insurance premium to pay as a hedge in case the holidays is crazy. >> nordstrom does this if you're a frequent customer you get early access to sales ahead of the riff raff. >> like me the riff raff. >> thank you good to be with you. thank you for watching "closing bell" starts right now. ♪ hello and welcome to "closing bell" i'm sara eisen here at new york stock exchange stocks bounce back in a big way following the frantic session on monday firmly in the green here heading into the final hour of trading. >> welcome back. feeling better >> yes. >> looking and sounding great. great to be reunited. >> it was an ordeal getting covid and everyone in the house and obviously get vaccinated but don't let it be a false sense of the comfort because watching your toddlers get it is scary.

>> great to have you back. >> yes >> let's have a look at what's driving the action today a meaningful move higher on treasury yield doesn't stop tech rallying facebook contributing to the gains as the whistle-blower testifies before a senate panel. on the data front the ism services number better than expected for september providing a lift to broad sentiment. financials, tech, communication services surge higher. >> everyone is up on the index except for merck we'll speak with senator elizabeth warren calling fed chair powell a dangerous man and now pushing for an invest of top fed officials calling out powell's leadership. also in just a few minutes a egs collusive interview with the ceo of norwegian cruise lines. we'll ask about booking trends

heading into the holidays and beyond let's start with mike santoli tracking the market comeback and julia boorstin has the highlights of the testimony of the whistle-blower. it's both tech and cyclicals, mike. >> it is broad based. respectable bounce market responding to what had become relatively oversold conditions with damage done below the surface. all to the positive. maybe one little bit of negative progress is today's high and trading right now on the s&p is above yesterday's high we had the days when we got the morning rallies they faded still looks like a stressed condition here just above there like 4380 was an area that was becoming very popular to be where selling came in you have to see if you rebuild damage at the levels still working on not the 6% pullback still in the seasonal head wind

period definitely today responding in a way you might want to see. look at the nasdaq 100 it was probably more so down more than 7% this is a year and a half long chart. see if i can draw this sort of trend line that we're bouncing off of there commentary about the fact to take this to be the general trend path it did get to the low end and bounced a few times and not bad with negative news flow. to show that this group which tends to do better late in the year is already doing all right and at least responding. not to say it's leadership again but what is sbrinteresting is cs to double down on the small caps, energy, cyclicals, the areas holding you better and there is an outperformance day seasonally speaking here's the normal or sort to speak average path of a year this is what we have been doing this year. 2021 the magnitude are different.

that is the right scale this year up a lot more than the typical year this is what it's meant to highlight. september/october period tend to flatten out. the lows tend to have come later in october usually there's a draw down in october from the starting levels you have the general tendencies that suggest to be on alert for turbulence but it shows you we're way ahead of the game beforehand and then on a look ahead period typically that is the strongest moment of the year and a question of whether it conforms to the patterns or used that upside energy going into september. >> way ahead in shape and scale looking at the different axis on the "y" side in terms of data side, a hot services print is positive and then other data points too hot isn't good for the markets and

the yields will be in focus. >> presumably yes. specifically inflation that's clearly the raw nerve of the market right now in general we have been able to shrug it out it's not really over excited at the moment commodities continuing to raise and the areas to be more sensitive but the macro message of the market is not that negative even as the indexes struggled. it's been the growth stocks to cause the latest bout of downside and then credit markets are okay and the cyclical groups have not breached the lows from a month ago or so. seems to be the mixed mess ablg to get from the way the tape is acting. >> i don't know. the atlanta fed downgraded the gdp tracker to 1.3% this quarter from over 6%. >> of course remember that's just incorporating the data as it comes in into the model not making a call on that why what i find fascinating is the

market seems to be treating that as peak supply chain friction and only going to get easier from here and demand that didn't get fulfilled in the third quarter in theory is tomorrow's demand that's maybe too optimistic but seems like the way that the market is approaching things. >> see what the jobs report shows friday mike, thank you. facebook shares are jumping today despite what was pretty critical testimony from whistle-blower frances haugen today. julia? >> frances haugen says the buck stops with zuckerberg and he won't make the necessary changes to protect children, public safety and democracy haugen urging congress to pass legislation to rein in what she said is facebook's dangerous impact and to mandate transparency around the da that the company gathers. >> facebook's own research says they cannot identify dangerous content and as a result those dangerous algorithms they admit

are picking up the extreme sentiments of division can't protect us from the harms that they know exist in their own system. >> facebook issuing a statement saying that haugen worked at the company less than two years and no direct reports and never attended a decision point meeting with c-level executives. quote, we don't agree with the characterization we agree on one thing. it is time to begin to create standard rules for the internet. in the testimony today, in the hearing room there seemed to be support of reforming section 230. examining if facebook broken current federal laws protecting children and possibly passing new laws to protect kids and teens online >> fascinating testimony there wanted your take on the outage yesterday and i guess that the costs overall that perhaps we didn't necessarily know about

yesterday. >> look. it wasn't just that friends couldn't keep in touch or share pictures of babies facebook's outage of the flagship app withen instagram fr six hours was felt around the world. there's 200 million businesses that use the services and the majority are small businesses. 10 million of those companies are active advertisers and of those 200 million companies they use the platform for more than marketing. they have established more than 1 million shops to sell things and businesses use whatsapp and messenger for customer service to seasoned more than 100 million messenger daily. for many small businesses facebook is a website to share the hours and any updates about the businesses end in india, latin america and africa facebook in a lot of ways is like the mobile internet. >> i wanted to come back to the

testimony and that statement from facebook an hour or so ago and particularly the line where they said it was a former product manager at facebook that worked for the company less than two years, never attended a decision point meeting essentially facebook is trying to discredit the whistle-blower and suggest that they have no standing to make the accusations. do you think that attempted blow will land for facebook or not? >> well, it is interesting because in her interview back on sunday night with "60 minutes" she said she knew that facebook would try to discredit her and she did everything she could to systematically gather information and it wasn't just data from her own role at the company but she pulled data from other parts of the company and why there's a mass of data on so many different issues so look. she is very well spoken.

there didn't seem to be any issue with the senators today. no one made any effort to discredit her so i think that from a public relations standpoint that might be a hard row for facebook to go down because look she seems very articulate and well spoken. very complicated issues. well able to simplify complicated situations around algorithms and i think it is interesting to see if facebook continues to pursue that line to discredit her. >> thank you facebook up 2%. shares of norwegian cruise lines jumped even as cruising ground to a halt in the pandemic we'll speak with norwegian ceo about how he sees the activity now and bookings for the rest of the year and beyond. you're watching "closing bell" on cnbc.

