Closing Bell - Closing Bell: Rollercoaster Ride, Crude Cut & Unilever CEO on Consumer Spending 9/6/22

Episode Date: September 6, 2022

Stocks taking investors on a wild ride. The market rallying out of the gate, but retreating throughout the session. The Nasdaq falling for the 7th straight day, the longest losing streak since 2016. Mobius Capital Partners' Founder Mark Mobius weighs in on the recent sell off and reveals which countries he thinks can deliver better returns than the U.S. Bridgewater's Karen Karniol-Tambour discusses why investing in China is a big part of her portfolio protection playbook. Citi Global Wealth Management's Kristen Bitterly remains bearish on the market, but reveals the two sectors she thinks can help investors play defense in this uncertain environment. Husseini Energy Founder Sadad Al-Husseini on how OPEC's oil production cut and Russia indefinitely suspending natural gas supplies to Europe will impact energy prices. And Unilever CEO Alan Jope on the state of consumer spending and whether people are trading down to cheaper products because of inflation and economic concerns.

A volatile day here for stocks with a more than 400 point swing in the Dow. The most important hour of trading starts now. Welcome everyone to Closing Bell. I'm Sarah Eisen. Take a look at where we stand right now in the market. Down about 200 points on the Dow. Low of the day was down 270. High of the day, as you can see, we tried a few temps earlier in the session, up 145 points. These negative reversals are becoming a theme in the trading sessions

lately. The S&P 500 down four tenths of one percent. It's helped right now by some of the defensive stocks, which are higher on the day. We're talking about groups like real estate, utilities and health care. The Nasdaq's underperforming as Treasury yields continue to shoot up. Tenure yield goes past 330. The Nasdaq down about three quarters of one percent. Take a look at health care. One of the winners today with names like Johnson & Johnson, UnitedHealth and Merck leading the Dow. You had a deal, CBS, for Signify Health. And also it's just traditionally a safe haven or defensive place to go when there are worries on Wall Street.

Coming up this hour, Mobius Capital Partners founder Mark Mobius on the recent weakness here and abroad where he's finding opportunities amid the volatility. Plus, we will also discuss the outlook for consumer spending and inflation with the CEO of Unilever, Alan Jope. We'll start off, though, with today's market dashboard, senior markets commentator Mike Santoli, tracking this pullback down half a percent now on the S&P 500. What levels are you watching? 3,900 is the one that it's been toggling above and below for a while today. Also in focus on Friday. Remember, the S&P was down about a percent and a half in the last few hours of trading on Friday. So 3,900, in addition to being kind of a round number,

it's also been really where the lower end of this range has been. And we've only dipped below it in June, really, in parts of July so far. So it's defined, you know, the prevailing lower end of this range since about May. The other part of it is it's kind of the uptrend from July is roughly right in there. So it shows you it's a little bit of a somewhat decisive area in terms of whether that rally from June is going to take. Now, we have very oversold conditions developing in stocks right here, going up against those higher treasury yields, higher dollar, a lot of the macro pressures that we all know about. So that, to me, is why the market isn't down kind of in a more comprehensive or direct way. We are kind of oversold. We should get some bounces in here. And that might be why it's holding together here at thirty nine hundred.

And if we were to go down another couple percent, I think you'd even get more oversold and washed out. And maybe that would mean the makings of an even better bounce, not necessarily have to go down 5% or 7% to the June lows. Now, take a look quickly at global bonds and stocks. They're kind of walking each other down the hill all year. This is the global government bond ETF. So that's the price of bonds, yields going up. And you see these times when yields led the way lower and stocks kind of caught down. And this is the global stock index. So that suggests, at least, that it is still going to be a drag on what equities do globally.

Well, and also the data keeps coming in good. Yes, exactly. ISM services was a beat. It was a four-month high. This momentum in the data now seen as pretty bad news. That's right. So we got a decent number, number right at 10 o'clock. And the market sort of took heart in that for a little bit.

And then all of a sudden yields flew because it does suggest that the Fed is going to see no real reason in there to let up on the 75 basis point pace. And that maybe is going to be the idea that the Fed is willing to kind of break things along the way if it does so. Mike, thank you. We'll see you later. Mike Santoli. For more on the global markets, let's bring in Mark Mobius, founding partner at Mobius Capital Partners. Good to talk to you. Do you see these trends, Mark, higher treasury yields, weaker stocks, stronger dollar continuing throughout the year? How much worse is it going to get?

