and i think that's how we ended up here. >> exactly as people watch washington, mcconnell said it is mr. schumer's responsibility and he holds the keys in the form of 50 votes to get that done. >> vix elevated on the session but off the highs as d.c. drives the action today. >> i will be at delivering alpha tomorrow see you thursday. >> "closing bell" starts now. welcome to "closing bell." i'm wilfred frost at new york stock exchange stocks tumbling as the treasury yields march higher. nasdaq hit the hardest down more than 2%. >> welcome, everyone i'm sara eisen. let's look at what's driving the action 10-year treasury yield hitting levels we haven't seen since june weighing on the growth names. the tech names, faang stocks, microsoft, apple lower fed chair powell and treasury

secretary yellen testifying today before the congress about the economy and yellen warning about the konsconsequences of n raising the debt ceiling building on a strong month as brent crude tops $80 a barrel and nat gas jumps strongly today. energy up more than a percent. we have got a big show in just a few minutes a rare interview with ceo jeremy grantham and why he sticks by the call of last year and graets voices to help navigate the selloff including tony guyer, jeffrey sherman, liz ann sonders and rick ryder >> great market voices there fist let's get to the big stories. mike santelli tracking the

selloff. steve liesman with highlights from the senate testimony. mike, pretty broad market and focus on tech. >> yeah. absolutely broad this was not a typical clean rotation type move out of tech however really didn't do much but to get to last week's pullback zone. the most direct tangible thing going on today sa global lift in bond yields. that is weighing most heavily on the big growth names and news from washington and unclear if that feeds that directly into that we had that rebound off the september 23 low of last year. we didn't regain all of what was lost prior to that decline and then you had another drop and retested it. it is not an unusual dynamic to roll back to that area we are still late september. i don't want to minimize what's

going on in the news or the economic and central bank effects but you have to keep in mind there's market dynamics look at the s&p tech sector relative to the overall s&p 500. you will see where tech is pulling back from on a relative basis. pulling back from an exact place it pulled back from multiple times in the last year it raced outhead and performed from this starting point and a ceiling pulling back from. i always point out bond yields higher doesn't translate to a specific amount of pain for big growth stocks that are expensive. look at where we stand on the nasdaq 100 coming into this period relative to the s&p and then on its own. off the highs but i think it is fair to say that we have stepped up so much in valuation in part at least the cover story is negative real yields have enabled or encouraged investors to pay up more for the great

long term cash flows is the fair value 25 times do we have to have that premium bled out that's the conversation but i can see it as where's the dollar go if we are in a reflationary environment? tech had the big move higher. >> it's always the speed of the move in bonds. not as much the levels still at super low levels. it is a familiar pattern how many spasms have we had where we see treasury yields spike and then all the growth fears? tech stocks sell off and then that dip is always bought. like the fifth or sixth one just this year. is this time different >> it's not clear that it's necessarily different of how it will go. i do think if stocks were to keep going when yields go up that's a self correcting dynamic

most likely. in other words one would change or the other would change and come back into a balance at some level but you can go back to march and june and saw a similar dynamic. value rushed up relative to growth we have the fears of a slow down in play and the fed and other central banks trying to pull back on stimulus maybe that's memories of 2015 and 2018 the starting point is good here. >> thank you let's turn to washington where fed chair powell and treasury secretary yellen testified today about the state of the economic recovery steve liesman has the key highlights for us. steve? >> yeah. highlights there were. fed chair powell voicing new concerns of the inflation outlook in the testimony said it appeared as if the forces

driving prices more long term or structural part of a long term evolution in his thinking and the federal reserve is looking into the legality of trades by federal reserve officials. >> looking at the trading that was done to make sure that it's in compliance with our rules and with the law >> he didn't mention anyone by name but two presidents resooned yesterday after questions of the trading practices. both have said their trades did not violate the fed's code of conduct. senator warren stating outright to oppose fed chair powell's renomination saying that he weakened banking regulations. >> over and over you have acted to make the banking system less safe and that makes you a dangerous man to head up the fed and it's why i will oppose your

renomination. >> powell rejected the criticism saying banking capital was at an all-time high. treasury secretary yellen warned congress of a potential financial crisis and a recession if they did not raise the debt limit. all of that in a couple hours of testimony. >> steve, fascinating stuff. i'm most interested particularly on a day like this how significant the comments were on inflation. if he's hinting it's structural it's not like we talk about it from a low level persistent inflation at the levels we talk about how has implications for his policy over the next year or two >> yeah. nothing gets by you. that's exactly the right takeaway from that some people say that they hear a balance thing that he thinks eventually it will come down and a definition evolution in the

thinking of the chair in inflation. first transitory and then for a few months and then next year and now the structural possibility is very important and has implications for the policy the proesht of a first fed rate hike is december from november and will see if people pick up on the idea that this may engender earlier rate hikes than the market anticipates. >> yeah. and then we can debate whether supply side inflation is different than demand inflation and would have to prompt the fed to move and take a moment on the comment calling powell a dangerous man. has he loosened restrictions substantially on the banking sector that made it more dangerous? >> i think restrictions may be somewhat less onerous on the banking system and i hate

answering this question with wilf looking over my shoulder on this because he's the expert but as i followed the changes there's some very necessary tweaks needed to the dodd-frank bill as originally proposed and some changes reduced some red tap, have rationalized some of the rules and hard to argue we still don't have some of the most stringent banking capital rules in the world and that relative to other countries and other times the banking system is about the safest it's been. famous last words. the idea that warren says you are flirting with disaster and just a crisis about to come, i think that's a little bit over her skisif you ask me. >> steve, i hate having to answer on this and sound like i defend the banks and not doing and weighing it all up and

unfair to single him out if you wanted to look at the very tight slight loosening of regulation around the edges you have to speak to randy quarrels as much as jay powell but we have got through a massive crisis fairly smoothly in the banking sector. >> right. >> you almost have to say stop fighting the battle from 11 years ago and focus on the tech sector or other sectors rather than make it out like the companies are evil and the regulator is evil within it. i find it extraordinary how that continues to come up time after again and to pivot, mike -- sorry, steve >> i was just going to give a response we can argue around the edges. are they looser. dangerous man? that's a high level. and the examples of warren used i don't think they hold water. she said that the fed had to

come up with $300 billion of capital. the fed came into the market for a bunch of reasons and maybe the least of them the dangers to the commercial banking system. >> yeah. the fed helped everybody let's be clear there's no doubt we would have had much bigger problems if they didn't but i don't think the banks are the cause this time. not the epicenter. mike, back to the market and the sort of theme earlier we were discussing with steve which is how significant if this is a chang in what the outlook for inflation is from transitory to persistent and stay near the recrept prints of cpi that has very big implications for market valuations. >> certainly would does he mean persistently higher than we got used to? it won't settle to 2%? i doubt he means 5%, 4% analyzed and could be wrong about that. it seems to me much more of a

moving in the direction of acknowledging current reality and where the story line and where consumers' heads are at right now, too he has to acknowledge it's an issue. probably does help explain maybe a little bit of the somewhat quicker time line to present out there for tapering and the idea we don't want to be caught sleeping here if inflation does through next year remain stickier on the high side than we thought. >> either way, central bankers get more hawkish in talking about exits. mike, steve, thank you joining us with more on the market reaction on the news line is jim paulsen jim, are we about to see a change now that the fed announced to scale back the stimulus starting next month in november meeting for instance and the fact to talk about higher interest rates and higher inflation? does that change the market

