Closing Bell - Stocks Sink, Fed Hangover & Jim Cramer On The Sell Off 12/15/22

Episode Date: December 15, 2022

Stocks selling off on increasing fears the Federal Reserve's interest rate hikes are sending the economy into a recession. Renaissance Macro Research's Neil Dutta explains why he is actually bullish on the economy and what that means for the market. Bespoke's Paul Hickey says historically the market tends to rally during the second half of December. Mad Money's Jim Cramer says he is buying during this market sell off and reveals the stock he just added to his investing club portfolio. Wedbush's Dan Ives discusses Tesla shares hitting a 52-week low and why he thinks Elon Musk's purchase of Twitter is really hurting the stock and brand. Evercore ISI's C.J. Muse discusses his bullish call on beaten down semiconductor stocks. And Cowen CEO Jeff Solomon discusses the outlook for M&A in 2023.

Fed hangover and downbeat data sending the market tumbling today, though we are off the worst levels of the day. The Dow is down almost 1,000 points at the lows. You can see we're down about 745 right now. This is the make or break hour for your money. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we stand overall in the market. Mention the Dow. There's only one Dow stock higher today, which just shows you the breadth of the selling. Verizon is the outlier. Everybody else is down. Goldman Sachs, UnitedHealthcare, Microsoft taking the most off the Dow. S&P 500 down 2.3%. Every sector lower right now. Hardest hit in the pockets of technology. Communication services at the bottom of the pack. Names like Netflix selling off more than 8%. Technology, materials,

industrials all at the bottom of the list. There's the sector heat map for you. And it just shows you the scale of the pain today. A big unwind that we are seeing with some of those tech groups down more than 3%. That's why the Nasdaq is in the eye of the storm. It's down about 3%. It's not too far off of session lows. Big declines for names like Apple, Microsoft, Amazon, Google, NVIDIA, Meta, Netflix, all taking the index lower. Tesla is actually an exception. It's higher today. But keep in mind, it's been lower over the last few weeks.

We're going to be all over the sellout for you this hour with some great guests to help you make sense of what is happening, including Cowan CEO Jeff Solomon with his thoughts on the Fed decision and the market impact. Plus, the one and only Jim Cramer will join us with his take on the sell-off and the big takeaways from his monthly investor club meeting. We'll begin, though, with the market and the economy, a slew of global central banks joining the Fed in raising interest rates today.

We got the European Central Bank and the Bank of England. We also got new data showing retail sales in the U.S. coming in well below estimates. Our Steve Leisman has the latest for us. And Steve, it really does feel like for the markets right now, central banks are front and center. And the message was higher for longer. Yeah, and nowhere to turn, Sarah, as well.

Several major central banks, as you said, joining the 50 Club today. Hiking rates by 50 basis points following the Fed's move on Wednesday. As investors endure global rate hikes and a global battle against inflation, and there's nowhere to hide, European Central Bank, Bank of England, Swiss National Bank, all hiked by 50 basis points today. Norwegian's up by a quarter. And most importantly, ECB President Christine Lagarde signaling more aggressive rate hikes ahead than the market had expected. It's a toxic mixture for markets where rates are rising and the economy looks to be weakening.

The data came in tough today. Retail sales down 0.6 compared to an estimate of down 0.3. Could have been some seasonal in that. It was a strong October as well. Philly Fed worse than expected. Empire State way worse than expected. But there it is again. Jobless claims stronger than expected.

211 versus 232,000 on the estimate. Jobless claims data remains a key point for the Fed. It's looking for more slack in the jobs market. Jobs market keeps showing strength while the market focuses on the retail and the manufacturing data, both of which are weak. The disagreement between the market and the Fed, it shows up in that 2023 outlook for the funds rate.

Median Fed forecast rising to 515 from 4.6 in the September outlook. But Fed futures prices year end at 441, 440. That is cuts after a few more hikes. So the market, Sarah, sees the Fed en route to making another policy error by tightening too much. I didn't think Powell was as hawkish as he could have been yesterday. Am I wrong? He was way more hawkish at Jackson Hole when he talked about pain. He was way more hawkish last time they raised interest rates,

where he really seemed to make the point that financial conditions weren't tight enough and that they had a lot more work to do. I mean, he was kind of hawkish, but not down a thousand points hawkish, was he? I don't know how to put that into context like that. I think it's a good point, Sarah, that he was not dramatically more hawkish than he was previously. First of all, I want to make a couple of points. I think what markets were listening for was some sense from Powell that he got a little more comfort with inflation given the last two reports. You read like Morgan Stanley today, Ellen Zentner says he did not pick up on those two inflation reports

or change their forecast the way the market did when they saw those two better inflation reports. The other thing I think that really was hawkish for the markets was not just the new level of the funds rate projected for 2023. It was the unanimity. 17 of 19 Fed officials above 5 percent, seven of them above 540. So they look at that and they say, you know what, is anybody listening to us out here? At least we have a point of view in the market that is not going to go that high. And they didn't see any comrades in arms out there. I agree. But also, I would think, Steve, it's also maybe surprising that they raised inflation forecasts both for core and inflation rates for the year. So did the ECB. They don't see the inflation rate coming to target, I think, till 2025.

And that seems like it's going to be a big question. How low can we get next year on inflation? You're absolutely right. And I think the other thing about this is I'm not sure the market takes into account the situation that both Lagarde and Powell are in, which is you are a central bank president with inflation running, core inflation at 6%. You cannot sound dovish in any way, shape or form. You have to hold the line and be as hawkish as is reasonable

in those circumstances because you are triple your target rate. You got down to three, four, five, then we could talk, but not at six. Right. I don't know. I think the market expected him to be hawkish, and I think he was kind of, but it wasn't extreme. Anyway, Steve, thank you very much. Appreciate it. For more on the market and the economy, let's bring in bespoke Paul Hickey and Neil Dutta from Macro Research, Renaissance Macro. You know, Neil, I really wanted

to talk to you today because you've been a bull on the economy. And I'm wondering if anything's changed lately as the data has come in weak. Well, has the data come in weak? I mean, if you look at the Atlanta Fed, which sort of puts all of this together, Q4 GDP tracking, Sarah, is close to 3 percent. And that's important because the consensus, if you look at blue chip, is at 0.5 percent. So there's significant upside risk to the consensus. And, oh, by the way, I think the consensus is offsides on GDP growth and the Fed, frankly, as well in the first half of next year, because the consensus is looking for basically no growth. And, you know, look at what's happened.

