the present value of that cash flow and that's why some of these more speculative tech stocks are being sold at this point the fed surprised people today by being more aggressive >> bob, thank you. tyler, what a market >> yeah, it's really been a wild hour >> and it's not over yet, folks. stay tuned to "closing bell. they pick up our coverage right now. ♪ yes, we do thank you, kelly and tyler and welcome to "closing bell." i'm sara eisen a turbulent day here on wall street with losses accelerating, yields jumping after the fed minutes this afternoon, the nasdaq sharply underperforming, down 2.5%. >> good afternoon, i'm wilfred frost. let's have a look at what is driving that negative action, as sara mentioned, the nasdaq continues to lag as rising yields remain in focus microsoft, apple, and nvidia among the biggest drags. salesforce plunging as well and putting pressure on the dow following a downgrade at ubs

and the fed just released the minutes with a more hawkish tone, sending yields sharply higher, stocks lower we will get to all of that in just a minute. 59 minutes left in the session >> coming up on the show we've got a great lineup of guests for you to help make sense of all this mess. bruce richards says this is the year that things will change for the equity markets he'll join us to explain why, and he'll tell us the one sector he is super bullish on right now. and later we'll talk to the ceo of authentic brands whose portfolio includes retailers like aeropostale, brooks brothers, so many of these mall-center brands that you know and whether consumers can hold up and just struck a deal with david beckham as well. >> i know you want to talk about that >> features on "closing bell" on big selloff day. that's a side story. anyway, let's get straight to the market and the selloff steve liesman has a closer look at those fed minutes and what the market has been reacting to

over the last hour mike santoli's tracking the broader action deirdre bosa has a look also >> minutes to the federal reserve's december meeting suggesting the central bank could be very aggressive, highing growing concern with inflation at the bank. it's not actually scheduled to stop buying assets, that is increasing the balance sheet until next month after that the first quarter point rate hike could come as soon as march, and markets are pricing in as many as three this year watch the x-axis here. it suggests the possibility of a faster rate hike than the minutes. a second hike in june, a third in november, and not putting, i guess, possibly a fourth hike in december there are some hints in the

minutes on when the fed might reduce the balance sheet and how it might do it some officials even said they want to rely more on balance sheet reduction than rate hikes to remove a combination. that suggests a potentially faster pace than shedding assets by the fed there was agreement it will happen faster than in 2015 when the fed hiked rates and waited two years to start reducing the balance sheet. it seems within reason to think about the fed doing it this year, maybe as soon as this summer if the committee hawks have their way >> steve, so interesting, and, as you said with those probabilities, interesting to see what people are pricing in the short end moving a bit, but the long end is really what's reacting today what about the balance sheet reduction? how much could that change in pace in the very short term or, realistically are we talking about march is the earliest that that might end >> well, i think for sure they will buy assets. i don't think they're going to

increase the taper any more. they're going to end increasing the balance sheet in february. and then, wolf, it gets very complicated and normally i don't like to bother people with this stuff, but it could be some of these details end up being significant. there's talk in the minutes about the possibility of not reinvesting the proceeds for mortgages, in other words, letting the mortgage-backed security portfolio wind down that could potentially be the first move they could also sell short-term treasuries or sell across the board. what's clear is if they're going to be more aggressive here this is going to be a challenge for the stock market because the market at least believes that part of a valuation of especially the tech stocks is linked to the amount of quantitative easing out there and the size of the balance sheet. it's worth thinking about what fed governor chris waller has said he believes there may be as much as 1 or 2 trillion on the balance sheet that could wind down or be run off without having no effect wolf, you know about this issue

of the excess reserves out there. there are an awful lot of that coming down to 8, 7, $6 trillion may not remember remember the fed doubled the balance sheet and there may be room for an extraordinary decrease over the next, i don't know when-several months or year >> you said it, steve, it is spooking the nasdaq. new lows down 2.76%. let's get over to mike santoli now for more on the market selloff. it is tech heavy, mike, but a lot else is getting dragged in the dow is negative today. >> tech been negative for a second day in a row. we really have had one of those days like yesterday when there was this delicate equilibrium. there was almost an equivalent amount of buying in cyclicals and economically sensitive things once we got the fed minute it's became a little less of a rotation and more of a risk reduction, at least for right

now. this is not enough energy and bank stocks and deep value stocks to offset a 2.5% drop in the big nasdaq name. 4800, tried and failed a handful of times to get above that we'll see if that really matters in the longer term in the meantime -- that's a real -- we're still not back to even the highs of november and december so still knocking around this range for the s&p itself now when we talk about this rotation, where are we coming from and going to? take a look at a two-year chart. the cloud computing software against the s&p basic material sector they're converging right here after massive outperformance by cloud. cloud's virtual, it's light, it's all digital steel and copper and lumber, they're heavy, they're real. it's not as if people are saying that cloud's going to stop growing, it's about the premium now drained away because the real economy seems like it's set to reaccelerate. cash on cash returns in real

stuff is probably where the marginal dollar goes as opposed to buying yet another ipo of a software as a service company. so that's one of the dynamics in there. very similar s&p 500 financials, old standard financials. insurance companies and banks fence fintech, again, converging after two years. mania and fintech comes off, i don't think it necessarily tells us it's game over for any of the long secular trends. it doesn't mean that, you know, the old financials necessarily have to race to the moon but this is the way the market is resetting its bet getting into this next phase of the cycle. longer term, take a look at just how good the market has been over the last several years. this is from goldman sachs this is the percentage of three-month periods when the s&p was up at least 1% over the prior five years this goes all the way back over the last five years you've never had a better win rate, 1% three-month gains except in the late '90s going into 2000. doesn't mean it falls apart from here, but it tells you that

there's a little bit of a -- and maybe why the fed feels it's okay to say we've doubled the s&p in the two years since we made the last low on a tighter fed than expected, and the credit markets seem okay, let's see what we can do in terms f being assertive, at least on paper about what's happening with inflation >> right times are so good. i'm just looking at the ark innovation, down 6% every single component within that etf is lower today. the nasdaq's off about 6.3% from the highs. the market's pricing in about three interest rate increases next year. how much farther do we have to go here to get these multiples back to somewhat normal valuations after they've been inflated by the easy policy of the fed? or is that an impossible question >> there's no kind of set algebra that you can go to and say this much fed accommodation or withdrawalmeans this much i

the way of the nasdaq. i also feel as if, you know, i always call the balance sheet stuff largely a placebo. but if you think the placebo's a real medicine and it gets taken away, you're not going to feel so good. so people are tell selling not just because they think something has changed with the nasdaq companies nothing changed with nasdaq with microsoft last year, was up 53%. alphabet last year was up 67% because people felt as if the marginal dollar was placed in there than in some other industry that was more tied perhaps to the real economy. i don't know, now it's at 47 or something like that. is 47 cheap? nope is it down enough? we'll have to see. >> mike, thanks so much. we'll see you again shortly. we are just down at session lows with the nasdaq down more than 3% momentarily the dow's now down 260 points. the s&p down 1.5%. but the nasdaq, of course, getting all of the attention today. it is the biggest decline.

and deirdre bosa has a breakdown of some of the key stocks that are leading that index lower >> reporter: yeah, wolf. i'm looking at it closely just like you are, just bouncing off that session low but this is a really rough start to the year for tech overall and that comes off its underperformance last year after those fed minutes that steve talked about, the 10-year yield sitting just below 1.7, and it's accelerating the selloff for the nasdaq that macro environment continues to weigh, especially on those high-growth names and sectors like fintech, gig economy, and software which mike mentioned. take a look at robinhood and coinbase robinhood down nearly 9% doordash with its higher multiple is getting hit harder than uber and lyft as we see sort of valuation reset here the ark etf is lower by more than 5% today with less than an hour left to go. what continues to work is that legacy tech trade, intel the best performing nasdaq 100 name.

dell slipped in the black. investors here really look for value. now, on tech check this morning, we did talk about value traps, in particular ibm, for example, a name that often starts to look appealing when growth sells off. but hasn't been able to maintain those momentums over the years versus, say, a qualcomm, which has been able to successfully diversify its business even within this tech complex, important differences and different performances certainly. >> ibm the only tech stock actually with intel and the dell that's higher today on that value trade. deirdre, thank you we'll have much more throughout the show for you including reaction from wharton professor jeremy siegel. and mark mobius on the very

volatile market and where in the world he is putting money to work there is the nasdaq down 2. almost 9% we've got it covered for you here on "closing bell. we'll be right back.

