♪to my astonishment.♪ ♪my doc gave me a script i got it done without a delay.♪ ♪i screened with cologuard and did it my way.♪ cologuard is a one-of-a-kind way to screen for colon cancer that's effective and non-invasive. it's for people 45 plus at average risk, not high risk. false positive and negative results may occur. ask your provider for cologuard. ♪i did it my way!♪ >> welcome to the closing bell. i'm scott walker. this make or break out begins with the bull case for stocks. how big of a blow has it suffered today with that harder than expected inflation report? we will ask our experts over this final stretch. including double lines jeffrey gumlog. he joins us for the closing bell expensive interview in just a moment. it's a big deal. can't wait to talk to him today. we will also get reaction from one of his country's top ranked

financial advisers. rich saperstein. in the meantime your scorecard with 60 minutes ago at regulation looks like that. it's been ugly, and it's been ugly all day long after the release of the cpi report. the dow was down more than 700 points. 721. we will see what it does over the final stretch. the russell 2000, absolutely hammered today. small captures. supersensitive to major moves in interest rates. they are paying the price today, because yields are jumping to the highest level since december. nasdaq, as you might imagine not much better. i want you to take a look added intraday charge. okay. it's read now. he doesn't tell he whole story, because it was red. then it was green. now, it's turned negative by less than 1%. interesting day for the poster stock of this momentum market. it all leads to the talk of the tape. what does today's cpi surprise me for the rally going forward? and let's ask liz young.

liz, nice to see you. >> nice to see you too. >> how much of a blow have the bulls suffered today? >> it's a tough day, and we have to pay attention to that. one of the thing is i always talk about is you can't fight the tape. the tape is always telling the truth about what the sentiment is. were coming off such a strong rally, and strong sentiment that it still yet to be seen. whether or not dip buyers will come into here. 700 points on the dow is certainly a big drawdown. i think the message it's sending as if you are investing in buying stocks based on rate cuts coming soon, and coming in a big way you have to rethink that thesis as we continue to push rate cuts out further, and further. that doesn't necessarily mean that the market has to have a 20% drawdown. the longer we wait between hikes, and the first cut the market actually tends to do okay. but, certainly today we need to reprice some of the expectation that the fed was going to come in, and support evaluations at this level very soon.

>> their fear is the great risk. that they're not going to be able to cut anytime soon. and in a worst-case scenario they might actually have to hike again. that's not actually on the table today. but, it makes the ppi later this week even more important. it makes the pce in a couple weeks mission critical. >> right. i would actually argue it is on the table today. it's not necessarily priced into the expectations for rate moves. the moves that we've seen in yields today. so, the two in the 10 year period we've seen bigger intraday moves before. but, these moves are telling me that the market is actually putting back on the table the risk of overheating, and the risk that the fed not only can't exit the hiking scenario, but might have to stay more hawkish as the year goes on. one of the things i think it's really important for people to look at, and track as we go forward as what the fed calls for super core. the cpi super core. that's been stuck at about 4%

for the last seven months. pre-pandemic, that was about two or 3%. 4% is uncomfortably high. a big portion of that is transportation services. which is up 9 1/2%. we thought we knew what all the big problems were in inflation. it was used cars for a while. it was housing for a while. now, we take that outcome and it's this whack a mole scenario. were you've got transportation services. that is a new problem, and keeping the services component sticky. services are always more sticky than goods. we are certainly not out of the woods here. >> there some of the argument that a stronger economy at this point in the cycle is more important than rate cuts anyway. that's what you should hang your hat on. that's what profession professor jeremy siegel told me the other day. middle is and what he says as he remains bullish, and not reliant on rate cuts. >> at this particular point i don't see the need for the sad to lower. look at all the real indicators. even the advance indicators

have not slowed down. when they begin to slow down to that, and inflation is under control. which i do think it is. i'm not saying that that bull market depends on the rates being lowered in march or even in may. >> do you agree or disagree with the professor? >> i agree that a strong economy is obviously a bullish thing for stocks. the issue here is that a strong economy also keeps inflation higher, and it prevents inflation, and disinflation from broadening out into all the areas we need to see. is lengthening, and elongating this waiting. if one were going to actually see the fed able to come off their hiking path. i think the fed is going to have a lot more ability to wait than the market is.

a lot of this market move has been predicated on the idea that the cpa came down. a lot of people expected to keep it moving in a linear fashion. that was proven incorrect today. it sort of plateaued at a level that is still uncomfortable. i think the market is going to have to get to a place where it makes more sense to be trading certain evaluations in the face of a strong economy, yes. but, also in the face of inflation estates higher than we wanted to be. >> we were right for a pullback anyway though, right? the way that stocks have gone up since november 1st. especially, the mega caps. it's been kind of crazy. just year-to-date for example. i know we mentioned in the video every day. the stocks almost up 50% year today. and even for much of today in such great upset for the market. it stays screen for much of the day. this mortgage is needed something to give it the excuse to sell off. >> yeah. we were definitely right before something. one day does not make a trend.

