clf, i bought more calls today >> we have 15 seconds left i just saw the dow is down about 633 points comments today from the fed chair and the testimony on capitol hill certainly helping the sell-off along today all of the major averages under significant pressure this hour appreciate you watching this show it does it for us. "the exchange" begins right now and we'll pick it up with the sell-off i'm melissa lee in for kelly chair. the fed chair tanking the markets. he says inflation is not saying it is transitory let's get to dom chu nor the damage we are seeing today >> the damage is session lows. if you look at the dow we are off 630 points, roughly thereabouts. 1.75% to the downside. s&p 500, 4577 there, off about

one and two-thirds percent as well the nasdaq composite, down 271 points, 15,511 the last trade there. yes, this is the session low right now. all 11 sectors in the s&p are lower on the day financials are very much in focus along with interest rates given the fed testimony along with treasury secretary janet yellen before the banking committee. i want to highlight the difference between ten-year note yields and two-year note yields, one aspect of the yield curve. it is 92 basis points. why it is important is that it represents the lowest levels all the way back to january of this year so the yield curve is now compressing. that is putting pressure on bank stocks certainly something to keep an eye on speaking of, if you look at some of the individual movers in trading today, those financials very much under pressure silicon valley bank or svb financial, the parent, down nearly 4%.

comerica, down 2%. the spiders of spdr regional bank down 2.5% watch those for financial rates. as for what is working and what is not, a lot of things are not working. not covid related. united airlines and norwegian cruise line, both reopening trades, both down big. meanwhile the ones that are supposed to do okay, the stay-at-home ones for fears of covid, peloton and zoom video down both. zoom video off 4%. maybe rising interest rates playing into the growth story and knocking expectations down apple standing out, up 2%. technology seems to be the place, at least with apple's side of things that people are flooding into in times of uncertainty. a tough spot for the fed back to you. >> thank you let's get to the comments made on capitol hill that spooked the markets. steve liesman is here with what sparked the sell-off

we had the embargo testimony yesterday afternoon, we thought it was going to be hawkish but it got even more hawkish today >> you're right, melissa fed chair powell did surprise marcus by saying he thinks the fed ought to consider easing back more quickly on its stimulus to the economy. in response to a question on inflation, powell saying in senate testimony for the first time that the fed should consider accelerating its taper. >> at this point the economy is very strong and inflationary pressures are very high, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at the november meeting perhaps a few months sooner. i expect we will discuss that at our upcoming meeting in a couple of weeks >> all of this began as melissa just said with testimony released yesterday in which powell emphasized his concerns about inflation and even said another virus wave could create an inflationary problem, not a

demand problem, by making supply bottlenecks worse if workers stay home. we put together this chart on four different scenarios here, keeping with the same pace of tapering the fed would complete more or less, maybe 5 billion leftover in the next month, but the last major purchase made in may and every $5 billion gets you done a month earlier to a point if it doubled its pace of tapering, it could be done as soon as february so what does that mean a faster taper, of course, raises the possibility of quicker rate hikes where the fed said first it is going to taper, then hike rates. to be sure powell said the committee would discuss a faster taper, not necessarily do it information on the omicron virus over the next two weeks before the fed meets could be critical, melissa in his decision. >> seems like a genius move by the federal reserve chairman, steve. i would think you would want to outline the most aggressive approach in terms of monetary policy at this point and then you have the ability to say, you know what? the virus is taking us on a

different path so we're going to pull it back a little bit. but beyond the record of saying and warning the markets that it is coming and it might be coming sooner than you think. >> i think that's one potential take, melissa. i was surprised he said it i thought before his testimony came out on monday that the fed would delay the decision, the discussion of the accelerated taper to january, thinking they wouldn't have enough information on this. but this makes me think that the news has to be very bad on omicron for the federal reserve not to accelerate this taper i don't think that they're going to be able to sort of say, oh, this is like delta and therefore we're not going to talk about it i think now the burden of proof is on the virus to say it is going to be really bad for aggregate demand i think powell has had a change of heart into thinking that maybe fed policy is part of the problem when it comes to inflation and the fed has to get ready or ready sooner to deal with it through rate hikes >> and it is an acknowledgement that the inflation problem is

