softness in equity markets it still has a back channel towards a bit of buying and treasurys, but of course, we all know that the days of buying treasurys when stocks go down, those days, for the most part are gone because treasury is leading the way at the beckoning of the federal reserve and that is the nervousness in the marketplace and you will also see a one-week chart of the dollar index and for the most part it's a positive sign. remember, one of the issues with weak gdp we learned last week down 1.4% was the fact that we have record trade deficits which in itself is a slight positive because of the domestic demand that's a good thing. people want to buy things and the strong dollar, let's them buy more than it would if it was weaker however, here's the dark side of the strong dollar that if you look at other economies, emerging markets there's a lot of dollar-denominated debt in the world because at the time was issued that was a big positive and procuring those dollars gets

to be an expensive proposition so we have to watch all of this as the lead into what is a perceived half-point tightening and as was pointed out, this is in itsen fancy with respect to the actions and the pricing in is much more mature and both of those will meet at some point in the future and that's going to be the big trade for equities. kelly, back to you >> thank you, rick let's send it to bob pisani at the new york stock exchange watching the effect on the yields. >> it's not helping anything and it's not helping the bank stocks, kelly. very choppy trading, but we're at the lows of the day the dow is below a 52-week high a short while ago. we could violate that. the s&p 500 nearing the lows of last may the nasdaq is at a 17-month low and that broke through that some time ago in terms of the dow movers oil popped up from 101 to 105 late in the morning and that's given a nice lift to some of the energy names so chevron's up,

most of the big energy names also trading to the upside microsoft's doing well, but a lot of the industrials like boeing are sitting at 52-week lows right now and many of the banks like j.p. morgan also at 52-week lows and see the dow movers beaten up tech is reboundzing a tech, media, telecom, paypal, facebook and a whole bunch of stocks that have had a very tough time in the last couple of months all rebounding today. that's good news by and largeo show you malls and regional malls

n, bank of america down despite the yields and the catalyst tomorrow -- or wednesday, kelly and tyler will be the federal reserve meeting back to you, tiler >> thank you very much from the consumer to the inflation to the economy to interest rates no one has a better look at where we stand right now than our next guest. bank of america ceo brian moynihan joins us live from the world medical innovation forum with our own bertha coombs ber bertha, the floor is yours >> thank you very much, tyler and this so much, brian, for having me here at the world medical innovation forum and having me this afternoon we have come off a volatile month and it is not looking any different in the start of may. you talked about how resilient the consumer seems and you seem very buoyant about the economy as we are looking at things here over the last couple of weeks and we're going into the fed raising interest rates this week, where do you stand now >> well, if you look at -- first

of all, bertha, thank you for coming to boston and helping host the conference with some of the great medical innovators, just walking down the hall, thi is about saving people's lives and we have to keep that in mind the month of april, consumers are stronger than they were in march and the consumers continue to spend money and people say they're spending more because inflation raised prices. the reality is the transaction volume is rising which mean happens they're going out to eats one time a not and not three. you are seeing the money being spent and you see the money in the accounts go down and build, which frankly, poses a tougher challenge to the fed and it slows down a consumer-driven economy and you heard santelli say earlier that the imports and stuff are strong because people are still demanding good and that's a good, final demand and we have the tug-of-war and business in great credit shape and trying to get goods and

services and trying to get employees and that's creating worry after the fed gets structure and oddly enough when raids are rising, the bank stocks are going up and the debate about recession we don't see any of that, our credit quality is as strong as it's been and the loan origination. >> obviously, one data point does not a trend make, but we certainly saw that first reading on gdp was contraction for the first quarter. we just saw ism disappoint and a lot of those numbers were lower, as well. could we be seeing some of the cracks and if the fed continues on this pace, the expectation is half a percent this week, but some people are starting to say maybe in july you'll be doing three-quarters of a percent. can they engineer this, get ahead of inflation without putting us into some kind of deep recession >> you used the word deep and they're trying to have a soft landing and not a deep landing that's the job they're trying to

manage the thing is the statistic you talked about, the one you didn't talk about was the labor market and last week it was 180,000 new claim of unemployment and the labor force was one-half that size 80 million people versus 150 and whatever it was, exactly think about that on a relative basis the labor market is very strong and that's the difficult challenge for the fed is to actually get the labor market to cool down. rising wages, and 1.7 plus jobs for every job that's open. 10% under employment with places needing workers and services, sites and sectors and that will be the tension simply put, from late last fall into early part of this year and our experts in the bank of america research team have lowered their estimates for gdp this year and next year because as interest rates move up, it's had an effect and the fed has yet to raise rates and people lowered estimates in anticipation and it's slightly under three this year and