view >> i think the biggest thing going on for me at least i think is the shift in economic momentum underneath all this covid cases have rolled over now. and with that is come a clear uptick in citigroup economic surprise index when bond yields respond to stronger economic growth overall, does the commodity prices going too high. you look at leadership in this market not only today but the last week of the period it is led by the cyclical portions of the s&p 500 and by small cap economic sensitive this is to me more about another reopening cycle which we have been through in the past which means you have underperformance by growth and tech and defensive

and move back to economic -- outperformance more so than maybe a krengs. it is just another leadership shift. and certainly the fed could be playing a role in that but i think they're acknowledging the fact they're hawkishness is acknowledging that it will pick back up again. >> so what - >> sorry. >> what's the strategy go ahead, wilfred. >> i was going to say to what extent does the rising yields there as a good thing and responding to reopening and the bounce in the economy but the market today particularly with sectors like communication services and tech is framing it as a bad thing is it wrong to do that >> yeah. i think it is. let's look at the last week from the low. we came back today to challenge the low on the s&p 500 from a week ago if you look back over the last week yields clearly gone up.

basically when they have gone up and there's five sectors in green and all cyclical sectors and then the five that aren't are defensive and tech and hasn't been the higher rates killed off cyclicals and small tiftd. it is that it's killed off growth in defensive. a leadership shift, not necessarily a correction i think it's a good sign look the other interesting thing about this yield move is real yields are going up this time. the 10-year yield is climbing but the 10-year break even yield has not. that's typically a sign of better real growth >> that would be a good thing. we are coming back a little bit. on the dow only down 381 down more than 600 at the lows thank you for jumping on the news line. a quick check on the meme

stocks both gamestop and amc down more than 3% and blackberry, bed bath & beyond and nokia some others are down more than 2%. s&p 500 right now down 1.5%. energy is the best performing sector on the day, only sector in the green pippa stevens with a look at what's moving oil and gas. >> energy the lone bright spot rising more than 1%, the second best sector is real estate down half a percent energy stocks catch a bid on nat gas. while brent broke above 80 today for the first time since 2018 finishing in the red we are seeing strength from oil field services names both up more than 2%

valero, con oco phillips higher. now xop up 17% for september guys, back to you. >> thank you so much for that. s&p's down 1.5% as we speak and of course the tech is leading the declines driven by that rise in treasury yields earlier today i spoke with investor and gmo co-founder jeremy grantham about the state of the market that he's been warning about for quite sometime i asked him about the recent comments of dangerous overpriced asets in the u.s. and if he thinks we're in the biggest bubble he's witnessed in his krir. >> not as big as japan in '89. but it's bigger than anything in the u.s. that's partly because it

includes real estate, bonds of course, stocks and commodities they're all overpriced >> what kind of metrics give you confidence that that is the case >> pretty well every metric you could use. the house price is a multiple of family income which is higher today than it was at the peak of the housing bubble in '06 and it's even high er than the u.s. in australia, canada,ening land, hong kong. shanghai you name it. this is a global housing bubble. >> more housing than equities? >> it's more global. the bubble in housing. than equities. equities is magnificent bubble in the u.s but strangely overseas it is

merely a routine bull market overpriced but no big deal but real estate is magnificently overpriced almost everywhere that has a market that counts and the bond market of course is as jim graham would say as a 6,000-year high in terms of low interest rates and high bond prices. >> so what would you say to the people that say you've been too early? you joined me on "closing bell" in mid-june of 2020 and called it then the fourth real mccoy bubble of your career and things have rallied pretty strong since then 42% for the s&p 500 since that interview. >> you knew it was going to be the real mccoy last june you didn't know if it would break next wednesday or a year later. but one by one we have checked off every condition that a

glorious bubble needs in terms of crazy behavior. this is crazier by a substantial margin than 1929 and 2000 in my opinion. so we've met all of those conditions so any time now you can go and the end of a bubble is like killing off a vampire. the market is so into optimism that even as the data turns against it, as it is today, the market shrugs it off, takes another bit of bad data, shrugs it off interest rates begin to go up. shrug. so the fed is beginning to talk about pulling back on its purchasing of bonds. shrug. so inflation is up at 5% shrug. and one after another the pressures are on corporate profits and we shrug that off, as well. this is typical and what

happened after 2007. going through the end of 2007 was amazing. corporate profits turned down. the market went up it went on and on and on until finally a few months later it quit >> and to give you your due last june you said the great bubbles can go on a long time and inflict a lot of pain. what about today are you kind of more confident to not even say that do you think we are closer to the point when we do turn down >> yes absolutely one of the interesting historical facts of these great bubbles is that the blue chips begin to outperform the high beta risky stocks that normally go up in a bull market far much more and get a situation in the

grantham project we are short the russell 2000 the small stocks as a hedge against our venture capital. and the russell 2000 peaked on february 7 it's just gone sideways. lower today than february 7. the s&p continued up nicely. this is a pattern that exactly occurred in 2000 in 2000 the growth stocks started to peel off led by the dotcoms. and the rest of the blue chips went up. and so in september of that year you had an s&p that was unchanged from march and the growth stocks were all down about 50%. so the balance of the market had gone up 17% to offset that the same happened in 1929. the flaky stocks were going down all year as the market went up a final 40%. and we're beginning to see that rather nicely now starting in

february so that's getting on to be six months. >> what about gold would you buy and hold gold here >> i do hold some gold and it is not helping me much. i will say that. it's a strange creature, gold. not as strange as bitcoin but darn strange and i feel comfortable and always have in owning it from time to time. i don't heartily recommend it but the problem in the broad overpriced world like this is what the heck do you own i would own some exposure to the green world. i would try and get some exposure to the vc world, not that it will escape completely but bounce back so much bigger and better than almost anything else that as i say it has an incredible wind behind it, the green side of the universe, so own some of that avoid the u.s. like the plague other than that. and look around here and there

japan isn't too bad. the uk isn't too bad the value stocks outside the u.s. are not too bad they're overpriced but they will return over the next ten years at positive return our forecast in the u.s. is for a negative return over the next seven years and how we do our forecast over and i strongly believe that that will be accurate. >> and just finally, to conclude, you mentioned already some of the factors that make you think that we are already seeing this bubble start to implode as it were what timing are we talking about now and what level of pullback for the s&p 500? is it months away from tens of percents of declines >> i would think so. nothing in investing is ever certain. stock market is just a perfect creature of psychology

it's very difficult to be certain of psychology but we can measure it in many ways in the market and it is seldom if ever been this high in terms of confidence the meme stocks are just a travesty of serious investing. and we have never seen anything to equal that. my own stock quantum stock that i bought eight years ago when that came public through a spac it quickly rose from 10 to 130 at 130, it is a brilliant company but a research company four years away from a salable product there and it was selling for more than the price of gm at 130. there was nothing like that in 1929 nothing that extreme nothing like that in 2000. there were hundreds of millions why not tens of billions which are the crazy spacs this time not to mention all the bitcoins

of the world a couple trillion dollars all based on confidence that other people will pay for what you have. >> we should note grantham's investments in quantum scape and green venture companies are a personal investment and not gmo investments. more to come in the next hour particularly some of those forward looking opportunities he's been mentioning in there. but what i thought was most interesting and we have had him on a few times, the message has been the same which is market valuations are significantly stretched and pointing much more clearly to the bubble as it were bursting sooner rather than later and outlined the factors as to why he has some confidence of that and even though he is clearly early on calling the market tops he said bubbles can