much worse than previously anticipated. i mean to retire -- to say that the word transitory was transitory in its use as a descriptor for inflation speaks volumes, steve, at this point. >> yes, you're right, melissa. he retired the word transitory and he admitted the fed made a mistake by not accurately gaming out the supply problems. that was the problem they had. look, it is also worth saying his base case still seems to be that inflation comes off and he used the word significantly next year as the supply bottlenecks break through. but i think the concern is, and he talked about this, he used this phrase entrenched and he is worried that inflation could become entrenched and that what i think is really animating fed chair powell indeed, i think it is going to animate the committee at the meeting in december. >> steve, thank you. rates reacting sharply to powell's hawkish term. let's get to rick santelli at the cme with more on this. rick >> melissa lee, i agree with

you. it was a brilliant move by the fed chairman and today is really like u-turn tuesday. you will see what i mean it is currently up three look at the u-turn it made but not everything made a u-turn the fed chairman opinion changed. u-turn short maturities, u-turn but look at the longest maturity in the 30-year bond, down 7 basis points what is going on think the simple view is that short data are clinging to the change of heart by the chairman and long dated are nervous about omicron and receiving some buying and flight to safety. if you look at the dollar index, it really wasn't involved in flight to safety, but it had a big u-turn in my opinion, when you talk about actually combatting inflation, that's a dollar friendly along with the steepening yield curve finally, everybody is talking about fed funds. listen, there's a lot of ways to calculate probabilities. in the '80s i used to get my

crayons out and do the same thing. however, let's keep it really simple this is december of '22 fed fund contract, one week you can see it made a bit of a u-turn as well it is starting to sell off when it goes down selling off, it raises probabilities, but if you look at a chart since the last fed meeting, this is mid-august, we had a fed meeting in september you can see how it started accelerating the sell-off. that's when the notion fit everybody other than the chairman inflation is real, and right now the way it sits it looks like two are baked in by the end of next year and the third one, the market is working on melissa lee, back to you >> rick santelli, thank you. so is powell right in suggesting that the taper may need to be sped up and we should retire the word transitory joining us is david zervos, chief market strategist at jeffries great to have you with us. >> good fob here >> has your view of the markets changed in light of what chair powell said today?

>> i don't know that they've changed. i have been very concerned that the messaging from the fed in this new world order for the fed with the new vice chair and a new governor and two new presidents was going to get a little bit difficult, and that the fed itself would have more trouble communicating in this environment where inflation is more persistent, and we have a new cast of characters that are leading the charge around the board table. so i think -- and you add to that, melissa, a time of year where, you know, you are either up a lot of money and you want to protect it or you are down a lot of money and you can't take a lot of risk. we saw the illiquidity friday and it is a preview of what happens toward year ends, so we can get a lot of whippieness i think those three things, a new fed, it is not the same fed as we had before we will get a new cast of characters and the market has to understand where they're coming from an inflation situation that does seem to have much more, in my

opinion, supply side rigidities than we may have thought earlier, and liquidity are combining for something that could be quite a bit of fireworks coming in. >> it sound like you're expecting a lot of chop, david should we take cheryl air powels message as the message of the fed given the new cast of characters or do you think there's a possibility for wiggle room one everybody is in and at the table in >> melissa, i think the market is sort of going to try to figure out where the strike is for if fed put we all talk about that fed put, when do they come in and save us when it is messy, is it down 5%, down 10%, down 15% one of the things we have seen historically when there's large changes at the fed, a new chairman or significant change at the top of the leadership, the market pushes around and tries to find out where the put is it feels like we are beginning to do that a little bit. i don't think it is as big a deal as getting a new chair, but i do think it is a pretty big deal and have thought it is going to be a pretty big deal as

we lost randy quarles, as we lost the two presidents from dallas and boston, and as the upcoming governors' seats get filled it will be interesting and i would venture to say difficult communication set of issues, communication issues for this federal reserve. >> sounds like a lot >> nor the market -- >> yeah, sounds like a lot of volatility to me david, we're taking a look down the barrel basically, staring down a barrel in which the markets have to stand by itself so to speak without as much help from the fed, whether it be from taper or low interest rates. i wonder in that kind of world what should valuations look like how much in the market right now is because of the very easy money policy and how much should we expect to ratchet that back >> you know, i think you've got to put it in perspective a little bit, melissa. we have had a pretty amazing year i don't think that many people on wall street were forecasting up 22% or 23% for the year on