Yeah, I still think it's going to get worse for a number of reasons. First of all, look at Europe. Europe is in deep trouble and the European Central Bank will have to raise interest rates dramatically. And the U.S. can't be left behind because you have a situation where the U.S. dollar is too strong. Already, the U.S. dollar is too strong. So that's a real problem. The interesting thing is that some of the markets in Asia, particularly Indonesia, Thailand, India, are beginning to outperform the U.S. market. And that tells you a lot about how those countries that are not impacted by what's happening in Europe with Ukraine and what's happening with oil prices to a great extent are going

to do much better in this market. But generally speaking, the picture looks very bad. So you're—are you making the case for for and I know you always are invested in emerging markets and your fund has been tracking emerging markets, but it hasn't looked that great for emerging markets lately. The stronger dollar is a headwind for overseas currencies. Right. And the energy crisis, China being in lockdown with a very uncertain trajectory for a recovery. It doesn't look that great when it comes to the cards stacked for emerging markets. No, absolutely right. If you look at the Emerging Markets Index, it's been terrible.

It's been underperforming. And the main reason is because of China. It represents 30 percent. As you know, China is in real trouble. It's probably going to get worse there. But what we do is look at individual stocks in individual countries. So, for example, if you have Indonesia outperforming the U.S., you're going to find some stocks in that market that will do fairly well against the U.S. stocks. So it's time now to be very, very picky in what you want to buy anywhere in the world, wherever you are, including, of course, the U.S.

So the indices look bad for emerging markets, but individual countries in some cases are going to be OK. What about China? You have liked China before, have been investing in China, Mark, even during some of the uncertain periods around regulation. They're still pursuing this zero covid policy and the tensions between the U.S. and China are getting worse. Is it investable? Can you invest there? China looks bad and we've had less in China than we have in India and Taiwan. Of course, with the Taiwan crisis, we have to be careful about what's happening there as well. But generally speaking, the situation in China looks bad, not only because of the lockdown, the COVID lockdown, but also because you know, they've lent billions of dollars to countries in Africa, in other parts of Asia, and even in parts of Europe.

So it's become a situation where the banks in China are going to have a real trouble. So I think the China market does not look very good. What about Europe, Mark? Are you putting any money to work in Europe, in any European countries, just with the energy crisis going from bad to worse? No, we're not putting anything in Europe. We think it's going to get worse before it gets better. Don't forget the winter is coming and things are going to get very, very tight. And it's not only about consumer prices, but also about industry.

Industry can't get energy in Europe, and they have to start closing down or slowing down their production. So this is a very bad scenario for Europe. Mark Mobius, thanks for joining us, tackling some of the global issues right now. Up next, former Saudi Aramco executive Sadat al-Husseini on how OPEC's production cut and Russia indefinitely suspending natural gas supplies to Europe will impact oil prices. And then later, an exclusive interview with the CEO of Unilever on the state of the consumer and his strategy. The Dow is down about 180 right now. You're watching Closing Bell on CNBC. Major headlines in the energy sector today.

Russia cutting off natural gas flows from the Nord Stream pipeline into Germany until it says the Western sanctions on Russia's oil end. Meantime, OPEC and Russia agreeing to effectively cut oil production by 100,000 barrels beginning next month. Joining us now is former Saudi Aramco executive VP Sadat al-Husseini. It's good to talk to you again, first on the significance of the OPEC plus cuts. We haven't seen anything like this since the depths of the pandemic. And just last month, they were boosting production. What do you think? Well, good afternoon, Sarah. It's not a big adjustment. It's a hundred thousand

barrels out of a global supply of 98 million barrels. It's just an indication that they're watching the markets very carefully and they're prepared to react, even if it's a small adjustment now. The big problem isn't just now. It's what's going to happen later in October, November, when Russian oil supplies get out of the market. That's when they will be poised to do a lot more, I believe. But right now, it's a small adjustment. Have you been surprised at how Russian supply has held up despite sanctions?

Yeah, well, the Russians have been very diligent. Somehow they've managed to keep their oil flowing. A lot of their ships are owned by Greek and Cypriot ship owners, so they will be subject to the European regulations once they have to conform with the sanctions. Yeah, they're doing OK. They've had a six-month window to keep selling, but they're running out of room to market. So it's going to be a real challenge for the market to replace that Russian oil once it comes out of the market. And obviously, this came after the G7 is agreeing to

basically cap the price of Russian oil on the market. Is that something that you think will work, will inflict pain for those, I guess, that go along with it? They'll get cut off from Russian oil. Well, you know, Sarah, this is really a big, big deal because we're talking about the third largest economy in the world, which is Europe. And we're talking about the largest gas reserves holder and a nuclear power, which is Russia. And when they come into a conflict like this, this is going to be a real big issue for a long time. So trying to put a cap on prices, I don't think it will work. I don't think the Chinese or the Indians or anybody out there buying Russian oil is going to want to see a price imposed on them. They'll negotiate their own prices. But the problem