keep on going hurting people and changed the tune on that. >> right i guess over a year on from that point it does seem that some of those elements might have rounded into shape in 2000 it was mostly mega cap and tech specifically that kept rising and everything else fell. we haven't seen that this year because it's been more of a clearer kind of synchronized rotation into the other parts of the markt and the big tech stocks crazy 20 years ago in terms of valuation grow the profits so fast. it is a tougher fit to me to make that call i absolutely agree that if you believe valuations need to reset to some very long term mean and profit margins need to reset to a long term average then we are in rare if ied territory right now and probably do have a hard landing coming but nothing in this period has necessarily

shown that we do need to revert back that way. not everything goes back to the long term average. >> i agree i think whenever you have him and he talks about a bubble you have to pay attention. he's gotten a number of them right. famous for exiting japan in the late '80s. the internet bubble in the '90s. but either way you pay attention. my question to you is, how has he been positioned for that and done for the gmo funds and the investors? because he has been warning for a long time an has missed a lot of the upside on stocks. >> yeah. listen he is not chairman of managing the grantham foundation and not gmo himself but they with the forecasts have been warning against u.s. equities as early as 2013. right to point that out.

they have been far too early to call a turn in u.s. equities and also to your point he has really called the last big three bubbles or so and he has been early on all of them but after the fact you forget the relevance of being early and focus on being right we don't know if that will be the case this time the other big changing factor from making the call to today is what we talked about for the first ten minutes of the show which is inflation and what that forces the fed to do and you can see why some people did argue that this looks like toppy levels but the fed continued to ease and inflation never arrived but if it does in a big way and the fid changes course then you could see his view starting to play out but the market did turn down a bit as we were playing that interview

>> down 491 here on the dow. let's check in on some individual market movers thor industries. the rv company posting an earnings and revenue beat this morning. saw sales double that stock up 7.5% right now united natural foods, that stock jumping after reporting earnings this morning margins helped by the wholesale segment and issued guidance. that stock up 23%. energy remains the only sector that is higher right now in the s&p 500. technology is hardest hit. where people's focus really is 10-year yield drawing the most interest and the yields march higher since the fed meeting last week. we have seen steadily higher yields ford right up there. big investments of evs up 1.4%.

hard hit tech sector, nasdaq come positive it down 2.5% it's really all of the popular names. microsoft. amazon nvidia paypal all the darlings of the market that continue to get hit off the back of the rising rates and seen the pat tern before. the question is, is something different this time now that the fed seems determined to scale back stimulus and potentially look forward to rising rates does that change the dynamic >> while the dow is off its lows by about 120 points the nasdaq not really still fairly close to the session lows on which note let's gek a break down of the action there with josh lipton. >> start with mega cap tech stocks lots of red out there. all lower here though some fans as well tech investor dan niles on cnbc today saying he likes alphabet

strong growth and benefiting as economies reopen he says chips also under pressure. smh on track for the worst day since may. news street downgrading citing valuation and worries of a cycle peak micron reporting after the break today. cloud names worth highlighting all lower right now. zoom actually tracking here for the worst quarter since going public back in 2019 and adobe a worst day in a decade. rough sledding as we know. game delays weighing on the names and some bucking the trend today like activision settling for harassment and discrimination back to you all. >> josh, thank you for that run down let's get to bob pisani. bob? >> this is a lot, very tricky

market energy we have been talking about. global demand for oil high and limited constrained supplies a great run in energy stocks names up 15% energy is 3% of the s&p 500. pile all you want into it. it won't move the index that much tech is 40%. and you can see they're still up today and a lot pushed to the limit as far as how far they can go banks similar situation. nice move up some up 10% or so as rates moved up but again a little bit overbought and stopped going up and most of the big names are down today industrials and materials with a slightly different problem hitting also supply chain issues and the slow down in china weighed on them. you see mixed overall today.

consumer staples, different situation, too having supply chain issues and problems with raising prices an issue. most names down 5%, 6%, 7% on the month. i got a lot of people messaging today covering tech saying interest rates went up in january and february with a correction in february it's a very different situation in january and february. january is recovery. early cycle. now a mid cycle. later in the recovery now and of course in january the federal reserve was a long way away from raising interest rates and might be a way away and closer than they were so i don't think the comparisons with this happening in january and february and tech recovered may be the same situation. >> your point on the banks is -- bank of america had been higher for most of the session and now

in the red itself. highlighting on the big down days the boast to hope for is relative outperformance. yield's rising sharply and should benefit names like bank of america now, bob, thank you so much. time now for a cnbc news update rahel sol man has it for us. >> here's what's happening white house spokesman psaki said that the u.s. would be at war with the taliban if washington kept 2500 troops in afghanistan. psaki trying to clarify there was no split with military advisers about the withdrawal after the joint chief of staff said they wanted to keep some troops in afghanistan senate minority leader mitch mcconnell repeating the view that the responsibility for averting a government default lies with the democrats. brit oish troops will begin to drive fuel to gas stations this week.

according to the sky news. prime minister johnson going on tv to say that the gas shortages are already diminishing and that the government has plans to get goods delivered as the holidays approach. larry david fans to find this pretty, pretty, pretty good because curb your enthusiasm is returning for a 11th season. hbo said that the first episode will be october 24th and i'm very excite d. back to you. >> what is going on in the uk? thank you. stocks sinking in today's sessions and ark invest founder cathie wood seeing losses this afternoon. down -- let's get it up there for you. 3.7% and clearly more than the broader markets. nasdaq down 2.5% and there are some other high profile tech stocks like doordash and shopify

and snap which have been associated closely with the ark etf down significantly more so frame it as you want either way it is not a good day for high priced tech stocks and the ark innovation etf there are some more stocks as well that she tends to hold all down sharply >> yeah. square especially down more than 5% broader market check for you right now. the dow down 475 at the lows of the day down more than 600 the nasdaq is hit the hardest down 2.5%. interest rates continue to be a focus. those treasury yields are higher marching higher for six days in a row. joining us is dwyer and jeff sherman. we have got bonds and stocks covered in this segment. tony, as you said it in your note, never feels -- everybody

calls for a healthy and normal correction and never feels that way going through it the nasdaq is off 5.25% from the highs. is it healthy and normal >> i think it is and some evidence of of that is jim paulsen covered this this is an offensive tape on a relative performance basis i think it's so important to define quote/unquote the market. if you define the market as the s&p 500 it is driven by the mega cap theme throughout the summer and everything else was suffering. you can use the index and the nyse advance decline line. the russell 2000 the mid caps in other words, it really has been a broad, i don't want to say pullback, consolidation, correction period. now the mega cap stocks are catching up to that theme. remember, the s&p was down about 5% a week ago into that monday move we're nowhere near having the

same number of stocks pulling back to the same degree as last monday last monday we had i think at the close 8% of stocks in the s&p 500 above the 10-day moving average. the reading was in the 30s i think the broader market is actually acting better than last week even with such a bad day. >> better than certain sectors all down 5% to 8% from the highs. jeff, on this big bond move, what does it tell you? is this fed driven the debt ceiling in there? >> i'm not thinking too much about the debt ceiling i think this is fed related. jay powell that essentially we

