Closing Bell - Closing Bell: Stocks Storm Back, Crypto Collapse & Cash Is King 7/6/22

Episode Date: July 6, 2022

Stocks staging a late-day rally to end in the green after the Federal Reserve reaffirmed its commitment to fighting inflation through interest rate increases. Evercore ISI's Julian Emanuel says he thinks the broader market can rally into the end of the year, but UBS Private Wealth Management's Alli McCartney says investors should remain cautious with so much economic uncertainty right now. However, JPMorgan Asset Management's Oksana Aronov says cash is king in this environment. And Tusk Ventures CEO Bradley Tusk, who was an early investor in Coinbase, discusses the outlook for bitcoin and whether more crypto related companies will fail because of the ongoing crytpocurrency collapse.

The Dow, S&P, and Nasdaq staging a bit of a late-day rally here. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we stand in the market. Not too far off session highs, which we got as high as about 200 on the Dow. We're up about 150 or so. S&P 500 up six-tenths of a percent.

Most sectors are working right now. Technology is doing well. Utilities are strong. Healthcare, what's not? Energy at the bottom of the list and then financials right behind it. The Nasdaq's up seven-tenths of a percent. It's building on yesterday's gains. Small caps, though, underperforming.

Perhaps the energy exposure there and the banks down half a percent. Coming up this hour, Tusk Venture CEO Bradley Tusk, who was an early investor in Coinbase, on whether this year's cryptocurrency collapse could just be getting started. But first, let's get straight to Elon Mui with the details from the Fed Minutes that came out last hour. Elon. Officials agreed that another rate hike of 50 to 75 basis points would likely be appropriate at its meeting at the end of this month. And in fact, they even acknowledged that a more restrictive stance could be appropriate if inflation remains high. The minutes also show Fed

officials were worried about inflation becoming entrenched. This came up several times in the document, and many participants viewed this as a significant risk. Officials believe that the Fed's credibility has been helpful in shifting market expectations toward tighter policy, and they viewed raising rates as required to meeting the central bank's legislative mandate. Fed officials repeatedly highlighted the resilience of the labor market and of consumers, though some officials did note there could be some clouds on the horizon. Officials also discussed the disparate impact of inflation on lower-income households who would spend more of their budgets on food, energy, housing. They stressed that persistently high inflation could stand in the

way of maximum employment. Still, the committee acknowledged that higher rates could result in slower economic growth and dampen the labor market. And that is why it removed some language in the statement that indicated the Fed could both return inflation to 2 percent and deliver a strong labor market. So, Sarah, this soft landing the Fed is trying to pull off could be very difficult. Back over to you. It is kind of stale, though, right, Elon? Because since that meeting where they did raise by a triple, basically, hike, the economic data has turned worse. A lot of the commodities, including oil prices, are well off their highs, more than 20 percent in the case of oil. And there are increasing concerns about recession in Europe and in the United States.

So is there anything in there that would give us a clue as to which way they were going in July? Markets pricing in 75 basis points, but the data has gone the other way. Yeah, I think it's really interesting that at that last meeting, they specifically pointed to a 50 or 75 basis point increase. They did not specifically call out a 100 basis point increase. So it'll be interesting to see whether that is even on the table at this next meeting and how sort of what the range of rate hikes will be that they're discussing. So I think that the concern at the last meeting was that there was this tradeoff between the impact that the higher rates could have on the job

market. You saw a dissension from Esther George at that last meeting. She was the one arguing for a 50 basis point increase and not going as high as 75. So sort of the bias of that last meeting was toward a little bit smaller. We'll see at this next meeting if there's a bias toward maybe even thinking about an even bigger one. Yeah. Elon, thank you. Elon Moy, 10-year Treasury note. The yield is stabilizing 2.9, a little bit higher, but still inverted in a sign of recession against the two-year. Let's get straight to the market move. Joining us now, Ali McCartney from UBS Private Wealth Management and Julian Emanuel from Evercore ISI. Ali, that last few days have felt bullish, lower treasury yields, weaker commodity prices, and this very hawkish Fed minutes is being

dismissed by the market. Is that the right move? I think everything you said is right on, both in terms of sort of the stale nature of the commentary, since we've had testimony and a strong dollar and global Feds follow suit. But also, yeah, we have had a little bit of a risk reversal in the last number of days. I think what has happened is this rotation that we've talked about from markets focusing on the impact of higher sustained inflation versus a global slowing has really changed, right? And that's evidenced in three ways. First, you see it in what is outperformed. We've had, you know, profitless tech outperform value, basically. Second,