You mentioned I think it was mentioned about homebuilders earlier in the program. Yeah, they're up today. Yeah. Well, I mean, some recession, I mean, with homebuilders working. So if interest rates... Well, they've been beaten down pretty hard. Well, up is up, Sarah. Up is up. You want to make a bet on whether residential investment is going to be as weak in the first half of next year as it is right now, I can pretty much assure you that it won't be. And at the same time, remember all that fiscal squeeze that people were talking about for this year? Well, what happened with that? What we know now is that the personal income numbers are coming in stronger than expected

because folks have been underestimating the mana that was going to be dumped down from the state governments onto taxpayers. And that's juicing personal income at a time when gasoline prices are now at year-to-date lows. So the risks to the economy are when the Fed is hiking aggressively and energy prices are very high. That's not what's going on right now. Gas prices are falling, and the Fed is signaling that it's going to step back. So that's where I am at. I think the Fed consensus— It's definitely pretty bullish. Well, I don't know that it's bullish. I mean, I think it's bullish for the economy in the short run.

Wait, wait. It's out of consensus. I mean, OK, I'm out of consensus. That's not happened before. But look, what I would say is that it's good for the economy, but it also means that the fixed income market is mispriced. If real economic growth is picking up, it reinforces the Fed's hire for longer approach. And it'll prompt people, I think, to push out their recession expectations, thereby making cuts in the back half of next year less likely. Paul, do you agree with Neil or is he crazy? Well, no, I certainly don't think it's crazy.

But, you know, I think, you know, when you look at what the market is saying here, Neil was talking about interest rates, maybe the bond market's mispriced here. Neil was talking about interest rates. Maybe the bond market's mispriced here. But the Fed, the unanimity that Steve was talking about with the Fed funds rate next year, they're intentionally inverting the yield curve. Now, the Fed itself has, you know, said, talked about the importance of the yield curve in forecasting a recession. And when you have the Fed funds rate 100 basis points above the 10-year yield, going back to 1994, when the Fed has telegraphed its rate decisions, when it's been disinverted, you've seen a recession imminent all three times. So I think in that respect, the market is saying to the Fed, hey, we're looking at different things here. And I think in that respect,

you get this little bit of a shock here in the markets. It's one day. It's certainly a very big decline. But I think overall, taking a step back from a bigger picture, there are some things to like about the market here. First of all, what drove the market lower for the first half of this year was the fact that as energy prices were higher, they've come in. The dollar was strong. That's come in. Rates are starting to come in as well. So those factors are less of a headwind now for the market. And when you look at internal measures of the market at the most recent low in October, they were much better than they were at the prior lows. And even right now, the market's behavior around this trend line that we've all been watching so intently, it's been a disappointment as we haven't been able to get above that trend line.

But the behavior of the market this time around has been a lot different, whereas we pulled back immediately and sharply both of those prior periods. For the last two weeks, we've been hanging around these levels just below that level. And as technicians will tell you, the more often you test resistance or support, the weaker it gets. So in that respect, I think you can take some solace. Lastly, seasonality. December is a back-end load historically. The lows of the month are typically in the middle of the month, right around December 15th, going back to the early 80s. And so in that respect, the second half of the month is back and loaded. And that sets us up for a potential surprise to the upside.

Today is the 15th. Also, to your point on technicals. I'm very observant. Well, since you mentioned it, since you're able to pinpoint it to that day, I thought it would be helpful for people. Since you mentioned technicals, just wanted to add some color. I talked to a big head of equity trading desk at a big hedge fund today, and he was saying that there's a technical level that a lot of folks were watching that was breached today, 39, 33 approximate on the S&P 500, that a lot of these CTA strategies, I don't know if you follow these, it's a trigger, and it makes them sell, and it picks up momentum on the downside,

and people who follow these CTH strategies sell. So perhaps that led to such a big decline earlier today, just one explanation. But bottom line, Neil, if the worry is no longer inflation and it starts to be growth for next year and earnings, you're pushing back on that idea because why? Because we're seeing a lot of rate hikes and a big adjustment and it's happening globally. So what is the bottom line for investors? Well, the bottom line is it's the surprise factor of the recession, right?

I mean, one of the ways you get a recession is through an element of surprise. Companies think things will be OK and and then something bad happens, and that prompts them to adjust their CapEx plans, their hiring plans, their inventory levels, and so on and so forth, and that sort of creates that downward spiral of the recession. But what if we've been talking about this for six or seven months, and companies have already been doing that? Now what? And now household demand holds up a little bit better and companies are offsides on growth. That could well precipitate a period of catch-up

where companies have to catch up to the Fed. But their financing costs are going up. That's going to impact earnings no matter what. Well, a lot of them have also turned out. But at the end of the day, remember, if you get the call on the consumer right, everything else about the U.S. economy will fall into place. And right there between still large pile of excess savings, lower gasoline prices and

steady labor markets, that's enough to maintain a reasonable pace for household demand. And look, I mean, I bet you every mortgage broker's on the horn with their, you know, with people that got stopped out at 7 percent interest rates, and they're calling them up and telling them to get back in. And so you'd expect to see housing demand pick up, which I think is part of what the builders are reflecting. So between these two things, I think there's, you know, look, the consensus is for no growth in the first half of this year.

So I think the risk is— But the risk is still for a soft landing. It's not for a hard landing. So a lot of people think that the earnings expectations are too risky. The odds are going up, Sarah, of a no landing right now. You're more bullish than soft landing. Final word very quickly, Paul Hickey. It sounds like you share at least the optimism on the market. Yes. I mean, the market's giving a better message. But the counter to Neil's point

is that we've had such an aggressive policy tightening in the last few months here. And it takes time for that, even as the chairman admitted yesterday, takes time for that to take effect. And you know, 50 basis points seems like a step down and seems light compared to what the last four hikes were. But historically, even that was a large move. So we've seen an enormous amount of tightening come into the system in the last six months. And we're still going to feel that going forward in the next few months here. By the way, I just also want to mention what's happening with bonds today. Very strong bonds right now.

The 10-year yield, 342. The two-year yield, 425. So we're seeing those yields come down as stocks sell off. The dollar is also strong today, following that ECB and Bank of England meeting in particular. The pound is weak. The dollar's up three-quarters of 1%.

Neil and Paul, we'll leave it there. It's a great discussion. Thank you both for joining me. Let's get a quick check overall on where we stand in the stock market. Again, low of the day was near down 1,000 on the Dow. We're down about 755 right now. It's a broad sell-off. Everything is getting dragged in.