is going to be beyond this. It's what do you do in 2023 2024 what do you do when russian oil and gas are forced to stay out of the market the world is going to have to find alternatives and you know this isn't afghanistan or iraq this is russia this is a big deal so where do you think this all goes in terms of the impact on prices both on oil and not gas and and the effort to find alternative sources? Yeah, what we've learned is alternative energy just can't cover everything. Europe, between nuclear and alternative, can only cover 25 percent of the requirements. 75 percent of the energy in Europe is still oil, gas and coal. So that's going to be a reality for a long time, not just for Europe,

but across the world. And that means prices will stay high as long as the Russian supplies and the rest of the world are at odds with each other. It's got to be resolved, or we're going to see high prices for many years, well into the end of the decade. WTI, coming back a little bit, was under more pressure earlier on concerns about Chinese growth. Sadat Al-Husseini, thank you very much for taking the time and for your insight today. And do not miss tonight's CNBC special energy emergency

for much more on the outlook for oil and natural gas. That is tonight, 6 p.m. Eastern, right here on CNBC. Let's check on the markets right now. The Dow's down about 141. We've recovered a little bit since the start of the final hour of trade. The S&P right now down less than a third of 1%. It is coming back. Industrials just popping into the green, along with health care utilities and real estate.

Still ahead, Bridgewater's Karen Carniel-Tambor reveals where she's finding opportunities amid this market volatility. Plus, Wall Street buzzing about Kanye West's war of words with Adidas. Why that matters for investors straight ahead. What is Wall Street buzzing about today? Kanye West waging war on Adidas, and it is getting ugly. Over the weekend, Ye posted on his Instagram account taking aim at Adidas, and it is getting ugly. Over the weekend, Yee posted on his Instagram account, taking aim at Adidas board members. He's accusing the brand of making decisions about his Yeezy line without his input and of stealing his designs. He's also taking aim at Adidas

senior vice president, Daniel Cherry, posting a picture showing a civil war between them. Previously, West went as far as to post a mock New York Times cover announcing Adidas CEO Kasper Rorsted's death on September 1st. West has been working with Adidas since back in 2013. It's been a very profitable relationship for the German company. In August, just last month, Rorsted told me Kanye is their most important partner worldwide and that he is very happy with the relationship. Well, today, Adidas is telling us no comment. This matters to investors. Yeezy's line has become significant. While Adidas doesn't disclose financials about the brand, Bloomberg reports that Yeezy brand is valued between $3.2

and $4.7 billion, which also includes the smaller Gap partnership. Let's not forget, Yeezy famously left Nike in a similar manner back in 2012 after reports the relationship was too difficult to manage. We'll see what Adidas' threshold is here when it comes to Kanye West. The stock is already down more than 50 percent over the last 12 months due to other factors like China and, of course, what's happening in Europe. When we come back, Bridgewater's Karen Carniel-Tambor joins us with her portfolio protection playbook and where she sees opportunity. She's worried about a stagflationary environment. Dow's down 132, continues to recover a bit off the lows. We'll

be right back. Take a look at stocks right now. Down day on Wall Street. The Nasdaq is down for its seventh, seventh day in a row. Longest losing streak since 2016. Higher treasury yields, weaker euro on the European energy crisis in focus today. Joining us is Karen Carniel Tambor from Bridgewater Associates. And Karen, you still think the market is painting too rosy of a picture of what's going to happen with the economy and the Fed? Yes, I think the market is really just starting to catch up. If you look at what you can see in the market pricing and you try to basically disaggregate what is the market really saying, you know, if you split out in the bond markets, what are really inflation expectations relative to what are rate expectations and real yields? The market is still

expecting that inflation comes down relatively quickly. This inflation problem is pretty short lived and that's true across countries, including Europe, the UK, the United States. And if you look at the stock market and basically try to disaggregate what's really happened to earnings expectations, how much do we expect earnings to be hit by all this relative to how much is the stock market just down because there are higher interest rates. So you want to discount earnings at a higher interest rate to today. Markets aren't really discounting a particularly bad earnings scenario. So that still adds up to a Fed that has to hike, central banks that have to hike,

but that their hikes are enough to kind of magically both bring inflation down pretty quickly and get an earnings outcome where we don't really need a particularly serious recession to kind of get things back on track. And that's unlikely, not to mention that we don't have a huge risk premium priced in yet for what it's like to live through volatile inflation, stagflation, needing to ration. Those things are just starting to get priced in, which is why you're seeing such terrible market action. So it's interesting that you don't buy