we have seen the Fed funds move from pricing in a terminal rate of four to closer to 3.4, and even more so pricing in 80 basis points of, you know, decrease next year. And then the third is what we've seen in the commodities market. So the last three days, I don't think you can say that they're telling a totally different narrative, but that's definitely where the focus is. And we'll see if that can be sustained. I think this is just in summer volatility. Julianne, if they truly are data dependent and truly are aiming for a soft landing, wouldn't that argue for a lesser rate hike at the next meeting? I know we have to wait to get the CPI report, but if you look at some of the economic data, even the job openings, which has been one of the hottest part of the economy and the

tightest part that they were aiming for, is starting to cool off. Policy's working. There's no question about it. And, you know, they are not going to explicitly say that they're data dependent. That is not part of the narrative right now. But I do think it's interesting when you go back to these minutes a little while ago that back on June the 15th, they were debating whether it was 50 or 75. I think every investor on June the 15th, they were debating whether it was 50 or 75. I think every investor on June the 15th thought it was going to be 75 for certain. And obviously, lo and behold, we've seen break-evens collapse. We've finally seen what we believe to be the most important inflation indicator, the price of gasoline collapse. And importantly today, for the first time really in quite some weeks, with weakness in the energy market, you're actually seeing credit spreads tighten ever so slightly, meaning that the concern over recession is just incrementally smaller than it was yesterday.

Although, wow, easy come, easy go. S&P 500 energy sector is off 25 percent from the highs. It's still up more than 20 percent for the year, Ali. So what are you telling your clients to do? You've been pretty bearish when you've been on with us before, sort of saying wait it out, sit it out. Are you changing your tune, given these changing fundamentals that are happening as we speak? Again, like, I don't know that they're actually fundamental. So that's the issue. So I think we have such disparate sources of data. We have so little flow in the market right now.

I mean, our desk said this morning, I thought it was sort of cute. They said, we're getting a lot of calls, not trades, questions, right? So everybody's trying to figure out what's going on. It's a slow week anyway, because, you know, we're in the everybody is both emotionally and sort of market level exhausted. So I think we still have a summer of watching for what the Fed does, watching for what happens in international policy, watching for the directionality of CPI. You know, we still see a world in which there is a chance of stagflation. We're sort of calling for what we've called slowflation.

But, you know, obviously there are some major issues and hangovers in the market that don't make me more incrementally bullish. It makes me see a set of scenarios that one needs to be diversified going into. What about you, Julian? Do you still see 4,300 year-end target? That would be a bullish call from here. We do. We do. When we think about the dynamics, particularly coming into the FOMC meeting on July the 27th, the combination of the tradeoff in commodity prices alongside, you saw the economic numbers this morning, the PMIs were better than expected, weaker as the Fed wants, but still not recession territory. The combination of that, and importantly, with yields backing up, to us mean there's a very good chance of a rally

that could get you as high as 4,300 in the near to medium term, even if this isn't the ultimate. Who drives that rally? Sorry to cut you off, but it's changed so much between tech and energy and banks and then staples. Today's a funky day where utilities and technology are the best performing sector. So how do we get there, Julian? Absolutely. So for us, it's two things. Across the entire space of the Russell 1000, there are a number of companies that have very high free cash flow yields. They come in technology, they come in consumer, they come in the energy space. Those are the companies you want to own. We also believe that things do not move in a straight line forever in this kind of market. And this is the time for the Nasdaq likely to outperform because you've had this significant

backup in yields and an expectation coming into earnings season that these names will be under pressure in terms of how they're talking about earnings. But that's already in the price. What about you, Ali? What's the one thing that you would tell investors to do, a sector or perhaps a market? I think you guys were interested in Chinese stocks. We're definitely interested in Chinese stocks in terms of the relative lack of performance that we've seen. I would say, you know, the one thing that I am looking at right now is earnings season begins next week. Normally, you have 70 percent of stocks

beat their estimate by about 4 percent. Question is how if that happens, A, what forecasting looks like and B, does the market react? But I think we need some real data on how companies are holding up, especially with this strong dollar. You know, we have gold not going up as much as one would think it would. But the dollar, I mean, you look at, you know, a friend of mine just called from Paris and said everything's on sale, right? It's almost a parity. But think about what that is doing to these U.S. companies that are already facing such higher prices and margin costs.

So I'm a little bit of wait and see. But if I liked energy, as you said, 20 percent ago, I still like it. I'm still into those dividend payers. Euro's weakening again today, 101.94, another half a percentage point move higher for the dollar. It's painful. Julian, Ali, thank you both for joining me. Thank you. Good to see you. Check out Bitcoin trying to stay above that closely watched $20,000 level as another crypto firm collapses. Up next, early Coinbase investor Bradley Tusk on how much worse this crypto winter could get. Dow's up about 153. You're watching Closing Bell on CNBC.