the s&p back on january 1, which is where we were we were up 27% for the year, you know, a week or so ago so i think it has been a great year i don't think, you know, there's a big desire to protect that financial markets with such a big year, and i think that's a little bit of what you are seeing from the fed. but, again, i also think as all of these folks go in front of congress, which they will, both vice chairs and the chair will go in front of congress and get quizzed by lots of different people about their views on inflation, growth, jobs, everything else under the sun, climate change, inequality it is just a lot of room for miscommunication and, look, a central banker does have a role in making sure that prices are stable right now the advertisement for price stability doesn't look good so they got to sound tough and jay sounded tough today. i think he is sort of prepping for any hard questions that might come in front of his hearing, and i think those hearings will probably be in december so, you know, we -- you remember, melissa, back in 2018 we had a lot of miscommunication

from jay in particular on being a long way from neutral and we finally spun that back around in january of '19 and got some cuts, and the fed had gone too far and the curve had inverted like -- not that it is inverting today but there were parts of the curve that were inverting not too long ago i think it is reminiscent of that i think you are seeing the fed kind of move into a bit of protection mode with all of the new cast of characters, and i think it is just a place where, as you put it, volatility could remain quite, quite significant. well, it could remain elevated i don't want to over blow it though >> yeah, it did feel like powell was moving into protection mode when he took back the word transitory i mean he had some leeway to leave transitory sort of out there, especially when later on in the testimony he said that he expected inflationary pressures to ebb in the second half of next year. i mean that wouldn't have been that long and could have easily been argued to be transitory so i am wondering how you

interpret that and whether or not you think inflation is really a much stickier problem than the fed had anticipated and that should really be the worry of the markets right now >> i think we know that, melissa, because we know the dot plots, we know what they forecasted for the end of this year at the beginning of the year and at the end of last year, and they were like, almost everybody, just completely wrong. we have 6% cpi and 5% pc and it was not in the numbers clearly their version of trans information when they first started talking about it was a couple of quarters, maybe q1 and q2 and it would subside and that's not really what happened, especially after the last reading in particular. q2 looked like it might have been the peak and q3 was pretty weak on inflation, all else equal, but we had this spike back up. i think you have to kind of redefine transitory if you are the fed. not everybody has the same definition and maybe yours or mine is different, but theirs was put in the books as what it was, and i think it needed to be

redefined. i think it was raphael bostick's point when he gave his speech about, you know, having the word transitory be kind of a sin at the atlanta fed and you had to put money in the jar every time you used it. i'm not too pessimistic here over the long run, your valuation question, i think we have low long-term rates in particular for quite a while, and i think at the end we will find jay is right that the inflation problem will ebb and it will be a supply story, not a demand story the fed has to look tough in front of the boss, and that's congress, and one of the mandates is inflation and it is not really working that's just going to set up a lot of room for miscommunication at a time when everyone is going to try to figure out who is lael brainard, who is the new governor, the two new presidents, and how is jay an his power base going to evolve

with all of the new characters in play that we've gotten used to >> david, great to get your thoughts, especially on a day like today david zervos with jefferies. >> thanks. market selling off as fed chair powell mentioned tapering in his testimony today once again, this becomes a driving force behind the markets. joining us is chris grisanti great to have you with us. >> nice to be with you, melissa. >> i will ask you the same question i asked of david, and that is what should a market be valued at without free money, without the fed there in support through taper and low interest rates? >> that's a great question the real answer is we're going to find out and i think pretty soon it was unfortunate today, melissa, that he chose the omicron background to deliver a needed message, which is, hey, inflation is chugging along as is the economy so that's not necessarily a terrible thing it means the economy is racing,