On the S&P, every sector is down. Communication services and technology, those groups particularly hard hit. They're down more than 3.5 percent. Names like Netflix selling off hard now down nine percent. We'll talk about that a little bit later. Some bearishness around the Netflix ad supported model. But also just a lot of these growth stocks are getting hit. Meta is down five and a half percent. Technology, the chips getting slammed right now. Materials and industrials and financials.

What's holding up best? Energy and real estate. But they're both down almost a full percent. Joining us now exclusively is Cowan CEO Jeff Solomon. Great to have you. Good to be back. Especially on a day like today. What would you tell folks at home?

Yeah, so everybody take a deep breath. Remain calm. The truth is- Why? Well, markets have days like this. I mean, the market is reacting to the specifics of what they heard from the Fed chair yesterday. I'm not surprised. What did we hear from the Fed chair yesterday that made the markets upset? He's just going to continue to do whatever

he can to tamp down inflation. He's been incredibly. Didn't we know he was doing that anyway? Yeah, he's been incredibly forward on this. Like it's straightforward on this. Very transparent. But is he wrong? Should he be more worried about the economy? Is the market telling you that they're going to make a mistake? So he's actually pointed to some very specific things in the 70s where the Fed sort of took off, took its foot off the gas in terms of tamping down inflation, and it got worse down the road. So he's following the playbook. The Volcker playbook is to get out in front of it, make sure it goes away. He always has the ability to come back and cut rates later on

if there's a problem with the economy. And so in times like this, I think you need to invest in places where you have a high degree of certainty of outcome regardless of the volatility in markets. We just put out our 2023 themes. There's a couple of really great themes in there that for the longer-term investor should absolutely hold regardless of how long it takes

the Fed to tamp down inflation. All right. So let's talk about some of them. Yeah. Here's a list. Focus on fundamentals, consumer and corporates. What are the fundamentals showing? So I think the consumer continues to be resilient, but I think they're going to be selective. And one of the things that retail sales were a bummer today. Yeah. So it's not one size fits all, just to be really clear, to use a retail term. So I think you have to look at the different buying patterns of consumers. So, you know, I was at a conference yesterday. You and I were both there and we heard a few things. Right. You can't get a room in Mykonos for like until 2026. You can't get airline tickets because there's... So how do you square that with the fact that the consumer may be saving in other areas

or choosing lower cost items in certain areas? There are new buying patterns emerging post-COVID. This is something that I've been saying over and over again. The old data sets, the things that people would look at to see where the consumer is going to be and how they're going to behave, out the window. 2019 and previous, doesn't matter. What happened during COVID doesn't matter. New patterns, new data sets are being formed on new consumer behaviors. Some of the things we saw during COVID will be stickier. Some of them will emerge as new trends. And as that happens, you'll get to see this dispersion around people's expectations until we actually have a higher degree of certainty.

So I think you can be sure of a few things. One, deglobalization. Absolutely happening. The decoupling of China and America or the Chinese influence and the American influence, 100 percent. What do you do about that? What's the investment? So one of them is that there's definitely going to be capital spend on reengineering supply chains and reshoring. We've been talking about this for years.

No question we're going to be building more chip capability, more fundamental commodity capability here in the United States, more ports in the United States. But nobody wants to touch the chips if we're going into a recession. Yeah, yeah. Again, people, we might be going into a recession. It'll be short. You're thinking longer. Yeah, I mean, we have to spend so be going to a recession. It'll be—it'll be short. You're thinking longer. Yeah. I mean, we have to spend so much money to replicate what we get from Taiwan, because

the likelihood of Taiwan being an independent country in a decade is just—it's not high. Like, it's—there are certain things that are almost destined to happen. Listen, I hope it does. I hope that's not the case. But you can't be—you can't expect that to be the case, especially with chips. So we will spend a lot of money in this country building chip infrastructure. We had a whole legislation around that. So I think those are the kinds of things that we're looking at. Energy. Energy. So basically, when you look at what Moscow did,

it threw everybody into a tizzy. But we had eight months to prepare for how to get increased natural gas and oil supplies into Ukraine and into Eastern Europe. Right. And so that that has actually been happening. It's been great that we as a country, the United States is a net energy exporter. We're doing things to stand in the face of of the the face of the supply problems they might be having in Europe. That's great. So you would tell investors to buy these energy companies, even now, after the tremendous rally they've had this year, as a long-term? Because we're going to need all kinds of energy sources.

So historically, it's been like, OK, carbon-based energy versus new energy. That was an investment paradigm. Now it's just all energy. So I don't, I think you'll continue to see pushes towards alternative energy, pushes towards solar, pushes towards any kind of energy that allows for people to have energy independence, countries to have energy independence. So I think those are the kinds of things that even on a day like today, you can make that investment and have it work out over the long term, even on days like today. You know I'm going to ask you about crypto.

Yes. Because you took Cowen into crypto. Yeah. In a first for custody, right? How's that working out? You know, it's this tiny business for us, right? We were trading spot crypto. So just to be really clear,

Cowen is not at all in any way, shape or form entangled in the FTX mess. I think those of us on the inside, certainly those of us that are catering to institutional investors, recognize that companies like FTX are a problem. Like you can't have a company that does execution and brokerage and custody all in one because there are too many conflicts. But it also makes you wonder if crypto investing overall is a problem. Well, I think it won't be back to what it once was until there's better regulation. And I can't give you a window into when that's going to happen or how long that will take. But there has to be more regulation.

Eventually, this ends up in a highly regulated fashion, which is what we've been seeing. What is the level of institutional interest right now? Well, it continues. They're continuing to look at ways to play in this space, but it'll take them longer to do that as things settle out. Let's not minimize this. The FTX changed, I think, people's perception and changed. Institutions will be a little bit more reluctant and maybe reticent. But the ones that actually have the ability to see where this is going long term will continue to play. Final question, because of your view into capital markets, I mean, you're big in IPOs. There have been no IPOs. How does it look for next year? IPOs, M&A, the whole pipeline? So I think for IPOs and financings,

little window, anytime you see the VIX kind of get into the low 20s or high teens, there's a bunch of companies that need to be financed. And certainly we see it in life sciences and health care, tools and diagnostics, capital intensive businesses. And these companies will not miss the opportunity to catch those windows. And there will be windows. There just was one and still we're still in one technically, even with today's activity, where there's been a lot of issuance over the last, you know, 30, 35 days. We saw a few big mergers this week, too. That was this week? Yeah.

Yeah. So when you look at, like, Horizon, Horizon Pharma, for example, listen, those things that need to be done strategically will still get done strategically. And what we're seeing in middle market M&A, which is really where we spend most of our time, still a lot of stuff to get done there. I think buyers and sellers are still trying to figure out where things are going to shake out. But we're going to learn a lot more here as we head into the beginning of 23. And once that happens, people need to get things done. And they will. They will.