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welcome back shares of norwegian cruise line sailing full steam ahead the company outperforming the broader consumer discretionary sector over the last year. let's bring in norwegian cruise line holdings ceo frank del rio. thank you for joining us. >> how are you >> very well all the better for seeing you

this afternoon tell us the outlook for when you hope to be back at full sailing capacity >> the outlook is on track we have eight vessels operating as we speak. we hit our first goal through the end of third quarter we'll have 75% of the ships operating by year end and all 28 vessels operating by april 1 and so far so good if anything the world is opening up more people are getting vaccinated demand continues to be very, very strong. for the sailings we have operated thus far everything is going according to plan. protocols are in place everybody on board is vaccinated i i believe that's a competitive advantage. spending is at an all-time high so we continue to be very

excited, very positive on our return to service. i think sequentially through the end of '22 and the first half of '23 every quarter gets better. consumers continue to believe that the worst part of the pandemic is behind us and they're booking cruises. they want to go out and see the world again so that's good for us. >> you took a hard line on vaccination requirements do you feel vindicated on that now? what do you think toward booster shots? >> good question on the booster shots. a lot of guests are asking, frank, will you mandate boosters the answer is not yet. we do follow the science we do follow fda and cdc guidelines i got the booster two weeks ago because i qualify and when the time is right if the pandemic continues to be a threat to

mankind then we have to consider that but for right now we do demand or mandate fully vaccinated guests and in terms of vindication, no we felt a sincere obligation to protect our guests, crew we are in the hospitality business that's job one to keep everybody safe and we're glad that others have followed. not just in the cruise industry but throughout the broader hospitality sector when we first came out for the mandate for vaccinations for the return to the office and service that was back in april it was heresy back then. we were the oddball. and today everyone's followed suit because the necessity to protect our society. i think we have seen how effective vaccines can be. the pandemic has now been

turned -- the pandemic of the unvaccinated and so, we feel that we made the right call at the right time we're happy to do that. >> fought the governor of florida in the courts and won. what are you doing about families with kids under 12? are they allowed on cruises? are you missing out on that business in general? >> yeah. so we have one rule. if you're not vaccinated you won't come on board. good news is that based on what we're hearing from the cdc and the fda the vaccine will be allowed for choildren 5 to 11 i short order and possibly as soon as beginning of the year for six months old plus so we're almost there to mandate everyone being vaccinated but up to right now

if you are not vaccinated you're not coming on board. look yes are we missing some customers? possibly but today we believe that our mandate is a competitive advantage. the advance bookings for 2022 and beyond as i said before especially sequentially, third and fourth quarter being better, are strong at the highest prices they have ever been so i believe that the majority of our target customer believes in vaccination and feels comfortable going on a norwegian cruise line and oceania cruise versus other brands that may not have the same mandate so that may change over time as the pandemic wanes, as more people become vaccinated but for right now we think that's the right strategy and will continue to do so. >> have you had any outbreaks on

board, even the vaccinated cruises or cases >> we have had cases but by no means outbreaks. one here, two there. many we catch on boarding because not only do we mandate 100% vaccination but at the terminal, at our cost we test every guest before they come on board so the vast majority of those cases are caught before the person ever boards a vessel. >> frank, also just wanted to ask a question on diversity in the board room and across corporate america. it is hispanic heritage month. are you encouraged by progress that's been made or do you think we're just woefully far behind on that front? >> i think we have made progress a lot of progress. i'm living proof of it i came to this country from havana at 6.

grew up in connecticut moved to florida worked up to the opportunity to start my own cruise line oceania cruises which we sold to apollo and then i got the opportunity to sell my companies to norwegian and here i am as ceo of norwegian i dreamed the american dream so i encourage that kind of opportunity. we have to give people opportunities. but then people have to perform and opportunity is one thing and we must grant opportunities. must be color blind. but then we must hold people to the fire and people have to perform. hopefully i performed well enough that i'm the ceo of this wonderful company and a member of our board you talked about board diversity. we have three women on the

board. we have five individuals who are parts of an unrepresented minority we believe in diversity and equity and inclusion at the top. i'm living proof of it we live in south florida with a big concentration of hispanics 60% of the employees are women 50% are hispanic or other underrepresented minorities and to boot we are the highest performing cruise company with having that kind of representation so we know that minorities can perform as well as anyone else we are living proof of it and will continue to promote the idea of diversity, equity and inclusion. we think it's good business. >> as are we, frank.

great story. thank you for joining us. >> thank you. and in the news letter this morning jim cramer said norwegian is a buy sent a number of stock calls throughout the day one is paypal saying he's buying 25 shares today for the charitable trust and find out more of why and the other picks subscribing to the investing club point your phone at the qr code own the screen just like a new york city menu brilliant. >> works seamlessly. next on the show there are a number of developments in the battle of covid. we'll tell you about headlines from pfizer, astrazeneca, johnson & johnson. plus news of a key official stepping down. later -- >> over and over you have acted to make our 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.

