money in chinese companies this schism to be fair they're they might be in a better spot than we are right now they're stimulating their inflation is very low their stocks are doing really well because they've got a pent up demand surge coming here from the covid lockdowns. You can't deny the fact that that's and that's a good spot to be in right now for the markets, at least. I smile because they have a closed capital account. Their currency is not even convertible into global currency today on any scale. Their banking system's three

and a half times more levered than ours, and they're run by a genocidal dictator. I mean, they are not a better place to be. They're not a better place to live, and they're not a better place to invest in because they don't even have a rule of law. I don't buy what Wall Street sells me, if you can't tell.

I can. I just wanted to rile you up there, which I did. I've also been teasing your call on oil because you made a really good one here on this program. Oil prices were at 80 and you said they're going well north of 100. We just don't have enough capacity. We have a ton of demand coming and then the war. We've seen this sharp slide, Kyle, back into bear market. Do you think we've put in the highs on the price of oil? Oh, gosh, no. I think, Sarah, if you look at what

we've done, we've taken our strategic petroleum reserve down to below five days of global demand, call it less than 24 days of U.S. demand. It's lower today than it was in 1985 in nominal terms. Think about how much demand has grown since 1985 and think about how much our economy's grown since 1985. We've put ourselves into a very precarious short term position. We haven't solved the supply problem and the demand global demand is inelastic. It will keep growing. And so this pullback should be bought with every dollar you have because oil is going to see 150. It's going to see 200 over the coming years. Wow. All right. There you go. Putting yourself out there with another call on oil. Kyle,

thank you. Thank you, Seth. Kyle Bass, appreciate it. SoFi surging after a bullish call today from Mizuho. The analyst behind that note joins us next. That story, plus a new list of recession-resistant tech stocks when we take you inside the market zone. We are now in the closing bell market zone. CNBC Senior Markets Commentator Mike Santoli back to break down these crucial moments of the trading day. Plus, we've got Mizzou host Dan Dolev on SoFi and Courtney Reagan on what to expect from Levi earnings out after the bell. We'll kick it off, Mike, with the broader markets. Another strong day here. The S&P is up 1.5%. Even though oil prices are jumping,

Kyle Bass just said they're going back to $150 to $200 a barrel. I'm not sure how the market would handle that. But also, treasury yields are higher. The dollar's stronger. All of these things have been problematic for equities before. Not today. They have. And again, they're below their highs

if you're looking at oil, if you're looking at yields. Also, gasoline futures are also lower. So it feels as if we're feeding off the relief that we're not racing to new highs on those real stress points in the market. At the same time, it feels as if the growth stocks are being rediscovered. If we're talking about slowdown, if we're talking about yields not running away to the upside, it seems as if growth was under-owned. So I think that we can draw that. Credit markets actually are ripping today. That's been a real problem for the markets is widening credit spreads. Junk spreads are actually coming in pretty hard for once. So I think all those things feed together. Another one of these rallies that makes it seem like people weren't expecting any chance at a real upside.

But, you know, the real tests remain above these levels in the market. And check out, Mike, some of the top performers today. You've got the meme stocks, your favorite in there, like GameStop up big. They proved the stock split. Plus, AMC is up 15 percent. Bed Bath & Beyond climbing more than 20 percent. Even former pandemic winners like Teladoc and Peloton are up sharply. Yesterday, you said, quote, garbage rallies fast when we turn.

Is that what you would characterize these stocks as? Is that what's happening? Well, what I would say is it's too early to characterize this move in the overall market as the turn. In other words, the bottom is in and we're in recovery mode from here on out. So you see some attributes of that. You see it being plausible. There's some conditions in place for it, but it's a wait and see. It's a prove it market. But when we do get rallies after we've been in a downtrend, absolutely the lower quality stocks, higher beta, less earnings visibility, all the stuff that got beat down the most, high short interest. Those are the things that are the most spring loaded to the upside.

So we're absolutely seeing that. Whether that means that we're rebuilding risk appetites in general and it's going to feed off itself, I don't know if that's the case. It seems like it's a little more of a mean reversion after a really tough time for those stocks. But as I said, in general, growth, that's not all garbage, of course. Growth has made a stand here in the last couple of weeks. Also, Adam Aaron tweeted about when pouncing, which I thought also got the meme-sters a little bit excited. We are watching, thanks, Mike, shares of SoFi. Is it a bank? Is it a fintech play? Either way, it's up today. Mizzouho analyst Dan Dolev says it's benefiting from the best of both worlds while reiterating a buy rating,