It won't be like it was in 20 and 21, but none of us thought it was going to be like that. So it'll happen, just at lower prices. Yeah, things are going to continue to happen. I really do. There's a lot of good fundamental reasons why there should be some consolidation in industries. I think certainly when you have difficulty in the capital markets, sellers, companies that might otherwise finance themselves to continue their growth, will look to be sellers. So there is that tension between, should I go the M&A route or the capital raising route. Many of our clients look at dual paths.

If the financing markets are not open, they're going to sell. So I think that's a... There's a buyer. Yeah, there is always a buyer. The question is really about price. And private equity still has gobs of dough to spend. And they're doing the smart thing here by waiting to see where things shake out. But they have a lot of money to spend.

And that is a three to five year run that, you know, still even in this environment. It's really good to get color from you, especially on a day like today. Jeff Solomon, thank you so much. All right. Good to see you. CEO of Cowan. Good to see you, too. So not all bad news on Wall Street today. We mentioned the homebuilders. They are actually rallying despite Lennar's weaker than expected earnings and a warning that new orders will slow and all this talk about higher rates for longer. Diana Olick joins us. What is driving this builder rally, Diana? Well, Sarah, this one's easy. Mortgage rates. The average rate on the 30-year fix dropped 14 basis points this morning to 6.13%, according to Mortgage News Daily. Remember, the rate last peaked on October 20th at 7.37%.

So it's down pretty sharply in a relatively short period of time. So no surprise, the home building ETF ITB is in the green. The builders were down in the pre-market due to Lennar's earnings release late yesterday. It did show a wider than expected drop in guidance on new orders. But in the conference call late this morning, Executive Chairman Stuart Miller harped on the lack of supply in the market and said the shortfall leaves the industry in what we believe will be a short duration correction. He also said that Lennar is not fire selling its homes, despite reports that it was selling some backlog to investors. Sarah. Diana, Diana, thank you very much. Four point one point four point three percent in such a down market, higher for Lenar.

Let's check out the Dow heat map because it just shows you the scope of this sell-off today. Boy, is it broad. Every Dow stock is lower right now except for one. That's Verizon, the only outperformer. If you look at what is dragging the most on the Dow, UnitedHealthcare, Goldman Sachs, Microsoft, the usual suspects here, IBM at the bottom of the list right now. We're off the lows of the day, but we're still looking at a decline of about 740 points. S&P down almost 2.5%. Mad Bunnies, Jim Cramer joins us fresh off of his monthly investing club meeting where

I love this, Jim, and I watched it. You recapped the lessons learned this year and the 2023 outlook. First of all, it's a great day to have you on. I think we have to just start with the sell-off that we are seeing, the why and how people should interpret this. Okay. I listened to Diane just a second ago, and it is amazing. You're supposed to be selling stocks that people are buying, but rates aren't going up.

And the fact is that Stuart Miller, the executive chairman of Lenore, said that there are not a lot of homes being built. They only have 800 homes in inventory. I'm using that as an analog. What's happening is that things aren't going the way that the Fed wants. I mean, the Fed wants housing prices to crater, margins to go lower, margins to go lower. The Fed wants you to be spending much less. The Fed wants you, if possible, to be fired, but they don't want to fire you. There's the, Jay Powell said he's got a less tight job market. Yes, I like that. Well, you are much more of a diplomat. That's because you're from Cincinnati and I'm from Philadelphia. But I do think that the problem with the market is a lot

having to do with yesterday, where some people just don't seem to understand. He is not trying to get expectations beaten. He doesn't want, wow, it's supposed to be four and it comes in at plus three. He wants minus one. He wants to get back to where we were. He wants to go and hear people at the supermarket say, it no longer costs double to get cream cheese. I can now afford flank steak again. He wants people to be able to say, you know what? Housing is within reach.

These are common goals that we usually have that a president might have. But what we've done is created a juggernaut economy fueled by a lot of growth packages that make it so it's very difficult even if people got laid off to not find a job immediately. So, Sarah, I mean, in this environment, the only thing that really kind of creates less purchasing power is what's happening on your screen right now. Which is what?

Stock market going lower. Yeah. I'm not saying he's rooting against the stock market, but I'm writing a piece for tonight. It basically says, do you really think this man cares? Stock market going lower. I'm not saying he's rooting against the stock market, but I'm writing a piece for tonight. He says, do you really think this man cares? Do you think he cares that Microsoft is down nine? He's not thinking like that.

He's thinking, good, maybe something will slow down the purchasing power. Financial conditions matter. It's a big part of his strategy with monetary policy. I mean, look, the stock market, he does not share President Biden's belief that the stock market is really the repository of only rich people. He actually thinks that there are a lot of people who saved through it. And President Biden, in the times I've met him, had almost scorned for the stock market because of how little money he had. And just said it's for the rich. We know that there's an impact. But we are in a jam here.

And we're in a jam because everything just keeps costing more. And he just has had it. And he does not want to hear, hey, we had some really good numbers yesterday, so we're okay. He's waiting for the big picture. The pain. The pain that he laid out. The pain. Unemployment at, say, four and a half.

Okay. That would be part of the plan. Yeah. Four and a half. Okay. That wouldn't, that'd be part of the plan. Four and a half historically would be great. He doesn't want to go down as the Fed chief that made it so that it was, that we had Weimar, that we had Zimbabwe, that we only hid masterwork paintings. Volcker gets remembered for taming inflation. I mean, when you go to Palm, have you been to Palm Beach? I have been to Palm Beach. I prefer

Miami. Most of our viewers are down there, of course. Now, there are yachts there. And the first thing you always say is, we are an incredibly rich nation. And then you think for a second, we have incredibly rich people in our nation. And I think incredibly rich people watch our programs. And they're saying, oh, my God, are Sarah and Kramer talking about that it's okay if the stock market goes down? No, I think what we're saying is it's collateral. It may even be necessary collateral.

It's a side effect from the medicine that we need. Exactly. Exactly. Okay. I do want to talk about your big call. I really like that. Yeah. That's good.

It's a medicine. I'll use it on the six. I don't know how many people watch your show and my show. Probably. Hopefully a lot. Yeah, right. We want that. on the six. I don't know how many people watch your show and my show. I probably, hopefully, a lot of people overlap. Yeah, right. We want that. We want that. Okay, so can we talk about the month of the call? I talk about Burrow and Jamar Chase all the time.

Burrow, making a comeback. Yeah. Good for you. All right. What I love about your call, Jim, is you started off by talking about your mistakes. Right. Right. And I'm going to go over them.