>> senator elizabeth wirn to join us on cnbc with the criticism and a call into insir addetring by the top officials. we'll be right back.

we are following a number of developments in the battle against covid. meg tirrell with the news. mega >> hi, sara. let's start with the pfizer news today as a study published which essentially we knew about from the booster discussion showing that after six months you see a decline in pfizer and buy i don't know tech vaccine's effectiveness against infection from 88% one month after full vaccination to 47% up to 6 months later good news from the study 93% protection against hospitalizations associated with the delta variant. still strong protection there and this played boo the booster

discussions and this morning news that johnson & johnson filed an application with the fda for a booster. this ahead of the fda meetings october 14 and 15. that's end of next week for moderna's and j&j's booster and a presentation of data on mixing and matching the boosters so that's fascinating to watch and then ahead of the fda advisory committee talking about pfizer's application for kids 5 to 11 a busy month at the fda. over on the dru reviewing side looking at an astrazeneca application for covid antibody cocktail for prevention. astrazeneca says this is a long acting version of a cocktail where protection could last up to a year and could be used in population without protection from vaccine and could reduce the risk of covid as preventive by 77% so they're discussing

supply agreements. news from the nih. dr. francis collins announcing he'll step down and been the director there through three administrations. this really being framed as a retirement but it means that president biden's going to have two huge health poims to make in the director and of course fda commissioner where dr. janet woodcock has been serving. guys >> questions about why that role hasn't been filled at this point in a pandemic. there's that there's the debacle over the boosters and the fact that the cdc overruled the advisory and feels like there are some real questions of stability within the key melt agencies 0 of this government is that fair >> i think you put your finger on why this is such an issue with jantd she is been with the fda for decades and seen as a

steady presence at the head of the agency but a controversial pick among democrats and could get through with republican support and might not have democrats voting for her and could be a key issue so it's a pickle for the president an enno names have been floated to potentially be the commissioner. there's ticking clock on it. >> meg, thank you so much. time for a cnbc news update with seema mody. >> hi. here's what's happening. the biden administration ordering arizona to stop using federal pandemic funding on a program that only directs money to schools without mask mandates the treasury department saying the program undermines evidence based efforts to stop the spread of covid. a new york city doorman and three men from tennessee facing 141 counts related to a gun trafficking scheme prosecutors say they conspired to sell 80 illegal guns to undercover officers and

allegedly sold them out of the midtown apartment building where he worked and his own home. a new report of a global water crisis 60% of countries need better warning systems to minimize damage from water related disasters like flooding and hurricanes the report found flood related disasters risen 130% over the last two 2 decades back to you. >> thank you so much. all this week we're getting the word on the street on the under the radar sectors to find ideas in this volatile market. coming up, the casino names you should bet on. here's a check on bond yields moving higher. with the 30-year up 2.1%

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welcome back an update on kellogg's shares south after news the u.s. cereal plant workers gone on strike including in nebraska, michigan, pennsylvania, tennessee. the company telling us in a statement they are in negotiations with the union adding, quote, we are disappointed by the decision to strike kellogg provides compensation and benefits for the u.s. ready to eat cereal employees that are among the industry's best. helping us meet the challenges of the changing cereal business. they say the average 2020

earnings for the majority of the employees 120,000. not a good time for this to happen to a consumer product. this doesn't help. >> doesn't help. but i guess some of those price pressures are factored in. stock is down but only 0.7% why we have got what 25 minutes left in the session and hit session highs at 11:00 a.m. we're at 1.4% on the s&p 500 coming up, the word on the street about gaming stocks, the top analyst to tell us the names he would buy in the space right now. sales are down from last quarter but we are hoping things will pick up by q3.

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this week we're taking a deep dive into the market to find hidden opportunity for your portfolio. today we're getting word on the street on gaming jeffries analyst jeffrey katz joining us from las vegas. good to have you here. so clearly snus are caught in between the reopening trade which is great and everything that's going on in china and macaw with the crackdown and covid. what's the top pick? david? i think we are having technical difficulties hearing him got him on the line. i don't know the cell service in vegas.

they had him in the break. >> we'll see if we can get david katz back to join us in the market zone and discuss what his top picks are. on the gaming topic, there's a special tonight on cnbc. melissa lee takes a closer look at the sport and betting trends and a leading company in the space draftking just here's a preview of what's coming up tonight. >> draftkings founded by matt, jason robbins and paul lieberman a decade ago at the time they were co-workers atavista print. >> running the office pool or doing daily fantasy sports together how did the idea come about? >> we played the softball league playing fantasy leagues why the idea of draftkings as a daily fantasy sports site came up and the concept is what if you could draft every day.

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with just under 15 minutes left in the trading day we are in the market zone why commercial free coverage of the action going into the close. mike santoli is here to break down the trading day and also ceo eugene profit back we'll kick it off with the broader market a comeback after a selloff yesterday. wiping away all of the losses now from yesterday every sector higher except for real estate and utilities. yields are higher. financials therefore in the lead. >> cyclicals doing fine. because the big growth stocks were so oversold they are able to bounce. third straight 1% s&p 500 day we're working on that's how it goes in a pullback zone tactical technically the market has a bit to prove 4360 where people said that's

where the easy bounce leads up to and what the market tends to do is preserve uncertainty until it can sort out whether it is just a reset of expectations as i have been saying. it is a more balanced market but not a high momentum one. >> what is your reading of this latest bout of volatility? >> hi. i think it's actually market's trading flat in the zone as mike was just saying. i think that we are in october so investors are looking at the yields being higher but not really as focused on that. we have changed sentiment around where we don't look for good news to go higher and not looking at story stocks but fundamentally earnings coming up in the next two weeks should be strong but focused on supply bottleneck constraints i think

technology is a good place to hide. >> bouncing back strongly today. josh lipton has more on that particular move for us josh >> take a look at the nasdaq enjoying a day up about 17% as for big tech apple climbing in the trade same goes with amazon and is about 14% off its high why basically flat here on the year. and ending on the semis. etf that tracks the chips bouncing up around 15% in 2021. 75% of the names in that etf at least 10% off the highs. >> thank you so much for that. eugene you buying the dip in tech >> i am. only buying the large core technology names microsoft, apple, nvidia, salesforce not the high volatile names such