it means good things it is just that that plus omicron at the wrong moment i think is really giving the market a little concern. however, having said that, i think higher rates will mean that p/e has come down the question though for the market is can earnings increase fast enough that that's okay boy, they're increasing fast don't forget earnings are nominal. all things equal will mean higher earnings next year. it is far from a far-gone conclusion the market has to slump if inflation goes up some. >> do you think the market reaction today is an overreaction i mean basically it is a give back from yesterday. how do you interpret it? >> i think it is an overreaction, i do >> uh-huh. >> the reason is, look, omicron could be as bad as delta, but remember because of delta i think the fed kept rates lower longer, held off on the taper. if omicron really comes out to

be something, you know, as bad as delta, the fed is not going to start raising rates they're not going to keep talking about how quickly they're going to do the taper. their first enemy is defeating a now mutating pandemic. inflation is a regrettable side effect of doing that, but it is one they're willing, have been willing for the last 20 months to take. if omicron continues to raise its ugly head, i think they will continue to go that fast >> so inflation will trump basically the concerns about a variant, because inflation is such a big problem they're going to have to go forward. that message to the markets though is a hard one to swallow, chris, obviously i mean if you are thinking that wage pressure, cost pressures are going to continue to go higher, and maybe even be exacerbated by omicron, that's not a pretty picture when it comes to earnings. we have already seen a glimpse of that in the last quarter. >> sure, when you paint it that way it is not, but i don't see it developing. i think it is a more dynamic situation. you have powell on day three of omicron. if omicron really spins into

something bad in day 14 or day 21 and when he is back in front of congress, he is not going to be saying, you know, we are going to feed inflation at all costs. he is going to say, we're worried about a continuation of the pandemic the language will change if omicron really becomes a problem. i feel very confident that jerome powell's first target is defeating the pandemic and second, only secondly is it inflation. >> do you rethink parts of your portfolio, chris, in light of what the fed chair said today or at least on the expectation that rates will move higher maybe sooner than we thought we originally had you on to talk specifically about the payment stocks and a lot are high multiple names >> sure. >> so i wonder if those names do okay in this rising rate environment. >> no, no, i -- our default has been that rates will be higher next year and so will inflation. as david put it, we have been putting money in the jar every time somebody says transitory because we don't think it is transitory but i would reiterate, this is

not a disaster inflation is not above, but a feature of a strongly growing economy. as long as it doesn't get out of control. so we think corporate earnings will be strong next year, so, therefore, our portfolio is set for what jerome powell is thinking about what it is not set for is another kindof shutdown if omicron really gets bad. i think that would be much worse than the relatively powerful inflation that i think can be controlled >> let's choose our own adventure, chris let's choose the latter that you outlined what if things get worse and there are partial lockdowns or at least some restrictions on travel or mask wearing, et cetera what sort of portfolio do you want to have i am assuming it won't be the old playbook of zoom, peloton, streaming, et cetera >> i don't think it will be those rather more speculative names. i think it will be the stalwarts of, you know, google, amazon, you know, a larger cap companies that can continue to grow.

even when you look at the p/es of those, while they're not low by any means, they're nowhere near the more speculative p/es of the others. i would stick. you know, cash wouldn't be a problem in that scenario having said that, i think it is unlikely i think the world is tired of shutdown and is willing to take more health risks now to keep things open. i think better would be this would be a huge push towards vaccines and to pushing that road along, which i think in the end would be quite helpful to the market >> chris, great to get your thoughts thank you. >> thank you, melissa. >> chris grisanti. activist janet partners has a new target in its sight. let's get to leslie picker for a market flash >> melissa, that's right jana partners looking for zendesk. shares are trading higher on the news, first reported by "the

wall street journal. momentive coming back about 2.7% right now. i'm told the activism shop sent a letter to zen desk i have not been able to con the size of the stake, but other large shareholders agree it should not happen. they agreed to acquire them last month. it is less now since zen desk has fallen 20% since the deal was announced at the end of october. but the jana letter says it lacked, quote, financial merit, that deal, and may prevent a potentially interested buyer for zendesk as a whole a vote is slated for the deal in february we called zendesk and momentive and have not heard back from either of them on news of the letter melissa. >> all right leslie, thank you. leslie picker. still ahead, we have much more on the market sell-off, including why apple is a bright spot in the big tech space today.

and as we head to break here is a look at the dow heat map we'll take a look at what is two components are leading, apple and nike stay tuned what's strong with me? i know when i'm ready to run. what's strong with me? i can find strength in a rest day. what's strong with me? there are some nights i sleep so well...