we were looking down the barrel of these huge games. some triple digit games. it didn't make sense for them to have moved that fast. what i think the big question that we need to find out the answer to is will dip buyers come in more broadly than justin video? will they come in, and by a dip in the indexes? that's going to tell us whether or not some of this inflation data actually did shift sentiment. will manny come out of the equity market? i don't know if that's the case yet, and obviously, we need a lot more days to show us what investors are really phil amato. >> i'm doing a double take as a look at the russell 2000. it's obviously been the benefactor of the narrative. and today oh, my gosh. it's down some 4%. speaking of the narrative i want to hear from jeffrey unlocked of a line of course who joins us exclusively now on closing both from the etf exchange conference in miami with our very own bob bassani. bob, what is a to have jeffrey come up with us today.

take it away. >> and scotty it is a big day of course. jeff joins us. speaking at the etf exchange conference. jeff, you just address 1000 people in the audience. your basic message today. want to talk about cpi. getting to that message right now. what's the application for that for investors? >> interest rates have very long cycles historically. for whatever reason they tend to move in a broad trend for about four years. and we all know that interest rates kind of rolled over at very high levels. a little over 40 years ago. and now interest rates are up over the last couple years. it's almost exactly 40 years. i just think that interest rates were absurdly low. particularly, real interest rates. now, interest rates are reasonable. but, i think we have a problem with the amount of money we need to borrow. and that will cause a strange movement.

were all used to thinking that the economy gets soft, and interest rates are taken way down by the fed. in long-term interest rates also go down by when a couple hundred basis points as well. i've got a feeling of the economy weakens enough i think we are going to have a real big problem with people understanding how much debt expense we have. they might start thinking that longer-term interest rates need to be -- while they were 10% real yields in 1984. so, it's not at all implausible interest rates go up into the high single digits. it's part of this long-term trend. one thing -- i think the economy is more vulnerable under a rising interest rate regime than it is under a falling interest rate regime. under a falling interest rate regime companies that are under a lot of trouble, and marginal credits. even though they might have to

pay more out of spread basis they are paying lower interest rates so they can refinance, and take money out, and reduce their interest expense. that prevents defaults. that supports all the risk assets they are reliant upon. financing marginal companies. but, when interest rates are rising maybe they will have to default. maybe it adds volatility to the economic cycle. certainly, that was the case when interest rates were arising in the 70s and 80s. so, i think interest rate volatility, and higher interest rates are a thing. >> scott was messaging mentioning. how does this play into the expectation for interest rate cuts? the market was expecting six. where are you at? and how does this data today change those expectations? >> i think the market has tremendously overpriced the amount of cuts this year. it was down to almost a

certainty of six. it seems the fed since they weren't going to move in march per the words of the chairman. that means they are getting started in may. then there's this thing called election. they probably aren't primarily focused on that. but, to have six rate cuts between me and the end of the year always seemed like a lot to me. some very substantial improvement in inflationary data. >> does the fed care about elections? j powell if he was sitting there would say, we don't make decisions based upon elections. >> i think they don't want to be blamed for everything. so, weirdly it doesn't matter if they intend to be political. even on a secondary variable which is where i would place it. they care about the optics of things, and they would prefer all things meaningful to be a little bit less aggressive i think in an economy like this. the cpi today.

it's funny how your inflation discussion has changed over the past year and a half or so. we went from -- it was going to be this super course pce was going to be the inflation metric. and they don't talk about that at all anymore. instead, back in november when it seems like they had a radical change in tone on november 1st. it seems like all of sudden we were talk about picking and choosing different inflation indicators, and not focusing exclusively on year-over-year. but, doing things like six month annualized. three month annualized. today's report came back to bite them on this, because the three month annualized core cpi is coming up now. it's 4%. the twelve-month number is 3.9. it's no longer, what we can look at the three month

annualized intake comfort. that's really what the trend is coming and maybe it'll stick. because it's not sticking anymore. it's going up. so, what really matters anymore is not the cpi. although, it's important. it's the pce. that comes out on the 29th. and with ppi coming out i think on friday that'll give us a pretty good idea of what pce is. pce cannot go up, and have the fed talking about cutting interest rates. >> and we've all been trying to figure out what's the leading indicator look for? you had a fascinating discussion at this conference about the two year treasury is the leading indicator. we tend to think the fed leads the two year, it was things around. it's a two year that leads the fed around. so, what is the two year? >> the two year is sort of telling you that you're going to get about 100 basis points of cuts on average over that two year period. if they are going to do this you should probably be about 50

basis points. >> let me ask about the stock market. are you concerned about the evaluations? there's a whole discussion here about the magnificent seven. they are worried about concentration risks. their clients are telling them via nvidia. it's too risky to have too much concentration. are you worried about that concentration? does it bother you that at such an important part of the s&p 500 now? >> it does. i think this concentrated technology -- this is going to be the future. this is going to take over the world talk has happened repeatedly. they are looking for 11 or 12% earnings growth. after they were looking for 11%. it came out at one. so, with the fed rate cuts being pared back in terms of expectations. thanks to the cpi data, and the earnings being suspect. what's predicted in my opinion. i have a hard time with basic passive market weight investment. i prefer equally weighted.