have achieved the inflation targets and you have a 20% year over year increase in the home inventories today and seeing signs of inflation and really every capacity and one thing that you haven't seen in the inflation data is a contribution from the housing component and it's still running at very low levels and something we think trickles into the system nengs year but look at what happened into the pricing it is not just the 10-year and 30-year. but we have seen this line in the sand with the 5-year and thought to be the health of the economy and the barometer of the economy has shot up past 1% and 1% is nothing magical about it but all of a sudden you are seeing a repricing of inflation expectations as well as potentially bringing that rate hiking cycle forward and so why you also see this in the credit sensitive assets is within the bond market high yield and some

secure tized products are priced closer to the 5-year part of the curve so what i interpret here is this is the idea that the fed is stepping back the economy is going to continue to do what it will do and also we are going to be living with a higher level of inflation than we saw pre-pandemic and if that number continues to hover around 3% to 3.5% then again bond yields need to adjust and what they are starting to do. >> this is just bringing forward by a few months, a few fed meetings the timing to happen any wooi or increased in your mind the chance of a major fed policy mistake that's taken place and rushing to hike rates next year? >> great point this doesn't change my view. i think that the fed is hard press ds to be hiking rates next year they have to get out of the bond buying program they got a lot of wood to chop

there. they're buying 120 billion a month. talking about reducing 15 billion to 20 billion reduction each month and will have a marginal impact on the market and what the market is thinking act is the speed of that taper and how they withdraw the purchases from the market. that's still an economy of policy they're still buying bonds and not that they're just stepping away from the market however, jay switched tunes. he was really very dovish at jackson hole and focused on the labor market, the values there and saying that we hit the inflation target now he is not even talking about anything dovish and saying we'll start the process of getting out of bond purchase and take a while and not hiking rates but the bond market is saying we have to take jay at face value and yields have been depressed over the second quarter and

really -- i'm sorry. over the third quarter for most of this period and now when he changes rhetoric everything's changed. >> tony, what do you do? investor buyers, i think you were calling for recovery. >> yeah. we have kind of coined it the banks tanks chanks and cranks. so if you do have higher yields it comes with better economic expectations and something that jeff said was really important where the evidence exists that this is good economic backdrop without massive inflation pressure that's going to cause the fed to all of a sudden start hiking, i don't think they'll hike rates for the predictable future there's too much debt but what you do get are the periods where you have a little bit of

economic enthusiasm and we are seeing that in on a relative basis and the inflation break evens, the 10-year inflation break-evens up less than the 10-year u.s. trash ri yield and that's unique to this year the inflation break evens have been moving up or had been earlier this year when the rate -- remember when the rates up to 1.74%? obviously that was predicting the explosive growth in front of us and we were talking about the 1.2% this year predicting the delta variant so maybe 1.59% is normalizing that situation it is not this massive inflation spike that's going to cause everything to go to zero i think economically sensitive areas are the place to be into year end. >> is the buying opportunity in those names there today right now or you're saying you eat get a better opportunity as the

current pullback growing into itself >> we are in the beginning of it you can add exposure we are in institutional advisers and it's sector allocation on a relative basis and i think that you have seen a turn in the economic recovery theme relative to the s&p 500 because they're dominated bety mega cap growth names so i think we can start looking at it that way. >> tony, jeff, thank you both for joining us today down 1.75% for the s&p 500 we're now in the "closing bell" market zone. commercial free coverage of the action going into the close. mike santelli is here and we have delo that sapporo with us, as well. major averages selling off

today. the nasdaq and s&p 500 on pace for the worst day since may 12 down 2.6% on the nasdaq. mike, this is d.c. related or rising yields pressuring valuations >> the most apparent effect is rising yields that are kind of undercutting the big growth stocks that we all know kind of punch above their weight in the indexes. you could see that yields peaked around 10:00 a.m they have ebbed a little bit from the highs and saw the nasdaq 100 bottom maybe a little while after that not bottom for good but they were come off the lows by about 1% and the way they trade right now. there's no rule that's ironclad saying they have to keep trading like that. i don't want to discount the fact that it's a very noisy environment that we have all the excuses to grab for for being cautious if you were looking for one such as the fact that we have the very clogged kind of

congressional situation with the budget and the debt ceiling and the noise out there about the shortage driven price increases that seem like they work against the global recovery theme and contributing to the inflation. i get that but looking at the market today it seems like a sloppy rotational move mostly related to bond yields. >> dollar at the highs of the yield and jives with the rising rates. delano, what are you doing on a day like today >> holding on to my hat. no, no it is really an area where we haven't seen volatility for a while. we had a slow upward move for the markets and we predicted a move downward in the biggest growth tech names. financial's moving lower today financials kick up and this is a

broader market move with profit taken. the market cautionary. since we have seen a high level. i'm sticky with the positions. we've usually seen a recovery next week or next day. this is a wait and see moment to see it play out with a pronounced move, sara. >> you are not doing that repositioning to cyclicals like in energy or financials? >> i'm kind of already in the allocations there and fully invested i think you are going to see a lot more of this move in the next couple of weeks and i don't think that snap judgment to reprice into the areas is a best move at this point. >> a bright spot in the session doubling down on the commitment to electric vehicles phil >> ford bucking the trend with almost all the auto stocks lower

today. four plants that will be dead kated to electric vehicles three of them will be battery cell production plants out of korea and will also be building a brand-new final assembly plant for the f-series outside of memphis. it will create 11,000 new jobs here's ceo farley talking about the importance of ramping unproduction of evs. >> this is going to be a further ramp up. as i said a million units worth of battery capacity just for ford so do the math we sell about 2 million vehicles in the united states this announcement alone is a million batteries. it's a large scaling >> remember ford has committed to 40% of its total sales by 2030 being electric vehicles that tennessee plant where they

will build pickup trucks that prix starts in 2025. back to you. >> phil, thank you up 1% for ford clearly delano, the market is cheering on these moves. talk about valuations. where does ford stack up is it worth a buy? >> if you have been holding ford you are a winner up over 60% year to date and that's when you look at it saying have we repriced to a place where you want to take off the -- [ inaudible talk about tesla that trade a lot of -- like technology. now you have to see where you want that valuation. i think it's got room to run and you want to look at the risk of

semiconductor shortage and the price of vehicles. so there's some things to look into as far as items looking at ford. >> coming up the ev space with the ceo of lucid motors. mike, we are back down pretty much at session lows and the nasdaq chart shows you that it is the tech heavy names that led that retracement in the last 20 minutes or so. energy was up a percent somehow. the only sector higher up a percent at the start of the show and only now holding on to gains and bank of america within the banks is down 0.4%. >> it's obviously a little bit of a step back from risk in general and i mentioned being a quarter in i don't think that's the main driver here but a situation where bonds and stocks have been moving together than not meaning as bond prices go down and yields go up stocks suffered

so this is the portfolio effect is probably at play here where you do feel as if you don't necessarily get any benefit from the bond allocation cushion right now. my kind of bellwether for when the market is in a macro move is microsoft. microsoft down 3.25% almost never because of something at microsoft it gets the credit when people want the best companies with the best visibility and the longer term profit path and why it has like an almost 30 times forward multiple a premium to the group selling off like this it tells you it is mostly just a kind of raking the chips off the table type of move 43.50. above that on the s&p 500. we bottomed last week. so it does seem as if a little bit of a relax into last week to see if the bounce off the lows

