Closing Bell - Closing Bell: Stocks Seesaw, Trusting the Fed & Crocs CEO on Consumer Spending 9/8/22

Episode Date: September 8, 2022

A volatile session on Wall Street after Fed Chairman Jay Powell reiterated the Fed will do whatever it takes to tame inflation and suggested a pivot to cutting rates is not on the table. Lazard CEO of Financial Advisory Peter Orszag discusses the impact the Fed's rate hikes are having on the economy and market and whether the central bank can tame inflation without causing a recession. Plus, he explains why he thinks the European Central Bank made a mistake by raising interest rates by 75 basis points today. Clocktower Chief Strategist Marko Papic says you can't trust what the Fed is saying and explains why he thinks there will be a pivot once inflation peaks. Becton Dickinson CEO Tom Polen discusses his company's Monkey Pox tests, whether consumers are still buying COVID tests with transmission rates on the decline and if his company is still facing supply chain challenges. And Crocs CEO Andrew Rees discusses the state of consumer spending and whether inflation is impacting sales.

Welcome, everyone, to Closing Bell. I'm Sarah Eisen. We actually begin today with a moment of silence here at the New York Stock Exchange and the NASDAQ to honor the life and service of Queen Elizabeth II. Let's listen in. That was Lynn Martin, the head of the New York Stock Exchange. We're going to have much more coverage of the Queen's death later in the hour and throughout the hours here on CNBC. But first, let's show you where things stand in the market. Final hour of trading. We've been up and down today all over the map. Looks like we're holding the gains here with the Dow up about 83 points, kind of in the middle of the range. We were as high as 200 points, as low as 259 points down. NASDAQ's lagging technology. It's still higher

right now, but it is underperforming. We're seeing higher treasury yields again. That relationship's sort of intact. The dollar's a bit weaker, and the S&P is up about a quarter of 1%. What's working? Financials, health care materials, consumer discretionary, and energy. All those sectors are green right now. Communication services and staples are bringing up the rear. Coming up this hour, we're going to discuss the outlook for the market, the economy, and, of course, dealmaking with Lazard CEO of Financial

Advisory, Peter Orszag. And the CEO of Crocs will be here to weigh in on the state of the consumer, supply chain issues, and some concerns about growth in their largest market, North America. But first off, we're going to kick it off with the market dashboard, as we always do, Senior Markets Commentator, Mike Santoli. Mike, as we try to monitor whether it's safe to buy again. We saw a big rally and we're actually higher now for the week, although it's tentative today. It is tentative. I would say it's a little bit erratic, indecisive. Now, we're holding yesterday's bounce, which is something about a 1 percent range in the S&P 500 during the day from the morning low to the afternoon high. We are around this 4,000 mark, about two percent above this thirty nine hundred area that

everyone seemed to want to hold the markets getting stress tested in the last couple of days by plenty of relatively hawkish fed speak it's really reiteration of the fed stance a lot of- market based expectations going toward. Three quarter percent hike week after next- seems like it's price in the bond market stock market trying to figure out if that's okay, if, in fact, that's the last big one. Now, sentiment has really taken a turn south. I think this is visible across the board.

Take a look at the National Association of Active Investment Managers' weekly reading on this group's equity exposure. So it's self-reported, but it's real money exposed in the market. These are tactical investment advisors. And you see we're barely above the June lows, mid-June lows in the S&P 500, 3,600 and change. Here we are at 4,000. And you still have this read of sentiment as well as some of the survey-based stuff showing people are very, very negative. There's a lot of hedging going on last week too, Sarah. So that sort of computes to me as there is still a wall of worry in this market. It's a net positive. It's not the whole ballgame because in bear markets,

sentiment can stay pretty negative for a very long period of time. But I do think that almost creates a psychological cushion for stocks. It takes a lot more incremental bad news to get them much lower. I know it's always jarring to hear Fed Chair Powell speak so hawkishly, so Volcker-esque. Yes. But he didn't say anything new today, did he? No. In fact, I think aggressively was attempting not to say too much that was new, really just kind of this is our stance. It's not going to change.

We're not going to try to preview any kind of a dovish turn or a pause in Fed tightening. But the market's looking beyond this and saying, you know, next week's inflation number could tell us a lot. We also did hear Charles Evans of the Chicago Fed say, once you get to three and a half percent of the Fed funds rate, which is likely where we'll be by the end of this month, that's when you have to worry about overtightening a little bit. So some of those very faint hints of perhaps a softening stance. Mike Santoli. Mike, we'll see you in just a bit. Thank you. For more on the markets and how to

strategize, Peter Orszag joins us, financial advisory CEO at Lazard. Peter, always good to have you. I'll start right there on Powell and the Fed. Tighter talk, tougher talk on inflation, which is what we've been hearing from Powell lately. What's your expectation about what happens next year on interest rates and inflation? Well, remember, the art of central banking is to make sure you talk tough and then adjust to the situation as it evolves. So I think that's exactly what the Fed is doing. Bigger concern is the ECB. I think they are frankly overreacting. The 75 basis point increase today was probably too much. And Europe, I think, in the face of a pretty severe energy and food crisis, has a lot of worry ahead of it. And the ECB seems not to be taking that fully into account.