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♪ welcome back to "the exchange." markets deeply in the red. we have the dow by about 1.7 points s&p 50012 points above the session lows, down by 1.7% right now. nasdaq composite down by 1.77% big cap hit today with meta down more than 3% today, and now 15% off the recent high. chip maker, high valuation

stocks, also retreating from the record highs marvel, synopsis, nvidia and amd among the biggest underperformers in the group restaurants are in the red casual dining names underperforming like shake shack, chipotle and mcdonaldes ark k is moving lower, no surprise down 14% in november, tracking for the worst month since march of 2020. zillow, teladoc, draftkings, robinhood, some of the names weighing this down we will hear from cathie wood tomorrow when she joins sara eisen tomorrow at 10:00 a.m. eastern time for more information and to sign up head to cnbc.com/pro. now, let's get to rahel solomon for a news update. rahel. >> hi, melissa here is what is happening at this hour. former white house chief of staff mark meadows agreed to be deposed by the congressional panel investigating the january

6th attacks on capitol hill. however, a lawyer for meadows says his client still believes executive privilege prevents him from having to answer some questions. the panel had threatened contempt of congress vote to force meadows to testify freddie mac and fannie mae will soon back mortgages of nearly $1 million. they are raising loan limits by 18% next year, which means home buyers in high-cost markets can get federal backing for loans up to $970,000. most of the country, the limit will be up to nearly $650,000. the world health organization is warning countries against blanket travel bans related to the omicron variant. it says the bans will not stop international spread and place heavy burdens on the targeted countries. the senate commerce committee invited the ceos of seven major airlines to testify at a hearing ondecember 8th. the chairman of the committee wants them to explain why the airlines have worker shortages despite receiving billions of dollars in pandemic aid. and on the news tonight,

holiday shopping deals on the dark net how hackers are using mainstream marketing to sell illicit goods. that's tonight at 7:00 eastern you're up to date. melissa, back to you >> thank you coming up shall consumer confidence hitting the lowest level since february, and high inflation doesn't appear to be going away are we looking at a perfect storm for the consumer that's next.

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♪ retail sell-off as consumer confidence sinks to a nine-month low and jay powell warns about inflation. to dom chu for a check on the movers >> it is a wide range of names we are watching including macy's and kohl's, both of whom are down 10% or moreover the past week, down 5% in today's session. t.j. maxx, parent company of home goods and tjx is lower,

slipping 10% off the highs we notched two weeks ago. we will end on target and walmart, both in negative territory today, tracking for longitudely declines keep an eye on that sector back to you. >> thanks so much. data from the consumer board shows 29% of consumers said business conditions are bad. that's a slight increase from last mont's number this was out right before jay powell said inflation could be stickier than expected in his testimony. here is what the fed chair said. >> most forecasters, including at the fed, continue to expect that inflation will move down significantly over the next year as supply and demand imbalances abate. it is difficult to predict the persistence of supply constraints, but it appears factors pushing it upward will linger well into next year >> joining us, the steve odland, a cnbc contributor good to see you. >> good to see you thank you. >> if you asked any consumer they could have told jay powell

themselves inflation was a problem and stickier than anybody thought, especially going to the gas pump paying 50% more than a year ago, and the list goes on and on with essential items. in terms of the items we have seen for the latest month, what do you think it reflect? >> i think you hit it, melissa last mont we saw consumer confidence bounce up and we were hopeful that this was a sign we were going to resume the upward trend. but, unfortunately, we have now trended down, and the reason is because of inflation people are telling us now that things are getting very expensive. when you break it down by demographics, it is the 55-plus demographic that scored the lowest or had thelowest levels of consumer confidence as well as the lower income folks. then when you start looking at purchase intent by category, what has come way down are purchases of automobiles and the intent to buy houses so these are the things that have been really pushing sales in the economy over the past few

months, and this came down now, i have to point out that this survey was cut off before omicron was even known as a possibility here i suspect, melissa, if we did the consumer confidence index today you would see even lower numbers because not only do you have inflation as the worry, but you would then have the potential result in omicron. that's what, you know, i think is affecting these big retail stocks today that are mostly land or, you know, bricks and mortar based >> right i would imagine too, when business takes a look at the data, steve, they look at the data of the consumer and think at what point do the confidence numbers actually spill over into spending patterns at their businesses the old argument used to be, well, wages are good, househol debt is down, a very historic levels, down to low levels i should say so the consumer is stronger than ever so we shouldn't be worried about inflation. at this point what is the real takeaway of this situation