is more than just a reflux. >> mentioned banks a moment ago. most of which had been holding up well come paired to the broader indices but wells fargo is towards the bottom of that sector of morgan stanley downgraded the equal from overweight saying it expecting the aset capture to be in place longer delaying the base case for the remuflt from q3 of 2022 to q4 of 2023. and note add tougher looking expense outlook for the downgrade. shares of wells fargo down by 3.3% just been kind of a slippage last three months ongoing fears about this outlook for when they will get the punishments lifted for wells fargo and betsy gracic is well respected and had the name as a rebound name for the year and the expense point is another factor and delano, what

is your take whether this is one of the banks that you want given the recent bit of a pullback and the fact that it is geared into higher rates >> exactly why the note was very much on point and questioning what if the current valuation is valid. if you look at the stock up 50% year to date and trading at about 13.5 times next months so it is a stock where you want to wait and see for an entry point. we were talking about the regulatory head winds and like you mentioned the risks on the legal side and if you have been in the stock you have been lucky and had a great ride and now take the chips off the table and look for a better entry point as we may see rates to rise in the near term. >> banks outperformed the

financials for the week down a third of 1%. are they overbought or readjusted >> i would say not really overbought if you look ed at the way -- nea the recent lows they were kind of washout levels and probably positions have to be rebuilt especially in the core banks opposed to things like the capital markets type stocks like the aset managers with a tremendous run and i think they're not immune to a big index move regionals even more so outside of wealth. >> up 4.4% in the last week. semi stocks among the hardest hit on wall street haeds of micron's earnings report josh >> let's start with the semis. a rough day for the chips.

the smh in the red here. downgrade over worries of a cycle peak street wants to see eps of $2.33. matt bryson says investors are not concerned with a particular metric but a broader question. is the expected decline in pricing especially for deram the start of a downturn to weigh on numbers or simply a short lived trend tied to vipt adjustments to work itself out back to you all. >> josh, thank you market struggles with micron delano, the chip stocks, they're at the heart of the supply chain shortages. and then of course as a cyclical indicator and a leading group. what will you be following from micron and the reaction?

>> exactly right i will be looking at how that chip shortage is being managed talk about inventory levels and the other side we know that demand is still there. the end users. demand is still high you want a broad allocation to the chip names and they have been doing really well and an area where you want that allocation if you look at micron their business model has a diversification play and they have the nan higher valuation that they have a big mix in their business. so this is definitely one to chemowatching to add allocation when necessary, sara. >> so semis clearly right at the session lows as we approach the close. as are broader markets s&p down 2%. and the nasdaq approaching an almost 3% decline. mike, as you were saying, kind of tracking yields

30-yield earlier and it is 2.078 at the moment so again kind of yields moving higher stocks moving lower and near the session lows what about the market internals? >> those relationships are loaded into the intraday moves equal weight s&p outperforming on the day as a whole so there you go that's the effect of the mega caps this is not particularly a washout level. 1 to 3, 1 to 4 to the downside opposed to 10% or 15%. like one day last week and sort of shows you that it is not completely everything going down at once. take a look at the index making new highs here at the year to date version of that

above the new highs. not absolutely levels that meant rough stuff for the overall markets. but clearly it feeds into that idea that both we have this head of steam up for a growth rebound, a central bank potentially tightening and some inflationary move there. the vix interestingly is a dog that's not barking today it is obviously up but not as much as you might have expected where the market is. last week topped at 27.5 as the s&p goes down to last week's lows it might suggest in a stable market or the volatility markets had the move last week. pricing this in. >> dollar index rise is part because of a massive fall in the british pound today. broader markets session lows close to the session lows approaching the close.

s&p down more than 2%. dow down 580 1.7% nasdaq composite down 2.8% only one sector higher that is energy the other ten sectors are lower and sharply lower. three sectors down more than 3%. technology almost at 3%. pretty much session lows for the s&p. down just over 2%. ♪ >> another tumultuous day in the markets. welcome back, everyone, to "closing bell. i'm sara eisen here with wilfred frost and mike santelli. take a look at how we finished on wall street dow down 615 at the low. as you can see there in the final hour headed south. microsoft, goldman sachs, biggest drags on the market.

s&p 500 down 2% at the close worst day for the s&p since may. every sector hit technology the hardest tech, communication services, consumer discretionary down at least 2% apiece. those higher bond yields weighing especially on technology that's why the nasdaq sold off the hardest. worst day for the nasdaq since march this year. so pretty heavy selling in the day. energy the only s&p sector in the green today. and september. we are tracking for our worst month here for september since last october it's been a very bumpy ride. coming up, you will hear from famed investor jeremy grantham on energy. plus, blackrock's rick reiter.

first up on this close delano is still with us. jack manly from jpmorgan asset management joins the conversation first to you, mike on the damage that was done today and then how it looks to you coming off a few rough weeks here for the market. >> the damage is mostly on an index level revisiting where we were a week ago. we had the snap back rebound in the s&p 500. lost the way in terms of follow through with the bond yield move undercutting the growth stocks down as a group today. what's interesting is if you thought this was about let's say anxiety over not raising the debt ceiling we wouldn't be talking about treasury yields being up i don't think in that environment. you would be buying treasuries, not selling them if you thought this was about concern that we're in a deep slowdown in the u.s. you

wouldn't see equal weighted industrials and banks outperforming. i don't think that's what it's all about and seems like it's more of a portfolio effect people worried about this fast move higher in real yields and then the overall indexes not proven that last week's low was bought by strong hands let's say. >> jack, do you agree? is it down to rising rates and portfolio rotation and how long can that go on for >> i think that is mostly what the story is right now but i would argue that some of this probably does have to do what's going on with the debt ceiling seeing the u.s. at risk to default on the debt then all of a sudden our credit quality isn't as high and the foreign investors that kept a lid on start to lose interest in this market i don't think that's the biggest thing but i think it is something to consider. when we look at the rate outlook i do see things grinding higher.

i don't see them moving higher materially and look at the high growth names hitting the lows recently long term growth potential is very much there this is not a 12-month story. >> delano, what are you doing with tech right now with some of the big cap tech names that have proven time and time again to weather the spasms of higher rates like a microsoft at the bottom of the 100 and amazon, facebook what do you do with those? >> i think with new money i think you should see investors dollar cost averaging and buying the names and reach reprice and retrace and eventually it's a longer story and then move higher and bellwethers and it's talked about also the discussion about the break even rate and remained flat and come

down a little bit from the year and expect this rotation story to keep playing a part and expect to get into earnings and the holidays to recover the losses and if you are an investor continue to look and ri price and put new money to work in these tech names. >> those micron earnings have come out josh >> micron reporting results here eps of $2.42 $8.27 billion revenue. beats on the bottom and the top. q1 guide there looking for eps of $2.10 they say that's weaker and expected same goes for the q1 revenue guide. the ceo saying that the demand outlook for 2022 is strong

micron is feeling strong it was 25% off the april high. at least lower here in the initially afterhours back to you all. >> yeah. tough tape to report guidance miss like that thank you very much. micron down 5.3% why the underperformance in micron and then does it say anything broadly? >> obviously mostly a memory play and all about where within semis that you are i would take a look at the one-year chart of micron and to see if there's significance to this after hours move and it would take it down below last december's low with a huge ramp and then this would give way and take you back to before we had this huge range up around the top so it's an interesting dynamic whether you talk about