But that's interesting. Don't they have to, though, do it to sort of match and keep up with what everybody else is doing with the euro already below 99 to the dollar? Yeah, but the size of the economic distress that Europe is likely to face as we go through the winter really suggests a little bit more caution. Most of the inflation problem in Europe involves food and energy. It's not things that are really susceptible to monetary policy. That is a somewhat different situation here in the United States. And so, again, I think the ECB is sort of falling back into an old way of thinking and not recognizing that the inflation that they're facing is largely of a different nature than historical periods of high inflation in Europe before. I think Christine Lagarde wanted to believe that for a long time, and then they just kept seeing inflation rates skyrocket and everybody else doing

75 basis point hikes. So, Peter, what does it mean ultimately for Europe? What's the prognosis there? And what are you guys doing at Lazard in terms of business there with all of these forces hitting at once? Well, the macro situation, again, I think particularly in Germany, where the hard stop on Russian natural gas is a significant shock, and then combined with the fact that you've got a climate-driven crisis on water and very low levels on the Rhine and other rivers means that it's very hard even to ship coal and do the other things that you would do to help substitute away from the Russian natural gas. So for now in terms of deal-making I think Europe the micro story is actually still quite active and optimistic but

the macro story I think is pretty dire. And that brings us back to both monetary and fiscal policy. Do you think that the U.S. is also facing recession? There is a path here. Look, the Fed, let's just be clear, if the Fed wants to or needs to create a recession in order to disinflate sufficiently, that's what will happen. It is within the Fed wants to or needs to create a recession in order to disinflate sufficiently, that's what will happen. It is within the Fed's power to throw the U.S. economy into recession. Whether that is necessary or not depends on the course of the next several inflation reads. And there are some very positive signs.

So in particular, the supply chain problems that caused not all, but at least a significant part of the inflation to date, those seem to be easing with freight rates coming down, availability of semiconductor chips dramatically higher, and gas prices also coming down, even though that's not a central focus of the Fed's attention. So there's at least a pathway here where the U.S. can avoid recession while still accomplishing the reduction in inflation that the Fed wants to see. So what you alluded to dealmaking in Europe still happening at a micro level. What about in the U.S., Peter? What is the what is making it through right now? It doesn't feel like it's all dried up, but it certainly has slowed down a lot.

Yeah, but you have to remember there are some big underlying tectonic plates that are driving not only the global economy, but also the desire for transactions. That includes technology, it includes the energy transition, and it includes what I'd call peak China and the end of Pax Americana. So we see a significant amount of deal activity that is coming from those forces. A good example is something we advised on, the Intel Brookfield deal, that is a new era of how chip foundries will be financed going forward as one of many types of transactions that are still going forward in this environment. What about private credit? I know you wanted to talk about that as it's a source of growth.

You made a big hire very recently on this. What is with the explosion of private credit? Everybody's doing it. Even the big banks are getting involved in it. Is there enough demand? And what does that tell us about the environment right now? Well, there is a significant amount of demand. This has obviously grown very rapidly. Even this morning, Neuberger Berman announcing that its private credit fund exceeded $8 billion,

which is quite a significant amount. This just, for many strategics and many private equity-owned companies, offers an alternative to the traditional ways of providing debt financing. So it's often faster to market, it's often kind of easier to arrange, and has a variety of other benefits. And we're seeing a significant amount of demand for the type of advice that Lazard provides in this space. We do have some existing bankers who do this sort of thing, but as you noted, we're very excited that Tim Donahue just joined this week,

and we'll be building out this practice further. Peter Orszag, thanks for joining us on all things macro and Lazard. Thanks for having me. Always good to be with you. Always good to see you. Yeah, you too. Up next, the CEO of Becton Dickinson, which makes at-home COVID tests and many other medical innovations on his company's strategy in a post-pandemic world, as well as Amazon's ambitious health care initiatives. We've got the Dow still positive, losing a little bit of steam here. It's up 35 points as the Nasdaq 100 goes negative.