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to session lows after the release of the fed minutes we're down currently 270 on the dow and 2.75% on the nasdaq. let's bring in mark mobius, founding partner of mobius capital partners mark, i'm really interested about one of the points you put in the notes because i guess one of the triggers for today's selling is the thought that liquidity is going to be pulled out of the market. you don't think that much liquidity is going to get pulled out of the market. >> no, i don't i think you're seeing a lot of liquidity in the market going forward. that's not only because of what's happening at the fed level, but you must remember there's a lot of other currencies that have been issued around the world because of covid, and the increasing in the markets is tremendous. then you have to add all of the cryptocurrencies that are making people feel rich so all of these elements tell me

that the market is still going to have lots of liquidity despite what the fed may do. >> so, if today's selling is down to fears from investors that the fed is going to tighten a bit quicker than previously expected following those fed minutes, is that a buying opportunity? >> of course for good stocks. by the way, i have to emphasize with higher interest rates those companies that are losing money, particularly in the tech sector, and by the way, one of the reasons why the tech market is down is because there are lots of companies that have not been making any money those companies are going to get hit very badly and of course those that are making money do very well. you have to differentiate between the companies that are having a high return on capital and those that are not >> so, are you saying like the f.a.n.g. names and that do see strong growth are good buys right now?

>> exactly those that have been hit as a result of the overall decline in tech stocks that are making money, have a return on capital, are growing definitely these are great buys right now >> let's talk, mark, about broader area of expertise of yours and china in particular. do you think this could be an added challenge for investors this year if china does have more of a slowdown or if it doesn't come out of its zero-tolerance crackdown on covid at the moment? >> i think what's happening in china is really very positive for the long term. because what the chinese economy is doing now, trying to create a level playing field. they are increasing the regulatory supervision of the market generally and of these throughout the country and that's a very good thing for investors -- i think china

warrants continued views we're bigger in india and taiwan, but china still is going to be a good place to invest going forward. >> you're not worried about the policies of the government jim cramer sounding pretty negative there on xi this morning. jeffrey gunlac warning yesterday that he thought, you know, it's just hard to trust what's happening with your money when you put it in china with the government so dominant and with some of the regulatory issues we've seen there lately that it's just a risky business >> well, that's true for those companies that are impacted by regulatory enforcements in china, definitely you are seeing some losses but if you look at the companies that are not the large cap, not the alibabas or the didis, the medium sized to smaller companies have done quite well they are benefitting from these

changes of what's happening in china. the other thing you have to remember is that from the long-range point of view, china wants and needs foreign investors just like the u.s. wants and needs foreign investors. at the same time, they want to make sure there's a level playing field in their own market >> in terms of the prospects for em more broadly next year, mark, do you think that the dollar's going to have a big impact are you fearful of rate hikes in the u.s. driving a stronger dollar and hurting returns for emerging markets >> actually, if you look at the dollar in relation to a lot of these emerging markets, you find that a number of emerging markets have strengthened against the dollar however, that really doesn't concern me simply because -- currency -- if you take a

country like -- some countries benefit from a weak lira you have to take it on a case-by-case basis there will be fluctuations, there will be problems of course if you're an investor in the index products in etfs, then you have to be cautious -- stocks, you can benefit from weak currency. >> speaking of currencies, mark, i do know you keep an eye on bitcoin and you mentioned it earlier. it's selling off today with tech and it has acted sort of like a high-growth tech company how much of bitcoin's assent do you think has to do with the easy money and the balance sheet expansion and the zero interest rates from the fed and therefore how vulnerable is it here? >> people have not been getting any interest in the bank in their savings in the bank.

i recently was in italy, i talked to a cabdriver, he says i'm not going to put my money in the bank because they're going to charge me for keeping money in the bank. now, as interest rates go up, then people think maybe i should be putting my money into cryptocurrencies, i can get some interest in the bank so this is something that makes -- and that's a big if, if interest rates go up -- two, three, four, 5% in the bank. so this is something we have to watch very carefully i hope and pray that these cryptocurrencies don't crash because it will have an effect on the regular markets, on the equity markets simply because people will feel less wealthy. a lot of people are depending on the cryptocurrencies >> but you think that could happen i don't know if you're calling it a crash, but just a big decline here as interest rates go up?

>> it definitely could happen. the only reason why these cryptocurrencies are going up is because more and more people are buying, and in they go down, fewer people are buying, there's no earnings, no dividends, nothing holding these things up, except the sentiment of the market >> a warning there, mark mobius, thank you for joining us good to check in with you, especially on a daylike today. we've got just under 40 minutes left to go before the bell take a look at the nasdaq, that's the big underperformer right now. it is down 3%. the s&p 500 down 1.5 and the dow down only a quarter of 1%. small caps down 2.8% technology, real estate, communication services, consumer discretionary, financials, industrials and healthcare all getting sold off today though tech the hardest hit. after the hit shares of gamestop also thinking today. we got data about the

performance of melvin capital, one of the hedge funds caught up on the short side of that meme trade. we'll bring you the news next. check out some of today's top search tickers 10-year yield on top as it goes past 170 after those hawkish fed minutes. ford giving back a little bit of the recent gains, down 2.5%. tesla down almost 6. apple holds up better, down almost 2 and nvidia down 5.6. it is the biggest drag on the nasdaq 100 we'll be right back. -kind, personalized education center. oh. their award-winning content is tailored to fit your investing goals and interests. and it learns with you, so as you become smarter, so do its recommendations. so it's like my streaming service. well except now you're binge learning. see how you can become a smarter investor with a personalized education from td ameritrade. visit tdameritrade.com/learn ♪ when you're looking for answers, it's good to have help. because