the idea that inflation is going to come down very fast, even though part of the thinking there is that if we do get a recession and weakness in global economic demand, that will pressure inflation even further. Right. Well, you need to either get a serious recession, which is not really priced into markets. And we know from the past that there is a lead lag. It's not like the economy slows and a minute later inflation comes down we see in the past that it takes you know six months a year for it to make its way to inflation first you get deep economic pain before really inflation starts to slow and that some of the I think overly optimistic views are that this energy stuff will kind of just go away not realizing how much it has second and third

consequences if you need to literally ration what you're making in the economy because you just don't have enough energy, that's an input into everything. And now you have a supply problem that's more pervasive and longer term, and you need to slow demand even further, a deeper recession before those price increases stop spreading across the economy. So it's a pretty doomy gloomy scenario that you paint of stagflation, which I know you've been warning about for a while. In the past, you have said that commodities are a good place to shelter. But if you're really worried about recession, is that still true? I think commodities are not great in a true stagflationary environment for the reason you're saying,

which is that when growth is weak, demand for commodities is going to slow at the same time. And you don't want to be idiosyncratically just in the commodities that end up being the most squeezed. I think stagflation is the toughest environment for investors. For the reason you're saying is that you don't want to be exposed not to strong growth and not to weak inflation. And most assets are and it leaves investors with tougher choices. It leaves them with choices of looking for inflation protection wherever they can. And to me, one

of the easiest things you can do is, you know, change some of your nominal bonds to inflation linked bonds. Instead of everyone has nominal bonds, everyone has a treasury. You might as well get paid whatever CPI ends up printing, because I think there's a decent chance it'll be higher than what is currently priced in. And in addition to that, yeah, look around the world. Not every country in the world has as gloomy of a stagflation outlook as the United States. Places like China and Japan look pretty different. And so just diversifying what you're holding geographically at least gives you some access to other places where stagflation is less on the agenda than certainly in Europe and the UK and then in the U.S. in a different way. So China might not have stagflation here, but it has

a lot of other problems and some of them potentially bigger when it comes to geopolitics. Obviously, it's getting worse between the U.S. and China on Taiwan. Between Taiwan and China, we saw the U.S. make a move for NVIDIA and other chip makers to ban certain exports last week. Why is China a good bet for you right now with all that going on and intensifying at the same time where it's still locking down millions of people every week to deal with COVID? Well, I think the risks you paint in China are absolutely true and cannot be ignored by investors, should not be ignored by investors. It's just a matter of kind of diversifying your risks and not having your whole portfolio in let's call it wealthy country stagflation. And so the Chinese risks are true, they're real. Some of them have knock-on effects on us.

For example, if there is a serious heating up of tensions around Taiwan, that could hurt supply chains all over the world, that could end up hurting other countries as well. And then the thing with China is that you are getting compensated for those risks in a different way. There's a significantly higher risk premium. So if you basically say, what do earnings have to do in China at a time where policymakers need to stimulate rather than need to cut back and make sure that inflation doesn't get out of control, but they can actually afford to stimulate? What do earnings need to do

for you to kind of break even? And you need to have about zero earnings growth relative to what you need to have in the u.s and europe which is significantly higher and so you're getting a higher risk premium and at least you're getting different risks everything you hold has a lot of risks in it that diversification starts making sense and that doesn't mean you don't think about those risks very seriously and weigh them i got it karen thank you it's good to see you and check in. Karen Carniel-Tambor. Take a look at where we stand right now in the markets. Got about 30 minutes left of trading, down 150 or so on the Dow. We've still got four sectors positive in the S&P. Industrials joining that group. The worst performers are communication services,

energy and technology. Kind of the playbook for concerns about the economy and higher interest rates. Up next, the CEO of Unilever on the outlook for inflation, whether he's seeing consumers trade down to cheaper products, something we're watching out for. And you can listen to Closing Bell on the go by following the Closing Bell podcast on your favorite podcast app. We'll be right back. Check out today's stealth mover, pest control company Rollins. It's the top performer on the S&P 500. RBC Capital Markets upgrades the company to outperform, saying, from Market Perform, citing expectations of record revenue growth. Rollins, which owns the Orkin and Western Pest Services brands,

has nearly 3 million customers and has posted 24 consecutive years of sales growth. Lots of pests. Up next, a top market strategist on the recent pullback and whether investors should be selling into any rallies. That story plus Porsche going public and potential trouble for a SPAC seeking to merge with former President Trump's media company. When we take you inside the market zone, just taking a little leg lower, the Dow's down 219. We'll be right back. We are now in the closing bell market zone. CNBC senior markets commentator