>> well, you know, if you have a lot of money, i mean the higher income classes are fine. it is -- but the majority of the spending comes from the center, and that's getting hit right now. so i think inflation is a big worry, and it looks like it is going to be not transient but it is going to be stickier as the fed chair said so if that happens, you know, we are projecting an inflation rate of close to 4%, high 3% for 2021, and 2022 we hoped it would come down closer to 3%, but if it is stickier it means these prices will continue to take more and more of the income. so, therefore, all of the discretionary spending goes away i don't think it is going to be a big impact for the 2021 holiday season, melissa. it looks like all of the inventory is in. it looks like, you know, you have opportunities here to buy online, and that's kind of what we've been seeing over the month of november, even though, you know, cyber monday and black friday was a little weaker than

was expected it was down versus a year ago. it happened earlier and it is happening online so, you know, what is going to be problematic here are the bricks-and-mortar retailers who don't have a great online presence, and then into next year the question is if it keeps going what is going to happen to gdp because so much of the dollars are getting inflated here >> how much does the stock market and whether or not the stock market shows declines such as we are seeing today factor into consumer confidence i mean we have seen record numbers of retail investors join in the markets over the past couple of years, steve, and really enjoy the markets' historic rally we have seen a lot of households get involved in crypto and build crypto fortunes. to the extent these markets are volatile as we have seen over the past few days and it is maybe the first bout these investors have had to deal with, how much does it weigh on confidence in. >> i think it impacts it consumer confidence is more

driven by what is happening to me as the consumer is my job safe you know, is my income safe? is my buying power safe? i think that spills over into the market, as does the projection on interest rates so, you know, if we felt that the inflation was ameliorating, interest rates might stay lower and therefore it would continue to fuel the boom when inflation goes up and interest rates go up, of course it hits the market i think you have seen a combination today of an estimate that maybe interest rates will have to go up higher we are projecting two to three increases next year in order to combat inflation at the same time, you know, you are going to hit growth. so, you know, the nasty word of stagflation, of course, for people who remember the '70s comes into play. now, we don't think that that's going to happen, but -- and we don't hope it is going to be happening, but you have omicron that comes on top of this. if it is a weak thing, if it doesn't fill the hospitals, if it is not really scary, if it

doesn't hit entertainment and travel, we should be okay. but if it is really virulent and it starts to hit those industries it could put us right back where we were at the beginning of 2021. so there are some real unknowns, melissa, in the market today as a result of the confluence of these events >> all right steve, we will leave it there. thank you so much. nice to see you. steve odland >> thank you coming up, apple a clear winner in today's tech sell-off and our next guest doesn't see it changing. she will join us with r he reasons why. that's next.

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good to see you. >> good to see you >> apple will do well in periods where economic growth is great and well in times when things are uncertain. is it win/win when it comes to owning apple >> three things going on today driving apple's outperformance one is 90 billion free cash flow and more cash than data on their balance sheets as other companies get cheaper, apple can buy cheaper. they gain competitive advantage. secondly, the biggest criticism of apple for the last five years is no new products when you look at the product pipeline, lots of excitement there, especially in the press today about how they will introduce augmented reality glasses at the next wwwdc in june, autos, you know, electric autos, self-driving cars lots of new product innovation coming back to apple now that they brought silicon in-house, chip design in-house third, lots of good numbers out of retail about how the products are selling, tablets, especially

the high-end iphones, all of which says they will have high margins and revenue for fourth quarter of this year >> amazon and google are not doing as well as apple i wonder in a rising investment environment if you think they don't do well on a relative basis. is that the truth, is the market telling us the real message? >> we have a confluence of the omicron uncertainty, and that's bad for google because 15% of the advertising used to be travel so if travel doesn't come back or autos doesn't come back, which used to be 25% of total advertising sales, it is bad for google so it is correcting a little bit today. then amazon just has a lot of debt so interest rates going up means all of your debt costs are greater. all of my ad-driven stuff is down today hard, 3%, 4%, 5%. that's because if you have to pay more for interest expense you often cut advertising spending so you can report growing earnings per share to wall street.

