all of this is hitting the crypto-related stocks. coinbase down double digits. microstrategy down 25% at this point. back to you guys. >> kate, thank you very much >> kind of hard to end it on a bright note at this point. >> maybe if celsius converted to fahrenheit it wouldn't be as bad. thanks for watching "power lunch" everybody >> we're off the lows. "closing bell" starts right now. >> thank you, kelly and tyler. off the lows but stocks are getting wrecked on this crucial fed week the most important hour of trading starts now welcome to "closing bell." i'm sara eisen take a look at where we stand. it's been brutal all session long we're down 750 s&p down 3.3%. the nasdaq getting pummeled, down 4%. all of mega cap technology stocks are lower apple, amazon, tesla, nvidia

weighing the heaviest. here's a live look at the s&p 500 heat map which shows you just how broad the sharp sell-off has been today. you've got energy and consumer discretionary groups feeling the most pain right at the bottom of the market consumer discretionary down 4% you've got names like caesars entertainment down 4%. carnival is at the bottom of the pack the home builders and retailers is lower on the day. the best performing sector is consumer staples it is a relative safe haven. it's where you're seeing very few pockets of green as well in the dow there's only two stocks higher, mcdonald's and cisco. boeing is the biggest drag we'll stay focused on the sell-off throughout the show with analysis and ideas for your portfolio from all sorts of guests include citigroup's scott kroner, thomas simmons who now has a 75-basis point hike pen

simmed in. brian brooks on the crypto crash. former barclay's ceo bob diamond and alli mccartney let's kick it off. stocks are plunging. the s&p is down more than 3% and mike santoli has a look at the market action for his dashboard. where do you begin, mike >> we begin with the depth of this 3% very similar to friday in a lot of respects, which is a sharp sell-off at the open you made the low for the day 3900 on friday, 3750 today you've been bumping along there. even though it's broad and comprehensive, it's not very heavy selling. believe it or not, volumes aren't that high we don't know if that's a good thing or a bad thing now, this is a three-year chart of the s&p 500 you go down in price, you go back in time how far back are we going? basically to early january 2021, the first week of january of last year. that's the first time we got above 3800 on the s&p. now we're down more than 20% on the high

we can get that out of the way we're down more than 20% other levels people are watching if we have to have another wave lower, really rationalize the valuations and price in some of the fed path, i think 3500 is late september of 2021 high and then 3400 the pre-pandemic high. still within sight but would be painful from here. this is stocks versus bonds of various varieties. new york composite, very broad index of stocks as well as vanguard total bond and the high yield index. year to date it's the same trade. worst start of the year, any year, for bonds ever stocks are tracking lower as well as financial conditions tighten. the good news is the best estimate of what bonds will returning over the longer term is the initial yield so it's starting to rebuild a little bit of return potential over the longer term for bonds even if it's painful on the way. we don't know if it's over. >> 3.36 is the latest on the

10-year yield. >> we started below half a percent. you're at 3.25 that's where the fed expectations get priced in. >> i would notice the bad breadth. 1200 stocks at 52-week lows. 41-1 negative on the s&p 500 i don't even want to say it out loud but isn't that the kind of stuff bottoms are made out of? >> yes, they are if you wanted to see the kind of washout numbers, it's getting there. it doesn't put a pin in the chart and say that's the low but it definitely tells you that you're going in that direction for sure. >> mike, thank you we will talk to you often throughout the hour. let's bring in citigroup's equity strategy, scott kroner and thomas simons. welcome to both of you thomas, the idea that the fed could go even more than originally expected this week certainly playing a role there's now one 75 basis point

hike priced in over the next few meetings you think it's going to come on wednesday. why? >> yes so i think one of the biggest reasons, point in favor for going 75 this meeting is because it's not expected. that's because the fed has found itself after friday's data in a real pickle in my opinion. the bedrock of their whole inflation targeting scheme, their whole policy framework is steady expectations. what we saw in the consumer sentiment survey last friday is those are starting to become unhinged as much as 50 basis points is baked in the cake from prior guidance they have given us, it doesn't seem like it's a good move to me to just go with what's safe and have to defend a relatively soft move in the press conference afterwards. >> i just think it's unlikely because you have a fed that has worked so diligently on its communication strategy and worked so hard to telegraph moves to the markets and be