we thought that was a superior for this time. >> i want to bring in scott walker. he's got a couple questions. >> i appreciate you so very much being with us today. especially, given what's happening in the markets. do you think that the fed's own calculus changes as a result of one cpi report? >> no. no, i don't. it's disappointing to them, i'm sure. because there was tremendous hope that this gentle decline was going to continue. but, this one cannot. the shelter numbers look weird. the oer number looks weird. it 6% year-over-year. and all i can see rents are growing at that level. home prices aren't growing at that level. in the indices like apartment rental or zillow indices lead

oer very convincingly. about a year to 18 months. and they fall in tremendously. so, those shelter numbers are really an outlier relative to the trend, and what we expect from these relationships. so, certainly not one number with his odd type of shelter reading is going to make that big of a difference. but, the pce number is going to be super important. i think then the next months numbers will be pins and needles. but, the market has priced out pretty much. so, the idea you're going to get more than two or three rate hikes. it's going to be hard to pencil out. >> the probabilities of may have come down. do you think may is the starting gate? >> it doesn't look like it to me. it could be. there is enough data coming up between now and then. but, it's probably going to be

june. if it happens at all. but, our inflation model is such that absence a spike in oil. which has had every reason to spike. every excuse. with ukraine, in the red sea, and all that. if it stays where it is that we think inflation on the cpi will relax. this will be somewhat of a blip particularly on the headline number. it will go down to about 2 1/2%. one thing i'm using is a lead indicator. or, commodity prices. it's been below its moving average for a long time. and i can't seem to get above it. and it just keeps falling. and that's further cooperation of relaxing inflation, but also of weak global growth, and weak global demand for these commodities. >> you know, there's another pretty big debate i think in the market. liz young alluded to it in the lead to welcoming you want to the program. it's whether the economy can remain this strong, and have

inflation go down towards 2% at the same time? or, if one causes too much demand that keeps inflation elevated. how would you address that? it appears as though the initial calculus of that by the fed it itself has hanged. and that you could still have a strong economy with solid growth coming and still have inflation come down. because it was caused by things around the pandemic more so than excess demand. >> you know, i suppose that's possible. i am skeptical of -- you see, the last man standing in the economy is always the last man standing. and it's the unemployment rate, and some of the unemployment data. i know that the last report was really strong. there's some weird seasonals, but that doesn't account for the strength. and i just think there's other employment data that leads much more than the youth re- employment rate. which is a coincident indicator.

that's things like the work week which is collapsing. it's sort of like temporary jobs which are shrinking. a lot of these leading indicators don't share that type of strength, and i talked about this last time i was on with you, scott. 88% of states. and the states report employment data as well. 80% of the states say unemployment is rising over the last six months. and those six states that don't have rising unemployment include wyoming. there's about five or six of them. wyoming, north dakota. okay. i might be adding jobs, but that's not a very big population base to carry the other 88%. and the states that have rising unemployment include california, florida, illinois, new york, new jersey. it seems very weird mathematically. just arithmetically that these two unemployment source sets could have such different

readings and implications. i don't know. i hear this type of talk. a soft landing. they used to be years ago. we call it goldilocks. in 1999 they called it nirvana. whenever i go anywhere now people are asking about this nirvana situation. that puts my radar up, because that becomes sort of -- everyone sort of agrees on something. that maybe they need to think through a little bit more -- a little bit more carefully. at this conference bob ointed out when we were on the stage that these types of conferences historically would always have sections on international investing. international equities. rudely, this one doesn't have a single one. so, to my eye that says something is happening in the zeitgeist that needs to be faded. you need to think, maybe i don't want to knotted and north, south direction because

everyone else is doing it. that's kind of where i am. i think this is a tall that international investing is a closer look. as you know, scott i've always recommended india. they are the strongest economy in the world with the best demographics. that's a pretty good one, two punch. >> i was surprised with your comments on your recommendation on allocation. the advisers here want to know what you recommending right now? you have 40% bonds. 25% cash. 10% real assets. that's pretty conservative portfolio. >> yeah. if you ask me, i'll give you slightly different answers on the hour of the day you asked me these things. because market moves. but, i could see it having 30% in stocks. i would have 10 in japan, 10 in india, and 10 in equal weighted u.s. >> tended to equal weighted u.s. on the market cap. literally, 10% of the asset allocations are just in the u.s. on equal weighting? that's it? because u.s. is too overvalued?