Check out today's stealth mover. It is a stealth one. Resolute Forest Products. Shares of the wood and paper products maker skyrocketing at more than 60 percent after being acquired by Paper Excellence Group for $1.6 billion in cash. That deal helping the company expand in North America, which is experiencing tight supplies of paper products like so many other industries. Meantime, more crypto damage. Crypto brokerage firm Voyager

filing for bankruptcy protection just a few days after pausing all trading and deposits and withdrawals. It's the latest collapse in the crypto world. Just look at the timeline. After Bitcoin hit a high back in November, the price began to slowly fall as the Fed signaled rate hikes. In May, Terra stablecoin collapsed. That led to companies like Celsius pausing customer withdrawals. And then just last week, crypto hedge fund Three Arrows Capital went bust. Joining us now, Tusk Venture Partners Bradley Tusk. His firm invested in crypto companies like Coinbase and Circle. And Bradley, have there been any others? Have you had any blowups in the portfolio or changes in positions? Luckily, not yet. Within crypto, I've had plenty of others blow up in the market in the last few

months, but not specifically in crypto. But, you know, look, I think what happened with Voyager today is not particularly surprising, not that Voyager was clearly a company that was destined to fail. But, you know, the industry got too expansive, too big, too creative, with too few kind of fundamentals. And just like we've seen generally with private tech startups that get way overvalued, then the market cuts them down considerably. You know, this is another version of that.

So what's the issue here? Is it that it just wasn't a mature industry? Is it that there wasn't enough regulation? Like, people are losing money. They're not getting it back. No, look,? Is it that there wasn't enough regulation? People are losing money. They're not getting it back. No. Look, I think it's a few things. But the biggest problem is crypto is an asset class that's based on nothing but momentum and ideology, which is totally different than any other commodity or stock or anything else. And with 2,500 different tokens, there's literally nothing to distinguish the good from the bad, the valuable from the less valuable.

And as a result, people end up making choices that feel almost kind of random and they can lose a lot of money. So what I would like to see, and I get that there'd be some antitrust issues around this, but is why don't we identify the currencies, the tokens that have some kind of intrinsic value, right? So it could be a Bitcoin where there's a finite supply of how much can be mined, and therefore that creates some underlying value. Or Ethereum, where you can build new applications and new protocols on top of it that could have real value. But, you know, find the tokens and find the currencies where there's actually Bitcoin that Bitcoin's gone from almost 70,000 in a matter of months to under 20. Yeah. But I think that part of that is because they're they're suffering from the entire industry

collapsing. And I think if you didn't have twenty five hundred different tokens, each with sort of its own totally different story narrative, it would be a lot less volatile. So I think that the vast number of it combined with the lack of regulation completely is what creates the volatility. And I think the way to limit that going forward is fewer tokens, make sure there's some sort of intrinsic value to them. And then as the SEC and the CFTC and whoever else are promulgating regulations around crypto, take that into account. You know, they could say, yes, normally we wouldn't let exchanges come together and decide here are the only companies that we're going to offer. But there are antitrust

exemptions in other industries and maybe there could be one here, too. So it sounds like you're not losing conviction and you see this almost like in the dot-com crash where something stable is born out of it. So what opportunities are there? Are you investing around things that you think will stick around in this crash? To me, at this point, it's the really basic fundamental tokens and currencies that make sense right now. Look, overall, if you take a half a step back, one reason why crypto really took off, other than sort of people being bored during COVID and not knowing what else to do with their time and money, is there's a fundamental lack of trust in institutions all across this country and all across the world.

That's been happening since the Vietnam War. So if you look at every poll, trust in government, in the in wall street in the media you know they've all plummeted and that trust has to go somewhere um and some one of the places that it went to is bitcoin and ethereum and basically the notion of i would rather take my chances with like-minded people than with some central bank who rigs the game against me i don't think that trust in institutions is increasing anytime soon. I think it's just going to get worse and worse. If you just look at our politics, it's pretty clear that it continues to degrade by the day. If you agree that that lack of trust is going to continue, that means

that fundamentally cryptocurrency and some of the key tokens are going to be fine long term. They're going to be successful, but they need a better ecosystem with more protection and more regulation than what we have right now. Though there's a lot of trust in the dollar right now because up every single day Bradley quickly you you mentioned that you've had a lot of other bus in the portfolio