as zoom and the reason is that these companies still have higher earnings growth than the market it will be on the year over year comparison coming down a little bit but i think that they're in a good spot if the market comes down because the pricing is so high so long term horizon core technology is the excellent place to add to as we sell off here a little bit. >> did it get oversold >> technically yes yesterday we talked about trading as a group facebook down 5% why apple, microsoft, amazon, alphabet down 2.5% to 3% people view them as a block and now up 1% to 2% today. makes sen. we have had even here a valuation adjustment still higher than the range before the pandemic but looking at the nasdaq 100 at 26 times

earnings is not cheap. skimming away the premium. if the index is flat from here and probably 15% growth then it's back to pre-covid levels so over time they can grow into it even if they're not the leadership group. >> you mentioned the key kind over levels for the s&p. what about the nasdaq? more work to do? >> but also tends to be springy. had a deeper pullback this year. the nasdaq 100 has a much more normal path this year because it had a high single digit percentage drop and it definitely has some work to do in terms of distance but also has the capacity to move quicker. remember the top five stocks something like 40%, 50% of the nasdaq 100 so it can kind of

take care of it in a hurry. >> pepsi topping earnings estimates and strong sales growth seeing organic revenue up 9% and broad across geographies i did just speak this afternoon with hugh johnston and the topic is inflation pepsi notes the challenges dealing with higher costs, labor shortages and bottlenecks hurting profitability and said it affects everything from alum any cans, gatorade bottles with the key resin to make them but he did say that pepsi has pricing power to pass it on to consumers. he says pepsi raised prices in the quarter. frito lay seeing price hikes this week and he said probably another round next quarter and did say he expects the shortages

and the other issues to moderate into next spring as for demand, not at all fading he looks at food service or the restaurant business that they sell through as an indicator of the reopening trade and seeing in snacks and foods in 2019 levels and no signs of letting up despite the delta variant and the other measures of amy coney barrett t-- mobility we have seen pepsi distinguishes itself with the other food makers and snack makers that have struggled on the profitability front. >> pepsico has the ability in all times to keep pricing as part of the story. nudge pricing up >> innovating. >> yes that makes sense it is not exactly a new mode to

launch into to say we have to try to push through price increases. basically to some degree limited by the general appetite for steady consumer staples. it is one of those 2.8% dividend yield. good stewart of capital. usually hit the numbers and what you want to pay for it. >> as we approach broader earnings system, banks and then leading into the other companies, if they all talk about inflation does that hurt the market or heard enough of that that it's priced in and it's a base case >> i think it's the base case and i think it ice in those instances positive because it means they can preserve margins better economy wide the cost pressures are going higher so any companies that feel as if they can act on that and try and get price -- i think it is a net positive and a decent case to be made that the supply chain

obsession maybe has reached the fever pitch and then we can see if it eases from here. >> i feel like you were saying that. >> not the supply chain. >> inflation >> yeah. it is off the point. we'll see. >> yes s.e.c. chairman genz ler might not be as a blow to robinhood as many investors feared. a buy rating on the stock after surveyed users asking if they'd pay a small fee to trade on the platform they say it's better than feared customer loyalty ken griffin said he would be fine with ending payment flow. shares of robinhood up about 2% today. broader fintech with a weak day yesterday of course. what's your take on this name, eugene, and fintech in general

>> i think fintech is a good time to be invested. i wouldn't buy robinhood to the client portfolios because it's too expensive. i would agree that's not a death knell for that company i think that customer engagement is probably a bigger risk. if we start to see the stock market selloff and losing interest the number of trades will go down but i much prefer square because they have that cash app and a little bit more diversified business and i think their valuations are similar so hood a good speculative play but for my portfolios i go to square. >> up today. i wonder how correlated they are. a much bigger part of the business and the growth. >> yes traded in sync and robinhood

well below the highs it's interesting the way this survey taking the temperature of the customer base because the initial question was if robinhood charging a small fee to trade and like a quarter of the people said they wouldn't use it what if everybody else charged a fee? that's complicated a firm to switch to is fidelity. fidelity which doesn't take payment for order flow zero commissions they don't take it on stock transactions from a third party. let's putt it that way presumably they keep it at zero. maybe there's not as much loyalty. i don't think it's going to go away and a little bit of a stalking horse issue by gary genzler. there's always a big ask spread. how that's allocated is an open question but there's going to be a spread. >> eugene, just want to pivot

back to the broader markets and your top sector pick for the rest of the year. >> technology quickly followed by health care the reason being that i think that if the market will go higher once we get through october. usually the end of the year technol technology does better it is a matter of how much spending is going on in space and in improvement as companies come back online the cloud implementation is still in play. in terms of health care a matter of a lot of delayed procedures if we get the vaccine completely in place there are going to be boosters a cross the board and so companies like nvidia, pfizer, metronic i think will do well over the course of 12 months. >> i was checking the energy

trade. almost 83 for brent. nat gas with a fresh high of 13 years. >> yes. >> does this start to become a bigger macro concern >> already is global, yeah, absolutely. >> really not a huge focus for u.s. investors but in the past energy spikes can do that. >> they can. i think it has to happen in combination with something else. the price at the pump. we were here ten years ago how much higher is consumer spending than it was this en there's a certain pressure point but i think it's not as much of an impact on the u.s. recovery what are you seeing? >> firm but softer we had a fade in the indexes and looking at the new york stock exchange volume split started the day something like 80% to the upside and not even 2 to 1 advancing to declining

still okay a kind of a mechanical bounce into the morning highs and then sideways from there. talking about energy take a look at the goldman sachs commodity index. you see they have kind of really die verged lately. stuff over stocks since mid august or september or so. it is a combination of the supply pressures and a momentum chase. commodities are starting to run hot. volatility index sleepy. still under a 21 going down as the market goes up a mini up trend from early september and if we brace for choppiness through october would make sense. >> heading into the close, let's show you where we stand on the dow. unabout 323. up more than 400 moments ago still a 1% gain and not enough to make up for the losses of yesterday. it is up a full percentage

point. financials are leading sector with communication services. real estate and utilities are the only red sectors right now dow going out with a gain of almost a percent nasdaq is the big winner of the three. up 1.2% in the close still down on the week a full percent >> welcome to the "closing bell." i'm wilfred frost with sara eisen and mike santoli we did just slip into the close. below 1% gains on the dow. just 312 of gain just the high 487. and 1.25 of a percent for the nasdaq it was a broad rally tech and cyclicals doing well today.