You're watching Closing Bell on CNBC. The FDA announcing steps this week to increase monkeypox testing capacity to address this ongoing outbreak. Meantime, Becton Dickinson and Sirtest Biotech launching a monkeypox PCR test that will be commercially available outside the U.S. for research. Joining me here at Post 9 to talk about that and the whole strategy is Becton Dickinson, CEO of Tom Poland. Tom, it's great to talk to you. Thank you for having me. So we'll talk about a lot of your sort of initiatives and your endeavors, but on monkeypox, where are we on testing availability and what are you seeing on cases? I think cases are still evolving. The diagnostic industry is ramping up production of tests right now. We have announced an assay available currently in Europe that we're evaluating bringing to the U.S.

How big of a portion of your business now is the COVID testing, which you also got involved in? Relatively small today. We're a $19 billion company, about $500 million in COVID testing today. We've been really focused on expanding beyond COVID, but to more syndromic testing, including testing for flu and COVID, trying to differentiate respiratory disease. How have consumers changed post-COVID in their attitudes around testing? They really want more testing at home.

And so that's been a big focus of ours. We have a home COVID test. We actually have in clinical trials right now, a flu COVID test to be able to test yourself for flu and COVID. And we see the future of more and more tests available at home. Things like strep throat, for example, is being able to test yourself or your child for that at home is where it's headed. You can do that without having the stick go all the way? Well, you still may have to do that. People can do that themselves? We think so, yes. I always found that difficult. So what about

hospitals? Are they back to pre-COVID levels of normalcy? Certainly, I wouldn't say a normalcy, but particularly with nursing shortages, et cetera. But procedure volume is up nearly to the extent that it was pre-COVID. But hospitals are facing challenges with nursing shortages. Many of the same labor challenges that many industries are facing are facing hospitals. And I think it's been a tremendous opportunity for medical technology companies like ourselves to apply new types of innovation in robotics, informatics, digital technologies to help address workflow issues, help drive efficiency while improving outcomes

at the same time. How acute is that nursing and staffing shortage right now? It's highly, it's been really accelerated as a result of COVID and accelerated retirements. It's highly, it's been really accelerated as a result of COVID and accelerated retirements. It's certainly something that's ongoing and needs technology and other solutions to help address. What about supply chain? Because you're also a big manufacturer and have run into issues. Is that getting better? I'd say we see stability, certainly in supply chain. As you mentioned, we make more about 40 billion devices every year, ship them to more than 190 countries around the world. The supply chain situation, we certainly see improvements,

shipping rates starting to come down, resin availability improving, chip availability improving in a number of pockets. Now, with that said, there's still, it's a very dynamic world. And so new issues can pop up here or there. But overall, I'd say we see improving stability. And I'm a bit more optimistic about where it's heading. What about pricing? What does that mean for pricing? I think certainly inflation. Inflation and supply chain challenges are something that no company is escaping, something that everyone has to navigate.

Inflation still remains well over historical levels. We seek to first offset inflation through negotiation with our suppliers, through being more efficient ourself. And we do see pricing as a last resort that we pass that through. But we've been, this year we'll have less than a 2% price increase on our products. It's important to make sure that health care remains affordable. You also have to deal with the strong dollar, which I imagine has been pretty brutal. In a way, although it's something we've been navigating very well. As I said, we're a very global company.

We also reinvest in many of the markets in which we participate. So many of our manufacturing locations are local in the geographies in which we sell. What about China? You've got a decent business there. How are you dealing with some of these COVID shutdowns? How has it impacted you? Our team in China has done a phenomenal job in helping us navigate. We still expect to grow about 10% this year in China despite the shutdowns? How has it impacted you? Our team in China has done a phenomenal job in helping us navigate. We still expect to grow about 10% this year in China despite the shutdowns in Shanghai.

And it's important for us as a frontline provider to patients in China to make sure that our products continue to flow into those markets. We continue to do that even despite of shutdowns. One thing we wanted to ask you as well, Tom, is what you thought about Amazon's initiatives in healthcare and what they're trying to do and how it might disrupt or not the space and the ecosystem. I think Amazon's been a partner of ours in the past as a distributor of some of our products. Certainly the innovation that they bring to the marketplace and a new way of thinking about healthcare innovation,

particularly bringing healthcare into the home, I think it's fantastic. It brings new ideas and challenges kind of the conventions of the industry. And so we'll look forward to seeing where they continue to go into healthcare. We talked to a number of analysts ahead of this segment just to do our research, and they all said that you're a force for good and you've made some positive changes on the company, but you're only, what, two years into the tenure. So one question that kept coming up is what does Beckton Dickinson look like in the next three to five years? Where do you want to take this company so that it can continue its outperformance, which you have seen lately?