semis. you have lisa su saying it will be solved next year. is it because everybody will produce and the orders in right now are for real demand or because we will produce a glut down the road? that is dicey trying to handicap the cycle. >> i want to come back to the broader market selloff and a rotation in light of higher rates but i guess we are also getting a look at there's not many places to hide if that continues to play out in a meaningful way won't have massive 570-point declines day in and day out but if yields rise in this rotation is the best we can hope for then one sector eked out a small gain and that was it. >> sure. doesn't necessarily have to go to the script. we were at 1.75 on the 10-year and did drive a massive rotation earlier in the year and didn't

have a full 5% pullback and i think it is hard to be a little bit too precise about what it translates into. versus what it means for the sector of the market but it creates a challenge for the indexes going up in a rapid way. but as they go higher and this is happening in every cycle the market makes the peace with each new level. if it's justified and see corporate balance sheets, if credit marks don't get disturbed by it then you can usually try to make the way around. >> jack, where do you want to be in a case of steadily climbing interest rates you don't think it's a major spike. what sector do you want to be in that kind of environment >> on one hand i see the higher rate story and same time a stronger than normal growth

story that will persist. we know the u.s. economy will shift back down to where it was precovid and for now i think gas left in the tarnk value in general tends to be a lot more levered toward economic strength we look to the value names there's a valuation argument on that front you see value names trading at a value relative to growth small cap stocks in particular, mid cap stocks within that value area are all extremely inexpensive in relation to history. the banks in particular. if we seep a steepening yield curve that improves pr profitability. >> been where a lot of investors wanted to be lately. thank you.

delano, thank you for joining us >> treasury yields trading near three-month highs today climbing as high as about 1.558%. that's caused angst on wall street especially until tech sector rick reiter joins us from the nyse balcony celebrating the eresg capital allocation trust first sustainable close end fund offering good to see you. thank you for joining us. >> that was a mouthful thank you for having me. >> a mouthful. congrats on the celebration i guess. what about the bond mark what does this move up in yields telling you and are you -- should you be rethinking the stock market allocations accordingly? >> i don't think so. you think about what happened in terms of a huge amount of supply of fixed income coming into the market literally 600 billion taking the gross supply of fixed income

into the market and a fed pulling back a bit and you have to putt perspective. you had supply coming. the fed pulling back and negative real rates. the 10-year i think the tightest is negative 113 basis points that's wrong that is mispriced. it took -- getting to levels now and i think we can go higher in yield but getting to levels that will be i think stabilizing so market's got to adjust because when you get moves like the last two or three days, i don't think we'll do that much so i don't think we're moving that far i quite frankly i think we get days like this it is a neat opportunity to put some money to work. >> put some money to work where? >> we like the areas of technology today was a great day to add to technology names particularly the big cap names builting book

equity health care is a place hit today that i think putting money to work there makes sense i like some industrials and some of the retailers we are doing some in the european banks but the sectors creating 20% to 30% roe you can buy them and don't trade at excessive multiples so the financials is interesting. i like european financials a bit more you can express the rate view if you trade fixed income i think more effectively than through financials but we own some and think they're okay and not adding to it. >> has your kind of percentage chance estimate for the fed missing the mark and having to aggressively altered or just a case of yeah the fed's going to taper in the next meeting and

moving things forward by a month or so? >> you look at what's happening today is historic with supply chain dynamics, shipping costs and comments, because consumers are in really good shape and corporate you see real pricing power so you think about if you have the pricing power you can get a stickier inflation dynamic. the fed move more aggressively i think the reopening inflation through the system will alleviate over the coming months and years but definitely more of a stickiness to this inflation and some you have to get through some of the supply chain dynamics and more and more talking to companies felt like a two to three-month dynamic and feels like a six-month dynamic my sense is you will get a fair amount of pass through in a good economy and i think the markets are re-evaluating that today. >> what's that going to mean will we see a fed hike in 2022

they're split on that. anything can happen with the makeup of the fed and what they do and respond to the high inflation rates. >> i said this for a long time and looked crazy for a long time i think it makes sense at this point to keep the options open for 2022 i think they should move in 2022 the markets will get in front of the fed and priced it in and there is the difference between a 0% interest rate and moving up a percent or so for the economy is not going to create a really debilitating dynamic at all. looking at the return on capital is that spread so wide today if you mover rates the front end of the yield curve 100 basis points it is not going to a debilitating impact on the market there's optics but not a den

grading impact on commerce in this country. >> tell us why you rang the bell today. >> we launched ecat, a sustainable fund, closed end fund to allow equities 75%, 25% bonds in and around areas of the big growth engines so things like health care and development around fitness and health care, sustainable and finance. we think what you will see in the fiscal programs you will see investments and an engine of core and growth equity and some effective lending and fixed income in places more bespoke financing opposed to treasuries that don't make sense today. >> congrats on the launch. come back and give us an update on the fund. >> thank you for having us. >> up next investor jeremy g

grantham on whether he's tempted to buy energy stocks investors avoid high priced growth names we'll discuss with the ceo of lucid on this move lower and the outlook for the industries we are back in a couple minutes. you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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welcome back a rough day on wall street major averages closing deep in the red. i spoke with investor and gmo co-founder jeremy grantham i asked him about some of the things he is holding including u.s. based venture capital names. >> i regret that it has to be so much in the u.s. but the u.s. to be honest is extraordinarily powerful in venture capital. it raises a lot more money, has a lot more enterprises, the quality of the whole industry is much higher. the society is more attune to investing in risky enterprises and forgiving people that fail the whole culture. the research universities that's

critical the u.s. has a death grip on the great research university and the handful of others tend to be in the uk but -- so it is hard to avoid the u.s. in venture capital and as you know venture capital is far and away the healthiest part of venture capitalism it is in full cry. companies starting everywhere and in the green area really important, promising new technologies springing out of the woodwork at the great universities and if you look at the faangs they were all the product of the u.s. vc industry. they're all pretty recent companies. these are not offshoots of the proctor and gambles. microsoft and apple started when my firm was starting so these are not old enterprises and the rest are teenagers. >> in terms of you mentioned

green investment, i wonder your views with the public marks on that topping and esg in particular, whether it deserves genuine higher multiples or people are paying lip service to it in a sort of slightly false way. >> i've got to admit that esg is complicated and over my pay grade as i like to say at a conference what's not to like good behavior. but "e" is about survivor. if we don't fix the "e" society will start to crumble and my god have we seen some really lousy weather since we last spoke why the floods and fires all around the world. the fires in the north of russia bigger than the rest of them

added together in the world including the biggest california fires ever recorded so the weather is going to hell everybody is beginning to recognize the dangers. the government quite suddenly are getting behind it. i would say in the public tradeable markets that greening the economy, decarbonizing the whole industrial system is the biggest challenge. it will take many trillions of dollars and dominate the investment opportunities of the future in the tradeable market and the venture capital market when did you have an industry with such a following? that every government is thinking about most governments are working on bringing in carbon taxes which will make half of the vc investments we see suddenly much more viable. we absolutely need a carbon tax and around the world they're

coming in fairly thick and fast and china introduced one in the last six months. >> what do you see about exxon or bp embrace esg? >> i'm nervous about green wash, of course, these are the guys who tried to persuade us that climate change was no problem and they knew since the 1970s it was. they probably cost utd 10, 15, 20 years of precious time because we are going to -- through technology, we are going to get out of the problems one day. we will have plenty of cheap green energy and storage one way or the other we will decarbonize the steel industry and the plastics replaced by bio plastics that we'll grow the problem is time.