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some news just crossing in the world of athleisure. nike following a lawsuit against lululemon, alleging patent infringement over the mirror home gym and some of its mobile apps we've reached out to both companies. i haven't heard back from them lululemon bought mirror during the height of the pandemic july 2020 nike is alleging that it went to lululemon, complained about the infringement, and has been dismissed by lululemon,

therefore, it is suing the company for triple damages wilfred, i'll let you know if i learn anything else. >> it's interesting because i didn't even know they had a product like mirror. so, i mean, i was glancing through some of the details there. it's a long document to read but you wouldn't have thought this was one of the areas that the two companies were most likely to clash on you would have thought it would've been technology in their shoes or sweat-resistant fabrics or something like that >> well, it's not exactly that they have an exact mirror competitor, but some of the digital technology that i think lulu is using in mirror and to build out from mirror, nike is going after claiming it infringes a lot of patents but, yes, it's complicated, and nike says it's had patents on some of that technology going back to the '80s meantime, cnbc obtained new information today about how hedge funds performed in 2021, including melvin capital, the

firm, of course, you'll remember, they got caught up on the short side of that gamestop trade. leslie's got the details >> reporter: there is a famous market saying as goes january so goes the year. well, the same can be said of last year's january market mania and some of the 2021 hedge fund returns. cnbc has learned that melvin capital, which met the ire of retail traders due to a publicly disclosed put position posted losses of 39% in 2021 of gamestop that's according to a source with knowledge of the returns. excluding the steep losses from the january short squeeze, melvin would be firmly positive with returns of 33% from february 1st through the end of the year now, on the flipside of that trade is another hedge fund that was prescient enough to be long gamestop looks like it will be the best performing firm of the year. sendvest management notched returns of 85% thanks to upside in participating in that

gamestop momentum. that's according to an investor with knowledge of the firm's performance. guys >> so, are they still playing in this stock, the hedge funds? >> there are certainly hedge funds still playing in this stock. i'm not exactly sure i know melvin specifically closed out its short position in gamestop a long time ago, and based on public filings, we have no evidence that they have actually re-entered that short position, especially given what happened in january. i'm not exactly sure other hedge funds that are short gamestop. there is still short interest in gamestop that didn't technically go away. although, of course, short positions aren't disclosed so we don't know exactly who they are. >> gamestop getting hit hard today, down 12%. harder than the broader market still to come wharton professor jeremy siegel will join us on whether he thinks tech investors are in for a rough year this is just a preview

the nasdaq composite down 3% as we head to break, another check for you on bonds this is the culprit. yields continue to march higher basically since the beginning of the year and the 10-year note yield is now surging past 1.7% the fed minutes accelerating this rise after fed members talked about more aggressive interest rate hikes and balance sheet reduction. we'll be right back.

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tonight, tragedy in philadelphia more than a dozen dead in a massive fire we're live on the ground plus, the attorney general speaks on the january 6th investigation. >>earn about covid-19, the more questions we have. the biggest question now, what's next?

what will covid bring in six months, a year? if you're feeling anxious about the future, you're not alone. calhope offers free covid-19 emotional support. call 833-317-4673, or live chat at calhope.org today. welcome back a very volatile day on wall

street the nasdaq sinking by 3% of the lows it's down 2.9 dow down nearly 300 points, 0.8% the s&p down 1.6%. amazingly, three sectors within the s&p are holding onto fractional gains, but just a matter of basis points let's have a look at some individual market movers salesforce slumping in today's session. this after ubs downgraded the stock from neutral to buy, citing concerns about the cloud company's growth rate. the stock's now down 8% itself and of course weighing on the dow. boeing shares getting a bounce, naming the company a top pick for 2022 saying it likes the company's free cash flow, news today of allegiant buying 50 boeing 737 max jets, and the stock which had been gaining and one of the strong performers itself slumping since those fed minutes, as you can see, 2:00 p.m. turnaround, now down half of 1%, sara >> time now for a cnbc news update with rahel solomon.

rahel? >> hi, sara. and here's what's happeningat this hour. the head of the cdc says that the definition of fully vaccinated is not changing that means that federal vaccination mandates for employment will not require booster shots, dr. walensky did, however, urge americans to stay up to date on their covid protection by getting boosted. former trump press secretary stefanie grisham is set to meet with the house panel she resigned from the trump white house january 6th last year in response to the attacks. prosecutors who want sex trafficking convictions against ghislaine maxwell. no word from defense lawyers on whether they may seek a mill tries. and the grammy awards are being postponed originally scheduled for january 31st, the event is being pushed back due to covid

concerns a new date has not been announced. wolf, i'll send it back to you >> rahel, thank you so much. we have 23 minutes left to the session. we are sharply lower across the board today. the nasdaq down about 3%, just shy of that. after the break the ceo of marathon asset management which oversees $23 billion in assets on this volatile market action, and the sector he most likes right now. sales are down from last quarter, but we're hoping things will pick up by q3. yeah...uhhh... doug? [children laughing] sorry about that. umm...what...it's uhh... you alright? [loud exhale] [ding] never settle with power e*trade. it has powerful, easy-to-use tools to help you find opportunities, 24/7 support when you need answers, plus some of the lowest options in futures contract prices around. [ding] get e*trade and start trading today. your shipping manager left to “find themself.”

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dow is down 250 points, all the mainly averages moving lower into the close, following the release of the fed's december minutes last hour. that just accelerated the

losses the nasdaq down 2.7%, though the russell 2000 down almost 3% as well. let's bring in bruce richards, managing $23 billion in aum. bruce, always good to have you you have been warning that this year is going to look different for the equity market. fed just told us it's looking at more aggressive and faster interest rate hikes and tightening of the balance sheet, the 9 trillion dollar balance sheet. is this a preview of what's ahead? >> absolutely, sara. nice to see you. first of all, big fan of chairman powell. but he overplayed his hand and sat there too long with the transitory script, and it didn't work out so well and all of america is going to be paying for that in the form of higher prices and inflation so cpi's running at 6.8% and -- running close to 10%. you see asset inflation everywhere, whether it was

housing prices up 20% or fuel prices up, food. look at port prices up 25% where people are paying for food at the super market inflation is running, it's the supply chain, it's the demand function it's the wage function as well but what it really is, it's the fact that the fed and treasury took the money supply of this country and printed dollar after dollar for years after years down from 7 trillion to 21 trillion, threefold since the '08 crisis and treasuries has also enabled the printing of money, taking the balance sheet from under a trillion to 9 trillion where it is today so now that we know inflation's no longer transitory and it's really running, the question is how does the fed respond and they tipped their hand today. when they tipped their hand, the markets didn't like it, and you'll see that throughout the course of this year.

the year 2019, '20, and '21, the best three-year run for equities that we've seen this century, up 26% on the average investing pick but look at 2018 that's your most instructive year equities went from being up 10 to down 10 that year, closing down 5% on the year. so a 20% pullback, and basically that's how i see 2022 playing out because the fed's ending quantitative easing, they will let their balance sheet run off, and they're going to raise rates. and when that happens, the market won't be prepared for it, and you'll see a major equity contraction. and what you'll see is although multiples, although earnings will increase, multiples will contract so i look at the end of the year, i think that equities can be either side of zero but there's a lot of volatility and a lot of risk between now and end of the year.

>> so, just dive into that a little bit more. a major equity contraction, i think you just said. certainly we're seeing that in tech over the last few days. i don't know if you want to call it major, but the nasdaq's off about 6.3% from its highs. how much damage can be done here, and which parts of the market would you want to avoid or be in >> so, first of all, the damage isn't now, it's really the second half of this year why the second half of the year? because the fed's still doing quantitative easing, they're still expanding their balance sheet. that doesn't end that quantitative easing until the second quarter of this year. and then we'll begin to raise rates until the second half of this year, probably july, maybe august so you're going to see inflation numbers run these next couple months and the market expectations, if the market starts to lead the fed, it could happen earlier, but the fed's really not going to be tightening till the second half of this year so i believe there will be a

rotation, we're just getting the ball rolling, it hasn't really begun to move in any meaningful way relative to what it can move to number one number two, the second it rotates into sectors of defensive. utilities, tele-com, it's pharma, biotech space sector having a good year this year but it's also major rotation into credit. high-yield leverage loans, structure credit, all the credit instruments that last year generated around 5 or 6%, this year we think it'll generate another 5 to 6% irr. and 10, 12% in terms of the credit market. within the equity sector and then on the margin from equities to some of the more yielded credit instruments that are defensive. and in today's environment with earnings strong and gdp still going to run 3% this year, maybe