Yes. As you know, we're a 125-year company. I'm the eighth CEO in our 125-year history. Where we see is we're focused very heavily on three transformational areas that are going to be revolutionizing healthcare over the next several years and so where you see what you see BD doing is shifting our portfolio into three solution areas. The first is smart connected care, the second are new solutions that enable care to shift to new settings like into the home

and the third area of innovation that we're focused on is improving outcomes in chronic disease. And so you're gonna see BD's portfolio. You're already seeing it today. It's a driver of our growth, creating solutions for these irreversible trends that are currently reshaping the face of healthcare. Tom Pollin, thank you very much for joining us. Thank you very much for having me.

Appreciate it. Give you a check on where we stand right now in the market. The Dow's up 100 points or so. You're continuing to see a divergence in terms of sectors in the S&P 500, which is positive. It's up a third of 1%. The leader today is the banks. Financials up 1.5%. Losers, communication services, staples, utilities, and technology. Up next, the chief strategist of alternative asset manager Clocktower Group on where he sees buying opportunities right now. Plus, Crocs, it was a huge pandemic winter, but the stock is down 40 percent this year. Coming up, you will hear from the footwear maker's CEO on whether he sees any signs of consumers slowing in terms of their spend.

We'll be right back on Closing Bell. It has been a choppy session for stocks after Fed Chair Jay Powell this morning said he remains committed to maintaining the tightening cycle to tamp down inflation. And also some hawkish news from overseas. The European Central Bank lifted interest rates by 75 basis points, getting more aggressive than they had been, but largely as expected. Our next guest says don't pay attention to what the Fed says. And there will be a pivot when it is clear that inflation has peaked. Joining us now is Clock Tower Chief Investment Strategist Marco Papic. It's great to see you. So you have a few views that are a little contrarian but on the Fed this was the whole thinking before Jackson Hole is that buy stocks, inflation peaked, the Fed will pivot. Jay Powell totally shut that down, and he's done it now twice in the last few weeks.

It doesn't seem like the market likes that. Well, I just don't believe him. You know, and I think what's important. Well, I think what's more important for stocks is whether CPI has peaked or not. Historically, if you look at all the other inflationary cycles, when CPI peaks, equities usually rally. The only two times that it hasn't happened was 2008 to 1937, both very, very deep recessions. And so I just don't believe that the Fed wants to engineer one of those type of recessions.

And so at some point next year, as CPI comes down, they'll be able to have the political capital to simply slow down the pace of hiking, which at 5%, 4% CPI is a, they'll be able to have the political capital to simply slow down the pace of hiking, which at 5%, 4% CPI is a form of a Fed put. I was just going to say that what if it slows down to 5%, 4% of PPI, which is still more than double what the Fed is targeting? They're still talking about a 2% inflation target. So that's the part that I just don't believe, that they want to get there in 12 months. If they do, if I'm wrong, then we're going to have a calamitous recession. And the truth is like... It doesn't have to keep tightening and tightening and tightening.

That's right. And look, I mean, electoral cycles matter for the Fed. The Fed has rarely raised interest rates aggressively 18 months out to the general election. And so that's something that we need to start thinking as well as next year comes into the forefront. So are you bullish? On equities, yes, provided that the view that CPI has peaked is correct. And so a lot of that will depend on oil price, which of course is a function of not just demand and supply, but also geopolitical risks, which have to dampen down over the next six months if you're going to have further decline in oil prices. And that's what's

interesting about this cycle. Oil price stock correlation has completely pivoted. It used to be basically positively correlated. Now I think it's negative. And so oil prices have to continue to be either flat or have downside. Well, because now weaker oil prices are a function of the slowdown in China and Europe and potentially the U.S. as well. That's right. But also, when oil prices go down, they tell you something about the Fed reaction function, which they didn't in the last cycle. Last cycle, oil prices go up or down. You're not thinking about the Fed. But when Jay Powell said on June 15th, like, I'm looking at headline inflation, you know, that means that oil prices matter for the reaction function.

And so yesterday was a good example. Oil prices collapsed like 6%. But what happened to the stocks? It was a good day for stock market. And you think that was why? I think that's going to be increasingly why. I mean, it's one day data point. Also, bond yields came down. Exactly. Well, that's all part of the same story, right? So you think the Fed's going to stop hiking and actual cutting next year? So that's a very important point. What does a Fed put look like in a world of 4% CPI? Because hiking or cutting is actually not relevant.

What's actually relevant for us as investors is our real yields going up, down, or sideways. They've gone dramatically up. But in a world of 4% to 5% CPI, you don't actually have to cut to get the real yields to stop appreciating. You just have to hike less. And so to me, if they go from 75 to 25 basis points, they're still hawkish. They can still politically say, hey, we're dealing with inflation. But they're actually creating a Fed put.