gonna ask you because I think you've been fundraising in this tough environment and I'm gonna ask you what deals if any deals are getting done and what what all yeah so like. Luckily we- we finished raising our third venture fund- in late, and we're able to

basically kind of avoid the current cycle. But in terms of deals, I just had lunch with my partners an hour ago. No, I mean, all we're really seeing are internal financings from existing VCs, no up rounds at all. And even the deals that we are looking at, we don't see a reason to pay, you know, more than they might have been valued at the Series A or the Series B or the seed, simply because that's where the market now lies. Whereas in the last two years, we were all paying vastly inflated prices because that's where the market was. So I think there's actually a lot of opportunity here. And there are good there are good companies or some of our companies that have gone public through SPACs have strong fundamentals.

And yet they've gotten kind of caught up in the broader SPAC kind of downward momentum and are trading really low. And I think some of them are really good companies that ultimately will be successful once we get past this sort of groupthink around SPACs. What's been the biggest blow up for you? Bird, specifically. Bird. Yeah. The scooter. Yeah. The scooter. Yeah.

But, you know, look, it was a company that was the fastest company ever to a billion dollar valuation. Reached as high as about three billion dollars. And was it ever a three billion dollar company? No. But last I checked, it was trading at like 43 cents. It's also a hell of a lot more valuable than that. It is a company that has a product that consumers really like. There's a clear need for it in the transportation market.

And so, you know, companies like Bird, Latch would be another one in our portfolio that we think have really strong products and really strong demand. Once we kind of get past this period, we'll rebound and do pretty well. I think I top ticked it when Wilford Frost and I rode the scooters outside the stock exchange. That was a few years ago. Thank you. We did not. We were safe. Thank God. Bradley Tusk. Thank you. Let's check in on the markets right now. And we actually financials have just turned green. So the only sector now lower on the day would be energy. The S&P is up almost a full percent. We're building on some gains here. The Dow's up 193 points. We're near the session highs. And the Nasdaq continues its march up 1% as we head into the close. Up next, Mike Santoli looking at the flight to quality and whether

defense will continue to be one of the best performing sectors for investors in this environment. As we head to break, check out some of today's top search tickers on CNBC.com. Ten-year treasury right on top, as it always is, selling a little bit with yields a little bit firmer. WTI crude is there below $99 a barrel. Tesla, slightly higher. Amazon, up 1.5%. It's really climbed during the session. And the S&P, which does continue to hit now, session highs.

We'll be right back. Time now for today's market dashboard. Mike Santoli here, as always, with a look at the flight to quality taking place. And I was saying earlier, it's weird to say see technology and utilities outperforming. That's true. That's what's happening today. Both definitions of quality, financial quality in some sense. And also it's happening within sectors, not just among sectors, Sarah. So here's pharmaceuticals and biotech.

You've heard some people say some friendlier things about biotech. It seems to be working right now. Well, here's been the bifurcation of the market within pharma. So the drug stocks, the big pharma names are cheaper. They're more steady. They obviously are outperforming.

There's two versions of biotech ETFs that are heavily traded. This one is market cap weighted. So the big profitable biotechs have a bigger weight. They're outperforming the more speculative equal weighted version. Also happening within industrials. OK, you have the overall industrial sector and then you have aerospace and defense, which is considered to be more predictable. Obviously, maybe lower beta, lower volatility.

And then you have transport transports, which are more cyclical. So my point is, it's all happening in these layers across industries. Financials as well. Insurance. Nobody talks about it, but it's been one of the strongest groups of the year. Insurance is beating banks, which is beating capital markets linked financials right now. So the question, I think, Sarah, is it makes so much sense from a macro perspective and a risk management perspective to say go to quality right now. So the question I think, Sarah, is it makes so much sense from a macro perspective and a risk management perspective to say, go to quality right now. The issue is, what if the market all of a sudden starts to get back to risk on if we sort of get some clarity on either the cycle or the Fed

and then you're in the high quality stuff? Is that what you're saying? I'm not saying I'm saying be prepared for the opportunity cost if you're all in boring quality. Because guess what? Garbage rallies fast when we turn. Progressive up 17% year to date. Who knew? Higher yields. All state up 12%. Pricing power, yeah.