slightly under two this year and slightly under four since last november and december, and that's what the fed's trying to achieve and the trick to your execution is to have unemployment at this low level and job strength at this low level and wages at this high growth level and trying to slow it down with only interest rates and balance sheet, and that's the execution because they can't create human beings to work. that's not the fed's role and that's our role and whether it's immigration or bringing more people into the workforce. that's the tricky execution. >> one of the things we talked about on stage is healthcare you spent $2 billion on healthcare and it's increasingly important with benefits in trying to retain people as they see flexibility to move around i wonder, as you work with providers like mass general, what are you trying to do to

rein in costs? i know everybody says it's about outcome, but that's a big ticket to write f . >> for us, the family members on our programs and we're self-insured and if you think about it, the key is to get people to get themselves more well and that's exercise, that's mental health and that's maintenance drugs and our maintenance drugs and plans are free for routine drugs and it's all free you are driving down the cost for the employee and you have the incentives on klugs whether it's cholesterol mants nance or whatever the drug is we're trying to figure out ways to drive that and we work with mass general to provide access to treatments that we can provide for all of our employees with access to trials when there is a serious case. those are very neutral circumstances and the real way is to lower the cost across time and you're not going to change it for next year the big change is mental

wellness and we've had 12 sessions you can get for mental wellness for free and we're trying to get people to use the system buzz frankly, if disease progresses with the person, stress progresses the health-related aspects and also missing work and things like that so it's all in our best interest to do this well and it's getting our teammateto figure out how to do better for they and their family and we kept the cost flat and we're below 75,000 and 50,000 and i paid to what they pay today and we're driving costs as the system and ours are flat and the teammates remain the same. >> tyler matheson has a question tyler? >> i'd like to join your plan. it sounds pretty good, but i'll pull you back, if i might, to interest rates and particularly mortgage rates which on the 30-year conventional are now in

the fives. the mid-fives and we haven't seen that for many, many years and that's a breath taker for people entering the housing market particularly after we've been spoiled by rates in the threes and lower what is it going to do to housing, to homebuilders and generally to the economy because housing is such an important part of it >> well, again, we're in unprecedented times because we still have a lack of housing even though rates are going up which generally curtail demand you know that, that's why the rates -- the fed raises rates and the whole rate curve moves up and slows down and the cost of -- increase the cost of financing and we just don't have enough units that's why you don't hear the home building and stuff say they're slowing down, so all of this will come and i think hsi last year to last month i think it was up 20% or something like that and that's an unsustainable level and we shouldn't cheer for

that, and we should get the level back out and yes, for an individual person entering the housing market today, 5% on a $300,000, that's $6,000, $5,000 a month more expensive and to qualify for that someone would have to make $100,000 in the household or even more it's not going to make or break the decision, but it would make it more expensive and slow it down, but that is the intended effect of what they're trying to accomplish with removing the accommodation in a very strong growing economy with very low unemployment, they from to move the combination because we'll have inflation that will put it out of reach as much as everything else. >> i have to ask you one more question in terms of banking and finance. your friend, warren buffett, this weekend talked about his theory on cryptocurrencies saying he doesn't see the value in it. he doesn't understand it, but you on the other hand, with merrill need to be able too meet

the needs of some of your younger clients who are all clmorring to trade crypto. what are your thoughts about making itty is success frl. >> every day, we have to seek a pruals our research team -- but the infrom structure and the web3 and all of the things that people talk about and yes, they research that so we do that and that feeds into the high net worth and we have very limited ability offerings in high net worth and very limited, honestly >> would you like regulators to be able to give you that are you getting demand from clients? the system needs to be regulated. at the end of the day, if someone gives you money and you store it for them that sounds like you're taking a deposit and people have to think about it. if it's really a currency, the