4% this year, although it'll slow over the course of the year, with that happening it'll be a very benign year for credit so, the big thing to understand for all your viewers is overweight spread with credit and be underweight duration because of the interest rate risk >> i was going to say you're wanting to get duration very short. are you not concerned that that's kind of what everyone says even if the market's -- oh, but credits benign, there's no need to worry about that, and the whole kind of credit sort of suite of opportunities might welcome under pressure as rates rise >> as rates rise they might initially. and that'll be a buying opportunity. so when that happens and when the credit markets trade off because exactly what you said, and i completely agree with you, wolf, you back up the truck and be buying. private credit, expanding that program as well as in the public

credit markets the fault rates will remain at cyclical lows and that is 1% or less for high yield and leverage loans. those spreads and yet have such low default rates. now, why will they be low? because there is still a tremendous amount of liquidity in the system from the credit managers and the sector rotation that's going to happen and, b, it's going to perform well with low default rates. >> bruce, thanks so much for joining us we appreciate it we're going to have to pivot back to these markets as we approach the close, but good to see you. >> nice to see you all we're going commercial free into the close here's a look at what is going to come up in the second hour of the show the ceo of authentic brands will weigh into the year for retailers. and we'll talk to wharton's jeremy siegel. top analysts will join us to

break down gm's big plan in the ev space and how it stacks up against ford and tesla and washington is considering a new round of covid relief. lots to come in the second hour of the trade but much more importantly, we are sharply lower. cnbc senior markets commentator mike santoli here to break down these crucial moments of the trading day. and we've got ritholtz management's josh brown with us as well. let's kick things off with the broader markets. we are pretty much at session lows sort of steadied at those lows for the last 20 minutes the dow, though, is selling off more down 321 now, nearly a percent. the nasdaq is stabilized at around 3%iii% of declines josh brown i'll come to you first of all it seemed to be the fed minutes that triggered this selling. what do you make of it >> i think this new wrinkle about balance sheet runoff seems to have been the trigger just the fact that they're even talking about that at this stage

in the game probably caught some people off guard and just for those that are just tuning in, balance sheet runoff is as bonds mature, they don't replace them, which would be a shrinking of the balance sheet, which would be considered to be way more hawkish than what people's expectations were but that's not really until we have liftoff of the fed funds rate, which the consensus doesn't seem to have moved earlier. so that may, june, july time frame makes sense. maybe it's sooner, but probably it's not the fed has shown every ounce of willingness to wait until they actually feel like they have to do something and they still have to do all of that tapering first. so, that seems to be spooking the hopes and dreams sector of the market, which i would characterize as small cap growth, robinhood is having a horrific day, the amcs and the gamestops, the docusigns and the

teledocs that's really where most of the pain is being felt right now large value down 55 basis points you see green on the screen with staples, materials, energy this is not a market selloff predicated on the economy falling off a cliff or the fed having already made a huge mistake. this is really just, okay, maybe they will be more aggressive than we originally thought but fact is that they can be and should be, and arguably they probably should've started this already. that's the way i choose to interpret it i think a lot of people agree with me. but at the margin you're definitely seeing some fear. >> some fear indeed. flex energy just turned negative it's not necessarily a rally predicated on higher rates for staples and utilities. they usually go the opposite way

of rates so how do you interpret the market message right now >> well, i mean, first of all, things just got pretty destabilized when you have the biggest stocks in the market selling off as hard as they are right now, and the cyclicals have been outperforming. i do think there's defensive this meeting was three weeks ago, and presumably the fed after its press conference with how the markets actually absorbed it, but setting that aside, there is a general sense that there is a lot of pent-up profits to be taken in this market because there are and so therefore, the idea of what's up the most is going to be down the most to start the year that's absolutely happening. if you just look at the year-to-date losers, it's all the software names and stuff that really was up a ton now, you're not going to have a dollar for dollar kind of compensation for those losses by people buying devin energy every

day. i think it makes sense we're having a little bit of a wobble here there was a little bit of a faint in the overall tape in midday when the 2-year note yield touched 80 basis points for a brief period of time, and then it settled back and the market stabilized. and after the fed minutes it shot right up through 80 basis points somewhere in there people are saying let's take some off the table here when the market starts to reprice what the fed's going to do at what pace >> josh, i know you always more buy the dips and stick to your fundamental analysis rather than take profits what risk do you put out there that the microsofts of this world which is down 7% over the course of the last year start to see profit-taking of the same sort of mentality, not for the same scale as the hopes and dreams sector that you so brilliantly named earlier? and that could just proliferate a total change in sentiment to this market regardless of the

fundamentals >> that's a great question we run a tactical model in house that tends to be somewhere between 10 and 20% of our clients' overall portfolios with us a relatively small but important piece of the puzzle. it's 100 rules-based it's never going to trade based on my interpretation of the fed minutes from three weeks ago it's trading on trend. when you pull back the lens a little bit and you look at things like monthly closes on the major averages and you look at 10-month moving averages, you're really still in a massive uptrend. microsoft is a really great example. i'm glad you brought that up the pull-back today and yesterday, while substantial in the near term, is completely irrelevant when you think about what the stock has done over the last three years so as an investor, the ongoing challenge is always to try to understand what is the primary trend, what is the primary direction, and then is what i'm seeing on my screen on any given day part of that far trend or is it counter trend

and very obviously selling in microsoft and apple is counter trend. the prevailing trend, the bigger story is higher and higher prices month after month after month. so, that tact wale model that i mentioned has been fully invested since may of 2020 the primary trend is higher. now, that is not the case for every segment of the market. the hopes and dreams segment certainly is no longer on an uptrend. it hasn't been for quite a while. but bigger picture, the overall stock market is still on an uptrend, and if you're running any sort of rules-based ex strategy, you are not taking today's action and extrapolating a bigger story of this being the end of the bull market because that is just not what's being presented to us right now. >> down 314 on the dow payment and fintech stocks taking a hit despite a number of bullish notes on wall street

today. sofi, robinhood named top 2022 picks. the firm expects sofi to be granted a bank charter in the first half of 2022, believes the payment for order flow regulation risk at robinhood is overstated paypal and mastercard, the top two payment picks at evercorp which predicts strong e-commerce growth in 2022 for paypal. they prefer mastercard to visa due to its market leadership in continental europe meantime, it has been a strong start to the year for the traditional money-centered banks. the kbw bank index up 5% since monday, though it is down today. josh, any opportunities here, especially among the payments sector which lagged last year and looked like it was starting off this year strong >> well, i think if you're a trader, these stocks look horrible short term. i think if you're an investor, some of them have come down so much that they're worth taking a look the name in this group that i'm long is paypal, and i continue

to think that the venmo franchise is going to be one of the dominant ways in which people not only pay for things amongst each other but now start to pay vendors and even start to express trades in things like crypto the venmo platform, i think, is going to make paypal a super app. i think in fintech you have to be a super app i am much more bullish on this than a lot of the other names that have come down that are one-trick ponies, robinhood comes to mind. so this is the type of name -- and, by the way, this thing down 1.73% on a day like today, that are just shows you how much it's already sold off from its high this was a $300 stock this past summer so i think that this stock is trying to bottom, and this would be the type of name i would buy here >> chip stocks, let's hit those because they are also sinking amid the broader tech selloff