>> normally, i might say 35% u.s. but, i got 25 minute of it in cash. so, i want to be ready for that. >> all right. always a pleasure chatting with you. we didn't even get into a long discussion on deficits, and social security has ideas of solving social security too. we've got to get them back, and get his ideas about us all that. next problem. jeff, thanks very much. >> thanks, bob. talk to you -- what is it? march coming up. >> we certainly do. we have another meeting coming up. which means we have another conversation in the wings. down at the etf conference down in miami. liz young back with us joining us also. wells fargo investment institute. thank you for being here too. i hope you had a chance to hear jeffrey. what's your reaction to what you heard?

i can't hear him. liz, you want to react to jeffrey gumlog? >> sure. i'll start at the end with 10% in u.s. equities. i think one of the things we haven't quite covered yet too is the movement in the dollar. if you look at what happens in the dollar from october through the end of the year as were pricing said cut in this weekend which is usually a tailwind for international a particularly emerging markets. there are some indications that even may be places of china are bottoming. so, i do think that it's worth a look. that is a difficult argument to make to investors today. they look at the shards come and say international hasn't outperformed u.s. in 15 years. so, why would i do it now? there is no such thing as something being due to outperform. if we do get cuts in 2024, and i do think we will. if we get some pot cuts more than 25 basis points longer they wait. you will see that weakening in the dollar again. and it should act as a tailwind for international investing. so, i thought that was interesting for him to bring up as well. >> what about the idea of what

jeffrey said about rate cuts? the doesn't necessarily change the narrative at all of for the fed. he said it could be in his words just a blip based on some other factors. is that how we should view this more broadly? >> i don't think it changes the narrative, because the fed has been pretty clear that they are going to wait until they are comfortable that inflation is moving on a sustainable path towards 2%. this is another indication that they're not comfortable with it yet. i don't know that they even need to change that to. i do think a march cut was going to be premature. now, it looks like i may cut will also be premature. depending on how the rest of the data comes in that's going to be important. jeffrey is right. that pce is their preferred metric. so, that is the one to watch. unfortunately, we have to wait a couple weeks to find out what happens with it, but that is the one to watch. but, i think this is actually consistent with what jerome powell has said.

we are not confident yet, in this reading is going to show them that this is why they're not confident yet. doesn't mean that it's wrong. doesn't mean that it's broken. doesn't mean that something is going terribly awry. but, they were right to say that they're not confident yet that the path is in place. >> yeah. here likely outing assembly through through the pce. our senior economics correspondent steve policeman is with us now. steve, i almost feel like -- okay. so, if the train is still heading towards the destination for the fed may be today. we will see what happens later this month as an extra stop so to speak before it gets to the destination we are all looking for? >> yeah. but, the think is the market saw this thing as a train track. the feds saw it more as perhaps of a cross-country path in terms of ups, and downs. downs and ups. absent arounds. the question i was asked to jeff which was, does this

change the fed's outlook? and i think the answer is no. i think it changes the market's outlook for the fed. jeff talked about one explanation which you call the blip explanation. you had a one on one thing in january. you had that event thing that's going to eventually come around, and help us out., there is another scenario that you got. this notion that growth may be too strong to achieve that last mile of going from 3% to 2%. that would wire the fed to remain on hire for longer to bring that last one percentage of inflation out of the system. >> steve, you know so much better than me in terms of when the fed gets access to certain pieces of information. certainly, they gather data points all along the way. they are talking to people within the system so to speak, all along. do you think they're surprised by the read today? does jay powell seem shocked by

what was delivered today? >> no. i think he put his feet up on the table, went like this, instead i told you so. right? we went back, scott. me and my producer betsy screen. in regards to the course of inflation. and i think it was like three or four. but, that was just last week. before that almost every single fed official has warned us of this. that's why as soon as the december euphoria took over i personally try to push back against it, because of the idea that inflation is not going to move in this straight-line. i do have a lot of economists that are saying, hey don't give up the ghost on this. the trail of inflation is still downward. but, what you need to do today, scott. build in some small probability that perhaps the soft landing may need to turn into a harder landing. it's not the odds on that. but, i was in may.

i got to think maybe that may cut is not a sure thing. maybe it's more of a june thing to think about. >> you used the word just now, euphoria. you could use that. other people have used exuberance. to what degree do you think powell has been unnerved in things watching the stock market? armed holdings 30, 40% in a single day. just the magnitude of the move that we've seen overall. >> the other metaphor for what jay powell has i think tried to do. it's interesting as to whether he was too dovish at the december meeting. but, i think he's been trying to hold back the reins on financial conditions. leaning back on this racehorse that has been trying to run. also, the economy. i think what he wants to have happen is he'd like to have financial conditions be a little tougher. i think maybe he's getting a bit of that today.