Sexy, boring companies. Mike, thank you. We'll see you later. Up next, Wall Street buzzing about recession-proof stock ideas. Sort of to follow Mike. And here's a hint. Love don't cost a thing. With some stock picks. We of to follow Mike. And here's a hint. Love don't cost a thing. With some stock picks. We'll be right back. What is Wall Street buzzing about? Love, actually. Turns out love is

all you need, especially in a recession. Morgan Stanley out with a new note saying the need for human connection, even during an economic pullback, makes online dating stocks recession-proof. It's something that Bumble CEO Whitney Wolf heard talked about last week on Tech Check. You look throughout history, regardless of macroeconomic trends and ups and downs, people don't stop meeting each other. People don't stop the quest for love. It's not just the quest for love, though Morgan Stanley does list that as one of the key reasons they are confident in online dating stocks. The firm also says it expects limited to no increase in subscription churn. And it believes the cost model better protects margins and cash flow than other business models, especially across the Internet space.

Morgan Stanley's top pick in the category is Match because of its market share and diverse portfolio. The stock's actually down about 45% so far this year. But Morgan Stanley says investors could find love in a hopeless place. Here's where we stand right now in the markets. Near session highs. We've been rallying throughout this final hour of trade. We're up now more than 200 points on the Dow. S&P up almost a full percent.

You've got technology utilities leading, but every other sector higher except for energy, which is down sharply one and a half percent. The Nasdaq's doing well. It's building on yesterday's gains up another percent and small caps lag. Up next, a top strategist on how you should be putting money to work as the Fed raises interest rates into this slowing economic environment. And a reminder, you can listen to Closing Bell on the go following the Closing Bell podcast on your favorite podcast app. Dow up 217. We'll be right back. Let's get a check on the market. It's been a little volatile after the release of the Fed minutes at 2 p.m. that did show officials anticipate more rate hikes again, more restrictive

policy. Initially, stocks dipped and then they've basically been jumping straight up from there into this final hour of trade. We are now at session highs, up more than 200 on the Dow. Joining us now is Oksana Aronoff. She's the head of market strategy for alternative fixed income at J.P. Morgan Asset Management. Oksana, what do you expect the Fed's next move to be? Well, I think today's minutes were quite interesting, Sarah. We saw, I think, 90 mentions of the word inflation and zero mention of the word recession, which is, of course, what's on everyone's minds these days. And the market is kind of swinging back and forth, at least in rates. We saw quite a bit of a move today from an early morning rally now back into the high two nines as the market anticipates that

the Fed will continue to choose and their minutes underscored this again. They will continue to choose inflation over growth. And that is the name of the game. And that's why I think investors have to continue to be focused on capital preservation here. So you're not buying into this whole Treasury rally on the idea that inflation has peaked and so have hawkish expectations around the Fed? Not at this time. There are so many unknowns still. First of all, we have seen inflation. I know that there is widespread sort of expectation that inflation is going to moderate here. And it's sort of like this magical thinking that, you know, if the market thinks about it hard enough, maybe it'll happen. But the reality is that the components of inflation that are continuing to tick up are stickier. It's core services. It is, of course, shelter. We don't know yet where wages are going to come in. We saw

continuously, you know, very tight labor market picture with two vacancies for every one sort of employee. And so there are just very sticky components to the inflation figure. And there is really no telling that it is, in fact, moderating. And I think jumping into either duration risk or credit risk here is way, way premature. And let's not forget that we still do not know what quantitative tightening will bring us. That is somewhat of a wild card. We expect roughly one and a half billion of Fed balance sheet runoff through the end of next year. That in itself is almost three quarter percent hikes. So there are so many unknowns at this point.

And a 2.9 on the 10 year, not a bargain yet. I take your point on the quantitative tightening. Huge unknown. We've never really done it before. Hard to figure out what that's going to do to financial assets. But on the inflation front, Oksana, increasing signs that we are seeing much lower commodity prices, everything from oil to wheat, even some new reports that rent prices are falling, that the jobs market is getting less tight. So adding that together and some of the economic signals that we're seeing, along with financial conditions tightening, why are you not sold on that idea?

So as I mentioned, we continue to see that the most kind of stickier parts of the inflation number are still very much, I will call them a wild card. You know, my expectation is that they will continue to surprise on the upside. But let's also zoom out and consider the fact that for the Fed to stop being aggressive here, they need to see more than, you know, an inflation number that falls from 8.6 to 8.2, right? They need a really meaningful, and this is what Powell underscored against again today and in past press conferences, they need a really meaningful turnaround to the inflation story in order to stop being as aggressive as they have. And the other point I would make is that, you know, with respect to

credit, and there is a lot of appetite, I think right now, or at least I'm hearing a lot of calls to get back into credit, to get back into risk. But the reality is that we have no experience or very little experience what it means for an aggressive Fed into a slower earnings environment, right? A Fed who is hiking into a slowing earnings environment. And I think that's a reason to be cautious on credit here. I think credit will continue to widen. Spreads in credit will continue to widen. And we will have significantly better investment opportunities there than we do now as the prospect of average defaults, which we haven't seen yet. We're at all-time lows right now, sub 1%.