Mike Santoli here to break down these crucial moments of the trading day. Mike, looking at the broader markets, the Dow's down 200, the Nasdaq's down almost a percent, but there's buying and there are names that are working today. For instance, in the NASDAQ, Tesla's up, Starbucks is up, some of the defensive groups. I almost want to say it could be worse, given some of the headwinds that the market is looking at right now around Europe and the energy situation. We've got an ECB meeting this week around the U.S. and the better economic data on higher treasury yields. What's your take? Yeah, it certainly could have been expected to be worse.

Catching up, really, on three days' worth of pretty tough headlines. The U.S. markets are not just the European situation there with the natural gas turnoff, China stuff, not good news coming in. So I do understand this is why we're down a little bit. It's lethargic. Keep in mind, the S&P, though, it was down 9% over the course of three weeks from that mid-August high. So we've done a good deal of unwinding

of that rally we got in June. That's one reason, perhaps, that it's not rushing lower in a broad way today. Well, I think that some of the bears, I was reading Mike Wilson of Morgan Stanley, who's obviously been pretty bearish throughout, and says we're still going to make new lows in the fourth quarter. They're resting on this idea that earnings expectations still have not moved lower enough to reflect some of the

weakening economic fundamentals that we will get if the Fed raises rates. What's on the other side, the economy appears to be picking up steam or at least holding some momentum here, despite the interest rate hikes. I mean, look, you can't disprove the idea that earnings do have downside risk, given that we've seen some slowing, given what's gone on, profit margins being pressured. But here we are more than two thirds of the way through the third quarter. It's not as if the economic performance that we can observe in the U.S. is something that would necessarily cause earnings to collapse for the third quarter. Yes, it always is a question of what the outlooks are going to be.

We do hear about the corporate conference schedule going on right now and whether that's going to be some landmines coming out of that. But I do think it's a good debate at this point. I also find it interesting that people are pretty comfortable feeling as if, yeah, sure, there'll be a year-end rally, but you'll get a chance to buy them lower from from here or at least even below the June lows. It's certainly plausible. September is not friendly. The Fed's tightening into a slowdown. All the basic inputs into a broad market view suggest that the downtrend has the benefit of the doubt here.

But, you know, at some point, sentiment gets too crowded on that side of things and it requires new bad news to keep the downside case going. I don't know if you were listening to the interview we just did with Bridgewater's Karen Carniel Tambor. Pretty dire forecast in terms of the stagflationary outlook, which she says is not being priced in, the fact that inflation doesn't magically come down, and that the economy is going to get worse, what's happening in Europe, what's happening in China, what's happening with the Fed, and that that's a tough environment for investors. What do you make? Do you think the market's too rosy on that? And if we do go into something more stagflationary for longer, what works? I think there would absolutely be further downside to valuations in that scenario.

There's no doubt about it. I don't think we're priced right now for stagflation. However you want to define that, does that mean inflation goes down to 4% and growth struggles and we get at stall speed or something like that and earnings flatten out or go down next year? Yeah, I think that would be pretty hazardous for the market. But I also think it's it's not a foregone conclusion that that has to be the path right now. This cycle has not really obeyed the cadences on the way up or the way down of a typical one. Let's talk about FedEx tumbling today after Citigroup downgraded the stock to neutral. Analysts there feeling bearish heading into peak delivery season, arguing weaker freight activity could impact earnings growth this year. Citi's price targets lashed to $225, but that still implies upside after a sharp decline

over the past month. And also questions swirling about whether FedEx's performance reflects something broader with the global economy. What do you make of the call and the valuation? Clearly macro driven, you know, kind of cautious about most of the group. So it isn't just a FedEx story and to some degree sort of ratifying how the market has been treating FedEx right now. Not a lot of earnings growth expected this fiscal year or next. It's still a bit of a turnaround play if you believe in it at this point. Dollar headwinds, all the reasons you would think to be a bit cautious on FedEx are in this call. But again, it's calling for like a 10 percent upside to what would mean fair value based on, you know, city estimation.

So I don't think it's necessarily desperate, but freight rates are going down. It's good for the inflation story. It's not great for transport stock performance story. Let's talk autos. Porsche going public. Volkswagen announcing plans to spin off the iconic sports car maker either later this month or early October. The IPO could have a valuation up to $84 billion, which would make it the largest European offering in decades. But it does come at a time when rivals Aston Martin and Ferrari have seen their valuations decline. Robert Frank joins us. The timing is really interesting, Robert, given what's happening in the luxury space, what's happening in Europe, how much investor appetite is there going to be for this IPO?