We also have QT going on. That's ramping up. That's trimming of the balance sheet. And a lot of people are worried about the impact that's going to have on markets. So ironically, what's the worst thing that can happen to the stock market? Bond yields go up by a lot. What QT does, interestingly, is it actually reverses what QE did. And QE basically made you sell bonds by stocks. QT reverses that. And in a way, yes, that's a headwind to stocks, but

actually keeps bond yields dampened, allowing the stock market to do okay over the next 12 months. I also want to get to Europe with you because you've got, I can't find anybody that wants to invest in Europe right now. They have this ugly combination of very high inflation. Now they're going to have a rate shock on the precipice of recession if they're not already in one and this looming energy emergency. How is that attractive to you? So markets are forward-looking. And so what I would say is that the market has currently priced in a pretty dire scenario in Europe, which includes a recession, which includes an energy crisis.

We know this. Look, the euro is at parity. Let me just remind something, the viewers. I mean, euro wasn't at parity during the euro area crisis when the very existence of the asset was in question. So that's like a lot of the bad news has been priced in. But the central bank then was stepping it all in, and now they're taking it out. So the way I see this is the ECB policy is much more relevant than the price of natural gas. I mean, it's all one trade. It's energy prices and natural gas prices.

And my view on that is that those prices aren't sustainable because Europe has found alternatives to Russian gas. Furthermore, we need to be geopolitical analysts today and really focus on what's happening in Ukraine. The war is in a stalemate. If that continues, I think that Europe and Russia will have to find a solution where they both kind of swerve from a game of chicken.

And that's a very difficult call. I know it's a tough one, but for long-term investors, you look at some of the valuation in Europe and they look attractive for long-term investors. It's a view we don't hear often. Marco, it's great to talk to you. Thank you very much. Same. Thank you. Marco Poppet. Let's get to Courtney Reagan now with the latest details on the death of Queen Elizabeth. Courtney. Hi, Sarah. Crowds have been building outside of Buckingham Palace as well. Wishers converged to honour Queen Elizabeth II. Notices have been building outside of buckingham palace as well wishers converged to honor queen elizabeth ii notices have been placed announcing her death british prime minister liz truss says the queen was the rock on which modern britain was built and that she prepared the country for

a great future with the passing of the second elizabethan age we usher in a new era in the magnificent history of our great country, exactly as her majesty would have wished. By saying the words, God save the king. Ken Dolenz's are streaming in from around the world. Washington is one of many capitals where flags have been lowered to half mast. President Biden says Queen Elizabeth was more than a monarch. She was a steadying presence in a world of constant change. With Queen Elizabeth's death, Prince Charles is now king. Royal officials say he will keep his name and will now be known as King Charles III. He will be staying in Scotland at Balmoral Castle before returning to London. Sarah? Courtney Reagan. Courtney, thank you very much. Closing bell.

We'll be right back. With our kids back in the classroom, we are focusing on back-to-school stocks. Footwear maker Crocs saw a huge surge during the pandemic, but the stock's sliding since then as consumers face inflation at 40-year highs. Joining us now is Crocs CEO, Andrew Rees. It's good to have you back on, Andrew. Welcome.

Thank you, Sarah. Great to be here. So tell us how back-to-school is going. I'm particularly interested because I know there's some concern in the market about slowing growth in North America. So what are you seeing? Yeah, frankly, we're very pleased with back-to-school. We can measure it in a couple of ways. We can measure it through our own DTC sales, so that's our own websites and our own stores where we saw traffic increases and

we saw nice gains in those environments. So we definitely saw a very strong business directly for Back to School, particularly here in North America. And then as we look at sell out in our wholesale environments, we sold out extremely well in a wholesale environment. So and I think we've sold out more than we've sold in. So we also continue to to right size our inventories at wholesale. So we feel really good about back to school. It performed well for Crocs. I believe as I look at our performance and try and measure the underlying performance of the market, I think we did a little bit better than the market. So I think we gained market share. It does feel increasingly like a kid's brand. I mean, I see, I have it on my, I use Crocs,

my kids wear them, other kids wear them. The Lightning McQueen ones, I know you're re-releasing for adults. I think you should do so for toddlers. But how big of a portion of the business is that? And is it a growth part? Yeah, it's a little less than 20 percent. Right. So actually, 80 percent of the business is men, men and women. Kids is about 20 percent. I would say that's relatively high for a for a multigender brand. I think one of the strengths of the Crocs brand is we sell to men, women and kids. So we essentially reach the whole population, which gives you a larger addressable market. So and would say the kids' business has been growing nicely. It's really growing off the big kids, right? So the teenagers have been a very strong market for us over the last three to four years, particularly girls and now increasingly