Which not everybody does. And let me just tell you. Here's how TV works. I heard that you watched the call. So I went to my executive producer, Regina Goggins on Blue Boy, and said, I'm going to go ask Sarah. She watches the darn thing. I went on. And I went on because I tell things like I forget about market cap.

I loved NVIDIA so much that it didn't seem to matter to me that it went to $820 billion. It shouldn't have been that big. I want people to take into account, should something have the market cap that it does? NVIDIA was 29 times sales. You know, there's a time to buy. I mean, not that, like, it's Ecclesiastes, but there's time to sell, too. And even though I loved NVIDIA at 29 times sales, no go. Second, does a company communicate to shareholders?

Now, I'm not saying that companies should have individual communications with individual shareholders. No, but I'm saying, do you return the calls of shareholders? Who did not do that? A company called Bausch Health. I mean, I got an email yesterday from saying, hey, listen. I've been a really weak performer. I wish I could help you. Really weak performer?

How about one of the worst performers I've ever seen? They should be like hosting barbecues. But no. I wish I could help you. Really weak performer? How about one of the worst performers I've ever seen? They should be like hosting barbecues. But no. I mean, like, I called him. One time I left a message. My staff was saying, who are you leaving that horrible message to? I said, Bell's Health. I told him, you know, basically, like, you were wrecking everybody's, well, whatever.

You can't do what they did. Then help this one. You will love. I read him what I call a riot act. Now, you will love this one. You got to stop having lunches and dinners with management. The CEOs are such unbelievable salespeople that you come back and say, I got to buy that. You just got to take everything with a grain of salt.

I'll come back from a lunch and I'll say, or even a $12 latte from Blue Bottles in there. I'll come back and say, I just had the greatest meeting. And Jeff Marks just works with me and says, Jim, stop taking those lunches, please. Because they're so persuasive. You get insight from them. Oh, but they're so, Sarah. But they sell themselves. Sarah, have they ever said to you, you know what, my stock's a little high. No, you've got to take it with a grain of salt. Maybe you buy it a little bit lower, maybe 8% lower. No! It's like, oh my God, I can't believe it.

This company makes semiconductors that go into cell phones. Holy cow. Bye, bye, bye. I mean, yeah, that's what it's like. But it's actually an important lesson for people to watch, too, because we talk to a lot of CEOs. They're salespeople. When I worked at Goldman Sachs, I remember when the CEO explained to me, you know what? I said, what are you doing? He goes, I'm in the sales business. I sell Goldman Sachs. I remember when the CEO explained to me, you know what? I said, what are you doing? He goes, I'm in the sales business. I sell Goldman Sachs.

So when I meet with the CEO of Goldman Sachs, he's selling Goldman Sachs. Although they're actually a little bit better because we know that they're cutting some compensation. Now, this is one that's really important. We have a thing called TAM in our business. The Total Adjustable Market. We heard a lot more about it during the run. Smile direct. I know one of your favorites. They said they had a $500 billion TAM because, like, everybody's teeth looks bad.

I mean, right? But they had it at $15. And then when the stock went to $0.53, holy cow, the TAM stayed at $500 billion. Don't believe the TAM. TAM is the whole future concept. Yes. And then I'll give you one more. When the Fed says that things are too high, don't say, what do they know?

Say, hmm, they've gotten hawkish. This is November of last year. Maybe we should temper our enthusiasm. And these were mistakes. Now, some of them I did better on others. But, you know, these are just things that I need people to know. That's why it's a lot of common sense. But you had a lot right, too, which you point out on the call.

But the call itself is usually about things that I've screwed up on. Because, look, I've seen money managers from your show. They've never made a mistake. One day I'll be like that. One day I will never make a mistake. I'll bat 1,000. I'll throw 34 for 34. Chase will catch everything. It'll be all 100-yard drives, and I'll get 500 in my

fancy. But then what would you talk about on Twitter? You think I would be involved with Twitter if I didn't? No. No, I'm just saying that I want people to know my mistakes so then I can talk about how last November I said from now on we're going to buy companies that make things and do stuff profitably and return money to shareholders while also not paying too much for the stock in terms of price to earnings. That was the theme of the year. Yeah, and that worked.

Does that work in 23 too? Yeah, it was fantastic. In November, we switched to that last year. But does that continue to be the strategy? Yes, yes, it really is. Then I added that you have to buy them when they're cheap, as the Fed got more vociferous. We didn't fall for fads. There's guys who bring

the SPACs. Why don't you just say, please take all my money and give me nothing. That's what a SPAC does. I don't know if you read the five sentences. We have every right to lose you every penny, and we'll return some of it. Terrific. We never took the bait on what Wall Street was selling. Four, we love boring. of it. Terrific. We never took debate on what Wall Street was selling. Four, we love boring. Boring. In the end, boring. I mean, if it was the more boring it was, the better.

Hormel. What? Hormel. Hormel's very, that figgy pudding spam juice, let me tell you something. I saw you drink that. That was a hit all over my Ferragamo tie when I got home. And then finally, don't panic. I mean, like, look today.

People right now are trying to think about, wow, Meta down six. I got to get the hell out of that. No, I mean, like, maybe it's an opportunity. You know, have conviction. Have conviction. I really ran through this. I'm sorry I went so fast. But it was instructive.

So given that, on a day like today, are you in buying? Yeah. Would you be? We bought Emerson today. I've been waiting for Emerson to come down. They're reinventing the company. This guy, Lyle Carsonback, he is doing such a great job reinventing the company, making it so it's getting out of housing.

It's sold in Sincorator. Hey, we all should be composting. And it bought, I didn't mean to point. That's very rude. No, it's fine. I use an Sincorator. You do? Yeah. All right. Well, maybe you ought to rethink your to point, that's very rude. No, it's fine. I use an insincerator. You do? Yeah.

All right, well, maybe you ought to rethink your game plan. It's very convenient. Everything goes down there. What he's doing is he's making this company into the company that you call if you want to be carbon neutral in 2030. They know how to do it. You bring them in and they have fixed so many things. Emerson has always been one step ahead of everybody else. And I've been waiting for the stock to come it. You bring them in and they have fixed so many things. Emerson has always been one step ahead of everybody else. And I've been waiting for the stock to come down. I've met with the CEO a couple times. He is a no-nonsense

guy. Unlikely other times when I come back and say, oh my God, the guy makes chips. I'm like, wow, this is so, and he's doing auto. I actually was, you know, waiting and waiting. And then we get a day like today. So today can't be the day I say, oh, my God, I'm afraid to buy Emerson. I have to say, you know what? Let's get started buying some Emerson. There's a lot of good things. It's not expensive.