government has the right to prince currencies. until that regulation comes out it's not something we can do much about we can do futures and things like that, but very limited. >> brian moynihan, thank you so much for joining us. we really appreciate it. good to see you. tyler. >> bertha, thank you and mr. moynihan, thank you, as well. this week as they were just talking about, all about the fed and earnings given the extreme stock market reactions we've seen to quarterly results so far and there are a few stocks in particular our next guest is watching stephanie link portfolio manager at hightower advisers and cnbc contributor and a member of the stock draft of 2022. welcome, stephanie good to have you with us. >> go team link. >> go team link! >> the strongest link. let's talk about the fed i think there's not a lot of suspense here about what they may do i guess there is more suspense

about what they may say. once we get this move out of the way, do you think stocks may find some footing? in other words, rally because, well, at least that one's over >> yeah. well it could certainly we could see a relief rally we're down so much into it, right? but unfortunately,tyler, the unknowns don't go away, right? the fed may raise 50 and talk more hawkish and they may do 50 again the following meeting and then 50 the following meeting and they don't know the outcome and quite honestly, that even if they did three 50s in a row that could improve inflation. i think inflation is here to stay and it will remain elevated that and then we have the wars so all of this unknown has led to multiple contraction, right because the irony of it all is earnings are actually going higher that we've had 75% of the companies beat expectations, right? and the estimates are going higher and multiples are coming down because the unknowns and this is normal could we get to 16 times and

we're at 17.7 times now. we certainly could and i wouldn't be surprised, but i am looking for stocks this sell off in the wake of all of this and i think there are opportunities if you are longer term. >> we will get to them in just a moment right now the dow off session lows off more than 400 points. this is a sticky time and it is for consumers, as well you've got rising prices, falling health and you've got rising costs of everything including the cost of money and then as you point out, you've got all kinds of exogenous factors like the shutdown in china, like the war in ukraine is it time to declare the great bull market dead and does it matter >>. >> yeah. i don't know if it matters i was encouraged to hear how strong and resilience the consumer is, and i think the consumer will hang in there and maybe it will not be to the extent right now and the consumer is 70% of the gdp and

we have seen an absolute explosion in services and services is two-thirds of consumption. and so you're rooting for the consumer we all are, and the job market is hot as can be and the consumer can handle higher interest rates and it's not unknown as to does the fed overshoot because we know they're so behind the curve. there are questions, tyler i don't think the bull market is did and they won't do as much of raising rates. >> i'ming iffing to go in reverse order, the number been that, petia talked about it being a reopening play and i'll go to z, zootis. you have animal pet stuff and they cost a lot of money >> they do cost a lot of money they did a survey of 16,000 pet owners and 86% of the people said they would spend at any cost for their pets.

this is a $42 billion markets, and it's growing at 10% to 15% per year and this company, zoetis, they have a great balance sheet and buying back stock and doing all of the right th things and the only problem is it's expensive it's down 27% of the year. i own the stock, in full disclosure. >> let's go to starbucks and a quick question on expedia. starbucks, obviously, a turnaround, schultz is back, but now on his agenda are serious issues of labor restiveness. >> yeah. he has a tough -- a tough job ahead of him, but it's howard schulze right? it would be plain for him to turn this company around my only question is what will they do the $20 billion buyback they just suspended? where will they put that

they'll reinvent themselves again and i know they've got food right they've got drink right and now can they manage strong u.s. same-store sales versus international, china issues and supply constraints and that sort of thing so it's a real mixed bag its down 36% on the year and it will start to get interesting. >> stephanie, the strongest link. >> keeping a close eye on these markets. consumer staples, no surprising and down amid the deep sell-off we experienced, but as price hikes continue, can the best opportunities be found in the companies gaining market share we would hope so our guests will reveal them and name some names. the fed will raise by half a point as volatility picks up in the equity and bond market here is the ten-year, it punched above 3% this afternoon for the first time since 2013.

and a quick check on the media space and the ad-supported streamers in particular have been a tough space, but they're rebounding even despite this difficult market roku up 6% and spotify up, and wbd rallying we're back in a moment hey lily, i need a new wireless plan for my business, but all my employees need something different. oh, we can help with that. okay, imagine this. your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, like asap! so basically i can pick the right plan for each employee. yeah i should've just led with that. with at&t business. you can pick the best plan for each employee and get the best deals on every smart phone.