boys. And then the little kids want to be like their big brothers and big sisters. So we see that growing nicely as well. So yes, kids is important. You mentioned Lightning McQueen. We re-released the adult clog today, in fact, and I think we had over 60,000 people signed up to get pairs on our website. We sold several thousand pairs in our stores today with great excitement. They are available in kids. They're always available in kids. They're always available in kids. But the adult was a special request from one of our customers. We made it a few years ago and we keep making it and re-releasing it. It creates tremendous excitement. I think the lingering concern, I mentioned the stock price, Andrew, you know, you had this huge

run in COVID, out of COVID, and then it's really turned around hard. And there's this lingering concern that, you know, fashion trends and people are fickle and they'll go out of style like they have before. How do you make sure that doesn't happen? Yeah, no, look, I think, you know, we've definitely been labeled with that pandemic play label that I know a couple of other companies kind of laboring under. Frankly, it's been true for others as well, right? I mean, we've seen a rapid reversal in a Peloton or a Netflix, right? I think it's not true for Crocs for a couple of reasons. One is we were growing strongly as we went into the pandemic.

The pandemic was good for us and we're able to do some exceptional marketing and appeal to that sort of comfort at home mentality. But as I look forward and I think about kind of what the global mega trends are that consumers align to, I think they're looking for comfort. I think in a constrained consumer environment,

potentially a recession, they're looking for value. They're looking for a little bit of inspiration. And if you think about Crocs, what we're doing is we're selling a comfortable, durable, incredible shoe at $50, not $150. At $50, we give the consumer incredible value. And then the other thing I think the market's reacting to is we made an acquisition late last year. We bought Hey Dude.

It was a significant acquisition. We haven't done one before. I would have to say it's going really, really well. We're integrating them into our company, and they're performing extremely well. But I think that creates a lot of concern and risk for investors. But also the long-term expectations have come down, haven't they? No. Our long-term expectations remain what they were. So pre the HeyDude acquisition, we indicated to our investment community that the Crocs brand could be $5 billion, right? And that was by 2026, so we're still committed to that.

We think that's very achievable. We did bring down our guidance for the full year of this year as we saw a constraining consumer environment, but I would add that still 15% to 18% growth on a constant currency basis. That's our current four year growth guidance in an environment where the market is flat to down. Right. So we're gaining share. We're gaining shelf space. And I think, you know, even given that slightly reduced guidance for this year, we're still very confident in that five billion dollar target for the Crocs brand by 2026.

And then we layer the hey dude opportunity on top of that. Got it so it's the it's the full year guidance that came down long term targets intact Andrew thank you very much for taking the time injuries. Thank you. Appreciate it take a look at where we stand right

now in the markets up about a hundred points still. On the Dow NASDAQ comp does remain positive it's lagging it's up two tenths. Of one percent higher treasury yields but ten years still below that three point three level. Bitcoin is higher today, but still below its key 20,000 support level. Coming up,

why the surging dollar is a big reason for the trouble in crypto. And tonight, please tune in. I'm hosting the CNBC special Blue Chip Playbook. Top Wall Street pros giving us their best investment ideas from each sector. Blue Chip Stocks, tonight, 6 p.m. Eastern. We'll be right back on Closing Bell. Check out today's stealth mover. It's a spicy one. McCormick down almost 7%. The Spicemaker, worst performer in the S&P 500 today.

Investors are salty about the company releasing preliminary third quarter earnings, which were weaker than expected. McCormick also slashing its full year outlook, warning it is being peppered by supply chain issues and higher costs, which are weighing on margin, taking down a number of food stocks today. You've got Campbell Soup, Kraft Heinz, Kellogg all at the bottom of the staples list, which is an underperforming sector right now. Dining reservations, though, are exceeding pre-pandemic levels, according to new data. One Wall Street firm is naming top picks that will benefit from this restaurant renaissance. That's ahead. That story plus crude's comeback and the dollar's impact on crypto when we take you inside the market zone next. Hanging on to gains, Dow's up 41 points. We'll be right back. We are now in the closing bell market zone.

CNBC Senior Markets Commentator Mike Santoli here as always to break down the crucial moments of the trading day. Plus, we've got Pippa Stevens on oil, Kate Rooney as well on cryptocurrencies. We'll kick it off with the broad markets. We are holding on to gains. The S&P 500 is up a quarter of 1%. We are now positive for the week. And, Mike, I don't know what to think. Peter Orszag with us earlier in the hour saying that the ECB is making a mistake going so big with its rate hikes into this energy crisis.