It's a dividend aristocrat, which I still think matters. It's a changing stripes company that I think, you know, only Honeywell has been very good at trading. Most people cannot change stripes. It's really hard to change stripes. Lyle's changing stripes. Honeywell has been very good at trading. Most people cannot change stripes. It's really hard to change stripes. Lyle's changing stripes. Honeywell changed stripes. Those are winners.

Software, tech kind of companies. So what else are you working on? I mean, I think we're just trying to figure out the outlook for next. My biggest question, honestly, is the outlook for next year. As the focus shifts from inflation this year to growth next year, what are the earnings expectations telling us? Are we not pricing in a hard enough landing? A soft landing appears to be priced in. I hate to sound negative, but they're downside because the market is actually looking at the

economy as not falling into a deep recession. I'm running a piece right now about how there's two economies. There's the economies, people who are from East Coast, Midwest, and they know how to fire better than anyone. It's like the day that they got their job, they said, let me teach you how to fire. And then there's people out West, and they're like, do we call them in? Do we say, I'm sorry? Do we give them a raise? Because they don't know how to fire. And they're part of the problem, not part of the solution. We have to have stock-based compensation.

People realize, look, things got too inflated. I'm sorry. You're going to have to fire. It is amazing that they fired. It was incredible. And it was a turning point, I think, for investors. I think so, because it shows you that if you fire, if you get your expenses in line with your revenues, you're going to have a win. Not today.

I mean, today's a day. People got too excited yesterday. Remember, we were up 500 earlier this week. And everyone kind of feels like, well, wait a second. Things got out of control. I will tell you, though, that after today, people are going to forget. The market doesn't have a lot of memory. By tomorrow, we'll be thinking, eh, maybe make it out for the weekend.

But by Monday, we'll forget what the Fed said and people will come in and look for things to buy. So you want to be ahead of those people. Well, Jim, always valuable. That's it? They're wrapping me. That's it? No, man, I'm supposed to be the co-host for the second half. For more, you have to sign up.

Everyone told me I was the co-host. We got to go to the market zone. You know the market zone? Final 20 minutes. My feelings are not hurt. No, it was a great summary. The lessons are good. Thank you for coming on and sharing them here.

Well, I appreciate that. And for all of you out there, be sure to sign up for Jim's Investment Club for more great analysis and strategy. It's a one-hour presentation, and I highly encourage you to check it out. I tried to make it funny. I mean, I talked about my partner's dog analysis and strategy. It's a one-hour presentation, and I highly encourage you to check it out. I tried to make it funny. I mean, I talked about my partner's dog dying and stuff. Yeah. You talked about NVIDIA, your dog, I remember. I just talked a good part.

I mentioned Lisa a lot, that she's my CEO a lot. That's my wife. I tried to make it interesting. You do that. You do that very well. Well, I appreciate that. That's why I was so thrilled that you told me I could be on your show. I'm so thrilled that you're here on the show.

Also, don't miss Jim's great lineup tonight. Mad Money, 6 p.m. Eastern time on CNBC. There's the QR code. Doug Peterson. Oh, that'll be good. Yeah, he doubles as the coach of the Jags. Not having a great year. No, that's the name of the Jags. No, he's S&P. I'm sorry.

Sorry. Are you throwing out sports references that I don't understand? No, I know, but I couldn't. I got the Burrow. No, you knew Burrow was really dynamite. I mean, that was really good. Chase, you probably know Chase. Not the bank, the player. Jim, thank you. We'll see you later. Thank you.

Jim Kramer. We touched on chips a bit just now with Jim. I want to point out they're getting wrecked today. The VanEck ETF down more than 3%. Names like NVIDIA, Intel, Qualcomm, they're all down sharply as well. Let's bring in CJ Muse from Evercore ISI, who published a note this morning with his top semis picks for 2023. So is this a group you want to be in in 2023 if the concerns are about growth and it's been so cyclical? Yes, Sarah, thank you for having me on. I think absolutely. If you look

fundamentally, we're looking for a bottom in the March-April time frame. And if that's the case, then the time to buy semis is between now and February. So, you know, we're not sitting here saying that there isn't a number cut ahead in January. There absolutely is one coming. But, you know, typically on the second or third cut, you want to buy semis. And that's our view here. We think the stocks bottomed October 14th. We've run 30 plus percent since then. As you pointed out, we're down roughly 4 percent today. We don't think we get back to the October lows. And we think, you know, the time to be short was, you know, in 2022 for semis. But now's the time to start doing your work and start to accumulate into that inflection, which we think will come in the March-April time frame.

I do wonder how much sentiment and positioning factors in here, because you say in the call that you think it's a very under-owned group. It is. I would say looking at our investor polls over the last four quarters, we've gone from 70 percent overweight to 70 percent underweight in our latest poll. I would say very interestingly in polling investors who they thought within TMT would be the best performer in 2023 and semis came in first. So I do think that you're right. Positioning is very important for semiconductor stocks. And in fact, you know, you've been paid really to do the opposite of positioning thus far this year. And I do think that, you know, investors are underweight.

But I think that will change. And I think the window for that to change is obviously, well, I believe in the next four months. We'll see if I'm right. Obviously, today, highlighting an inflection has not proven to be right. But I think over the next four months, we will be proven right. But, you know, time will tell. I want to get into the names with you. We're showing on the side of the screen some of your top picks. NVIDIA, ASML is on there, Wolfspeed. Why did you pick the names that you did? So I think that there's a group of names that offer both offense and defense. So ADI, ASML, Broadcom, you know, those are names that'll do

well in a down tape, but also in a recovery, cyclical recovery, they'll do well as well. Now, part of our call here is that we want to move more offensive. And on that front, we point to Marvell, NVIDIA, Wolfspeed, And those are really names that offer compelling growth. And that's why we're positioning there. CJ, we appreciate you joining me. Thank you. Thank you. Very much. With a big call today from Evercore ISI, chips going higher in the next four months. Let's stick with tech because the mega caps are getting hit pretty hard, harder than the rest of the market in this sell-off. Steve Kovach here with a look at some of the biggest movers as the Nasdaq, Steve, drops three and a third percent. Yeah, that's right.

So shares of all these mega cap tech names falling with the rest of the market, Sarah. And the losses have been extending into the afternoon. Let's start with Apple. Those shares are down more than four percent. Look, this week we got the report from Bloomberg that Apple is working to allow third-party app stores on the iPhone in compliance with a new law in the EU that will go into effect in 2024. Now, if more countries impose similar regulations, Apple's lucrative app store business could be at risk. Let's move over to Microsoft now. Shares off 3.5%.