we're just taking too long and the damage building up in the environment is getting to be already very painful and before we finish this the carbon dioxide that we have up from 280 in the last 200 years is going to go to 550 we are going to go sailing through two degrees centigrade and seen the damage at 1.1 and it's geometric you don't get twice the damage at 1 degree at 2 degrees probably four or five types the damage and at 3 degrees perish the thought which we may get to. you'll have another five or ten times of damage. it really is a serious threat. we have to address it and beginning to on a global basis and the critical problem that we can't replace is time. and these exxon guys cost us 10

or 15 years and lord knows i hope one day they pay for it. >> and the full interview including what we played earlier in the show with his current views on the markets are available now online on cnbc pro. >> always worth listening to him and the carbon tax which is front and center in the reconciliation bill. see if the politicians here we hind it. let's send it to mike santoli for a look at consumer confidence >> we got a consumer confidence report from the conference board. this is the difference between what consumers say about the current conditions and the expectations so it's actually the expectations component minus how things are today and this is really accelerated compressed

economic cycle normally springing out of a recession people say things get better sure of that they get better and then over the cycle trend lower. this is a big whipsaw and seems to be about delta and also inflation. so consumers are acutely sensitive to gasoline prices and home prices and rents going home and seems to be weighing on things why i things i don't know how it feeds into the fed but it does point up a sort of offsetting dynamic here where we have -- expect growth to be okay and see this very, very kind of tight job market and see incomes going up and components of consumer confidence in a good place but people aren't feeling that great because things are already really good with the stimulus and now we're worried about the other things like inflation offsets down the road. >> thank you so much. up next the ceo of lucid

motors on ford making another investment in the future of evs and whether liz ann soernds thinks today's selloff is a buying opportunity my retirement plan with voya keeps me moving forward. they guide me with achievable steps that give me confidence. this is my granddaughter...she's cute like her grandpa. voya doesn't just help me get to retirement... ...they're with me all the way through it. voya. be confident to and through retirement. (vo) while you may not be a pediatric surgeon volunteering

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welcome back teem for a cnbc news update with shepard smith. >> hi. thank you. here's what's happening. a strategic failure. that's what general mark millie said of the 20-year war in afghanistan. even bigger he said it's a very real possibility now that isis-k or al qaeda to gain strength in afghanistan and be a threat to the united states in 12 to 36 months senators grilled him along with the defense secretary lloyd austin and general frank mckenzie about both the war and the chaotic withdrawal from kabul. secretary austin defended the actions of the military saying it will be difficult but absolutely possible to contain future threats without boots on

the ground there five life sentences and no chance for parole. that's what came down for the man convicted of killing five at a maryland newspaper in 2018 prosecutors argued that he was so obsessed about an article at the capital gazette wrote on him that he said he was harassing a high school classmate. that was the focus the gunman retaliated by going into the newsroom, shooting out the doors and then gunning down five staff member why is the man, the judge today said showed a complete disregard for human life. and covid shots for kids age 5 to 11 a step close irto fda approval pfizer sub mitting data today to the fda showing it is safe and effective. dr. fauci says regulators will analyze the data as soon as possible and hope shots will be available by the end of next month. tonight astro the robot.

like alexa on wheels the break through or the next step on the road to the robot apocalypse you decide tonight on "the news." sara, we have a robot for you. >> oh, i guess so. the robot apocalypse is that where you are? is that your fear? >> i'm not afraid. i don't really want them mapping out my home and may get one anyway. >> it's a little personal. could be perm. look forward to that. >> will grab a beer. >> 7:00 p.m. exactly. lucid motors, phil with the details. phil >> lucid which has been planning on this has had an important milestone achieved at the plant in arizona the company has begun production of the lucid air shares under pressure with a lot of automakers and the market

today. the important news here is that it has begun production in arizona. deliveries start late next month. lucid air recognize vagszs are now topping 13,000 and they have more than 13,000 reservations for this luxury electric vehicle and calling production of the gravity a suv. that will begin in 2023 as they continue to expand their plant out in arizona speaking of the plant let's bring in peter rolanson from the lucid facility thank you for joining us today as you hit this milestone and map out what's next for lucid how confident are you to continue to grow the reservations on the air and then start to get that order book going on the gravity extremely confident.

we have accrued over 13,000 reservations to date and it is only today that key kurs hers and reservation holders had the first opportunity to drive these cars and they love them. these recogservations will expl whether people realize how awesome this car is. >> how often can you ramp up production of the lucid air? a year from now what do you expect the monthly production rate to be >> next year we are on schedule for producing 20,000 units we want to expand that to 50,000 in 2023. but right now our emphasis is upon quality, delivering an awesome car, a car that our customers will really love so that takes precedent upon rushing the ramp up of

production in the immediate future but clearly next year we ramp up. >> you clearly have the demand at least early on. 13,000 reservations. you're playing in a space that already is rare air talking about vehicles over $70,000 and a number of luxury electric vehicles whether tesla or porsche out there or the new cadillac, others that are planning to roll out evs is there enough demand in that luxury space above 70 grand to support all of these electric vehicles >> absolutely. there isn't a market for electric vehicles as such. that's a fantasy the market is for vehicles and that is huge only about 2.5% penetration in that market through evs and i welcome the competition.

isn't it great that the mercedes is being launched in the u.s. imminently then our product can compete and be compared with the very best i thrive on that competition. >> slightly different question which is i'm sure you've seen the extraordinary goings on in the uk with these fuel shortages and massive queues to get to gas stations and if it's actually something that will boost demangd for evs in the short or long term. >> it doesn't seem to be a shortage of electricity there, does there >> so you think it does boost demand or don't have a take on it >> okay. pete, in terms of the demand, you're likely to see in due course is it predominantly in

the u.s. i'm not sure peter can hear us phil, thank you so much for bringing that to us. i think we lost connection towards the end. that or my question was just so bad he decided to -- >> i believe we lost connection. >> i enjoyed it whilst it lasted thank you and thank you to peter. >> you bet. up next, charles schwab chief investment strategist on whether the market is overreacting plus cloud stocks have been crashing this month and it is getting uglier today details on "closing bell." esg is responsible investing. who's responsible for building esg into your investments? at pgim, the pursuit is on for outperformance.

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one potential source of uncertainty on wall street, will fed chair powell be reappointed when the term is up in february by the biden administration? senator warren said he is a dangerous man and wall street has mostly expected it to happen there's a lot more reshaping of the fed that could also come to highlight. next month vice chair of supervision randall quarrels the

term expires there's also richard clarida whose term is up in january and there's still a vacant seat on the board of governors that's four people that vote on policy at the meetings and then add in two regional fed presidents that announced retirement early and one of whom gets a vote next president and then five question marks on votes next year so maybe the point investors can say here is that you can forget the dot plat because last week we learned that it's an even split on whether to raise interest rates next year. it issen certain for a market obsessed with fed policy and tightening moves not having 100% certainty on who the chair will be and surrounding him at the core with a heated debate and inflation and whether to raise rates. >> some of those dots are just

not going to be around to make the ultimate decision arguably especially this applies the elizabeth warren attack on chair powell is normally you would say democratic administration, you would probably get more dovish measures in there but powell himself and the frame work he put forward with the expansive view of employment means and overshooting the inflation is pretty much the stance to expect from the biden administration if they were looking for people to follow along and doesn't necessarily mean incrementally that the policy swings unless it is on the regulatory front and the fed can bring weight to bear there. >> i kind of agree it is not often to see an incumbent government to appoint lots of hawk just the bigger question is i guess whether the

current members of the board and governors are so tied to the rhetoric that inflation is transitory and a change allows a look at the numbers which we were starting to get a tone out of powell over the last week or so anyway. >> no. also the name that you hear most commonly is lionel brainard and leans dove iish and potentially more than fed chair powell and the question is the center of gravity and has been one where up until recently talking about transitory inflation, keying policy easy for long and now that we have the inflation question hanging over the market could you get the center of gravity shifting more? maybe it's happening toward the camp of raising interest rates and just the fact -- >> yeah.