eric johnson who downgraded the bullish view of the market last month on whether he thinks there' more downside senator warren on the call for an insider trading probe into fed officials and why she said fed chairman powell is a dangerous man. jimmy chang joins the conversation mike, to you first slipp slippage into the close but brings us back to flat for the dow on the week. >> kind of made up for yesterday's losses the bounce stopped right exactly where you would say tmd if it were just a reflex bounce. we talk about this a lot when the market has been in one of these chop zones it gets tactical the levels seem to matter a lot and because really the macro fundamentals haven't changed that much. it is about positioning and the

clustering of positioning is around a lot of these levels so that's where we are at the moment takes more than a day bounce to say that we are back into buy mode i think for big cap growth but in general we're still kind of conforming to pullback within a bull market. credit markets seem okay and the downside momentum has not picked up. obviously if we need a big surrender and a flush to the downside you don't always need that for a low. >> jimmy, how do you feel about the market what are you doing for the rockefeller global family office >> i think everyone is still focused on the short term catalyst a lot of known issues concerning the market from a weak third quarter gdp. how that affects earnings to chairman powell renominated and higher energy prices but investing is about looking at

the headlines down the road so i would imagine in the month or two most of the headlines will look much better so i think that we are in the midst of a corrective phase within a bull market markets are still likely to move higher. >> eugene, talking about rising yields and inflation do you think that fear is priced in to markets or continuing to see inflation surprises to the upside will that lead to stocks pulling back further >> it would lead to stocks pulling back and you are seeing the yields creep higher. we are at 1.5. we are below 1.3 not so long ago. below 2 on a 10-year won't have a lot of impact on the stock market i think investors talk a little bit but longer term i think that two months most of the headline risk will be out of the market and still going higher because

that pent-up demand is so strong. >> eugene, jimmy, thank you. we'll continue the discussion -- thank you both for joining us. we are only three trading days into october and major averages are off to a volatile start after posting monthly losses the volatile was predicted back the start of september. >> i think that returns over the next year to two years are not going to be great. i think a vast majority of the bull run is complete september and october i think are going to be a tricky months. >> joining us now for an updated view is eric johnston. you were worried about the end of fizz call and monetary stimulus and proved to be a bumpy few weeks.

you see more pain ahead? >> so we remain cautious and i think that the risks are to the downside why monetary policy is going through a major inflection point and seeing the tightening starting in a few weeks in november but outside of that what you see going on, inflation. inflation is becoming persistent seeing that in the commodities market oil breaking out to new highs. cotton moving to new highs nat gas doubled. same time growth is slowing so if you look at the atlanta gdp forecast for this quarter it's down to 1.3% earnings estimates which we had talked about we felt were peaking. they have started to turn lower. and then you have the additional sort of concerns in the market around tax hikes which are likely coming. certainly the corporate tax hike and a variable of who will be the fed chair in four months so

the environment right now is very different from the environment that we had during the 18-month bull run off the lows. >> what level of pullback do you think is warranted then or what factor are you looking out for that would make you change your mind and think we might bounce >> sure. one is time. whenever you go through a change like this in the market investors need to bring down risk and rejigger the portfolio. that takes time. from a price perspective which can also do it and force further quick derisking another 3% to 5% from here maybe get to 6% or 7% and 3% to 5% from here makes me feel better about the risk reward from here. >> good to get an update thank you for joining us from cantor. when we come back, a dangerous man.

that's what senator warren called the fed chair jay powell. now she is calling for an insider trading probe of top fed officials. she'll join us next to discuss. jeff rosenberg on opportunities amid the market volatility we're back on "closing bell" in two minutes.

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estamos orgullosos de haber creado el sistema de reciclaje. convirtiendo a san francisco, en la ciudad mas verde de america... sigamos haciendo la diferencia juntos. senator elizabeth warren delivering a floor speech this afternoon addressing corruption among highranking federal reserve officials. comes after warren called for an insider trading investigation at the federal bank asking for them to look into the actions the fed announcing yesterday that it's asked the inspector general to start an independent review of those trading practices. senator warren joins us now for a first on cnbc interview. good to have you back on the s show

welcome. >> good to be here thank you for having me. >> i wanted to start with the comments that made a ton of news and got attention calling out the fed chair as a dangerous man and i understand your criticism around financial regulation but isn't it hyperbole to call him a dangerous man and smearing instead of an honest conversation about the issue >> i've been having a conversation about the issue for years now since the first hearing with the chairman. but just remember what happened in the leadup to 2008. we had a federal reserve that just piece at a time kept deregular litting. refused to rein in the largest financial institutions it didn't happen with one big step, with one explosion no it was just a little bit and a little bit more and a little bit more until those giant financial institutions had loaded up on

risk and then they blew up the entire conomy. it is the job of the regulators to make certain that the rules are tough enough and to show that they are willing to rein in the largest financial institutions that's how they protect the american economy and american families. >> we can talk about that. i hear you nobody wants another financial crisis certainly, senator warren but why the name calling of a dangerous man for a man that acted pretty swiftly and pretty in a huge way and createdly to protect our economy and our system from a global financial crisis in covid-19 >> look. the federal reserve chair has two principle responsibilities one is monetary policy and the other is regulation. is to make sure that giant financial institutions are not

loading up on risk, to make certain that banking regulators have the tools they need in order to avert future financial crises that is the job of the chair of the federal reserve. when chair powell was not yet chair, when he was first nominated i asked him of all the financial regulations you have seen can you anyname one that should be tightened an up little bit and the answer is no what happened in the years since then during his time as chair is piece at a time he has when given the choice always moved toward deregulation, toward weakening. and this creates trouble that we can already see in the economy we saw it last year when the fed's own report stated that if