♪ ♪ welcome back to "power lurch. we are taking a look at three corners of the market. consumer staple, the best performing sector even though it was the best performer last months, kroger and heinz, although estee lauder and clorox have been dragging the sector lower and you have to be stock specific how can you pick through the names of this classic defensive sector to find and stick with the winners, those companies that have pricing power. let's bring in nick modi i'll start with el, hopefully they're on your list you would expect estee lauder of all companies to be a classic case of pricing power. what happened here >> absolutely. they'll be reporting tomorrow, actually the reality is they have a lot of exposure to china so when you think about lockdowns happening, that's

obviously going to be a weight on their top line, and we'll probably hear that from them tomorrow, but the stock has corrected way more than i think earnings will correct, and i suspect what's happening in china will end up being transitory and we should start seeing the growth resume once the china situation resolves >> that would be a name you're more constructive on even though it's been on the red what about codi, sort of sticking with the space? >> i was on the show not too long ago talking about my view on where you should be placing their bets and that's companies levered toward mobility and estee and the china lockdowns got in the way, but when you think about cody, here is a company, coty from shelf space losses and gaining market share and as we all get out and about especially over the next several quarters or several months, you should start seeing the beauty

category look a lot more attractive than what we've seen historically during the peak of the covid situation. >> what's the improving sort of level of excitement about coca-cola all about? is it -- is it -- is it -- i mean, i'll tell you, i think coke zero is really good. >> yeah, look, they spent a lot of time tweaking the formulation and every time they get closer and closer to coke original. you had new management that came in and tried to broaden the portfolio footprint to focus on carbonated soft drinks and it's growing with a high degree of pricing power right now, so when you think about mobility, coke is also a mobility play. 50% of sales from outside the home when you think about the channel exposure and we haven't even recovered on mobility like in asia and europe so there's still a long tailwind

of mobility benefits that happened for coca-cola which is one of the reasons why you're seeing the stock do so well year to date. >> dr pepper is a pick that i always thought was a stay at home play and then you have the soda on the go as you address that, nik, what would you do with grocery names like kroger? >> i don't cover grocery, but let me come to keurig and dr pepper this is a company that's gaining a lot of market share so you're right it is a hybrid, at home, but also away from home depending on which category you're talking about, but they're gaining so much market share. they've delevered their balance sheet and they have enough balance sheet to potentially do another deal and we've seen the last several years that they're very good, at least this management team is very good at doing deals and so if they do do a deal it would be favorably received. >> there you go your playbook for consumer staples, thank you for your time. >> nik mody.

>> we'll tell you what names to avoid and highlight why there could be some opportunity. plus, the nasdaq 100 down 20% this year. that describes a bear market in most definitions a lot of names falling victim to volatility, but some are surviving the declines and we will highlight those names next. it ain't all bad news. lan. visit letsmakeaplan.org to find your cfp® professional. ♪♪

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made to do anything so you can do anything. >> welcome back to "power lunch," everybody. there are a few names that dodged the bear market and are growing their earnings cnbc ran ascreen of nasdaq 100 members that are down less than 20% from their 52-week highs these companies saw earnings grow over the last four quarters and are expected to see continued growth this year the stocks have also been less volatility than the norm the seven names that made the list are, get out your pencils and papers adp, american electric power, costco, pfizer, keurig, dr pepper, paychex and texas instruments. you can hear the nasdaq story at cnbc.com/pro there are some of the names. write them down.

let's join john fort for a cnbc news update hi, john. >> i am jon fortt. here is your cnbc news at this hour civilians in eastern ukraine continue to get hit by shelling and the senior u.s. official getting quoted by nbc news saying it appears the military is making mainimal on the ground they're being tepid declaring victory and then leaving and allowing the ukrainian to move back in. the archbishop of new york made an unannounced visit to ukraine. timothy dolan has been meeting with catholic aid agencies in poland as they try to help the millions of ukrainian refugees crossing into the country. the biden administration is planning to steer $3 billion to companies making batteries for electric vehicles. the money is part of the $55

billion infrastructure plan passed by congress. >> amazon workers have voted against unionizing while the vote count is continuing, the no vote has enough to declare victory. the vote comes weeks after the first successful unionization vote at a warehouse in staten island kelly? >> all right ahead on ahead on "power lunch," the chip shortage as covid struggles raise the existing supply chain hang-ups and not all stocks are equally created, obviously and we'll find out which ones have the most leverage to outperform. as we head to break, down session lows down 1.3% or 444 points we're back in a moment