The FTC sued Microsoft a week ago today in that attempt to block its $69 billion acquisition of the video game publisher Activision. Now, that deal could take longer to close than Microsoft's initial target of June of 2023. Also over at Amazon, Amazon is down as well, off nearly four percent. But it's the two names relying on the digital ad market that are getting hit really bad so far today. We got Meta and Alphabet both down around 5 percent. Meta really taking it on the chin, though. Look, it's the worst of the group here, Sarah.

And look, it's also perhaps a sign folks or investors are more worried about the ad-supported social media companies. I want to point out one more bonus here. Roblox down about 15 percent as it put out some weaker than expected user numbers for the month of November, Sarah. Got it, Steve Kovach. Thank you for running through some of those big losers today. We are going straight for you commercial free into the closing bell market zone. The Dow is down 800 points right now. Ariel's Charlie Berenskooy here to break down these crucial moments of the trading day with us. Plus, we've got Wedbush's Dan Ives on his new note on Tesla and Kate Rooney on the fintech movers. We'll kick it off broadly, Charlie Berenskoy, with this deep sell-off reaction to the Fed, to the ECB, got some weak data

on retail sales. What do you make of the selling today? What does it tell you? You know, unfortunately, this time it's pretty simple. One of the old adages in the market is don't fight the Fed. And Chairman Powell has made it clear that despite all the data that's come in the other direction, he was proven wrong before in underestimating inflation. And he's going to make everybody sure that he doesn't miss that again. And so now he is, in my opinion, ignoring the data showing that inflation is getting better. And he's made it clear that they're going to be higher for longer. And the Fed has real power to make to bring on a recession if they want to. I think he's fundamentally wrong about wages in the labor

market being the cause of inflation. Wages are up less than inflation, but he's stuck on this idea. And if he wants to cause a recession, he can. So we've heard a number of times today on the program. We started off with someone who said that the consensus is too bearish on the economy. We had Kramer. We had Jeff Solomon from Cowan saying good opportunity for long term high conviction buys. Are you buying today? Yeah, but I want to be careful. I'm absolutely long-term bullish. There's some wonderful values. We calculate our portfolio versus our calculation of intrinsic value every day, and it's at a big discount. But in the short run, there is no doubt that a recession is not

going to be good for the stock market. And some of the information coming out from retailers, some of the consumer data has not been great. And so I agree, long term, we absolutely like the market a lot here. Short term, it's going to be bumpy. What does that mean in terms of what you're buying? Unfortunately, what I'd love to say is in something like this market, you should buy more defensive names.

But those defensive names are more expensive. Right now, what's on sale are things that are going to have a tougher time in a tough economy. So the great names, we have some, for example, BorgWarner, I always talk to you about, which is the auto supplier. Extremely cheap. But if there's a recession, people are going to buy fewer new cars. The expensive stocks in my portfolio, Lockheed Martin and J&J, are both very stable, not cyclical, but they're not very cheap. So I think this is a tricky time where you are going to have to invest for the long run. We think that's what all good investors do.

But know that, again, I'm not making any promises, nor should anybody else, about in the short term. A lot of caveats there, Charlie. Stay with us. Let's talk Tesla. Hanging a 52-week low, I should say, today, and then edged a little bit higher. It's actually now in the green, bucking the overall downtrend. But it has been a big underperformer in the last few weeks. Elon Musk revealing in an SEC filing he recently sold another 22 million shares of Tesla, valued at about $3.5 billion. Let's bring in Wedbush research analyst Dan Ives. Your note getting a lot of attention today, Dan, because you think this is a really big issue for Tesla.

Does it change your view of the stock? Look, we're still bullish long term on the Tesla story. But, Sarah, I mean, Musk is essentially using Tesla as his own ATM machine to fund Twitter and the losses. And it's really been a boy that cried wolf. I mean, continuing to say that he's done selling, yet you continue to see form fours. And this has really been a black eye for Musk in terms of the overall Twitter situation. And it's cast a massive shadow on Tesla. And I think the clock struck midnight. Investors are frustration building. So why are you maintaining outperform?

Because on the fundamental thesis, my view of where Tesla goes in terms of one of the most transformational names in electric vehicles, I think fundamentally the stock's oversold in terms of where this thing could go in terms of 2023. But in the near term, it's a Musk-driven sell-off. We've met 75%, 80% of the sell-off here. And now it's about course correcting. But I think it's a moment of truth for Musk and the board to ultimately get through this, because this has just been a train wreck situation that continues to get worse. What is the fix for it? He owns Twitter now. He's focused on Twitter. Well, I think that's a big part of the problem, because right now the attention's focused on

Twitter, not Tesla, but also in terms of selling stock. I mean, it's $40 billion over the last year. Come out with some sort of 10B5 plan. Communicate what those sales are going to be like. Need to be more transparent. And that's why this has just been adjuta for investors in a risk-off market. And I think Musk has really gone in the odds of many investors from a superhero to almost a villain on Wall Street. And that's really something he needs to turn around pretty quickly here.

I guess what I'm wondering is, is that overstated? In other words, is there a real fundamental risk besides, you know, selling Tesla, which that's a real risk and not paying attention as much when it's been widely reported that he has key deputies in place running this. Do you actually think it's going to affect the sale of Tesla vehicles, the supply of Tesla vehicles, any of the things that actually make this company valuable to you in the long term? I mean, brand deterioration for Musk is brand deterioration for Tesla. And I think that's part of the problem. The Twitter circus show is having an impact, we believe, on the brand of Tesla. And that's part of the problem. That's why this spider web continues to get worse. And I think there's real risk here if he does not course correct. And I think that's why this has just really been a black cloud over the Tesla

story that with every form four gets worse and every tweet gets worse. And I think that's part of the problem. But you're not taking down your numbers. Yeah, because right now, fundamentally, I still think we could look at a four hundred thirty thousand four forty Q4. But no doubt in the near term, if this does not course correct, then ultimately this really does potentially change the Tesla story. And that's why I think this is really what I view as a fork in the road time for Musk. So you're nervous about it. Dan, thank you for joining me to discuss. Thank you.