here but intel got upgraded to outperform at northland capital markets, the firm saying it believes intel is starting to execute on a coherent strategy for the first time in many years. jeffrey is initiating kla corp with a buy rating today. though those stocks aren't faring as well in the session. jeffrey says tectonic shift let's this group will contribute to its double-digit growth how serious is it getting? >> well, it's the same migration that's happening in the overall market, which is out of momentum, high pe, high-price to sales and kind of crowded names like nvidia and amd, and into things that people didn't think were worth looking at three months ago like intel. intel is absolutely the big cap value, you know, maybe slow to no growth name in the group. and that's just getting the marginal dollar. so, again, we're talking about reallocations here and from overowned to underowned

and i think that's what's happening in general you look at things like nvidia and amd, they start to look a little bit dicey technically but only in the short term because they built up these huge gains even over the last six months, let alone the prior years. >> mike, just over two minutes left of course, take us through the internals as all 11 sectors in the s&p turn negative. >> yeah, wolf. got pretty sloppy obviously since 2:00 a.m. after the fed minutes. before that you had positive breath on the new york stock exchange, and you even had the equal-weighted s&p outperform. but that's certainly turned right here after the mention by the fed of potential fourth rate hike so three to one declining to advancing stocks a lot worse than that on the nasdaq it's more like four to one so clearly a little bit of actual liquidation happening here is on a two, -day basis not escaping any losses.

the volatility index had been pretty quiet it was sort of settling around the 16s and didn't go back to the recent lows. but obviously we've popped up here 20 here as things got a little bit destabilized as we got a little bit closer to the close. that's not really an alarming absolute level but two to three-point pop in the vix definitely shows you people are putting on a little bit of protection in response to this wobble. >> less than a minute to go here before the close take a look at where we are in the market and we are falling even harder there is the nasdaq. it is down 3.26% looks like this is going to be the worst day for the nasdaq since february of last year when it fell 3.5% it's down the sixth down day for the nasdaq in the last seven sessions so it has been hit for a number of days now, and it is reaching the lows you're seeing a selloff in the software names, the chip names as we mentioned, the mega cap tech names it's really pretty broad there is the dow down 380

points s&p 500 down about 1.9% with most sectors in the red. real estate actually the hardest hit along with technology, communication services, consumer discretionary. everything tight around technology and you've got further selling after the fed minutes today from the last meeting so a faster pace of interest rate hikes and talks of drinking the balance sheet. the nasdaq down 3.36% at the close. ♪ >> welcome to the "closing bell," everyone. i'm wilfred frost along with sara eisen and mike santoli, cnbc senior markets commentator. a sharp selloff today, as sara mentioned, for all three of the major averages, but led by the nasdaq down 3.34%. the dow, which had outperformed most of the session. jeremy siegel will weigh in on whether this is a buying opportunity or whether there is

more selling to come josh brown from ritholtz management is still with us. mike, in terms of this intraday move as well, all sectors negative by the close. the dow, which year-to-date, week to date, outperformed so significantly, closing pretty much at the session lows, down 400 points what were your main takeaways from today's session >> you live by a price-weighted index, you die by it salesforce and microsoft together are down 30 points, which means something like 250 dow points of just those two stocks the rest of the market's down more but it does show you why the dow itself also succumbed even when you had things like energy and financials outperforming a very weak tape. markets knocked off course by what was an orderly-feeling rotation from, you know, stable defensive growth into economically cyclical value that

was happening for two days a lot of people came into the year thinking that should be the trade. they were probably feeling pretty smart for two days. and now it seems as if we have to rethink exactly what the fed's intentions are perhaps, and then what it might mean for the cost of capital, everything else the credit markets have not freaked out. it is just a little bit of a, you know, kind of a poke to people who had thought they had, you know, something figured out in terms of the cadence of the way this year might start. >> and just into the close, every sector went negative, including utilities, staples and materials which were holding up better than the rest josh, you made the point that you shouldn't necessarily rethink the long-term picture of the market that there's still a bullish uptrend. but should you be thinking where in the market you're exposed, given we are on the brink of a major policy shift from the fed, and the fed is looking increasingly aggressive about going about it >> if you believe the story, and

there's a lot of evidence that you should, if you believe the story that small caps are the canary in the coal mine and will lead coming into a new economic expansion, then what happened last year in the small cap space is somewhat remarkable you basically had a situation where small cap growth, i think, was up about 2%. hugely trailing the overall stock market but small cap value is -- sorry? oh >> go on, josh >> small cap value is up almost 30%. so, that did not happen in the large caps but that was a distinct phenomenon happening amongst the small caps so when we say small cap value, what are we talking about? industrials, energy companies, and a whole lot of banks if you were to see that type of action echoed in large caps this year, that would be significant given how long large cap growth

has been smashing large cap value. this past year they were neck and neck this is the year where large cap value might actually take the baton. and if in fact that were to happen, that would be very interesting for all of the investors who sat there last year saying, this is a circus, this is a bubble, this is a carnival, i can't watch kids do these trades anymore, i can't stand the crypto stuff, the spac stuff, the ipos, the electric vehicles those stocks, those areas of the markets have been absolutely slaughtered, down 40, 50, 60%. and you're just not seeing that in the, quote, unquote, real economy names. they look fantastic, today's pullback notwithstanding, and it would be very interesting to see a correction continue in the hope and dream sector while that area of the market that really hadn't been doing great since 2015 starts to take the lead so i'm very anxious to see if

that's the tone of the tape in q1 of this year. there's a lot of reason to believe that it could be as the fed continues to become a bigger risk than omicron. >> the russell 2000 lost 3.3%. so not happening yet it closed down more than 10% from the highs so officially in correction. treasury yields spiking today after the federal reserve did release those minutes from the december meeting this afternoon, extending this week's bond market selloff the two-year note yield hitting its highest level since march 2020 the 10-year hitting its highest level since april. let's bring in global head of rates strategy what a good day to have you on what was it about the fed minutes that really spooked the overall market and caused this big jump-up in rates >> thanks for having me. so i think the fed minutes put in context that december really hawkish meeting. and we heard from the fed that actually the last cycle

normalization path, that that may not be the playbook for sort of, you know, this exit. and so that the fed could be faster, they could be sooner and i think the market's starting to price that risk in i would argue that a lot has been priced to the front we're pricing an almost 80% chance of the first hike in march. so i think the start of the cycle is priced in it's really now about the second and the third year and the balance sheet runoff and the fed is suggesting that they might be eleveletting the balance sheet cycle run off faster we're looking for the 10-year to rise closer to 2%. >> so there's a lot of literature and academics and historical references for interest rate increases, not as much on the balance sheet shrinking. yes, we can look in the last decade or so, but what should investors be prepared for here as the fed looks to start shrinking more aggressively than

last time that 9 trillion dollar balance sheet? >> sure. so i think balance sheet runoff, at that point it's not just normalization, it's clear tightening investors need to be looking at how soon does that happen and how quickly do they phase that in the increase in treasury supply last year was gradually ramping up over the course of the year today they suggested that it might be faster. we have a lot of treasury supply to contend with once they start balance sheet runoff i think those interest rates and that long end can start to move higher i would look at 10-year real rates have been extremely low. that's one of the reasons why risk assets love this move even though rates have risen, it was all inflation linked if those real rates start to rise a lot, that's when interest rates start to hurt the economy, they start to hurt risk assets i still think we're very low but another 50 basis points higher, because when the fed lets the balance sheet run off,