although lowering the price target to $7. Dan joins us now. Explain why you took this action today, Dan. Hey, thanks. It's not a bank. It's not a fintech. It's a fintech. This is kind of how we call it, right? So we took down the price target to $7 seven i just think it's enough upside here we want to you know i think long term there's definitely more potential but we want to see it we want to give it like a reasonable given where multiples are so that's just more of a marking it to market but our call today is very simple the valuation has actually got to a point it's gotten to a point where even conservative financial investors who didn't

like SoFi because it's screened as too expensive, they now see this as being reasonably priced. And you've got all the optionality of high FICO lending deposits and other things that are not, they're actually based on how priced in. I think that that's the key, what you just said. So because when I think of SoFi, I think if the credit cycle is really turning here, which it is, how would a SoFi hold up? And you're saying it's more resilient than people think. Why? A hundred percent. And I think that's what most people don't appreciate. It's got about a 740 average FICO loan for their borrowers. If you look in the past, you know, recession cycle, right? So the high FICO, the super prime is actually outperformed the lower prime. It makes

a lot of common sense. But I think people don't appreciate that those personal loan borrowers are, you know, very high FICO, which is very different from all these other kind of names that people don't like right now. Plus, they lend deposits. They're like a bank. They are a bank. And that makes them more resilient. They get a better spread between the lending and the borrowing because they're a bank. So they got the best of both worlds in that sense. Dan Dolop, thank you. A little bit of audio issues, but got the point. You like it and you think it's worth seven bucks, which is higher from here. Mike Santoli, the flip side is it's gotten hammered. You know, Wall Street doesn't like these kind of future earning stories that well,

especially ones that are sensitive to the credit cycle. That's right. And, you know, it just doesn't seem as if that mindset that said there's this massive opportunity because of huge generational behavior changes and how we're going to access financial products is going to create the potential for this fast-growing super app and all that stuff. It may be true over time, but it's a crowded enough field. And while it might be true that the existing borrower base has a healthy FICO score, is not big credit risk, in a tougher economy, you run out of those people to lend to. So loan

growth goes down and their own credit standing might not hold up. So it doesn't seem as if there's enough specialness to it to come into the valuation. How is it valued relative to other banks? Because a big part of Dan's thesis is that it's a bank. It's not way out of whack in the sense of, you know, versus book value versus tangible book value. And I think that's basically been his case there that, you know, OK, there's some smaller banks. If you take out the very largest super banks, which trade closer to one times book value, 1.7 is not crazy, but it's not really earning much off that capital base. So it's different from a regular old bank that is making good returns today off of that type of book value. 1.7 book is closer to

regionals, I think, than the bigger ones. Well, a trio of internet stocks are getting positive calls from Evercore's Mark Mahaney today. Heading into earnings season, he says that softening consumer demand and recession risks will hurt the sector, but that booking holdings, Airbnb, and Match Group are best positioned to hold up. Mahaney writing that booking in Airbnb, especially highly profitable with strong balance sheets and battle-tested management. Well, for Match, its freemium business model and strong user loyalty should keep it in despite positions, despite macro headwinds, keep it in prime position despite these macro headwinds. Mahaney also noting three stocks with the most risk heading into earnings are Roku, Amazon and Pinterest. Mike, what do you think of the calls?

Well, it's good to say Amazon on the list of being most vulnerable to disappointment is pretty telling if that's what Mark thinks, because the estimates really have been slashed. I thought people basically felt as if the company's guidance was, you know, relatively, you know, cutting things to the bone. So we'll see if that remains the case. You know, when it comes to something like Airbnb and booking, I grant that perhaps they are being swept into the people are going to travel this summer and then it's going to fall off a lot. And they're very sensitive to consumer moods. So maybe there's an opportunity if you believe that's incorrect, that travel is

not going to sustain itself in terms of demand on that. And then, you know, match, it does look very cheap. So just kind of leave that as it is. Right. And the calls that we covered yesterday about love being recession proof and dating being recession proof. The retailers are actually having a good day today. Levi Strauss is the big name on the earnings calendar after the bell. We'll give investors another read on the state of the consumer. Courtney Reagan joins us. Courtney, what should we be watching? What are the key numbers in Levi's report? Yes, Sarah. So last quarter, they put up a really nice quarter and said that they hadn't started to see any signs of the consumer slowing down or demand. And so that's really sort of the key

theme that we're looking for throughout all the numbers that they're going to present here after the bell is what does consumer demand look like for denim here in the United States, but also around the world? Has anything changed since they last talked to us in April? They said, look, look, we have been able to push through some price increases where we need to do so, but we don't have our head in the sand, right? If things change, then we'll have to pivot too. So that, of course, is the big question for Levi Strauss. But things have really held up for them. It did reaffirm the full year guidance last year. We'll see if we get another reaffirmation or even potentially move in either direction. But as you mentioned, Sarah, investors liking the action today in Levi