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i love you all. we've got about 86 minutes left in the trading day and for some of you it may not come too soon we want to get you caught up on the markets which are down, stocks, bonds, commodities and a closer look at chip stocks as the shortage, again, grows worse. let's begin with the markets more broadly

they are sinking this afternoon though we seem have stabilized just a bit that's the good news stabilized near the lows for the dow down more than 400 points and that's 1.25% we had been up 250 points at the high the nasdaq outperforming today by a little bit. in other words, in percentage terms, but that hasn't happened much recently, so maybe there's evening out of performance there. real estate, consumer staples and the worst-performing sectors today. communication services posting a small gain, but there aren't many gains to be found today traditional payment stocks getting hard hit even names like mastercard, visa, american express among them we know about some of the pains that have been felt by the likings of paypal in the last few weeks. now to the bond market where the yield on the ten-year hit 3% today for the first time since december 2018 and you can see it right now just a hair's breath below that at 2.989% highest rate in the last two months, the yield traded below

2% below 2% as recently a go as march 11th oil is closing for the day, holding steady around 105 a barrel and pippa stephens joins us with the commodity report hi, pippa. >> hey, tyler. oil spent much of the day in the red, but then reversed course around noon erasing a 4% loss now trading higher data out of china which showed factory activity contracted in p april had been weighing on prices and eu energy ministers met today to debate a sixth round of sanctions against russia reportedly moving closer to an oil ban. john kilduff adding there was a technical bounce from support around the $100 mark he said the chart points to a price breakout the next leg could be in either direction. let's check on prices. wti up half of 1% at 105.27. brent crude up 0.4% at 107.60 and natural gas up another 3.5%

after jumping lerche11%. diesel prices hitting a record for a third straight day it will now cost you $5.32 according to aaa. >> pippa, thank you. another cause for concern and that is semiconductors and you know the story, one of the hardest-hit sectors and a divergence is under way. western digital is up about 10% during that time and the best performer in the xlk nvidia, the other way, down 29% and that one, the worst performer. here to talk about opportunity in the sector, stacy ragson, senior semiconductor analyst stacy, one of the things that i found interesting in your commentary is that if you look while there is dispersion, if you look across the semiconductor market, they tend now to be trading at roughly their values -- their values over the 2015 to 2019 period so is what's happening here just

a correction or reversion to the mean because they got so far out of play or something more worrisome than that? >> this is how semiconductor cycles play out, right at the peak, what happens is that the stocks stop going up and frankly, once you get to the trough you see the opposite why the stocks will stop going down on bad news, but they tend to overshoot in both directions and you're absolutely right. if you go back to the peak of november, multiples were 22 times forward earnings and a 20% into the s&p at that point we've come down now. we're about 16 times, we were a week ago and something like a 15% discount, give or take to the s&p and it was right back in line with pre-covid averages, and so my take of that is that valuations have begun to normalize although i don't think we've broadly seen panic yet and that's usually what will happen before we see total capitulation

and these valuations have come down and off the normal relative to history >> are we close to panic in any individual names i know you think that qualcomm may be getting closer to that level. is nvidia there? golly, maybe it was 16 months ago, if somebody had asked my, hey, what stocks should i buy if i was in the business of advising people, i might have said nvidia. >> i think if you bought nvidia 16 months you would still be doing pretty well after the sell-off there are a few stocks that we had started to see some panic and you mentioned qualcomm that's a good one and anything that's been touch happening the smartphone recently has been death. we've seen weakness and we've had weakness in china, and qualcomm got caught up in that and they just had earnings last week they seemed to be powering through without a problem. they're less exposed with the areas that are weak and they picked up new things like samsung and qualcomm is back down to trading at ten times earnings and it's cheaper today than it was not that long ago

when people thought large chunks of their business was going to zero and they were with apple and it is much cheaper today than it was then there are some areas of the space where we are starting to see it, and i get why, the end market is out of favor right now, but those are some where i think there is opportunity you mentioned nvidia and that's another one that's relatively expensive, but it is much cheaper than it has been, and they are exposed for some of their in markets and the data centers and other things where they shouldn't only be okay in the near-term, but the long term trajectory like data center for them is phenomenal. >> nvidia is at 23 times forward earnings it's crazy. >> it's not that bad anymore >> quick question for you, you mentioned anything that touches the iphone cycle is death. >> not iphones, smartphones. >> iphones are okay. >> smartphones my larger question going back into last year we thought it was going to be autos where we saw the biggest overhang problems