transparent. i think it would be a real shock -- maybe they need to do it to restore inflation credibility, but what would that do to its communication credibility when last meeting the fed chair said 75 basis points is not under consideration right now. >> he said it's not under consideration for that meeting he also said the fed needs to look at the incoming data and react to it. in my opinion a 75 basis point move is completely consistent with that. obviously you point out that they have been much more clear in their communication in the last 10 or 15 years or so telling us what they're going to do ahead of time and that has some value at certain times. right now i don't think that's the case i think if the fed were to just go along with their prior guidance, even if it doesn't match up with what the economy is telling them, that risks the credibility they have had building up against inflation for the last 40 years. once that's gone, i don't know how long it would take to try to rebuild that i don't think that jay powell wants to go down as one of the

more irresponsible fed chairmen in history for doing so. >> a lot of people calling for a volcker moment is that what today's broad and sharp and painful sell-off is telling you? >> i think what we're looking at here is the market quickly pricing in something that's akin to a recession we've been arguing for a while that as the markets teetered of late, we're pricing in recession risk but not the actuality of a recession itself our work gets you to the 3650 level on the s&p, which is really a function of seeing a more severe hit to earnings expectations for 2023, combined with some multiple contractions. so i guess the way we would think about it is the closer you get to our 3650 level, the more we feel like the market is pricing in something akin to a mild recession, which is tricky

because we're still many months away from that recession actually taking hold the house view is still 50-50 chance of a recession for next year so nothing is for certain at this point. i think that speaks to some of the issue here in terms of discounting and a situation that is still kind of murky in terms of how it might unfold >> so what do you do because today there's not too many places to hide. bonds are not working as safe havens even staples are down 1.75%, maybe a few or higher. but it's been a while when i've looked at the s&p 500 and seen a handful of stocks that are green. >> it's a relative call to your point, sara. we're out over the weekend suggesting health care is our projected recommendation until other work we've been using quality as a means of navigating this market where you steer clear of more levered

companies, either economic swings or debt leverage. so i think those are ways to mitigate some of the risks they don't completely eliminate it obviously so at this point we're looking at a relative positioning perspective that keeps us for the most part either defensive or within more sensitive areas of the market, the more defensive component of that sector. >> so thomas, scott says 50-50% chance of recession, but there's not wide agreement on this and not too much evidence of it yet. where are you? >> unfortunately, i'm more or less in the same boat to be honest i think that the economy, despite having a lot of challenges from inflation, still has a number of good elements of foundation to build on for good strength the consumer, again, facing very high prices for a host of different things still has a very sturdy balance sheet in terms of a lot of accumulated savings.

we haven't seen any cracks in the labor market yet we have announcements about having to reduce head count but you look at the weekly jobless claims data and still see continued downward pressure so more people are getting jobs than losing them. >> it's not the question as to what we're seeing now, though. it's a question when we see a 75 basis point hike with a bunch of 50s in there as well and by the way quantitative tightening. do you think the economy can withstand a recession then, thomas >> i don't think that a 75 basis point hike is going to put us into a recession before the end of this year what i was trying to say is there's a lot of momentum there and i think that will continue for some time even with tighter policy as we get into 2023, if the fed follows through on what we expect, which is a policy rate that tops out around 4%, yeah, after a period of time the economy will slow pretty significantly.

but the fed right now, priority number one is getting inflation down and that is going to require a slowdown in growth at some point. >> great discussion, guys. thank you both for joining me today, thomas and scott, appreciate it. after the break, what is behind the bitcoin breakdown today. we'll talk to the ceo blo blockchain bitcoin down more than $4200 right now. overall stocks getting hammered, the nasdaq is down 4.3 and the dow down 814 points. you're watching "closing bell" on cnbc. welcome to your world. your why. what drives you? what do you want to leave behind? what do you want to give back? what do you want to be remembered for? that's your why.

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bitcoin tumbling below $23,000 earlier hitting its lowest level since back in december 2020. several headlines out today hurting investor sentiment celsius pausing withdrawals from its customers and blockfi is laying off people and binance pausing withdrawals. joining us now is brian brooks brian, do you have any more color on what is happening in some of these issues like celsius or binance >> absolutely. thanks for addressing this at this moment, a crisis for the crypto industry. you have a perfect storm of multiple things all happening at the same time. first, you have celsius blowing up it's the second big centralized crypto project in three weeks to

blow up. that causes people to think the whole sector is affected at some level, which it isn't but that's a natural human reaction the second thing is bitcoin had its enormous rise during a period of very, very high inflation building up in the economy. and now you've got federal reserve action and central bank action around the world taking impressive steps to rein in inflation which is a bad thing for bitcoin at the time. and finally every stock in the s&p 500 are down by a specific margin, including financials so it's a perfect storm. everything that could be going wrong is. >> you keep calling it inflation hedge but it's not acting as an inflation hedge. it's really acting as if it's just one of the speculative parts of the market that got overvalued during the massive liquidity and stimulus that the fed and the fiscal government pumped in in the last few years. sort of like spacs, what's happened there. >> i would tell you i don't think that's quite right what's been going on the last