the u.s. treasury will need to issue more treasuries. we have auctions three weeks in a month. we need to bring in investors from other asset classes, equities being one and that's why i think the broader market cares about balance sheet runoff because we've got a large deficit, and then we'll have balance sheet runoff meaning more treasuries which would drive investors from other asset classes into treasuries that's when i think it starts to filter through across broad asset classes. >> what is your view, priya, on the fundamental economy and the outlook for inflation? if we do see a big market wobble because of what the fed is planning to do and likely to do, do you think they'll have much wiggle room to pull back if the market's scaring them? or will inflation force their hand >> sure. i'm glad you asked that because i would say since the december fed meeting, it's all been about the fed reaction there's the economic outlook here as well and i think the reason why the fed has been hawkish is they are

responding to high inflation, they are responding to wage inflation, much of that over the last year or so is why the fed has sort of shifted. well, what about going forward our view is a significant fiscal drag we see growth momentum slowing there's also the omicron impact. i think the market's looking through it as a temporary impact it's absolutely having an impact in the travel industry across the service sector we actually think that's going to slow the fed in terms of how quickly they can hike. i put your question in context of the economy you get tighter financial conditions with the growth momentum slowing, and that gives the fed pause to, you know, some caution, and they can slow their normalization. if the economy's able to look through omicron and is able to handle a fiscal drag, then i think tighter financial -- is exactly what the fed wants so i think it will depend, we have a key data report coming out tomorrow with ism services we have payrolls

might be too early to see the impact in payrolls another few months of the labor data i think is going to be important whether the fed will be comfortable with the tighter financial conditions, which come from normalization do they think the economy can handle it? i think we're not entirely -- we don't have that much comfort that the economy will be able to handle a significant tightening in financial conditions given the amount of fiscal contraction that is happening. a lot of that far fiscal support over the last couple of years has stopped. and, so, that's why our view is that actually the fed will end up -- they are sounding really hawkish, they are trying to control inflation expectations but when it comes down to actual steps, we actually think they will be more cautious in that exit because they don't want to tighten conditions too fast and delay the recovery >> priya, thanks so much for joining us, we appreciate it great to get that take in terms of the outlook for rates and what the fed might be doing. josh, before we let you go, we want to get your zone in trade

idea i don't know if you changed it during the course of today's session with things pulling back but what's your pick >> my new zone in as of today's close is cash. [ laughter ] i know we had originally planned to spend more time on semi capital equipment. the big question in that market is whether or not it's even cyclical anymore like, we may have crossed over to the point where there is so much demand for chips from so many sectors of the market that the right way to think about this group may no longer be that it's going to be prone to these big swings up and down in demand like, it's not about pcs and phones anymore there was a chip in my lunch today. now, it was a vinegar and salt chip, but still. so i've been looking at this name ultra clean holdings, ucct. this is the type of stock that if it really gets whacked on broader market volatility, is the type of name that i would pull the trigger on. it's in the same space as koa

and amat and lam research. it's in a red hot space. but i feel, technically, it's got a breakout brewing around 60, 65 so i'm stalking names like these. i didn't get a chance to buy this one, but i'm very bullish on its sector. i want to say one more thing i totally agree with what priya said the fed's going to do much more talking than they are hiking because they are governed by two very important things. the first one i mentioned the other day which is that they're not going to deliberately invert the yield curve. so if they start going too far and the market calls b.s. on them and you start seeing that 10-year yield fade as demand for risk wealth assets increases, that's going to slow them down it did in 2018, and it will again. the second thing is, and no offense to anyone that doesn't believe in this, the 200-day moving average, historically over the last ten years, that has been one of the bigg governs

of the fed's behavior and the types of statements they've been willing to make publicly i don't think that jerome powell, given his formative experience running the show in 2018, is anxious to see us violate the 200-day moving average in the s&p given how important stocks are to the economy, or deliberately invert the yield curve for no reason. so let them say whatever they want in their minutes. let's see what they actually do. and something tells me priya's going to be exactly right in her take all right, that's it, i'm done >> that's a good point josh, thank you. we do have some breaking news right now. hasbro just out and announcing the appointment of a new ceo chris cocks will take over for the interim ceo stoddard who stepped in after the longtime and beloved ceo of goldsner.

he's actually been with the company since 2016 where he joined from microsoft. he takes over the ceo job effectively february 25th. hasbro for its part has done really well and, in part, because of wizards of the coast, which is a business that cocks ran. they have dungeons and dragons, magix, the card explosion. their big buyers are gen-z and gen-x, millennials they've really transformed that business and broadened the appeal, something he possibly could do with the other hasbro franchise as the stock is trading at a near and all-time high even though they've had some hiccups with the supply chain and manufacturing issues no real reaction here in the after hours. but an important step for investors certainly that they're getting a permanent ceo who is also a cincinnatian. we're just getting started here on the second hour of "closing

bell." coming up on the show, wharton professor jeremy siegel. and then we will take the pulse of the consumer and whether the omicron surge is hurting brick and mortar retail sales when we are joined exclusively by the ceo of authentic brands. they own all sorts of everyday brands that you have surely seen in your malls. we're back in just two minutes

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it's been a rough week for tech and many other parts of the market but check out the weekly move in some of the mall names up more than 6%, retailers like gap, ralph lauren, best buy, nordstrom all outperforming the broader markets this year. the omicron wave causes some retailers to cut back store hours this month joining us now jamie salter. welcome back to the show have you seen any impact on store traffic and consumer behavior as a result of this

surge in omicron >> um, no. where did you go >> we got you. >> okay. no, i have not seen any slowdown at all on omicron, not even the malls, there is no slowdown at all. people are still out shopping. and more importantly, we're making sure that at the head office that everyone is vaccinated and making sure that everyone is safe >> i just mentioned some of the performance of the mall operators. what specifically are you seeing in the mall as the consumer, as you say, remains pretty strong it sounds like the mall is not dead >> the mall is definitely not dead the malls are very busy. what you're seeing, though, is people are coming into the mall, they're going specifically to the stores that they want to go to they know exactly what they want

to buy, and generally the baskets are much bigger than they have been in the past they're maybe not roaming around the mall as much they're very specific on what stores they want to go into. >> jamie, i wanted to get to your david beckham deal, which maybe we're getting to too early. and sara had some more important questions to come first. >> no, i was going to start there, but i wanted you to go first on that. >> well, there we go, good teamwork as usual. jamie, tell us exactly about the intricacies of the deal that you might be able to tell us does he get approval on everything you do? is it a partnership? do you have a majority >> i mean, obviously we have not put out any press release on the david beckham deal we don't calm it on rumors or a speculation. so at this point if there is a david beckham deal to talk about, i promise, wilfred and

sara, you will be the first people that i call and fill you in on what's going on. and i'm sure if there's a deal to talk about, david would be happy to come on the show, too >> okay. >> oh, good. >> so, there is not a deal of any shape or form to announce yet? >> that would be a correct statement. >> although you have been getting more into the rights of athletes, celebrities. i know you've got this big deal with shaq. is that a growth area? why are you seeing value in people like david beckham if you were to do a deal? >> i mean, there's definitely -- you know, our entertainment business is about 25% of our total turnover today and abg's doing approximately $21 billion of retail revenue globally so, we see big value in these celebrities not only, you know, on the endorsement side, the

merchandise be side, but they also collaborate with our other brands that are within our portfolio. i think we're just continuing to build our ecosystem inside abg today abg has over 300 million social media followers and, as you know, social media is really part of the weave of the world that we're all living in so, it wouldn't be, you know, a bad idea to have someone like a david beckham in our portfolio that does have a world-class social media following >> it will be interesting to see if that happens if you can move him from adidas. but i know there's nothing more to discuss on that in the moment my question is how will you weigh up with all the areas of expertise that you guys have at authentic brands whether it makes more sense for a celebrity to launch their own self-named brand versus getting them to