Yeah, and Sarah, and what's happening in the markets and with IPOs, it's a very difficult time to come out with one of the biggest IPOs in recent history, certainly in the markets and with IPOs a very difficult time to come out with one of the biggest IPOs in recent history certainly in the auto market now on the bull case this is a chance to own one of the most storied names in the auto sector that gold Porsche badge is a profit machine it's got margins of 22 to 25 percent you know in the auto world that is massive and you know they had they're expecting sales this year of around 38 billion euros. That's only on production of around 300,000 cars.

You've got Qatar Investment Authority, all these folks trying to buy large blocks of stock. The problem is on the governance side. You've got the family that's going to basically control this through a special block of voting shares. The public shareholders will get non-voting shares. So that's an issue. Second issue is that the CEO of Volkswagen, Oliver Bluma, will also be the CEO of Porsche. And for investors who really want these companies separate,

it's a problem to have the CEO running both companies. So the devil will be in the details, but this is a great brand, certainly in the auto space. We'll see whether it's overpriced. Why is Volkswagen doing this now? Obviously, you mentioned the IPO market has basically been shut down. So why do they feel like now's the time strategically for the parent company? Well, there was a lot of negotiations with the heirs of the Porsche family. So this has been in the works for many years. They finally got that settled. The bigger issue, though, is Volkswagen needs this cash to switch to EVs. The investment on the EV side, as we know from all these companies,

is massive and they need the cash infusion from this spinoff to fund their EV side. Got it. Robert Frank, Robert, thank you. The timing, Mike, will be interesting. It's such a large offering. It's happening over in Europe at a time where we haven't seen too many large IPOs. I don't know. It could be different just because of the name brand and people like it. And it's an EV play. There's scarcity value in the most elite auto brands out there, clearly. Also, when Ferrari came public and split away from Fiat Chrysler at the time, it was in early 2016. It was an industrial recession.

Valuations were depressed. That's not necessarily something that makes or breaks a deal for the longer term. In fact, there's an argument to be made that when an IPO does get done in a very slow time for offerings in general. And when the markets are a little bit under pressure, it usually means that it's a deal people really want and therefore can perform over a longer period of time. So the question is, does it get out? And if so, you know, are we valued at a pretty, you know, undemanding level because the markets have been tough? Well, they do have one thing going for them, which is a weak euro, which certainly helps the translation on earnings. Shares of digital World Acquisition, that's the SPAC planning to merge with Trump Media and Technology Group.

Big loser on Wall Street today, as you can see, down more than 16.5%. The company is now delaying a shareholder vote on whether to give the deal a one-year extension until Thursday, which is the deadline to take Trump Media public. According to a published report earlier today, Digital World has not been able to secure enough support for an extension. Leslie Picker joins us. So what happens next, Leslie, and why all the delay? Yeah, so basically they need a pretty sizable turnout in order to get this extension approved. They needed 65 percent of shareholders to vote in favor of this extension.

And as you know, DWAC has a very large retail base, which tends not to have the highest turnout when it comes to corporate governance. Now, they had two weeks to drum up enough support for this extension, weren't able to do that. They are now delaying it by two days. We'll see if the media attention from today, potentially throughout the rest of the week, will do the trick. But clearly, the market is getting a little concerned they'll be able to get this deal done, given all the regulatory scrutiny. That's kind of why they need the extra time to complete the deal. Got it, Leslie Picker. Leslie, thank you. The Unilever CEO speaking at

the Barclays Consumer Staples Conference today, saying he is seeing some trading down among customers, including in the Americas, where people are swapping out, for instance, body wash for bar soap. But also there are some pockets of strength, including e-commerce, where he is seeing customers add on to pints of ice cream, for instance, on their Uber Eats orders. Joining us now from the conference is Unilever CEO Alan Jope. Alan, it's good to talk to you, given you have such a broad reach across food and household products. What are you seeing globally right now

from the consumer as we monitor how they're holding up in the face of a lot of macroeconomic challenges? You bet. Hi, Sarah. Thanks for having me. I mean, Unilever is quite a different company from where we were three years ago that we're entirely focused on growth. We're not tied to a long-term margin