from the pandemic. has that not borne out and now it's more the smartphone not iphone segment that we're seeing this -- this pandemic cliff? can you explain what's going on there? >> you bet autos is one of the markets where investors are worried that there's a cliff coming and we haven't seen it yet. the reason investors are worried is there's a sizeable discrepancy between auto shipments which are 30% plus where they were pre-covid and automotive production which is 20% lower than it was pre-covid and there is a sizeable gap and when you're looking for these parts in the market where you can actually see evidence of double ordering and overshipping, auto is one of those areas that draws concern for now, the demand is very strong like on reported this morning and the demand for auto and semiconductors is strong and weigh don't know how sustainable. >> stacy, thank ou, as always. i appreciate it. coming up, how all this

market volatility we've been discussing could impact the fed's big decision on wednesday. we'll discuss the cause, effect, the linkages with the dow still down 440 points. stay with us in one second, sara. yes! will get a job offer somewhere sunnier. relocating in weeks. weeks? yeah, weeks. gotta sell the house. don't worry, sell to opendoor, and move on your schedule. yes! when life's doors open, we'll handle the house.

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welcome back, everybody. as i said into the commercial break we were down 440 and slid down 80 points. still 500 and that aligns with the s&p and you in a 1% drop for the nasdaq down to 12,213. now it comes as wall street economists have been saying recession risk is rising we heard it this morning as well from the former fed official mr. ferguson the fed's widely expected to hike rates this week amid escalating market volatility on that note let's send it out to brian sullivan at the millkins global conference brian, take it away. >> by the way, almost everyone w we're speaking to is bearish, is

negative and is nervous. i've never seen more pessimism in a place like this, ferguson of stanford is joining me now. putin's insane, unwinnable war in ukraine you have the real possibility of egypt and ethiopia potentially having a conflict over a dam, you have food shortages and electricity and energy crises, how does this play out >> the reason people are bearish is that they have forgotten the 1970s because most people wandering around this hotel came into markets in the 80s, if not much more recently we are now re-running the 1970s, brian. let's remember, a huge military and monetary blunder was made in 2021 most economists missed it and larry was right. that was the initial mistake that led inflation expectations get away from the fed and then came the geopolitical shock that we've had since the russian invasion of ukraine.

now the fed that's behind the curve of the fed of the 1970s. so yeah, welcome back to that 1970s show >> is the fed -- do you have any -- i'm trying to be nice do you have any confidence in the fed. i've had people call them effectively incompetent here to me >> i knew paul volcker and jay powell is no paul volcker. in the beginning of 2021 he said in an interview in "the financial times. we have nothing to worry about we will not so the kind of inflation problems and i wrote that quote down because i knew future historians would use that y quote to document how much they got it wrong the same fed blinked when it came under pressure from donald trump, not to continue tightening monetary policy >> yeah. 2018, 2019 and now they are so behind the curve that if you talk to smfr those orthodox believers and rules-based

monetary policy like my colleague john taylor, they just kind of shake their heads because it is so inconceivable that they would do the kind of tightening necessary to bring inflation under control. >> so in your mind and john taylor, which the taylor rule of economics is named after, what is the lesser of the evils is it to put the gas, the brake pedal on too hard? send the economy into recession, but kill inflation or ease up, let inflation run hot and not destroy the economy in the short term >> the lesson of the 1970s is clear. half measures don't solve the inflation problem and in fact, the inflation problem tends to get worse. as it gets embedded in inflation psychology and the labor market starts to see the kind of wage pressure that we're seeing in some areas so if you postpone the evil hour you end up having to do the painful recession that paul volcker had to inflict on the u.s. economy after he was

appointed in 1979. remember, it's a long road from the late '60s through the late '70s and through that decade the fed was always behind the curve and they would try to get tough and then they would blink and that's why inflation became so embedded then. >> do you see where we could see inflation, niall >> let's remember there are elements in china. what's interesting china has hubris and then it becomes nemesis. the omicron variant is hard for china to control, and shutting down the chinese economy as drastically as they did in 2020, that has to take some of the heat off of the global inflation problem. so there is a possible they they might get lucky. it's not exactly like the many 70s. the labor market isn't so strongly unionized and the probability of recession has gone up very significantly and you'd be kind of naive to bet against it at this point my fear is that they don't tighten enough and then they

blink when the market sells off and we'rye re-running the '70s. >> niall ferguson, lucky to have you. thank you very much. >> kelly and tyler. >> tyler and mr. ferguson, thank you both as well more "power lunch" right after this esg into your investments? at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve, with our commitment to better esg outcomes. join the pursuit of outperformance at pgim. the investment management business of prudential. cal: our confident forever plan is possible with a cfp® professional. a cfp® professional can help you build a complete financial plan. visit letsmakeaplan.org to find your cfp® professional.