The historic average is at 3.5%. It is absolutely reasonable to expect the market to move towards that historic average. And spreads will widen to reflect that. So I think maybe the interest rate punch here is close to done, maybe, but certainly not the spread widening, certainly not the credit fundamentals punch. That is not done yet. And we need to see that happen in order for capitulation to come through and in order for the bargains that we are looking for to cash. Is that what you're saying? Cash capital preservation? So capital preservation is the name of the game. Whether you do it through liquidity, we like to do it for a combination of liquidity and also high quality floating rate instruments that are really going to be, you know,

together are going to be really a free option almost on any asset class in the world. As we continue to see this repricing, there are certainly parts of the market that are starting to look increasingly interesting. For us as credit watchers, we are looking at sort of the edges of fixed income at things like convertibles, for example, that have obviously suffered really significantly in this sell-off. And that is maybe at the top of our shopping list. Gen funds have also demonstrated significant weakness. So our shopping list is growing. But without a doubt, we're going to see much better entry points than the one we're observing now. Interesting bearish view. Oksana, thank you for joining us. Thank you.

Eighty two dollars. That's Goldman Sachs's new bear case scenario for Apple stock complying could drop more than 40 percent from its current price. Up next, we will discuss whether the shine is officially off Apple. That story plus energy slide and Amazon getting back into the food delivery wars when we take you inside the market zone. Dow's up 179. We'll be right back. We are now in the closing bell market zone. Lafler Tangler CEO Nancy Tangler here to break down these crucial moments of the trading day. Plus, we've got Pippa Stevens on energy, Deirdre Bosa on Amazon and Grubhub. We'll kick it off with the broader markets, Nancy, and start with you as we are seeing a rally and a pretty strong session here for the second day in a row. Besides energy, most of the other sectors are working right now. It's utilities and technology that are at the top of the market. I don't know what to think. You come into a day like today

after we've seen a few days with traders thinking maybe the worst is over as far as inflation, as far as the Federal Reserve hiking interest rates so aggressively. But then we just heard from Oksana Arnav from the fixed income desk at J.P. Morgan Asset Management saying that it's too short term in terms of the thinking and inflation is actually quite sticky. So what do you do? I think this has been the big conundrum for the whole year, Sarah. I mean, the cross currents are pretty deep. And in the short term, these rallies and sell offs are white noise because you really can't discern what the next next move is for the markets. But I will say this. We've been we

decided about a couple of weeks ago to start adding risk back into our portfolio. And I think you've seen other investors stepping back into back into many of the NASDAQ names not not the stay at home bubble pop names. But the kind of long term technology that can. Deliver reliable growth have strong balance sheets free cash flow. But to your to your

question I don't think it's over I think we continue to see choppiness. Of the feds done a remarkable job and I've been a big critic that they've done a remarkable job in using rhetoric. To get the markets to do thepiness. The Fed's done a remarkable job, and I've been a big critic, but they've done a remarkable job in using rhetoric to get the markets to do the heavy lifting for them. And I think that's what you're seeing in the bond market. And stocks are now realizing they may have overstocked investors. They may have over discounted a recession and

how hard the Fed is going to fight inflation. Let's talk energy, because crude oil right now is below $99 a barrel. Energy stocks are the worst performing right now in the S&P 500. CNBC.com's Pippa Stevens joins us. Pippa, are recession fears the big catalyst? It's been a pretty sharp slide, fast unwind of that winning trade. Yeah, really fast unwind, Sarah. And recession fears are front and center with the idea that any type of economic slowdown will curtail demand for oil and petroleum products. But there are a number of other factors weighing as well, including the stronger dollar, as well as an unwind of the oil as an inflation hedge trade. But on the demand side, I think that it's natural to look at prior downturns and prior

recessions to try to gauge where demand might come in if there is the slowdown. But experts say that that kind of ignores the supply situation right now, which is so tight. And also, the consumer is a lot stronger today than, say, in 2008, meaning that we might not have that same kind of slowdown if we do get an economic downturn. Now, Matt Maley did note today that the XLE, which tracks the energy sector, fell below its 200-day moving average. It's only done that three other times in the past year. And each of those three prior times, it was able to regain the level in a matter of days. And so this time around, if it can't regain that key technical level, then that could be a sign of concern for the energy stock bulls. Pippa Stevens, Pippa, thank you. Nancy, would you be a buyer?