commitment. And we're executing with more discipline. We've made clear strategic choices. And so we find ourselves in a position where we're quite well equipped for this continuous volatility that we're living with. It's wrong to make sweeping global aggregations and generalizations. What we're seeing right now is continued strength in Asia, particularly South Asia. Our business in India is doing very well. The consumer there is holding up well. Similarly, in Southeast Asia, Latin America and Africa continue in very difficult circumstances to deliver strong growth. We've seen the U.S. to be fairly resilient. I think high household savings levels and the fact that we've not yet reached peak inflation means the U.S. is doing well. And Europe's been one of

the softer parts of the world. By and large, there is a limited down trading. The example that you gave of people moving from body washes to bars is an exception rather than a rule. And I think we're going to be in a period now where we will have to watch carefully as the Northern Hemisphere starts to endure winter heating bills, as costs start to peak, and as household savings are being depleted, I think the next few months we're going to have to watch carefully. You said something about inflation not yet peaking in the U.S. Is it your view that it's going to get worse? What's happening with your products and your categories? Well, let me restrict my comments to our business,

where the basket of commodities that we use across agricultural raw materials, petrochemical-derived raw materials, paper and board, freight, distribution, logistics, we are not seeing an easing off in our landed costs in those types of commodities. And so I'm afraid any early optimism that inflation had peaked and was behind us, I think is misplaced. And we anticipate that we're in this for a few more months yet. So are you continuing to raise prices on products? Yes, we are. We will continue to take sequential price increases. You mentioned at the top, Alan, that you guys were in a very different spot.

And I know you've been making a lot of strategic changes and going through restructuring. Still, over the last year, the stock has underperformed. It's down about three times as much as Procter & Gamble and even more than that of Nestle, some big competitors. Why is that? Yeah, I think if you look over the last six months, you see quite a good rally in Unilever's stock. What we understand is that the market is valuing consistent, steady growth. And in a couple

of years ago, we had one or two too many surprises for the market. And we're really focused now on that steady reliability of top line organic growth. And as we've delivered that over the last three quarters, we are seeing it reflected in stepped-up investor confidence in the company and in the strategy that we're following. How is it going with Tryon Partners and your new board member, Nelson Peltz? What have those conversations been like? Yeah, we brought Nelson onto the board

because of his extraordinary track record in the consumer sector. We're enjoying an extremely collaborative relationship. Nelson, like our other board members, are keen to see the trapped value in Unilever unlocked. We think we're a business that's undervalued. One area in particular where we've enjoyed the engagement with Tryon is we're moving into a new, simpler organization. We've ditched our matrix organization that we've enjoyed the engagement with Tryon is we're moving into a new, simpler organization. We've ditched our matrix organization that we've had for a couple of decades. And we're now running the company end to end through five very simple divisions.

And that enjoys a lot of support from Tryon and from Nelson himself. And he's keeping the pressure on us to make sure that we realize all the benefits of that simpler organization, specifically the improved accountability that simpler organization, specifically the improved accountability that it brings. Well, I mean, this is the strategy that he helped create, the structure at Procter & Gamble. Is that the kind of structure that we're talking about that you're adopting? Well, I think, yes, it's very similar. Tryon, like many investors, has a playbook on what they think works in a particular sector. And I think right now what Tryon are seeing from Unilever mirrors some of the success that they've enjoyed with other very successful consumer investments that they've made in the past.

Really quickly, Alan, on Ben and Jerry's, because we've been following this news. They're suing you because they don't want to go through with the Israeli sale to the franchisee. Should they should they scrap their lawsuit and have they gone too far? Sarah, that's for them to decide. But it's too late. The sale to the Israeli franchisee is closed. We wish them a lot of luck with their business in Israel. And we're back to focusing on making great ice cream in Vermont and championing causes that are very important to Ben and Jerry's, like climate change and equality. So we're thoroughly enjoying having Ben and Jerry's in the portfolio. And the situation in Israel, as far as we're concerned,

is closed. Alan Joke, thank you for joining me. It's good to talk to you from the Barclays Consumer Conference. CEO of Unilever. We're going to have more on the state of the consumer tomorrow. We've got an exclusive interview with the CEO of Kellogg, Steve Cahill. And remember, he is in the process of trying to break up his company into three different new companies, cereals, snacks, and of course, the plant-based food. Let's hit the broader market because stocks are lower here heading into the close. Our next guest says there could be worse to come. Let's bring in Kristen Bitterly, head of North America Investments at Citi Global Wealth. Kristen, it's good to have

you. So what should investors be doing on big sell-off days like today, seven in a row for the Nasdaq? I think right now we need to play a little bit of defense. And that's something that we've been doing in our portfolios, being very balanced across both fixed income and equities and really leaning into quality parts of the market. Unfortunately, I think the market is trying to find some signs, some dovish signals, some signs. Look at the jobs report. Maybe that was Goldilocks. But ultimately, we are in an environment where there are tightening financial conditions, and that is going to impact the consumer and it is going to impact earnings. And so that's not