two years during the big bitcoin bull market, when bitcoin went from 4,000 to 69,000 is all of those inflationary pressures were building. and especially in 2020, when the massive run-up in crypto and bitcoin in particular first happened, that's when we were baking inflation into the economy. what's happening now is a series of major rate increases by major banks. so inflation is super high but the activity by bankers is putting pressure on it so the last two years of inflationary cycle great from bitcoin. tightening, bad for bitcoin. >> 2020 is when we get the massive stimulus, including from the fed. nobody was anticipating inflation. we could have been sowing the seeds of inflation but there are questions whether they will get ahold of inflation because it keeps going higher so i'm not

see that it's an effective hedge. >> you can debate the effectiveness but those of us with long memory were warning against inflation in 2020. that was a point where the monetary policy had shot all of its arrows we had zero short-term discount rate for a long time and all that was available was fiscal stimulus so i would take the other side of that to be honest different minds can deiffer, i suppose. >> so what about celsius and what else is lurking there given all that's happened in bitcoin in the last few years. >> it's a great question my mental model for all of this is 2000 and 2001 in the dotcom bubble bursting. what we all knew in those days was there was a really important thing going on called the internet but a lot of those companies were going to go to zero the companies that were scams or didn't have a core thesis, all

the pets.com of the world went bankrupt in crypto, a lot of the projects you're seeing going on here are going to zero. but there are amazon.coms in there somewhere. those are going to make it out here stronger than ever two years from now but things will get shaken out now the scams, the charlatans, the easy money guys, those guys will get shaken out and you're going to start to see that. >> there's all sorts of places it could pop up. what about your business, how has it been affected can you mine profitably in this environment? >> so the good thing for companies like mine, if you have the right chips and right electricity prices, you can mine a bit. at bit fury, we're a highly diversified portfolio of different kinds of companies

and so companies in blockchain analytics will be even more valuable now that people are trying to figure out where the cash flows are going bitcoin mining less profitable than yesterday for sure. >> brian brooks, thanks for joining us bitcoin is getting slammed right now. check out where we are in the markets right now. we've still got a pretty sharp and broad sell-off with the dow down 800 points. the s&p down 3.5%. every sector in the s&p is lower. consumer discretionary feeling it the worst, down 4.5%. energy is not far behind yes, it's still up 51% that sector down 4.4%. it was down more than 6% this morning. real estate, utilities, communication services, the nasdaq down 4.2% as technology gets absolutely slammed. cisco is one of the few bright spots in the nasdaq right now. still ahead, bob diamond with his read on the market pain and how long we could be in for. as we head to break, check

out some of the top searched tickers. 10-year yield getting the most interest look at the 10-year at 3.41 right now. we're looking at the highest yields we've seen in years, as expectations ramp up that the fed will have to go even bigger to fight inflation bitcoin is on there, s&p, nasdaq and dow round out the list we'll be right back. your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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a serene river voyage on an elegant viking longship. learn more at viking.com stocks sharply lower across the board as we head toward the close. the nasdaq is down 4.4% near the worst levels of the session. here's a live look at the nasdaq 100 heat map which shows you how broad the selling is, reaching

every single corner of this market there's the nasdaq as i mentioned 100 heat map at the bottom you've got splunk, datadog, pin duoduo. they're down 10% docusign, okta so the software names, microsoft and amazon and apple all weighing hard. the only two positive names are cgen and cisco systems technology is one of the worst performing groups in the market. consumer discretionary and energy doing even worse right now. check out today's stealth mover. it's duke realty, which is also one of the very few s&p 500 stocks in the green after the warehouse owner agreed to be acquired by rival prologis they can rejected a $24 billion deal last month. it looks like that has been accepted prologis down 7% and duke is up almost 2. up next, bob diamond on this market sell-off.

where he sees potential opportunities amid the volatility we'll be right back.

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look at the bank stocks getting hit again today even as treasury yields rise leslie picker as a look at what's pressuring this group leslie. >> yeah, after last week where financials were the worst

performing sector, actually today they're one of the top performers but still down significantly, down about 3%. only bested by consumer staples among the s&p sectors. banks, asset managers, brokers, all getting whipsawed by the prospect that inflation or the fed's response to it pushes the economy into a recession some may argue that higher rates can be good for certain businesses, making lending more profitable and trading more robust however, a recession can diminish credit quality, freeze m & a activity, gene scoreman sought to assuage some concerns saying he's not expecting a deep or long recession if there is one, adding, quote, i am totally relaxed about it sara >> what's happening