so, he's probably not unhappy about that. jesse inflation come down. he loved to be cutting interest rates. to the question about politics i would say he's not going to be deterred by it. he would love to have the flexibility to dance around in a sense of getting some cuts in may be a little bit earlier. may be going a little bit later so the cuts don't happen around the election if he could help it. but, i think what he really wants to have happen here is to see financial conditions remain a little bit tighter so they can have this last bit of inflation come out of the system. >> he may not get his wish though. in terms of the political prism. the longer they wait as you allude to the closer potentially they get to the election. not only that, but the closer you get to the election you may have to do bigger rate cuts. that'll have its own political consequences. at least in terms of the

rhetoric that the chair, and others at the fed will have to face potentially. >> yeah. but, here's the deal scott. you get paid to be in that position. right? the federal reserve in some respects, scott exists to take that kind of political flak. it comes with the territory. what the fed prefer not to take it? yeah. has powell tried to put the fed in that position where it takes us spending a lot of time talking with lawmakers on the hill from both sides? can it be avoided? no. it's going to be the source of either the democrats saying they are not coming fast of us where the republican saying that they are playing fast and loose. i personally believe the fed will do the right thing at the right time irrespective of politics. >> steve, i appreciate it so much. thank you. some really important context of what not only what today's cpi means, but reacting to what jeffrey had to say too. i think we've figured out the audio. can you hear me?

>> yes. >> rate. give me the view here. jeffrey talk a few moments ago about what all this means for the fed, and where interest rates may go from here. >> yeah. i think the real opportunity is industrials, materials, and healthcare. those rural areas that still have quite a bit of pricing power. they trade at cheaper evaluations. so, the rate elevation doesn't harm them as much from standpoint. i think that's where the opportunity lies. they've been left behind by this go-go market. which is focused mainly on growth and tech. but, i think there's a lot of opportunities for those areas to catch up specially if they remain resilient. >> have we crossed over into some euphoric.? too much exuberance that someone becoming irrational when you look at some of the moves and growth, and stocks? >> we think so. and it's not so much that there

aren't some good stories there. i think the tricky part is evaluation does matter. i think that's where they got well ahead of themselves. we saw this last june and july. i think you do for a reset. >> i'm wondering also liz young about this brought story, whether that now is roadkill again? because there was this belief that finally, finally we had some real broadening to believe in. we posed that question at the top of several programs this week as to whether this was broadening in the market that you actually believe in for the first time in a while that was going to last a little more than a couple days. how would you address that ow? >> i would say you have to watch small caps coming in small caps only in order to confirm whether or not the broadening is occurring. they have not confirmed that. >> that's why i bring it up. yesterday, okay. the russell is up a lot, and here we are down near 5% on the russell 2000.

it was nicely over 2000. and now it's 1950. >> right. and if you take a long-term chart of the russell 2000 you will see there is this line of resistance that it can't quite get over. we got over it for a sniff of the second, and fell right back down. small caps need to confirm an upward move, because that is what would show us that the economy can still expand. also, remember this goes to one of jeffrey's points. small caps employ over 50% of americans. we need a small just for market confirmation. but, we need it for employment strength. we need small caps for economic activity. and the fact that small caps can't get put off the mat to the place where we need them to be is concerning to me. there have been parts of the market that have broadened out. industrials is one of those that is sort of confirming the broadening. but, were back to what i would consider late cycle behavior. which is large caps leading. some excessive risk-taking,

insert names, and certain pockets of the market. we still have an inflation problem, and the chance of overheating. this is all very characteristic of late cycle. not literally cycle. >> is that how you see it? >> we do see it that way. if you can speak your pick your spots in small caps. i think over the coming years there is a place for them in the portfolio. >> going to leave it there. i appreciate it so much. thank you for your patience today as we try to work on your audio there. i'm glad we were able to hear from you. we are getting some news as well. on walmart, and testing. >> yes. we see roku shares moving lower on this headline from the wall street journal that walmart is in talks to my smart tv maker visio, and we've reached out to walmart, and also visio for comment. but, the stuff we want to point out is roku. shares are down about 10% right

now. of course, roku has its technology not only in the devices, but also integrated in tvs. we see roku shares trading lower. but, visio shares were halted briefly. they resumed training, and up about 35%. we will come back to you if we have more comments on this. certainly, a lot of interest in this connected tv, smart tv space, and what it means. >> we will keep our eyes there. >> one more thing, scott. we do have the ceo of roku coming up. that's going to be an interview coming up on thursday. >> all right. great timing there. thank you for letting us know that. anything more? please come back on, and tell us. let's send it over to christina for a big look at the biggest names moving into this ugly close. >> shop a fight. the e-commerce are seeing shares on .12%, probably worse now.

despite posting and earnings beat investors had high hopes. they pushed the stock up about 10% last week alone. the cash flow, and earnings came in light, and rising costs are a concern. meanwhile, shares of jetblue. let's see if that's maintaining. yes. the 20% uptick today after famed activist investor icon reported a roughly 10% stake in the air carrier. that chipley was undervalued, and represented an attractive investment opportunity. and that's his voice of concern. i should say confidence helping shares of jetblue. >> all right, christina. thank you. >> tao seeing its biggest drop in nearly a year. all of it coming after that higher-than-expected cpi print. with me now rich saperstein of treasury partners. he's one of this country's highest rated financial advisers. your phone is ringing off the hook today, i bet.