And then we had Marco Popic, who's a strategist at Clocktower, saying he's actually bullish because he thinks Powell is going to pivot when it becomes clear CPI is peak next year. And even bullish on Europe because he said that the bad news is just a lot of it is in already. Right. Because, I mean, valuations are really on the mat in Europe, I guess, if you think that there's anything but a really nasty recession coming. Interesting today when the ECB raised rates, it did, you know, it sort of helped perhaps soften up the dollar a little bit, even though Lagarde was talking slightly dovishly after the move was made in the press conference. So that seemed to allow the stock market to kind of get its footing. The rising dollar has been one of those things that's been a bit of a headwind. So I wouldn't draw too many conclusions about today's market action, except to say people had been leaning pretty negative. We got this good bounce off of support. Economic numbers have been okay enough. And that's

why the stakes are so high for the CPI number next week and the subsequent inflation numbers, because that's going to tell you whether Marco is correct, that whether the Fed says it or not, inflation is going to become friendly and they're going to be able to take a pause. Let's hit energy because the sector's in the green today thanks to a rebound in oil prices, although crude is off the highs of the day. And it has been a rough ride lately for WTI. Look at the chart. It's still down more than 3 percent this week. Pippa Stevens joins us well off the highs. Pippa, specific catalyst here for today's gain or any move in either direction after we've seen such a big drop? Yes, Sarah. Well, it seems that oil might have just become oversold after those recent declines

that you were noting. And today's bounce came despite a weak inventory report from the EIA. And so that also indicates that maybe traders think the bad news is priced in for the moment. There have been so many headwinds hitting oil, including demand slowdown fears out of China amid the country's COVID lockdowns. There's also growing concerns over a recession in Europe. Oil also fell below key technical levels, which led to selling. And then just all this volatility and uncertainty has really led to low conviction trading. And of course, there are still so many factors to watch going forward. The Nord Stream 1 is offline. President Putin has said that he will retaliate against any nations that implement price caps. And so there's still a lot of unknown here in this market.

Secretary Granholm said today that the Biden administration is considering extending the SPR release beyond that October date. So some relief today, Sarah, but whether or not this will hold really remains to be seen. Pippa Stevens, Pippa, thank you. And the relationship, Mike, we were speaking earlier about between oil prices and the stock market. So the stock market wants to see lower oil prices, right, because it means lower inflation. Yes, absolutely likes to see it. I think it's been one of the reasons the market's been able to come off the lows the way it has. What's interesting is, you know,

Treasury yields had been tracking with oil prices, generally speaking, for most of this year. The last couple of months, they've diverged. So clearly yields are moving a little more on what the Fed's now turning to, which is non-energy based inflation. But also, energy stocks have outperformed the commodity to at least oil. They've held up better. It seems like a comfortable level for prices, even if they're down a lot for the companies to do OK. The restaurant renaissance is here. Open table data showing dining reservations did exceed pre-pandemic levels on average for the first time in August and September so far. 44% of surveyed users dining out at least once a week.

And it's not just restaurants enjoying a dinner rush. Bernstein seeing consumer strength in fast food as well, initiating Chipotle, Wendy's and Yum! Brands with an outperform rating. Analysts there calling this post-pandemic era an opportunity to build scale and pivot to digital and highlighting those names as disruptors in the space, Mike, which I don't know that the market mood sort of shifts on this because restaurants are also considered very discretionary. And you give that up when you're in a time of hardship in the economy. And we're certainly feeling that on the inflation

front. And we've started to trade down and the restaurant earnings were kind of mixed. Yeah, there's no doubt that, you know, eating out is an extremely discretionary thing, but employment is very strong. That's kind of the first stop in checking as to whether the consumer can keep up the dining out habit. The other piece is food at home. Groceries have had enough of a price increase that on a relative basis, a lot of the casual dining and fast food chains, even though they've raised prices, still don't look so bad in comparison. So I think that's the bull case.

And in terms of performance, it really is the pure fast food stocks that have held up better. Casual dining has shown a little bit of relative weakness just because of the concerns you mentioned, trading along with pretty much the other consumer cyclicals. But if you think that could be resilient, then things like Darden all of a sudden don't look too expensive at this level. Just want to point out what is happening with the broad market because we're gaining a little bit of steam here into the close. The Dow's up 140, Mike. The Nasdaq composite is now up a third of 1%, so solidly in the green. Nasdaq 100 turned positive over the course of this final hour. And a number of sectors have turned green, like technology in the S&P and industrials, joining some of the other groups like healthcare, financials and materials. Biotech is rallying

hard today. The ARK Innovation ETF is up 2.3%. So it's hard to understand exactly what to make of the threat on a day where the ECB did a jumbo rate hike. Yeah. And Powell came out and talked tough on inflation. Yeah. I mean, on some level, and I wouldn't want to apply too specific a storyline to the moves in the last hour, except to say the market continues to feed off the fact that it did get nicely oversold with almost a 10 percent drop over three weeks. You do have yields and the dollar is still pretty tame. So it's not necessarily throwing up a roadblock to a little bit of buying here.