the fed had not rushed in with taxpayer dollars to support the market the banks would have lost about $300 billion that's loading up on risk. now so far, i think that we have been lucky there hasn't been a major crash but we need someone that heads up the fed to take both jobs seriously. monetary policy and regulation over the biggest financial institutions. >> i guess people would push back and say that there's been slight tweaking of regulation after a decade of severely tightening it but even putting that aside just to come back to sara's initial point your view today is that the fed chair has put the financial system in the i in a dangerous position. you think that banks are dangerously unstable

i'm not sure many would agree with that. >> what i have said is exactly what i would have said about what was happening in 2007 as others kept saying, each individual action was modest didn't get a headline but tilting in the same direction and reappointing someone for another five-year term who always tilts in the same direction, that's what he demonstrated, poses a danger to the economy and oppose him for renomination. >> aren't capital and liquidity levels at all-time highs through the stress and restricted share buybacks and they increased capital requirements for the biggest banks? >> you may want to check your facts. a thing that senator brown and i for example kept hammering on is to force the banks to suspend

dividends if they were going to get taxpayer support then the banks ought to have to have more capitalization and the fed chair resisted that repeatedly look this is about safety the job of the fed chair - >> i said buybacks. >> -- i understand the part to the fed chair is to make sure that the american taxpayer is not on the hook again as they were in 2008 to have to bail out these giant financial institutions it's not always a popular place to be but a fed chair needs to demonstrate that they have the courage, the backbone to be willing to stand up to pourful financial institutions our financial institutions are now bigger than ever and they exercise their muscle with regularity in washington and i think that's a problem >> buybacks were suspended

capital and liquidity levels are record highs. >> what facts were wrong there the dividends? >> yeah. we wanted to pivot and talk about the speech today the other topic and the trading that we have seen by certain members of the federal reserve in your speech today again to question of the scale of wrongdoing if indeed wrongdoing is ploroved that you spoke aboua culture of corruption at the fed which is pretty strong terminology. have laws been broken? >> i am concerned about a culture of corruption. when we find out that there have been three different high officials at the federal reserve who have engaged in practices that may be a violation of law,

but certainty undermine the public's confidence about whether they are acting to line their own pockets or on behalf of the american people, that's a real problem and it's a real problem in leadership we need a leader who makes it clear. this actually shouldn't have been an issue. who could be at the federal reserve in a position of authority and responsibility and think that it is okay to trade individual stocks or to move from a bond portfolio to a stock portfolio the day before there is a major announcement about possible changes in fed policy this is not hard stuff and it shouldn't be close to the line and that raises questions about leadership i've already said that i'll not support the renomination of

chair powell but i think this is a second big problem >> i know in the past in the last congress you introduced the anti-corruption and public integrity act and the aim to ban individual stock ownership across different public body just the white house, congress, the federal reserve. if you have seen our debates we understand it because we face tighter restrictions than those public elected officials would you say any singling member of congress who ever traded an individual stock in their entire time in congress is corrupt? you use the words for federal reserve members and not sure you go the same level with others that seem to be in the same boat in your eyes. >> i have been talking about the culture of corruption in washington for years now i actually ran for president of

the united states talking about corruption in washington a significant part of that corruption is when the american public can't know whether or not decisions that an individual who's in power makes are for that individual's own financial gain or for the good of the country. and i think one way that we deal with that is we just say, you know, you can do one of two things you can either be a member of congress, you can be on the federal reserve, you can run a big agency, you can be in the cabinet, you can be in a big political and economic and decision making position, or you can trade in the stock market. but you don't get to do both at the same time. >> agree just to the leadership point obviously you're calling attention to the right issues.

i don't think chair powell would disagree it looks bad and that the rules need to be changed in fact he's taken the issue seriously and not shied away just to play devil's advocate to you. he called for an independent ig investigation and doing a federal reserve investigation and not backed his colleagues for what they have done. seems to be leading on this issue actually. >> this is dragging on now for a while and we have found out more about what's gone wrong with the latest fed report. i believe that this should have stopped a long, long time ago. look what does it mean -- >> were you calling for the federal reserve to not trade i know you have been for congress. >> for years.

>> for the fed >> yes i'm sorry. go back and read my plans from when i ran for president it was that nobody getting to be in a decision making position in washington and still trade in individual stocks. it's just -- no. we should not be able to do that frankly i can't believe anybody would defend that and i can't believe anybody in that position pallial the fed. think about the information that the fed makes. >> i think they'll change the rules. i think you are right. >> -- insider information. it should be clear to everyone who is there that they cannot be trading individually and participating in a position of public trust you can't do both at the same time. >> senator warren, also wanted to quickly ask you about facebook i know you are making a speech

earlier during part of the hearing with the whistle-blower. my main question on this is the extent to which lawmakers need to take responsibility we know that facebook does, as well but some of the revelations are new and some aren't. we had warnings and information about the potential of social media to society since 2015, 2016 why haven't lawmakers acted yet? >> part of the problem is not just that facebook is huge and powerful and stomps out its competition and controls a large part of information flows in the united states. it's also that they have great political influence. their voice is heard louder around these halls than that of most americans go all the way back to teddy roosevelt when he talked about

breaking up giant corporations do you know the principle reason that he used to cite because of the political power because they kept washington from doing the things that needed to be done in order to make sure that markets are fair and transparent and not just for the giant monopolist at the top but that work for everyone. >> meantime, urgent issue. lift the debt limit to prevent the country from defaulting. there's some reporting today that senate democrats are looking at a bill, a carveout to suspend or lift the debt limit would you be in favor of that? >> the senate republicans said they would do nothing to help raise the debt limit notwithstanding the fact that much of the debt was incurred on

a bipartisan basis often while donald trump was president they said they would rather see the economy thrown over a cliff and would be on the democrats to raise the debt limit do it all by yourself without a single republican vote the democrats have said, okay, fine we will be the adults in the room and raise the debt limit but we need the republicans to get out of the way and lit it happen they can't filibuster us at the same time and say democrats have to raise the debt limit and takes ten republican votes to make that happen just get out of the way and the democrats will raise the debt limit. that's my message to mitch mcconnell and every republican >> finally, senator warren, on this -- just to wrap up the fed conversation you criticized fed chair powell not supporting him for renomination but biden has confidence in the fed chair.

why are you not putting out an alternative? would you support brainard >> the question right now is the renomination of fed chair powell i have made my position clear on that i'm not going to talk about other ominees. i don't talk about private conversations with the white house. i'm making it clear i cannot support chair powell for renomination. >> senator warren, thank you so much for joining us. we appreciate it as always. >> thank you for having me. >> a myriad of topics. i'm sure we'll discuss later on in the show. up next jeff rosenberg will discuss the risk of stag inflation. we'll be back in a couple.