partner and endorse with an existing brand >> i mean, look, i think it depends on the category. something like shaquille, certain products make sense to have shaq's name on it, and then certain products do not make sense to have shaq's name on it. so, you could have a shaq running shoe for children and it does incredibly well, his kids' footwear line. but then you could have a collaboration with reebok who also does incredibly well. so it really does depend on product, category, and gender. >> there's also the nfts and the metaverse which i know you're doing some partnerships with how are you thinking about all of that? >> nfts is definitely a very strong booming part of the business it's new, but we had a strong fourth quarter on the nft side,

and we're going to continue to push our nfts, especially with our celebrity and entertainment business, "sports illustrated," terry o'neill, we got a very big launch coming up with terry o'neill collection that you will hear about over the next couple of weeks >> cool. finally, jamie, just, any update on the supply chain issues is it getting better or worse or sort of the same >> i mean, supply chain, you know, truth be told, we're bringing things in six weeks, you know, early. so, there is a little bit of slowdown, but because we're bringing things in six weeks early, it's really not affecting us too much. where we are seeing still continue issues is on the, you know, freight costs and the shipping costs, and we'd like to see that come down but, interesting enough, we are

the first few days into january, and discounts are not as heavy as they have been in the past. so that's sort of a bright spot on the retail side and i still -- you know, we're still seeing very, very strong margins all the way through '21. and i think that '22 is going to be up 2.5 to, you know, 5% on the retail side. we were up 15% on the retail side of our business yes, e-commerce was through the roof for us and for everybody. but we're still seeing bricks and mortar is continuing to grow and i think that, you know, that last mile is incredibly important, and people that have a real retail stores especially in the simon property malls, because they have all the rate-a locations, they can get the product to the consumers incredibly fast. so, i think the omni channel is ultimately, you know, going to be a very, very big winner in

the years to come. >> jamie salter, thank you for the update we appreciate it next time with david beckham, if you have a deal. >> sara, i promise you i am going to call you first. and i'm sure that you'll be very happy to talk to us. >> and, sara, you've got - >> and wilfred will be happier >> sara's just looking for a date with david. >> well, i think i'm the one that wants to get him back on again more, jamie. but, anyway, either way, we hope the deal happens for many years, not least we can get him back on "closing bell. we did have him once before, which don't tell the bank ceos and the politicians, sara, it was probably my proudest moment as a television presenter. sticking with retail, costco sales numbers are out. and courtney reagan here with that court? >> reporter: i mean, i'm no david beckham, but i've got costco numbers for you, wilfred.

so for the total company for the month of december, costco putting up 14.5% increase in comparable sales for the total company, including gas united states loan actually stronger than that for the five weeks end of january 2nd, up 15.9%. e-commerce for the total company, for the five weeks into january 2nd, was up 17.8% over the year prior shares down slightly here after hours. wilfred and sara, back to you. >> courtney, thanks so much. up next jeremy siegel on today's massive selloff.

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tonight, tragedy in philadelphia more than a dozen dead in a massive fire we're live on the ground plus, the attorney general speaks on the january 6th investigation.

welcome back big selloff on wall street today. nasdaq having its worst day since february of last year. casinos getting hit hard >> in sports betting take a look at draft kings it was down almost 8% there, 7.5% rush street interactive closed down 7.5%. this space remains heavily promotional. investors are increasingly uncomfortable with those cash-burning companies

and then hong kong tightening travel that's bad for macau you're seeing that reflected especially in melco. look at sands, wynn. worries here over fourth quarter earnings, the impract of omicron fear of the fed all weighing on these gaming names wilf >> contessa, thank you tech of course got crushed today with the nasdaq down more than 3%. let's discuss now with jeremy siegel, professor siegel, thanks for joining us to start things off, i'm actually going to ask about yields what do you make in the rise in yields over the course of the last two or three trading sessions and those minutes from the fed today? >> well, as you know, will, i've been saying for over a year the fed had to befar more aggressive than the market had expected with the inflation, i think never temporary, and going to get worse and i think the minutes in

december reflect a lot of concern of those fed officials and i think the market is beginning to say, yeah, they are going to get serious i heard steve liesman say that there's a 40% chance of four rate hikes i think a couple weeks ago i told sara there was going to be eight rate hikes and everyone jumped. i think they're going to do many more than four rate hikes coming up and i think that that fear is now what we see in the 10-year bond >> but here's the problem, professor siegel the nasdaq fell 3.5% today, and the s&p, you know, got hit pretty hard as well. and how many more of those days can the fed stomach? in other words, did the fed miss its window inflation looks like it may be peaking. and if we continue to see these financial conditions, then things might tighten fast, not really affording them the opportunity to do rate hikes >> well, let me comment on it a

little bit i love josh and i heard you interview him a little bit more, saying we can't repeat 2018, but we're in a very different situation. we have $4 trillion more of reserves in the bank than we did back then. so when they began to run it off, it was beginning to tighten on the bank. we got 4 trillion. and we also have an inflation problem. back then we had zero inflation, inflation below the fed target so, remember, we are virtually at full employment, in some measures over full employment. and the second important goal of the fed, and some say the most important goal of the fed is controlling prices so, yeah, there may be a market reaction i actually think it's a rotation, that's what you're seeing i still think we could have a good market this year. but certainly those with good cash flows are going to benefit at those that have the discount rates go way out in the future when the fed is being aggressive so i don't think it's going to be a bad market. i thinks going to be a rotated

market and i see that's what you've been seeing in the last two or three days >> what about professor siegel those companies that, while they have good cash flows, do have quite rich multiples like a microsoft, which was down almost 4% today i mean, is this the start of something more meaningful in terms of pullbacks for those types of stocks or not >> well, i think anything with a higher multiple is more vulnerable just on the basis of simple financial arithmetic when you raise the discount rates, the higher the multiple, which means you're discounting further out in the future, means a bigger price drop and that's the tilt that you're actually experiencing now. and i would not be surprised at all to see that tilt continue throughout this year certainly the more conservative stocks, i mean, 40 is certainly not 400 times revenue.

they're not going to be hit anywhere near as much as what we see when we take a look at what is down 30, 40, 50%, those are the ones that are going to be hit the most now, i actually think the value stocks this year will be up. i think even the s&p could be up 10% this year. but i think you're going to see the rotation because of the interest rates >> i was going to ask about the market multiple for the s&p 500. what is it trading at 20 times next year's earnings that's historically higher than average. and just what type of hit the s&p 500 itself could take in the environment that you envision. >> yeah. actually it's selling at around 22 times earnings, a little bit more expensive even if the fed raises, as i say, to 2% and the 10-year goes to 2.5 or 3, that is still extremely low. with those low interest rates,

you would expect the market to go back to its 200-year average of a 15 pe when interest rates were much higher than today. and the markets were nowhere near as liquid as today. in fact, i've often said i think the normal range of price earnings rate is always 20 to 22, and we're in that normal range right now. >> so, overall, professor siegel, when you mention that we could still have a good day overall -- a good year overall for the major indices, do you think that that comes by year end as opposed to immediately bouncing this week, next week from these small pullbacks like we kind of seemingly did throughout all of last year? do you think we will have a 10, 20% pullback in q1 or q2 >> well, remember i think i coined the term last year, the taper tremors. whenever you hear that they're going to have to notch up, you're going to have a day like today. and then people are going to say, yeah, where else am i going to go? i don't want to go into bonds, i don't want to go into cash, i

want to go into real assets. so in between times the market will be supported, the fed is going to have to tighten again you'll see the rotation, the tremors are going to come and they're going to be out through the year and that's why we're not going to have a 2021, 26% gain but we still certainly could have an 8 to 10% gain with the rotation taking place. >> yeah, all about the value jeremy siegel, professor, thank you. good to see you. >> thank you very much walmart is doubling down on its bet that consumers want groceries delivered directly to their fridge details straight ahead and later, find out how another potential round of covid stimulus funding being dcuedisss on capitol hill could impact wall street and your wallet. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect.