>> yeah. true >> so it would be the long end of the treasury curve to tell you that the market sniffing out something that was going to get out of hand on inflation. >> we'll watch it why they don't have that many votes and senator warren calling powell a dangerous man is i think surprising let's bring in liz ann sonders >> hi, sara. >> do you think the powell uncer uncertainty and these nominations coming up plays into the market uncertainty right now? >> maybe a little bit. i think generally with regard to the fed and the timing of tapering but more recently at least last week the early part of the week you had to throw the concerns of evergrande in there and then the move up to 1.55 and the hit that that provided for the longer duration higher valuation segments of the market

and then of course the debt ceiling with that more definitive date that yellen passed along and i think that that those had more of an impact today in terms of weakness. >> i remember asking you last week, post-fed why technology was holding up so well given the rise in bond yields and you said if it keeps going let's watch and that's what's happened is kept going and technology is dragged down do you see this as a long lasting move is it different than the other times that this happened this year >> i think it's a little too soon to tell hitting the intraday low of sub 1.2 we felt that yields overshot and then the path of least resistance is higher and clearly that's what we have seen the next test point is 174 which is where we hit on march 31 and as you remember we did have a 10% correction in the nasdaq and

saw some of those higher valuations segments of the mark take it on the chin so i wouldn't be surprised to see some of those growthier areas stay under pressure while we watch this move up in yields and remember that we have really exited many year environment where bond yields and stock prices positively core lated because we were in the disinflationary mode and reflation before the inflation spike the move up in yields generally met with a move up in equities and now reversed that to an inverse correlation because of the inflation backdrop so i think that that's a very different environment in terms of backdrop for this market that equity investors need to be aware of and should always heed the messages from the bond market but especially in an environment where that yield stocks correlation has gone to positive. >> are there any fears that buy

the cyclicals and the bapgs is already too much of a consensus call >> i would be careful that if yields continue to move up we don't get a boost in forward looking growth estimates and purely because of the inflation piece then i think you probably see some of those cyclicals areas run into trouble it is no surprise to see energy is only sector in the green today because of what's happening with oil prices but there's also a lot of interesting things happening in the commodity complex given in the last week an ascent in the dollar with an ascent in the commodities and that it's only a week but that's broken the normal relationship of the inverse correlation so i think that's -- there's funky things to use a technical term going on under the surface in the past week or so. >> do you worry about economic

growth here? because the issue is really inflation and fed policy but what about a slowing economy some of the fiscal stimulus has 0 worn off and the monetary stimulus will start to wear. is that an issue to look at? >> of course it is an issue. i don't know that we're looking at a protracted stag inflation environment like the 1970s but unquestionably a period of e expectations roll over you see it in the blue chip consensus. the congresswoman frens board with a consistently descending pace of gdp expectations out to the middle part of 2022. you see it with the atlanta fed gdp putting in q2 at the peak in terms of the growth rate and you can apply the same thing to earnings no question in my mind that the peak growth rate in earnings is second quarter but the rub now is that forward revisions have

started to roll over we're still going to see earnings and the economy grow, just at a lesser pace and when that happened in the past even if it is not tremendous weakness for stocks it does suggest to curb your enthusiasm for a repetition of the kind of remarkable gains we have seen in the past year so i would expect to see continued volatility and this churn continuing under the surface in terms of leadership shifts in large part driven i by expectations of inflation and the moves in the 10-year yield. >> until yields settle would you avoud tech and communications services and those higher multiple stocks? >> i think you have to be careful but even within the growthier areas within tech and communication services you can still take a lower case "v" value approach you can look for hybrid factors

around earnings revisions and the consistency thereof and not paying an egregious multiple and have a value tilt within areas of the market that might be classically classically housed in the growth indexes. so i think you have to be really careful about either throwing a sector fully into the buy mix or fully into the sell mix because i think a factor base approach could be applied across the spectrum of sectors and i think that quality emphasis is really key right now, and that's really where consistency of performance has been >> thank you for joining us. >> my pleasure good to see you. much more on today's market sell-off ahead and what you should be watching for in tomorrow's trade, thus some key names in the work from home trade getting hit hard today we'll break down those moves next

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welcome back a market flash on key remote work starts. christina has those for us >> cloud stocks and remote work names back in the red again today, making their september slumps a little bit worse.

worst performers, docusign down almost 2%, okta down 2%, continuing a trend despite a 57% jump in year over year revenue earlier this month you can see the sea of red adobe closed in 4% lower today and particularly down over 13% this month and on pace for its worst month in more than a decade and last but not least, zoom video worst quarter since going public two and a half years ago. the sector is falling in line with the broader market sell-off back to you. >> kristina, their up next, worst day for the nasdaq since march what should investors be looking at as we head into a fresh trading day? we'll discuss when "closing bell" comes right back

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pending home sales and weekly mortgage applications. warby-parker expected to go public via direct listing tomorrow and big event of the day is delivering alpha, bringing you our insight and investment strategies as we do every year, i'll be hosting a panel focusing on the 3-d shift in wealth management tune in to find out what that is join some of the biggest names in investing, can't miss event, it's virtual so you can still register, delivering january alpha.com. it's the biggest names and the best in the industry with super interesting conversations, and it comes wilfred and mike at a time where there's a lot of uncertainty in the system around politics, around the fed, around whether we're going to see this changing dynamic in the market continue to play out out of tech and into cyclical groups mike, what will you be watching and listening for? >> it does feel as if it's -- it's always a theoretically transitional point in the

markets but feels more so at the moment we are dealing with moderating growth expectations at the same time, we're all on alert for how central banks might react, deceleration and corporate credit growth and also this changing dynamic that we were talking about before, stocks and bonds moving together creates for some portfolio challenges. i would say all those things i want to kyle back to a week ago monday, we had that big sell-off, and it seemed as if it was all about ever grande and that was a month's long process, seems that was the excuse, maybe today obviously bond yields matter a lot to the big tech stocks and also this idea of the policy fog that we have in washington might also be an excuse for a market where you had heavy equity exposure, lots of built up gains and trying to figure out what third quarter earnings look like as they get revised any more quickly than they have ever waiting to see how the market deals near last week's lows, which is less than 1% below. >>over night interesting to see the action if asia which was a

relative outperform we are today's tape europe definitely bore the brunt of the selling the u.s. dragged it down at the open, but not as pronounced as the u.s., which ended down 2% for the s&p. the dow down 1.6%. the nasdaq down 2.8% thanks for watching. "fast money" starts now. >> tonight on "fast stocks" rocked is a major sell-off grips wall street, the market on pace for its worst month of the year. coming up, breaking down the aftermath today, sell-off and finding you opportunity in this big drop, welcome everybody i'm melissa lee live at in times square let's get right to it. we start off at ground zero today, sell-off, a rate shock sinking stocks look at the nasdaq today, the index dropping nearly 3% for its