>> in your coverage universe, laura, there are names that are higher valuation i wonder which names are you most concerned about, what names are you telling clients, you know what, this kind of environment might not be the best for these stocks? >> right so i sort of think we have to learn more about the virus, but i would say if you have a point of view that the virus will keep it all at home, you will like netflix and the streaming better because you will get more uses, especially for ad-driven if you think we are going back into the real world, things like theme parks and disney will do better because they still have pretty easy comps. >> even aside from omicron and variants and the fear of lockdown, just the fear of rising interest rates has been a driver of the markets and certain higher valuation stocks, laura. i wonder if there are, in fact, stocks you think are vulnerable to higher interest rates >> definitely. any stock that's losing money, like i have a lot of high-growth stocks that lose money, it is bad for them because a lot of the value of the stocks is in the term nal value ten years

from now or five years from now. if they have higher interest rates, guess what is happening to your discount rate. you are discounting the cash flows for more years at a higher rate it is bad for companies that are negative free cash flow. >> can you give us examples? i wonder also if you actually changed your view based on what powell or the fed has projected when it comes to interest rates? >> right so i think, again, we are dealing with both the uncertainty of the variant of the virus and the powell stuff today. i would like fubo loses money down hard today. roku, not making a lot of money, down hard today. we have a bunch of stocks, especially small cap, where when you start getting sellers it moves the stock more than fundamental value would indicate so i would say those get more hard hit in this environment i think there's a flight to quality with companies that you know are going to still be -- they're going to weather the storm, not go bankrupt and not have financial distress, and

that's why we see the faangs outperforming today others, even if they're down a little they're down a third as much as some of the smaller cap companies. >> if you have a longer term horizon, laura, and can maybe weather the storm of volatility for a bit, i wonder if you think some names are being thrown out on fear that shouldn't be? >> yeah, like mag light we like a lot. 100% ad driven if we don't get another hard covid lockdown we like them for the rebound in auto advertising and advertising in general we like that one and some of the other ad tech names that are 100% ad driven >> thank you so much for joining us today, laura. we will reveal what it is next

welcome back as more cases of the omicron variant are identified, cruise stocks are getting crushed seema mody joins us now. >> melissa, travel executives i have been talking to say they're

leaning on the scientists for more clarity on how transmissible the variant is the timing of the omicron news coinciding with black friday was unfortunate, and analysts telling us that cruise bookings over cyber week end were weak. it was scheduled to deploy one of the ships, jade, from capetown in late december, but the cruise line telling cnbc, quote, we anticipate eliminating all south frickn ports of call that, of course, due to the variant. as to how this broader recovery story will be affected, kayak ceo sharing they saw a moderate decline in travel searches when delta was at the height of the news cycle in early july, but by early september demand started to climb up again. most recently levels nearing 2019, which he says shows how travelers are getting more comfortable navigating changing restrictions melissa.

>> yet last night kayak, seema, indicated their searches on sunday were slightly lower from a week ago i won'der at what point we get a read on what the impact psyche l logically is from consumers. >> that's right. we get the numbers on weekly gi accurate read on how consumers and travelers are starting to react to this news around the variant. you're right, we are less than four weeks away 'til christmas, a number of families still haven't taken that vacation so we have to try to understand if that family that was looking to have their first trip and reunite with family are now canceling that trip because of news around omicron. we have to wait and see. every thursday that's when we get the hotel occupancy data, key to understanding this travel recovery story >> theoretically, this might be a boost for airbnb and the owner of brbo? >> you would think that, melissa

but the travel stocks airbnb is down more today than a stock like marriott. interesting to see how the stay-at-home travel names don't seem to be working today of course this month airbnb has had a strong month for november compared toment so of the other travel names we'll have to see if that holds out. >> seema thanks. coming up, are there any sectors out there that are oversold in we'll check the charts and read the tea leaves oil took a down by 7% and the big players falling with exxon the laggard and bitcoin down fractionally. "the exchange" will be right back