Appreciate it. Dan Ives of Wedbush. Fintech stocks getting crushed today. Our Kate Rooney is here. Kate, how much of this fintech weakness is a result of today's disappointing retail sales number, the rate story. What are you hearing? Yes, it's a little bit of a combo. The retail sales disappointment was a huge part of this. These consumer names like Block, PayPal, any of the companies that rely on consumer payments. That's not a good thing. If people are spending less, that's disappointing. And you can see

shares of Block down by far the worst of this group, down more than 7 percent today. PayPal is sort of a relative outperformer. They have benefited from some some upgrades and seen a bit of a discount here and have been actually one of the more favored of the fintech names. But you're also seeing it in some of the credit card names. Speaking of a consumer slowdown at the end of last quarter when they talked about some of their numbers, they said they weren't seeing inflation or any sort of slowdown. If that changes, you've got Visa, MasterCard, Amex today underperforming the rest of the S&P. And then you mentioned rates. These are extremely rate sensitive, high growth names. And then you've got within that a lot of the lending names. So names like Affirm, Upstart, some of the

worst performers out of the group. And when borrowing costs go up, it hurts their margins. It makes their business a bit dicier, especially if you start to see more delinquencies in those businesses. There's been a lot of fears around buy now, pay later and how it's going to hold up in this economic environment. Yeah, big declines. Look at a firm down 7.75%. Kate Rooney. Kate, thank you. Let's get back to the broad markets as stocks continue to struggle here into the close.

Joining me is Nancy Tangler, CEO of Lafleur Tangler Investments. Charlie Brinskoy is still with us. And Nancy, the dollar is stronger. Stocks are selling off. Everybody's worried about higher rates for longer. The message from the Fed, that was the message from the ECB and yet. Bonds are

getting bought right now and yields are slipping so what do you make of of the sell off and what do you do. Well this is one time where I'm going to basically pound the table and say you go in and you buy now the Fed is almost done the bond

market is telling us. That they're almost done and that we should expect economic slowdown. So it's important to buy the right kinds of stocks. But this this volatility, this this the market movements today have been very typical of every post meeting press conference. The market is reading the same data and they're saying, listen, the economy is already slowing. And we have multiple examples of that you know shipping rates new orders inventories rising. I you know you can M two flat you could go

on and on and there's plenty of indications. P. M. I. is rolling over that inflation is on the move down I think. Investors should be looking at the same thing the Fed is looking and that's a three month annualized rate you now

have. It estimated inflation below the Fed funds rate. And so I think we're closer to the end of this, and this is a good time to be going in and buying high-quality names that are reliable growers. And I brought one for you today. Yes, tell us. Okay. Xylem. This is a company that is a water treatment and solutions company, has been hurt by a tremendous backlog. Well, the supply chain is now easing. They embrace our theme, which is old economy companies that are embracing the digital revolution. They saw growth in Europe despite the European economy, and they pay about a 1% yield yield and they grow the dividend 10%. And the last thing that is important about this company is it's an ESG darling, which puts kind of a floor under the stock price.

So this is one on any weakness you step in and you just incrementally add to holdings. And it will continue to perform in slow growth environments and high growth environments. It's down about 7% or so in the last 12 months, so outperforming the market, really outperforming the last three months. Charlie, do you disagree with Nancy's premise that the Fed should be closer to the end and you should be buying stocks?

Should be, absolutely, I agree. That's the whole frustration here, is that the market is looking at the data and saying the Fed should be close to the end. But I just don't think you could listen to that speech yesterday and believe that that's where Chairman Powell is, let alone the rest of the people. These are people that are insisting. Yeah. No, I just I just want to pick up on that point. So, Nancy, are you saying to fight the Fed? I thought you're not supposed to fight the Fed. The Fed's been behind all the way through and the bond market and the stock market have led.

And they are going to lead them out of this. And if you go back and look at the dot plot in September of 2021, they didn't even get to 2 percent until 2024. And that wasn't even a majority of the Fed governors. So we on Wall Street, we put so much emphasis on every short-term piece of data and metric. And that's the overreaction that you're seeing but if you look forward which you should do as an investor. They are not going

to have any choice the markets already making that choice for the many. Instances and we are seeing economic slowdown mean. GDP now just got revised down again today to the mid twos- for GDP growth in the fourth quarter retail sales were're doing it and

and it's also a great time to be buying stocks because stocks bottomed a couple of months before volcker changed his tune in 1982 and they erased all of the market sell-off or bear market in three months now i'm not saying that's going to happen now but i am saying by the end of next year you're going to be happy if you went in and added to high quality names. Our theme is old economy companies embracing the digital revolution and then the companies that provide those digital solutions in a low productivity, seriously limited participation rate from a labor standpoint. You need to own the solutions to that. And that's technology and then the companies that are benefiting from embracing digital. Sorry, Charlie, didn't mean to cut you off. How does that fit into your worldview here of the market? Sure. If you're willing to look longer term, then 100% agree,

because there are very good quality companies that are going to do very well on the other side of this recession. But between now and then, it is going to be painful. So you better, if you're going to take the strategy, which I am taking, of investing long term, you better be ready for volatility in the short term. And the only thing I want to push back on a little bit is a lot of us were telling the Fed that they needed to be more serious about inflation way before the Fed got serious. And I think this is going to be the same playbook. A lot of us are going to be telling the Fed that the inflation situation is in better shape and they're going to be slow to react. The Fed is always slow. The Fed is always behind. The data is always behind.

And they are making it clear that they are behind. And so I think we're going to have this tough Fed until the middle of next year. So, Nancy, thank you very much for your contribution. Love the passion today, pounding the table. Nancy Tangler, just in the final minute we have with you, Charlie. So are you are you fully expecting recession? Is that in your base case next year? And how do you guard guard against that? Is it staples? The chance of a recession has moved way up. And I think I've tried to tell you most of this year that I thought the economy was in good shape. I thought the consumer was in good shape. Balance sheets were in good shape.

I am now telling you that the Fed is having an impact. And I'm seeing softness in retail. I'm seeing people concerned about inflation and the impact that it's having on their salaries, which aren't keeping up. So the chance of a recession is absolutely higher today than I would have told you three or four months ago, well north of 50 percent, probably 75 percent that we'll get some kind of a recession in the next two or three quarters. So how do you allocate more than to health care and staples really quickly? No, we don't like to invest short term. Those short term things are going to do well in the short term, but that's what the market loves right now. So you do just have to buckle up

and take a long term approach. The cheapest, best values are in some kinds of cyclical names, inflation protected names. So oil and gas, by the way, is going to do well. Oil and gas. Charlie Rubinskoy, thank you very much. As we head out, tough day for stocks, down two and a half percent for the S&P 500 three and a quarter percent for the Nasdaq as the Dow finishes lower 770 points it is not the lows of the day but a pretty broad and pretty ugly sell-off in reaction to the Fed the ECB a weaker retail sales number and the fear of higher rates for longer that's it for me on closing bell see you tomorrow