>> not really. >> so, what's your read here? what is this mean for the rally? >> stocks are selling at 2021 earnings. only a carriage two times during post-covid. right now the market is priced for a tapestry of perfection. meaning, declining inflation. accommodated fed actually making cuts. low unemployment, and continued physical stimulus is as well as achieving 245 in smp earnings this year. so, there's a lot of the things that have to happen to give the market where it is. you get a day like today you get one point that disappoints, and you have a market selloff. >> yeah, but you're right for a selloff. what you need so many good things to keep things going? >> i would actually argue it's exactly the opposite. >> welcome any of those could

go wrong. in the markets going to take it as a nonhospital act. >> i know, but we've been up a ton. so, yes it's going to selloff. should change how the bulls should think about where this rally has done and what it might do from here? >> no. i think we have to look at the market over longer periods of time. so, the s&p over the last two is years is on the up 5 1/2 percent. if you extend your outlook over 10 years the earnings are up 100%. the stocks are up 125%. so, you have a long-term view, and a pullback. means to you. >> what are you currently doing? >> well, we like large technology names. if you take google, and microsoft, and look at their cash flow in 20 they generated

55 billion and operated cash flow. last year it was 104 billion. so, that cash flow has increased by 90% over the last four years. microsoft solved 150%. and google is up about 115%. so, the cash flows have gone up a little bit more than we would like. but, at some point those stocks will come back. and it's important to follow the cash flows. cash flows are growing tremendously here in, and here out in these higher technology names. >> so, you think the mega caps are overextended? urine microsoft and urine amazon. >> they are overextended relative to the cash flows . i don't want to make an argument that they are cheap. but, if you look at the price to growth ratio meaning of these stocks are expected to grow at 20% next year. this year.

and the pd is our 30s. so, it's 100% times pej growth ratio. if you look at the nonna max they are selling at roughly three times the price to growth ratio.

sometimes cash bleeding names. >> what's the most actionable thing on your screen? what's the thing that jumps out to you? weather were having a day like this or not. >> well, i like the fact that rates are higher, because for our clients the return of the capital is more important than the return on capital. we have a shot at buying long- term immunities at 4 1/2 tax- free. that's a great opportunity for us. because we want to own the long- term immunities for many of our clients.

especially, in the long run we see the economy slowing. that'll lead to lower rates. and that'll drive prices higher. on the equity side we are still . we thought global tensions would lead to a spike in oil prices. it represents 4.3% of the s&p. yet, it's generating nearly 9% of s&p ratings. there are names there that are attractive, and on the technology side you mentioned the names. whether it's google, microsoft, apple. you know, these -- or, amazon in the long run. investors who don't own these names shed on them. if you got a long-term holding period, let's say three, five, 10 years. they're going to continuously grow their cash flows, and they

represent foundations, and portfolios. >> i appreciate the time, rich. thank you. let's send it over to leslie pickering out to look at how financials are faring amid the selloff. obviously, red like everything else leslie. >> yeah. red like everything else especially in the regional space today, scott. once again, that area under fire. thinks that cpi report. we will string the case for higher for longer, and potentially delaying the first rain cut. take a look at the spider regional banking etf. that is down to 4.7% as we head into the close today. rates are important for regionals right now for two reasons. number one, lower rates would help margins because they would decrease funding loss what banks pay out to depositors. and number two there are fears surrounding credit quality. and lower rates would relieve some of the pressure there. so, leading the way to the downside today are some of the

smaller banks more exposure to commercial real estate, and give names like valley national, of course that's been in the news lately. and first foundation. the smaller banks have more exposure to commercial real estate than their larger peers, and smaller banks have lower reserves. so, if commercial real estate truly becomes more of an issue smaller banks have higher earnings risk. that's according to kbw analyst christopher mcgrady who told me earlier today about that discrepancy. he could see that in the price action today with the carrie falling a little bit more than the big bank needed kde. >> yeah. representative of course are the russell 2000 is well made up a lot of those -- by one of those regional, small regional banks. leslie, thank you. stocks continuing to selloff after that harder than expected inflation report. let's get straight to new york life investment economist and chief market strategist lauren goodwin. for how she's playing it. welcome. it's good to see you. what are you doing with this

market today? >> i think that we will look back on the last couple months and know for certain that this fed pivot rally e've been enjoying was just a step towards what's increasingly becoming in the data a much clearer binary outcome for the markets. are there the impact for head. we will see economics slowed to a minor regression. that's where the data points. a little bit closer to today. i don't want to overstate that point. but am i think the market is making that risk much more clever in price action. >> so, you're betting on an overheat. what does that mean for your calculus on what the fed does? >> our base case is actually were going to see an economic growth slowdown sooner rather than later. that base case points to the fed doing exactly what it said. which is wait until june -- at least june rather to start cutting interest rates.