something that we would have seen in Q2. That's something that we're going to see with the Fed's trajectory going forward. So we are cautious here. I guess the pushback and something you can point to, and I'm not sure how much of a bullish argument it is, is that positioning is light again and people are getting very bearish again. And last time that happened, we saw, what, a 17 percent rally in the market in midsummer. That's absolutely right. And I think it's one of those things from a positioning standpoint. If there were something to turn, then you would see maybe a pretty fast rally off off the lows that being said where the market is pricing right now it's not pricing in a

recession it's not pricing in any type of earnings contraction as well. And so that's why it's not a function of not being invested in the market it's picking your places in the market. So if you have equity exposure. Leaning into

quality leaning into some of those sectors that are actually resilient in recessionary environments. Like health care like consumer staples, and then balancing that out with some quality fixed income where now you're earning yields that far exceed the dividend yields in U.S. equities. So having that balance is a way that you can benefit from some of those bounces, granted not to the extent that we saw, but still have some skin in the game. Why do you like health care and staples over I don't

know real estate and utilities. And so I think health care is one of those areas it's an area that we've liked for quite some time it's obviously held up quite well and it's a favorite of many people and for. For that reason I think when you

look at if we are nervous about earnings contractions if we are nervous about that tightening of financial conditions you need to look to places in the market that have inelastic demand. Healthcare obviously provides that. And when we look at the past three recessionary environments, a sector like healthcare has been one of the few sectors that has been able to consistently grow their earnings

for that period of time. So that's where we're very specific. We want that inelasticity of demand in terms of where we're picking our spots. Kristen, thank you for joining me with some of the advice that you are giving to your clients. Just under two minutes to go here. Just over that, Mike, as far as the defensive stocks that Kristen mentioned, real estate and utilities are working today. What do the valuations look like if you are feeling like you want to take an opportunity on the sell off to get to get more defensive? Well, you're kind of paying up for the privilege in a sense here in most of those areas. You mentioned real estate has been tougher, but utilities, they never really looked that great based on standard valuation metrics. They're bought for the safety themselves as opposed to

the earnings they're going to deliver. Also, the slight leverage to natural gas prices has helped them out a little bit. And if you look at consumer staples, you know, there again, you have to generally pay a bit of a premium there if you want to smooth the ride. It has paid off. People have been willing to do it. What's interesting to me is that type of thinking and those flows have not really made their way toward what we used to think of as the more reliable areas, which were some of the big tech platforms and things like that, which just got too expensive. People don't want them yet. Yeah. Tesla's higher today. I mentioned Starbucks, Lululemon adding another 4%

on top of an already big rally last week. What are you seeing in the market internals, Mike? Yeah, some softness there, Sarah. We've been kind of toggling mostly below the flat line all day, and it's about more than 2 to 1, 2 and a half to one declining to advancing volumes in New York stock exchange. So pretty consistent with what we're seeing at the index level there. Take a look at the communication services sector. Made a new load today, actually, as a group, while the S&P has not yet made a new year to date low. And you talk about traditional defensives, the telecoms, the cable stocks really look awful right here. People are very concerned, I think, about things like cord shaving and cord cutting. Our parent company, Comcast, Charter, all those things not working.

And then Meta and Google are also relative underperformers. So that's an area that probably is starting to look statistically cheap, I would imagine. Volatility index not doing much, perked up into the 26s. It's elevated, not panicky. We had a little bit of a Monday rebuild in volatility, but you see that chart there. It shows you higher lows, and we're in between panic and concern. That's sort of what jives with what the market is telling you right now, concern but not panic. Take a look at the Dow as we head into the close, down 165. So we've come off the lows again here

as well. It's been kind of a bumpy ride in the final hour, but lower. We had a few attempts to try to go positive earlier in the day, up 145 at the highs. Didn't quite work. UnitedHealth, Visa, Boeing are the biggest adders to the Dow. As far as what's hurting the Dow the most, Goldman Sachs, 3M, Microsoft, but most of the Dow stocks are lower. S&P 500 down four-tenths of one percent. It is the defensives that are working, utilities, healthcare, real estate. Industrials are also positive now on the day. Communication services, technology weaker, along with energy off the back of oil prices and materials.

The Nasdaq down for seven days in a row. That's it for me on Closing Bell. See you tomorrow, everyone. Now we'll send it into overtime with Scott Wapner.