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welcome back stocks rebounding today after yesterday's selloff. the 10-year treasury yield higher today now back over 1.5% let's bring in jeff rosenberg of blackrock. good to see you. thank you for joining us

>> good to be here. >> the note is stagflation risk is real. >> it is what happens when you combine the outlook for secular stagflation with transitory fails to be transitory returning on the growth side coupled with persistent signs of inflation equals stagflation not our outlook but the risk that we're talking a lot more about and it is a type of regime that the markets have not faced in a generation so it's something that we have to pay attention to. >> if we do have serious stagflation what do you want to hold >> that becomes a real challenge because what you're looking for is a very different mix. it is about pricing power on the inflation side in an environment where you're looking at a lack of growth. and so it's still a come by

nation of where can you find earnings and earnings growth where can you see pass through without the tail winds of a growing economy. so i think that is a type of market environment we hadn't seen before. particularly in the fixed income environment that's a new challenge particularly since we're starting that environment with so little inflation and inflation risk premium. >> what happens when a fed tightens into a stagflation environment? we are on the brink of seeing the fed taper, scale back the stimulus wrapping it up next year and then potentially raise rates. >> yeah. you know, the oirs is how fast are they raising the rates and trying to catch up and get in front of the inflation or just normalizing against a perspective that the risk is as they have been talking about is

transitory on the latter it's what the markets are expecting. the fed is not worried about inflation. we have flexible average inflation targeting saying the fed is willing and tightening slowly in an environment where growth is not significant enough to really accelerate that and a little bit of what you have seen in the last week or so with the yield curve steepening off the fmoc meeting and the realization of tapering is about to come and then means liftoff of interest rate just higher inflation isn't here in the near term but if it is in the long term the longer run inflation term premiums are not where they need to be. >> dxy is up where from here? >> a lot of that is a different story and a little bit more about global risk and it's consistent with what we had been

seeing inside the internals of the equity market where despite the overall headline increases in index values you look at a market emphasizing quality it was a scared rally with emphasis on quality stocks and in that kind of environment the risk preference is benefiting dollar investments i think in an environment where we have seen this global growth slowdown, a significant shock coming out of the property sector in china, spilling over into emerging markets, it is an environment where dollar and dollar based investment have favored support with that safe haven status. >> i don't know if you heard us talk to senator warren but the debt ceiling came up she wants republicans to back this and own this. there's no agreement the standoff is escalating this always happens and then always a last-minute deal and not a 0% probability that they

don't do this in time. is blackrock doing anything to protect people from that >> it's a good highlight and the risk is not zero but what is the risk that we're talking about? most likely even if there's a failure to meet an agreement by the deadline is it's a technical failure and most expectations around the technical failure is that this is not about a default in the sense of willingness or ability to pay in an economic sense as opposed to a political sense and that technical default would be cured whether it is an additional interest payment for deferred amounts or other fashion. so that the market pricing today is benign and reflects an exec thags that a last-minute deal will happen and a realization

that full faith and credit of the u.s. treasury is not at stake. not the ability or the willing mpbs but the political process getting in the way so as a result there's very little market reaction so far. we can be surprised and the brinksmanship can go all the way and take us over but unlike 2011 the significance of that is seeing less surprised and certainly the downgrade of the u.s. treasury is a precedent back in 2011 was one of the cat lizing issues is not something that will be unfamiliar to investors if we see that unfortunate debt failure occur again. >> yeah. no they were buying debt after that happened seeing the downgrade. thank you for joining us. >> thank you. still ahead treasury secretary yellen warning

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it is time now for cnbc news update with shepard smith.

>> thank you here's what's happening. a former facebook data scientist testifying to congress today after going public as a whistle-blower frances haugen argued that facebook's productings harm children, stoke decision and weaken democracy and that facebook knows it. she's delivered tens of thousands of internal documents. haugen said congress needs to require transparency from facebook the company issued a statement saying it disagrees with the characterizations and she was never in meetings with c-suite managers but that it's time for lawmakers to create standard rules. the justice department's criminal division opening a review into how the fbi handled the investigation into larry nassar, the former usa gymnastics doctor in prison for abusing young girls and women. lisa monaco acknowledging the

probe. facing tough questions from lawmakers about that department's decision not to prosecute two agents who allegedly lie odd the inspector general about the failure to investigate the allegations. the drug maker astrazeneca today requesting emergency use authorization from the fda for the antibody cocktail saying the primary use would be as a preventive measure for people with chronic diseases or other conditions that might limit a vaccine's effectiveness. tonight need to find a way out of the debt limit crisis there's always the trillion dollar coin idea we'll xlaun that on account the news" 7:00 eastern cnbc. back to you. >> shep, thank you so much. up next, a look at whether history suggests small caps look undervalued. plus, the founder of left lane capital on whether the recent tech selloff is having an impact on the priva mketearts

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stocks reboumnded today mike >> yeah. a lot of chatter, strategists saying looks like small caps might be a decent opportunity going into the end of the year and through for economic reasons and the way they underperformed here take a look. this is the xlg. extra large the top 50 stocks in the s&p 500. very largest

two-year chart see that they have certainly built up a lead here mostly since the spring as small caps caps themselves gone sideways. now on the valuation side this is another point that small cap bulls point out if you look at how small cap shares are valued relative to large on a price earnings weighted basis you see that the massive discount opened up that's a big gap and larger than it's been throughout history and the valuation level is above where they were before we got this run higher. in other words relative to small caps own history not necessarily cheap and maybe saying that the very biggest stocks are fully valued i think this dynamic might have a little bit to run on the base that small caps bottomed

compared to large cap and buying interest as people catch on to the trend. >> for the russell the sector makeup has an influence with banks more heavily weighted. >> i used the small cap 600 index. sector breakdown matters there, too, but these are profitable. the companies tend to be more profitable and maybe more cyclical. >> thank you tomorrow mike is hosting a pro talks with tom lee at 2:00 p.m this is a good opportunity to sign up. cn cnbc.com/pro. >> what could be better? >> what could be 2:00 p.m will we watch it bit too close. >> i'll watch it got to.