No. Well, we have a pretty full position. We've been trimming into the strength, but we still own and are overweight energy. I think this is more of a dollar story than a demand story because we know we have supply constraints and you know we know that- the president has been going to other countries to ask you for them to increase supply and

that's that's just not going to happen- OPEC plus and OPEC in particular. Is pretty- well constrained from. From a capacity and delivery standpoint so I think you'll see a return to this trade, but I don't think it goes on for years as many do. I think it's a six to nine month

imbalance that will ultimately get sorted out. And I think as China, you know, continues to reopen, we'll see a return to higher energy prices, unfortunately. Some of the energy utilities doing well today, Constellation Energy, WEC Energy Group at the top of the market. Meantime, let's talk tech because Goldman Sachs cut its price target on Apple from 157 to 130, maintained a neutral rating because the stock on the stock because of increasing recession risk to consumer electronic demand. But analyst Rod Hall also did issue a bear case scenario where he says that Apple could plunge to $82 if recession turns out to be worse than the mild economic slowdown that Goldman is currently predicting. Steve Kovach joins us. Steve, how strong right now is demand

for Apple products? Is it a safe haven in recession or is Rod Hall right typically that it really suffers on consumer electronics demand falling off? Yeah, Sarah, this is a really big question going into this earnings seasons with Apple is where is demand standing? So we we get tons of different signals throughout the first half of the year from Apple and suppliers and so forth. Apple kind of signaling on their last earnings report demand is so high. We just can't make enough stuff to get out to people. They prioritize their iPhone development as those shutdowns in China kind of hurt other products like the Mac business and iPad business. So we're hearing from Apple and people like Qualcomm, which puts chips inside of these expensive smartphones,

that, hey, demand is really good. It's holding up great. Then last week, we have Micron come out saying, well, smartphone demand is about to fall off a cliff, especially if we head into a recession. So Goldman kind of laid out this bear case for Apple here saying, look, if we do hit a recession, demand will likely fall off for pricey phones. Apple sells the most expensive phones. And this is the bear case they're laying out. Now, we're going to get a test of demand in a different way starting next week, Sarah, when the new MacBook Air, which is supposed to be a really hot product for Apple, starts going on sale. So we'll see if they can keep up with demand for that, especially with these COVID shutdowns still lingering in China. Yeah, Hall likes telecom and cloud-exposed companies, which he thinks are more resilient.

Steve, thank you. Nancy, you said you have been nibbling in the past few weeks at tech stocks. Is Apple one of them? No, Sarah, we've been raging bulls from 2014 to about 2021. And we became net sellers of the stock. We still own it. We own about two to two and a half percent across our strategies. But it's expensive. still own it. We own about two to two and a half percent across our strategies- but it

it's it's expensive and- so I while I don't necessarily agree with the bear case that Goldman presents. And I understand it's a scenario that they're suggesting. But I do think if you do get a sell off further in the stock that you

you would want and we would be in stepping in. And accumulating more shares it's a great- iconic brand And the ecosystem is what you're buying. Handset, you know, demand can decline and the ecosystem can still grow. I think they're doing some really interesting things in health care and just in general around the edges of the ecosystem. So we would be in buyers. We still hold some and we're done selling for now. It's up today, despite that sort of bearish call. It's up about three quarters of a percent. It's up two and a half percent for the

week. Take a look at shares of Grubhub parent Just Eat Takeaway soaring today after news of a deal with Amazon, which will bring restaurant delivery to Prime members via a one-year subscription to Grubhub Plus. Amazon also has the option to take a two percent stake in U.S subscription to Grubhub+. Amazon also has the option to take a 2% stake in U.S.-based Grubhub. Just Eat said Amazon could bump its total stake to 15% based on performance terms of the deal. That news hitting the rivals. Look at DoorDash down 8%. Uber, which has Uber Eats, down almost 5%. Deirdre Bosa joins us now. Deirdre, the Amazon effect in the food delivery business, it feels like we've been here before. What do you do? We have been here before. You know, Amazon was actually in this business. It closed in 2019. It was called Amazon Restaurants. Didn't

have a lot of success. They closed it and then the pandemic hit and people really bought into food delivery and Amazon was out of the game. So I think they've seen that trajectory over the pandemic. They've seen that these habits are sticky. DoorDash was even able to become profitable on an adjusted EBITDA basis, free cash flow positive. So this is a way of Amazon being able to dip its toe back in and keep tabs, too, on what are increasingly looking like its competitors. Remember that Uber and DoorDash are expanding beyond restaurant delivery. They're moving into beauty and cosmetics, into convenience, into grocery.