were looking at our price environment where price pressures are re-broadening. it's when a report will have plenty between may, and june to clarify the picture. but, because were seeing prices paid pickup in the services sector in the manufacturing sector, and were seeing small businesses in the nfib report today. saying they're still the to pass on higher prices. that's painting a sticky picture for the fed. >> ever told you we were going to get a june cut. the ribbon gets cut. they start cutting interest rates at the june meeting. why shouldn't i be optimistic still about the stock market? >> because we've already seen, and enjoyed a lot of the evaluation uptake that comes from a gradual cutting cycle from the fed. if we know for certain that the fed is cutting in june that really what investor should we think about is the oversized cash allocation that we've seen investors take on over the last year, 18 months. how with a lock and higher

rates now? do they move into short-term municipal bonds? duration or high-yield. which is what would then be in that place declining treasuries on the front end of the curve. >> he would talk about credit opportunities almost every time we've been speaking. including, the most recent. you just mentioned it there. do you still avorite credit plays relative to equities? >> i think investors have to be balanced. as i mentioned this is a binary market. were not likely to see a clear signal from equity until economic data turns to the downside. i don't think we are seeing the equity market do anything particularly directional. so, that's an environment where you have to own. because that's where there is growth, and stronger earnings. free cash flow. you myself you also might own some of the potential beneficiaries of those trends. but, that is a relatively narrow opportunity set for

adding incremental exposure at this time. when it comes to adding incremental exposure we are looking at shaving off that gritty. operationalizing it credit. a >> but, you're also making the case just like richard saperstein was. that narrow was okay. and narrow is the play. and that maybe the 23 playbook is the 2024 playbook for all the reasons you suggested. >> i think that very well could be the case. it's not clear to me that narrow is the play, but narrow is what's happening. narrow is a great cycle economic environment where a large-cap, and profitability, and free cash flow are more likely to benefit over time. there are going to be moments in the next couple months, i'm certain of it where we see enthusiasm in a broadening out market performance. but, with inflation looking sticky as it is now. with the same type of risk playbook we've seen in 2023.

i think 2024 is playbook may look similar again until we've seen a decisive break. >> so, you think the broadening idea suffered a pretty big blow today? like a lasting blow? >> i think that could very well be the case. look, again i don't want to state the inflation data today. the distant inflationary process is wavy, and we've seen several months of much better than expected inflation data. we get one month it looks a little worse than expected. it's not the end of the world. i completely agree with what liz was saying earlier on in the program to this end. but, what it does do is cost incremental doubt that we could see the extent and cuts the market was expecting a few weeks ago. and that's an environment where stickier inflation, stickier rates for longer. martha market. more investors are likely to acknowledge that's actually a riskier environment for the economy in the medium term than if we were seeing a clear slowdown. >> good day to have you.

thank you so much lauren goodwin. i forgot to officially think liz young too for being with us. thank you true. we have two mystical for the closing bell. >> you got a lot of people in this show today. let's talk about the maker of cornflakes and flukes. seeing its shares climb higher despite the sellout after posting the sales that beat all his expectations. this would be wk kellogg which was spun off of kellogg last year. even though the company did beat, they did drop a q4 sales. they are pushing back on recent price hikes, and they're looking for bargains instead. that's a trend worsening with general mills. you can see shares of 7 1/2%. marriott falling despite beating a mental analyst estimates. it was weaker partially due to a higher tax rate. this was according to management. but, the management cfo dennis and the writing so that she

expects slower, but is still growing leisure revenues this year. shares are down almost 6%. >> all right. thank you very much. we will see you soon. utilities. they're getting slammed today too. energy relics he. everything is red. i can understand. yields are going up. i can see why utilities would be going down. talked with. >> that's exactly right. starting here with utilities the group as you noted is very sensitive to rates. so, the cpi report signaling that the fed may have to stay higher for longer is weighing on the sector. utilities have quite a bit of debt giving out capital intensive the industry. so, when their rates go up the costs rise. higher yields on treasuries. making utility dividends left attractive. both have quite sizable renewable as per four leos. on the flipside aep, and energy both in the green. in this selloff energy stocks are relative out performer with

a modest 1.3% decline. that comes as oil actually trades higher. although, that gases added more than a three year low. so, that is weighing on gas producers like eq t and konterra. the refiners though looking better with phillips 66 both in the green hair. gasoline futures are up more than 10% in the last month. which does help those margins for refiners. >> i appreciate that. we are now in the closing bell mark his own. mike santilli is breaking down the crucial moments of the trading day. is joining us today on what instacart, airbnb, and lifts earnings must tell us about the economy. mike, i guess one thing we can start on is the broadening story. definitely seems to have gotten a body blow today. russell is getting absolutely creamed. >> for sure, scott. it tells you a few things. one is that maybe it was a little bit forced, and maybe we