>> i'm a sur scriber are you? >> why the heck not? master works is shaking up the way collectors buy art and left lane capital looking to catch in on the craze.

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stocks finish in the green investors look to diversify the portfolios in this volatile market some turning to the art world. master works is a platform where investors buy and sell shares in iconic works of art. the company announced its series "a" today and now a valuation of a billion dollars and led by left lane capital and harley miller joins us now. thank you for joining us want to get to left lane more broadly. interesting idea it's a modern take on old art opposed to the sort of nft craze which is totally new. >> you're absolutely right listen we had a thesis and tech enabled classes and the peers in the

venture and growth equity world pursuing things whether felt faddish or smaller ranging from pokemon cards or wine and farm land and i think those can be viable but the research comes back to contemporary fine art. historically inaccessible to anyone and constituency and institutional works and this is the first ties to the inaccessible asset class and a special opportunity and scott and the team the ceo and the team there are extraordinary and found the founder product market fit is second to none so we were privileged to work with them and consumed the summer was prospecting and working on that. everyone else on vacation we were hard at work preefforting that. >> as you say everybody wants a piece of everything and this

fractionalization of securities and sneakers and art and just everything memorabilia exploded as the quest to demock ra tiz moved forward. how do you know that's not a bubble or a sign of the exess going on in thedemocratize ever. how do you know that's not a bubble or bit of excess in the system as a result of people being home and the government stimulus and everything like that >> i think it's a fair point a lot of the broader populous had a lot of time so they were at home gambling on equities or other things that are not proven source value many that have not produced like contemporary fine art has.

it's not something that's necessary, doesn't provide an advantage. so, frankly, i don't know if that phenomenon is fad or will persist. we come back to decade long returns. prospecting and sourcing felt they could beat the historical average. it is a good diversification plan that has consistently beaten the s&p over the years versus flash in the pan so to speak. >> the only other point on master works is you are making it an asset class for protection of money you wouldn't get it with an nft or if you were a billionaire and

owned the hpainting in full or you could look at it and enjoy it >> there is still that dinner table cache where you could flash the portfolio to a friend or family member, and that may have some of the same phenomenon, but it is not the same as hanging it on your wall and not the same consumption but certain investors can visit the pieces but it is a fair point, you don't get to hang the pieces on your wall. that is a drawback, but given the demand for things uncorrelated with public stocks, this is as good as it gets >> we spent the entire interview on your latest investment. i know there are many others we want to talk about those. maybe you will be able to come

back and discuss it more broadly. >> definitely. >> take care >> it was a pleasure thanks up next, the secretary janet yellen calling on congress how it could impact your money closing bell will be right back. our retirement plan with voya, keeps us moving forward. hey, kevin! hey, guys! they have customized solutions to help our family's special needs... giving us confidence in our future... ...and in kevin's. voya. well planned. well invested. well protected. after my dvt blood clot... i was uncertain... was another around the corner?

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treasury secretary janet yellen said it's necessary to raise the debt limit >> -- partly accounts for the reserve status of the dollar and placing that in question by failing to pay any of our bills that come due would really be a catastrophic outcome >> i recognize -- >> i fully expect it would cause a recession as well. >> you have the latest on the debt ceiling yrchl lan, what are the updates? >> the senate will move tomorrow

whether to move forward on the debt lirmt the gop is not budging telling democrats to do it alone >> they need to do this. they have the time to do it and the sooner they get about it, the better, to make sure the markets and american people know that as usual the american government will never, ever default. >> democrats warn that we are getting dangerously close to hitting the limit, but moody's is maintaining its stable outlook for debt and saying that democrats would be the first to blink and raise the debt limit on their own >> it's as assenine we go through this every time. if there isn't a deal, it's only

a technical default, doesn't get into the full credit of the government and there is a playbook, buying u.s. government bonds. >> absolutely. that's the way it went down last time the treasury with privilege payments, no outstanding bonds would go unpaid. all of that remains true maybe that leaves the market more open to adverse shock if we get down to it democrats say they don't have the time to go through the arduous time to go through the process to do the reconciliation, make the time i suppose. >> the british government is by no means perfect, but this -- >> uv raysed it like 80 times over the years it has led to government shutdowns from time to time. it does seem silly that no one

thinks it's a core element of how markets funneled the country. >> we did have a bit of a sell-off slippage. >> there is low conviction on the buy side we have widened out the range of what the pullback has meant. it doesn't mean we are far from some kind of decent low. but it tells you the market trades in this tactical way when we get to these levels, these levels above are rock solid because of whatever, because of the technical breakdown. >> one of the biggest questions is is this the garden variety correction that everyone called for and that we were long overdue for in this market or is this a real change if you do see fed tightening as a reason to change your outlook on the market and cycle. i mentioned the oil prices

all of it is coming together >> the perceived fed has been the formula. 2015, 2018, that was kind of what got the markets in trouble. i doubt and hope it is not an every three-year thing, but that's the combination you have to look out for. right now it seems like a relatively routine correction. >> tonight i am going to make sure my cnbc pro subscription is up to date >> i am going to watch the playoffs >> no, i am going to watch melissa lee at 8:00 p.m. and right now as we turn it over to "fast money. >> thank you this is fast money tonight's lineup -- we are going off the charts. one top technician is laying out the top key level to watch plus fanduel