with directv stream i can get live tv and on demand anywhere. look, serena williams... matrix... serena... matrix... serena... matrix... ♪ ♪ ♪ get your tv together with the best of live and on demand. introducing directv stream. . welcome back to "the exchange." stocks seeing so much volatility in the past three days, what are

the charts telling us could be next are there areas that look oversold katie stockton from fair leaves strategies, great to have you with us. have we seen damage done to the s&p 500? >> there has been a distinct loss of momentum but short term in nature. no breakdowns in the major indices, even the russell 2000 index is holding up okay despite having underperformed in the pullback the s&p support around 45, 46 based on its most recent breakout points so former peak on the chart, and there's also that 50-day moving average to meet that level so it has support nearby >> intraday we're well off the session lows if you look at the intraday action this proves my theory or your theory in this case that the s&p 500 does have support and this is just some minor

setback within a longer term uptrend channel. >> there is support and the first short term oversold reading since october 4th for the s&p 500, and that's meaningful it will be more meaningful when we dosee some kind of stabilization. i think it's too early to suggest that we have it already but to the extent that we do see a strong close relative to the day's high/low range that's always an incremental positive and of course the market internal measures, things like market breadth or participation, market sentiment, as measured by things like the vix, those get oversold on their own, so that suggests that perhaps that sentiment has shifted enough to get us a short term low ahead of what is typically a positive seasonal time of the year. >> i want to talk about volatility we did see it spike today up 17% at this point, again, off of the highs that we've seen in the session. are you seeing that also in an uptrend going for -- i would imagine at some point no, because you're seeing the s&p 500 has support and is going

higher >> we have been in this low volatility cycle really for several months based on the vix, which we use as a transactional gauge of market sentiment. we indeed have seen a vix spike over the last couple of days and that is associated with pullback in the s&p 500, negatively correlated what we don't want to see from the vix is a breakout above the top of its range which is roughly 29 on the chart. it's also a resistance level per our work and that would suggest we're getting into a higher volatility regime, something that would be somewhat reminiscent of 2018 if you recall overall it was for the neutral year but had a lot more volatility from an intermediate term perspective >> i want to get to small caps, katie. a lot of people were excited with the recent run-up basically at this point we've given up the gains that we made for the entire fall action people started getting bullish on it. what are you seeing for small caps

is it over >> it's too early to say that. we do have first buy signal in the pullback mode. that's interesting for the russell 2000 index as it comes in to support from september, also right around support based and other measures that we use it has a good chance of holding up here based on that. we'd like to see that stabilization confidence the short term lows put in place if you look at iwm as representative of the russell 2000er have sups the spdrs or spy, there are downsized based on the demark indicators and based on the same model back in march so we find that compelling especially at a time where you tend to get small cap performances with the january effect outperformance doesn't always mean that you're getting the,

relevant performance doesn't mean you're getting absolute gains all the time but it suggests we'll get a rebound >> i do want to ask you about banks as well, bad day friday. relatively bad day yesterday financials underperformed and bad today. what does the chart look like? >> we're not seeing a lot of breakdowns in the financial sector, not confirmed ones yet we always like to see more than a day or two below a certain level and that would confirm so that's what we're watching and waiting for, ten-year treasury yields are something to watch as well. we highlighted in a morning note they are below minor support around 1.46% and if we see consecutive closes below that level that increases downside to 1.35% and of course that would have an impact negatively on the financials especially in the banks. >> thank you katie stockson of fairlead

strategies p "power lunch" starts right now >> see you in "power lunch" in a few seconds. welcome, everybody, to a very busy edition of "power lunch." sell-off on wall street, here's what's ahead >> at this point, the economy is very strong, and inflationary pressures are high and it is therefore appropriate in my view to consider wrapping up the tape every of our asset purchases which we announced at the november meeting, perhaps a few months sooner. >> so the fed chief weighing an earlier end to the taper, the pulling out of those fixed income security purchases that the fed has been making to juice the economy. we've got hot inflation. he says it's time to retire the word transitory to describe those higher prices. we have reaction, analysis and what this all means for you and your investments, this hour, what's next for the market, bonds, oil