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at least a century 13 people are dead, seven of them children. two others are in critical condition. officials say they were all in a crowded two-unit row house where 26 people were staying four smoke alarms in the building do not appear to have been working attorney general merrick garland said he will not rest until everyone involved in the deadly attack on capitol hill have been held accountable garland says the justice department will follow the facts wherever they lead and walmart is cutting in half the paid leave to employees. walmart is the largest private u.s. employer and could serve as a bellwether for other major employers looking to reduce covid leave. on the news, from innovative ways to work remotely incentive aimed to get employees back into the office that's all tonight 7:00 p.m. eastern time back to you, sara>> melissa lee, thank you. we'll see you later.

as melissa mentioned, walmart, it certainly was a bright spot today. up 1.3%. the dow itself lost more than 300 points the company making some news in the delivery space earlier frank holland here with more frank? >> hey there, sara walmart says 30 million customers will now able to get its high-tech delivery service called inhome this year. that's up from 6 million, adding major cities like los angeles and chicago. this is a demo of the service. they place your items in your refrigerator, your kitchen or in your garage. the delivery, it's also recorded you can also watch it live orders placed by 1:00 a.m. are delivered by noon the same day you can also schedule for one of your online returns to be picked up by the associates walmart is hiring 3,000 workers for this expansion and paying 9% more than the company's average wage the 3,700 walmart stores, they're going to serve as warehouses this is going to put a lot of pressure on meal delivery stocks

and also provide strong competition for amazon's grossy delivery service called amazon fresh. sara, back over to you >> frank holland, thank you. coming up, cashing in on the ev craze gm unveiling its electric truck today. we'll get an analyst's take on what it could mean for the company's bottom line and its stock price. and don't miss the premiere of "american greed." it is the 15th season. :00 p.m. eastern time right here on cnbc "closing bell" will be right back and to be prepared if anything changes. with ibm, you can do both. your business can bring data together across your clouds, from suppliers to shippers, to the factory floor. so whatever comes your way, the wheels keep moving. seamlessly modernizing your operations, that's why so many businesses work with ibm.

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as omicron cases spike in this country, let's go back to mike santoli for a look at global mobility data amid this latest surge mike >> yeah, sara. a much more muted effect on the economy on people moving around versus previous covid waves. that's part of the premise of what we've been seeing in markets, people feel as if the economy is not really as restrained as it was back in prior waves. this is from jp morgan, obviously showing the new cases. this is coming into the week we know that as of yesterday we went up to a million but coming into the week you saw this vertical spike in new cases, and a decline in the mobility indicator that's to about 8% below 2019 levels so obviously a significant hit look at what happened last time with a much lower spike in new cases is we were 25, 28% back

there about a little over a year ago. this goes to that idea that in general we didn't have as much of a risk aversion move or a change in real economic behavior so far, anyway, when it's come to omicron this sets the scene for what the fed's talking about and what the real economy might be capable of this year. >> mike, thank you gm unveiling its first electric truck today. we'll discuss what that could mean with an analyst who's bullish on gm. and bitcoin, 44,000 now, down 5%, maybe not falling on of a cliff in terms of bitcoin moves, but it's kind of really held ground below 50k for a while now. erca lel0, signifintev the.

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tonight, tragedy in philadelphia more than a dozen dead in a massive fire we're live on the ground plus, the attorney general spea

auto and ev stocks mostly lower today, including general motors the company debuting its new model. it is a push to expand its ev lineup as demand heats up for the sector

the stock down along with pretty much everything. clearly these traditional auto names have performed very well, though, over the last year or so, playing a bit of catch-up to the teslas of this world are we now we're back into a phase where there's unbelievable competition with more pockets like ev pick ups. >> yeah, there's no doubt that competition is increasing. we compared it to the 1920s where you had dozens of car companies. the strategy gm pursued there i like the strategy they are doing now. offer a variety of products with common underbidding and use that to go after the smaller players as well.

it's just one vehicle in a much broader ev line up from gm >> what a well received announcement yesterday from ford they were upgrading the capacity which stock do you want to be in ford has so much out performed gm over the last 12 months but both have done quite well. >> we have over weights on both. the big question is where between the 8.5 and the p/e of ford and about 300 p/e of tesla is the right for an auto stock that's active in the evs the advantage ford has is it's a skunk work product it's not a scaleable platform. they made important progress in transitioning the broad from an ice brand that dates back nearly over a century into an ev brand. gm is a bit later but has a much more solid underpinning of flat form economics >> what is the p/e multiple on

both of these companies, gm and ford now are they still relatively cheap but are they going kind of expensive compared to their own recent history >> compared to recent history they're still even about half the multiple of the overall s&p 500. they both have interesting robo taxi subsidiaries. they still are that in the u.s

all of that bodes well for multiple expansion >> what is baked into these prices and others in terms of consumer adoption. if it does feel like we're at a turning point and growing fast especially if you look at tesla's numbers lately but where is the market versus what actually might happen. >> yeah, i don't think you need heroic evassumptions the people deep in the auto stocks have the relative economics producing gas pick up truck versus ev. if it's slower than they still have the very ice businesses if it's faster, they both have plans to transition factories into the ev world. >> we'll leave it there. thank you for joining us up next, more stimulus on the horizon. lawmakers in talks for more coronavirus relief we'll tell you the latest from

d.c. when closing bell comes right back

mpl new report suggesting lawmakers discussing more covid stimulus what do we know?

>> i confirmed there's preliminary but bipartisan discussions about ways to give more money out to businesses over in the house, 60 lawmakers are calling to help restaurant, gyms and hotels as well. he wrote tens of thousands of small businesses are looking at out right closer barring federal relief some republicans are throwing cold water on this idea saying the answer is to open the economy, not another taxpayer bail out back over the you.

>> especially the question, colliding with this inflation problem, which is a problem for the biden administration politically and economically might be hard to make the case that more money should go into this economy even if some of those businesses do really need it because they have been hit so hard. >> yeah, that's the argument you're going to hear from republicans. i would point out some of the money that cardon and whenicker have been talking about could be repurposed they could use it for a different kind of purpose. that will be constraining the potential size of this package the washington post is reporting it will be about $68 billion which is a lot of money but compared to the trillions of dollars in covid relief we have seen pump into the economy is just a drop in the bucket. >> thank you today was a tough day for investors in the market. the s&p lost 2%.

technology down more than 3% the fed is increasingly aggressive and hawkish >> i feel there's not a lot of concrete valuation support behind a lot of the big nasdaq names and especially the small ones that have been obliterated. it's one less reason why your compiling into those names in first place. i still think it's the case. the fed is not going to necessarily try to over shoot beyond what the economy is ready for. it's trying to get lucky and hope that inflation starts to recr recede on its own.

i don't think the bigger picture has changed. this positioning shot into the underown cheaper stuff that is what's making it sloppy today. >> have a lot of voices on this all day tonight and tomorrow >> we look forward to that we're out of time. "fast money" starts tonight. a hawk attack. stocks selling off in the back of today's minute. is the party oafver for the bul? dinosaur tech roaring back to life. we're breaking down what worked today welcome to fast money. tonight's trader line up we start off w