And I mentioned, you know, sentiment is a little bit leaning in a pessimistic direction. That's probably a help, although I don't know that any of that means, you know, ARK should be up 3% at this moment. Let's do Bitcoin. It's falling nearly 4%. Oh, actually, we're going to hit a tweet that just came across. Scott Minard, because he's going to be joining Closing Bell Overtime, he just came out with a pretty bearish call on stocks.

He tweeted that, here it is, stocks could fall another 20% by mid-October. And I said Minard will be on Overt on overtime 4 p.m. Eastern. That's a CNBC exclusive. He's saying here, I guess the PEs have trended lower when inflation is higher and year over year core PCE now at 4.6 percent. The S&P trading at nine times. We should see stocks, Mike, fall another 20 percent if historical seasonals mean anything. What do you think? Well, look, the rule of 20, which he's alluding to there is, you know, the P.E. plus the inflation rate in theory should compute to about 20. We're way above that right now. Valuation has not necessarily been the thing that's flashed a green light. I don't know about 20 percent downside in a month. Yeah, September is a week seasonally with a skew

toward, you know, the latter part of the month. But valuation doesn't really work that way in terms of adjusting on a step function basis over the course of a month because it's out of whack with macro inputs like inflation. So look, this has been one of the headwinds. The overvaluation, if you still think the market's overvalued, it remains somewhat concentrated in those huge growth stocks. Outside the top five stocks. I think you go down by two points on forward earnings, you know, with the rest of the S&P, the four ninety five below that. So, yeah, the market's not cheap, but I don't think that means you fall off a cliff right now. Pushing back. Well, be interesting to hear Scott talk more about this.

Scott Minard with Scott Wapner next hour. Let's hit Bitcoin now because it's falling 4% nearly that much this week already. Remaining below the key 20K support level, big part of that weakness is the ongoing strength of the U.S. dollar. Bitcoin getting a little bit of a bounce now. Kate, is there another factor here weighing on Bitcoin? It's definitely the U.S. dollar, Sarah. That's the big thing crypto analysts have been watching. And then it's a lot of the macro news in general and things like monetary policy, a lot of what you and Mike have been talking about. But despite it's kind of ironic if you think about how Bitcoin was created, why it was created, this premise of really being separate from the banking system and decentralized. And then you've got global macro factors really being the biggest drivers

right now. Things like the Fed all weighing on risk assets, which Bitcoin is really an extreme example of, hit its high back in November, right before the Fed started hiking rates. A lot of people are pointing to that. No coincidence there. And then the only outlier we've really seen in crypto-specific news that's moved markets this year

has been those bankruptcies and liquidity issues. And that was really to the downside and hit investor sentiment. If you take a look at the dollar versus Bitcoin in the past year or so, around May, you really saw this inverse correlation get a lot stronger. In the past month or so, it's been almost a perfect negative correlation. So a minus eight, a minus one correlation coefficient would really be a perfect inverse. So it's been a leading indicator of what's going to happen with Bitcoin. We've also seen some of the bigger investors, the smart money, as you might call it, or the whales have been selling and really got out around the 24,000 mark,

according to Glassnow data. So marking the near-term top and adding to some of the selling pressure. Back to you. Got it. Kate Rooney. Kate, thank you very much. Heading into the close, less than two minutes to go here. Regeneron is actually topping the S&P up 19% on some positive trials. What are you seeing overall in the internals, Mike? Yeah, it's been actually pretty solid internally. The breadth has been pretty good most of the day. You see it more than 2 to 1 advancing to declining stock. You still do have small caps, for example, outperforming the big cap indexes.

Take a look at industrials relative to the S&P on a year-to-date basis. Been pretty steadily outperforming, almost by, what is it, about five percentage points at this point. And it's not just because of one or two industrial stocks. So while consumer cyclicals have suffered, financials haven't led, industrials have sort of bucked the idea that we're in some kind of big global economic downturn, for now anyway. And the volatility index is eased back. It's under 24. Probably not going to crash too much more before the Fed meeting on the 21st. But right now, kind of benign, not going to stay in the way of further gains in stocks.

As we head into the close, the Dow is up 183 points or so. So we have seen a nice rally just in the last 10 minutes or so as we have ended out this trading day at near the highs of the day. We got up as much as 200 points earlier in the session. Don't think we're going to get there. You've got Salesforce, JP Morgan, and Goldman as the biggest contributors to the Dow gains. The S&P is up six-tenths of a percent, now up 2% for the week.

Healthcare and banks are leading the charge today. NASDAQ up a half a percent, so technology joins the party just sort of late in the day here. Regeneron, though, is helping the Nasdaq. Tesla, NVIDIA, AMD, and Meta all having a good day. Apple, though, is dragging. That's it for me on Closing Bell.

See you tomorrow.