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the 10-year yield crossing 3% for the first time in three years, pushing up the 30-year mortgage rate. let's go to diana olick now. >> the average rate on the 30-year fixed now over 5.5% to 5.55, according to mortgage news daily. it jumped 14 basis points from friday as bond yields surge. mortgage rates loosely follow the yield on the 10-year treasury but that has been super wide we expect to get a better idea of how much more at the fed meeting wednesday but apparently investors didn't want to wait. this is the highest rate since mid-2009 to add insult to injury, home prices aren't letting up so we

are on the verge of hitting record low affordability. >> diana, thank you. still to come, what rising rates mean for the home builder stocks we'll take a look at that with a few minutes left to go before the 3:00 hour. (vo) some bonds last a lifetime. some bonds inspire confidence, and some you grow to rely on. these are the bonds worth investing in. for over 50 years, pimco has reinvented fixed income to create opportunities for investors in every market environment. so, no matter what happens you can build the bonds that mean the most to you. pimco, a global leader in active fixed income.

welcome back we're off session lows but our third concern, corner of concern for the stock market is definitely housing the rising 30-year mortgage rate

is hitting the home builder names. lgi was down 4%, d.r. horton down 7%. the home builders have fallen in 16 of the last 18 tightening cycles who can weather the storm? ken has been warning us about the effect of tightening cycles. are you feeling like you're anywhere closer to the sector being a buy here >> no. in short, our wall of worry thesis, as you noted, 16 of the last 18 cycles back to 1969, the stocks did fall 30%. that did not include a recession. as niall highlighted, we are ask youing towards trends that we saw in the first half of the '70s, not the second half of the '70s and it's not priced into the stocks yet because they don't bottom until the end of the credit tightening cycle. >> we are, wouldn't you say,

about 30 manual count off the highs? how much further is there to drop for the builders? >> well, more is obviously our baseline assumption, because i think the recession and really stagflation is really starting to come in we did downgrade some product names last week. we're seeing low to no volume, rising prices, which is really a function of price demand destruction. so if you look at the home builders trading at four times earnings, the earnings at three to four times what they were in 2019 reflects the credit cycle there's too much -- the bullish housing narrative is too reliant on adjectives. we put a report out last week showing record listings, highest since march of '05 seasonably adjusted that means more supplies coming on. >> anecdotally, i know folks who are still having trouble trying to get into a house. you still have some plays.

you like nvr it's outperformed the rest of the group but still down 25% year to date you also have some aspects like pool and shw which you think are ways that investors can possibly benefit from some upside here? >> right we think these are the best position within our framework which is defensive in fact pool and paint are the only two categories where we actually see volume contribution to revenue growth, not just price. so those are, we think, the best positioned but our w.o.w. thesis casts a shadow over the product names. >> wow indeed. ken, thanks again. good to see you. >> thank you. >> so he says we're not anywhere closer well, we're closer, i guess. >> i guess we're closer. the dow coming back a little off its lows, down 450 points. another 1.33 kind of day the nasdaq the better performing

of the three major indexes as of this hour, off just 0.75 of 1% but it will be a busy final 60 minutes. >> the hope is we're just pulling forward the volatility from the fed meeting that's the hope. thanks for watching "power lunch. everybody. >> "closing bell" starts right now. thank you, tyler and kelly here we go again stocks under heavy pressure as may gets off to a choppy start the most important hour of trading starts now hello, everybody, and welcome to "closing bell. i'm sara eisen coming to you live from the conference in beverly hills, california, where all the financial heavyweights are here talking about this market and this volatility here's where we stand. s&p down 1.3%. dow off session lows got a little lower than down 500. down about 450 at the moment nasdaq outperforms communication services interestingly is the only sector that's positive right now in the s&p. th