And this is where Amazon is pouring money into in terms of its own grocery offerings. So it's kind of a way, at least I'm seeing it as a way of Amazon saying, hey, I see you. And now I'm going to kind of help your third competitor get a leg up in this market. Yeah, can't beat them. Join them, I guess. Deirdre, thank you. And Amazon, by the way, has been climbing throughout the session, started out down. Now it's higher. Look at Rivian, big winner today after the EV maker announced it produced, announced that it produced more than 4,000 vehicles during the second quarter. The company also says it's on track to build 25,000 vehicles this year, which is in line with its previously reduced guidance. Bill Abode joins us. Phil,

was this a big surprise? I mean, clearly this was a big surprise out of Rivian. What were the expectations and what do we expect now? Well, there were pretty limited expectations, Sarah. Most were expecting them to say that they would produce anywhere from 3,500, maybe 3,900 vehicles in the second quarter. Came in at 4,401. Look at the weekly production and how it has grown. This speaks to the confidence that investors are showing in Rivian today. January to March, just 196 vehicles a week picked up in the first part of the second quarter, really picked up from May 10th through the end of the second quarter. To put this into some context, they need to average 694 vehicles built per week for the rest of this year in order to hit their guidance of 25,000 vehicles. And remember, that's an

average. They are increasing production on a weekly basis. And if they add a second shift later this year, most believe they will hit that 25,000 mark, Sarah. It's had quite a run up lately, Rivian, as we've seen a return to some of the beaten down names. But the stock is still down sharply. Where does the street stand right now? And some of these newer listed EV companies, Lucid, I notice, is also getting a pretty nice surge today. Right. I would say with Rivian, they're cautiously optimistic.

Many believe that if they can get past these initial growing stages, you know, the pain that goes with ramping up production. Look, we saw this with Tesla 10 years ago. And at the time, Tesla was not getting as much attention. There's so much attention focused on Rivian that people are saying, look, you get past this period here and you gradually increase production and deliveries over the next couple of years. The stock should grow. That's the expectation out there. Got it, Phil. Thank you, Phil LeBeau. Just want to point out what's happening in the S&P 500. We've we've actually lost a bit of steam just in the last few moments. We were trading at the highs of the day, but now we're lower and we've got a little while.

We're still higher on the S&P, but lower than we were. And we've got a few sectors turning red, not just energy. Now, consumer discretionary has joined in the red column, along with financials and real estate. When it comes to consumer discretionary, check out the cruise lines. They're really getting hit. Norwegian, Royal Caribbean, Carnival, some of the casinos as well. So, Nancy, it's, I don't know, it's still dangerous if you want to be buying profitless tech and some of these other stocks that are 60 to 80% off their eyes. At I absolutely believe it is Sarah

I think you want to stay away from- the very speculative end and we are when we know that as investors that at when growth slows. Investors turn to reliable growers. And historically that's not been tech but now we have names that

are delivering. Especially in the cloud and cyber security so I think you want to you kind of want to give a wide berth to these very volatile short term. Travel names we're playing you know the reopen and a return to travel through American

Express. As we think we have other lovers to pull there but I don't I don't want to own any of those stocks I mean they're up six percent one day and down seven the next. Right Nancy thank you. Nancy Tangler from Lafler Tangler investments just want to show any of those stocks. I mean, they're up 6% one day and down 7% the next. Right. Nancy, thank you. Nancy Tangler from Lafleur Tangler Investments. Just want to show you what's happening as we head into the bell. S&P higher by about a third of 1%. You've still got really some nice strength today in groups like utilities up a percent. Information technology

is doing well. But again, energy stocks hit down 2%. Oil prices lower, below $99 a barrel. When it comes to the Nasdaq, you do have strength in the big cap tech like Microsoft, Apple, Alphabet, Amazon, Cisco, NVIDIA, Meta. That is certainly helping out the Nasdaq outperformance. It's up about a third of 1 percent, but again, well off the session highs. You've also got strength today in names like Moderna, Lucid Group, and some of the other sort of harder hit pockets of technology. If you look inside the Dow, which does remain higher, UnitedHealthcare is the biggest positive contribution. It's adding 70 points, along with Microsoft, Travelers, and Procter & Gamble.

There's the Russell 2000 small caps, underperforming, down almost a percent. Goldman Sachs, Chevron, and American Express are the biggest drags on the Dow. There goes the bell. Dow up 70 points. S&P up a third. Off the highs, but still another positive session for the holiday-shortened trading week. That's it for me on Closing Bell.