have a lot of weekends who thought we really wanted to try to make it happen with a potential breakout in the russell 2000. the other piece of it is, the other time we talked about this interplay between stock and bond markets. you know, treasury yields leaking higher. why is it really bothering the stock market? every time i said, well it still inside the range. the yield sensitivity is in the small caps, and is impressive. that's what we are seeing as well today. we have a really good rinse in this market. it's 95% downside volume in the new york stock exchange. that's pretty rare. it's more like 8020 on the nasdaq. so, you definitely have a pretty comprehensive unwind here. you've got the 10 year above for the quarter. 4.3. there's a big rethink going on. i usually come about the path of inflation. every thing else. but come all of that boiled together in the context of a market that was kind of at a pretty high perch, it will even down 3%. we haven't had a 3% pullback since october.

so, i don't know if it's one and done. it probably isn't. two people are braced for something more. but, all of that seemed to touch off together with the cpi reaction. >> well, one thing it does is it undoubtedly increases the heart rate for ppi and pce. and were not going to get pce for a couple weeks. so, now are going to be a little on edge. >> we will, and everyone is going to try to distract the way . which is probably going to be a little bit more tame. i do think that the economic growth matters doomed. for me if you have to wait long for the first three cutter or if you are going to get as many that in of itself is a vacuum of somehow a body blow to the overall stock market. you can make your peace with that of the economies welded together. if it means there's a greater chance feds are going to make a

mistake, it's going to end up being too tight. for me that's potentially the biggest issue for edward to get there. >> was with the dip buyers do as well. and this is an interesting story today. we highlighted it several times. let's see how long they remain red. there's been an appetite to buy on almost any dip in the space. that's going to be key. >> for sure. and the big stuff down. microsoft down 2%. it's really not cutting into muscle at this point in terms of the rallies those stocks have had. for the s&p in general the 20 day. just 20 day moving average for the s&p like 4906. really strong rallies will find support at the 20 day. we will see if that happens if we get there. that would really just be a blip. i'm not sure that's going to be enough to unwind some of what's built up to this point. but, we will see. >> almost doesn't feel like there's anything else going on. your big earnings to watch in overtime. you have a lot on your plate here. >> the gig companies. right. let me separate them. for them it's about profitability.

of the last year over has widened the gap between its stock and others by focusing on efficiency. all three of these names. so investors are going to want to see some progress here. airbnb has been profitable for a while. it'll be more about growth and pricing power. airbnb guidance last quarter fell short of expectations. the stock is up nearly 36% over the last three months. since everyone is looking at inflation cpi today we may get some clues tonight from these companies. airbnb. what's the average daily rate? is that still rising? instacart basket prices were an indication of how prices were doing. >> those earnings as well? >> yes, scott. for robin hood investors are searching for any signs of rebounding in a robin hood's once very active retail traders

last earnings season. we saw a robin hood dropping monthly users, and revenue per users. analysts are hoping for a turnaround there. recently, launched in the uk. i can help user growth as well. we will see how that plays out. robin hood change the weight also charges for options. that could help some of its operating leverage. some other companies have got a lot more disciplined. the street is looking for a loss of a penny per share. if you look at a year ago rates are also a key to a higher rate interest income. finally, scott crypto volume is expected to come in strong as those markets rebounded in q4. >> i appreciate that. thank you. take a look at the dell here. we are down more than 700 points at the worst levels of the session. we spared that a little bit. we are down 555 right now. but, it's a rough day across the street. the russell 2000 is really where the pain point is.

mike santilli i'll send it to you to take us into the close. >> yeah, for sure. the nasdaq 100 did actually find a little bit of a bid in there. is down 1.6%. still, the biggest downside contributors are the biggest recent winners. that would be microsoft, amazon, and apple. i pointed out the very, very weak breath before. that remains the case. that has not turned around. 93% of all stock exchanges declining stocks. that is pretty good across the board selloff. also, the volatility index is significant. your about highs we last saw right at the very beginning of november. you are above 17. we are in this weld zone just about a week ago. that seems a big move considering we will need two, 2 1/2% off of record highs. maybe there's a little bit of jumpiness. maybe it turns into just a really quick spec from there.

you've been talking about it's got 4% on a one-day decline. that's a pretty good shakeout. it did have a little bit of a time above 2000. were going to have to reassess as to whether we are going to be able to celebrate to a relatively strong economy even in the face of higher-priced treasury. we went about 432 on the 10 year. looks like the s&p 500 is going to finish that. almost equivalent percentage decline in the dow. that does it for closing bell. were sending it's overtime with morgan and john. >> the bears coming out of hibernation today as the dow. prepare some of the worst losses of the session here to the final moments. that is the scorecard and wall street. the auction is just getting started. welcome to closing bell overtime. >> could've been worse. the dow, s&p, nasdaq. all down what i percent. at one point they were down about 2%