up about 3%. They're down about 15% over the last three months. So we'll have to see where we go. I think we need some direction and commentary on the state of the consumer around the world. The denim cycle, I think, is key for Levi. But in general, Courtney, I do wonder if we are going to get in this earning season for retail, especially more on markdowns, on inventory issues, on seeing more sales across retail. What do you think? Yeah, absolutely. I think it's going to be category dependent and potentially retailer dependent, too. Right. And how they did their inventory planning when they were able to get the product in. So in some cases they had the right product, but at the wrong time or vice versa. We know, obviously, Target has been pretty transparent about some of the categories that it was a little

lopsided in. And so as a result, to your point, Sarah, they are offering sales. I'm not sure we're going to see that with a Levi, mainly because denim cycles, of course, are sort of year round to a degree, right? Maybe you're not buying shorts in December in the Northeast, but I think people sort of reach out for their denim often throughout the year. So we'll have to see. But inventory does remain the major theme throughout retail for this upcoming quarter and really beyond. I still think the Western theme has, I think it has legs. I think the trend, I think people are wearing more. I bought jean shorts for the first time in like 10 years recently. Oh my gosh. Oh, that's awesome. Thanks. That says something. Courtney Reagan,

Mike, as we head into the close, we've lost a little bit of steam, not much. We've seen utilities go red, for instance, and staples are kind of trading around the flat line. But between the surge in energy stocks right now and also consumer discretionary, and I'm looking at some of the cruises and the casino names, which have been hit hard lately, really rallying today. Yeah, there's a sort of an effort to scoop up things that have been left behind and, you know, losing a little bit of steam. I mean, obviously, we've been hovering toward these highs all day. The Nasdaq has had every dip intraday bought but we do have a jobs report coming in the morning so you have to believe this one might be a little more consequential people don't want it to be falling apart but they also maybe too hot is going to make investors think that they haven't fully accounted for what the Fed is remember we've had these bouts over of this year, Sarah, when investors felt as if they were finally in tune with what the Fed policy path was going to be and they had it figured out and they could see toward the end of it.

And then it's been kind of foiled when the Fed has remained more aggressive. So I think we're still in that in that phase right now where we say, yeah, we got these hawkish minutes. We got a lot of hawkish Fed speak today. We got it. We figured it out. They have to speak that way. I wonder if there's a little bit of a soft landing in today's trade in that the cyclicals are doing well. The semiconductors, I wanted to point out, one of the best performing groups. We have hit the semi slide lately because, of course, they're very sensitive to what's happening in the economy and that end demand. They're all working today. So is consumer discretionary. So are the banks and so are energy. So that's all that all tells a better story on the economy. Two minutes to go.

What else do you see in the internal? Yeah, it tells me people don't want to get super negative after they've been so weak. And the internals have been very strong, actually close to 90 percent of volume to the upside, not quite all day on New York Stock Exchange. You see, that's where it sits over three billion advancing, 300 million declining to Two-year note yield. This is part of that story of investors feeling as if they've seen some moderation in the likely Fed path, but it picked up in the last couple of days. You've got firm ISM data, and you have a lot of the hawkish Fed speak saying, don't get too comfortable that the Fed is about to declare victory here. Volatility index has actually come in down around 25.

It's toward the lows of this range we've been in for the last few months. Definitely not relaxing, but it's also not going to new highs. The real volatility has been in currencies and in the bond markets, Erin. As we head into the close, we're seeing the Dow rally 350 points. Most Dow stocks are higher. Caterpillar, Goldman Sachs and Salesforce contributing the most to the Dow rally 350 points. Most Dow stocks are higher. Caterpillar, Goldman Sachs, and Salesforce contributing the most to the Dow gains right now. Coca-Cola, UnitedHealth, and Travelers, the biggest laggards. And, of course, that tells you it's a defensive, lagging story today.

What's leading? Things tied to the economy. Energy is the best-performing sector in the market. Consumer discretionary is right up there. As far as stocks, APA up 8 percent. Diamondback up 5.5. Marathon Oil up 5.6. The S&P 500 is up 1.5 percent right now into the close. The Nasdaq is really the strong story of

the day and of the week. Nasdaq Comp up 2.3 percent. On the week, it's up about 4.5 percent heading into a Friday. It is a jobs day Friday, so it'll be very important. S&P 500 up about half of that on the week, up 2%. But building on the gains today and in this final hour of trade, it's been the theme all week long. That's it for me on Closing Bell. See you tomorrow.