fundamentally, leslie? are we starting to see a turn in the cycle from the banks because we have heard a lot of really positive commentary from the banks. bank of america, for instance, citing how good the consumer is lately comerica had some good news when it came to loan growth and stronger net interest margins. an investor sent me that so what's happening under the surface here >> no, you're right, sara. fundamentally the picture hasn't really shifted yet, at least as far as we know jpmorgan gave guidance saying they were expecting a big boom in trading investment banking expected to be weak. it was weak in the first quarter and expected on in the second quarter as we navigate this situation. but interestingly there is an accounting work that impacts banks called cecil there are various models that the c-suite will input and

basically that determines how much they need to set aside for loan losses. those models do incorporate a lot of the macro factors so what we saw, for example, in the first quarter, jpmorgan was forecasting a more dire situation, and had to set aside more in those loan loss reserves which do have an impact on their earnings directly. so it's not necessarily mark to market, it does affect them fundamentally, at least in the earnings they report. >> leslie, thank you for more, the fed which is very much front and center, bob diamond joins us ceo of atlas merchant capital. there's a new "wall street journal" report saying bad inflation report raises the odds of surprise 0.75 percentage point rate rise this week which clearly is something economists are talking about and speculating. do you think there's a chance that that happens? >> i think there's a chance.

i still think since chairman powell announced that they'd do asecond 50 at this meeting, a second meeting at the end of july that's probably the most likely but if you asked me a different question, which is if i were going to have a vote in this, which i clearly don't. but if i were going to have a vote in this, i really think 75 or 100 is right. i think back to paul volcker and a situation similar to this. rather than say 50 now, 50 in june, 50 in july, more likely to say let's get back to 2% let's get back to neutral and then see how the markets react and since chairman powell and the fed have pretty much said it's going to be 50 now an 50 in july, i think it would be really a good idea to do the full 100 now, get us back close to 2% and see how the markets do then. and so i think the odds are it's going to be 50 i do think there's a chance of 75 or 100. >> because chair powell also

said that we need to see evidence that inflation pressures are abating and coming down if we don't see that we'll have to consider moving more aggressively so maybe a surprise this week. maybe he'll signal that they're up for it maybe next meeting, bob. do you think the fed can get inflation levels back down it's a question given a lot of what's pushing prices up on energy and food are way out of the fed's control. >> sara, one thing is clear. inflation is not going to fix itself we have to take action and we know a couple of things we know that the fed played an absolute blinder early in covid with their fiscal and monetary stimulus we also know now with hindsight they went too far. did we really need that last $1.5 trillion to have $5 trillion in fiscal stimulus. compare and contrast that to 2008 when the entire period following the financial crisis there was $700 billion in fiscal stimulus this time we had $5 trillion

so we did probably too much. and then what's absolutely clear, and we've talked about this before, they waited too long you know, six or nine months ago you saw the tightness in labor, we saw the signs of inflation. everyone was talking about it. we left interest rates at zero and we continued buying $120 billion in u.s. treasury and mortgage securities each month so we were easing into an economy that had already recovered. it wasn't recovering, it had already recovered. we have to pay that price now. we need to get rates up. and i think we should not be surprised at the situation that we're facing now because we kind of overstimulated the economy and now we have to -- and we probably waited too long and now we have to calm it down. inflation is not going to cure itself. >> what does it mean for the banking sector, bob, which is down sharply today and now almost 25% off the highs >> well, listen, there's a lot of factors

a little bit of it is just risk off. so all equities are impacted when you go from a risk on trade to a risk off trade. basically everything was going up stocks were going up, house prices were going up, bitcoin was going up, it was across the board. but i think in terms of the fundamental specific to banks, i do think higher interest rates, steeper curves, more volatility are very positive in and of themselves as you mentioned on the previous program, we're going to see credit losses start coming through. one of the things we did three years ago is we hired ty wallick to build an opportunistic credit business with 12 years of zero interest rates, lower and lower covenants, there's going to be a time too much credit, too much debt will impact the corporate sector that was really delayed during covid and all the stimulus that

came but we're seeing the signs of it now. and i don't mean across the board. there are really, really a lot of liquidity there and very sound balance sheets but there is a sector of the corporate sector that would have borrowed too much or borrowed unwisely and we'll see real opportunities in credit. that will be a negative in some ways for the big banks because of the revisions requirements and what they have to set aside. >> bob, i've got to ask you. you, i think, had plans to take circle public via spac both of those are -- spacs are not doing too hot and neither are cryptocurrencies is that still going forward? >> in this case we've already announced the merger and are awaiting approval. that spac has a partner going through the process. in terms of circle, we're very excited. again, it's a risk on, a risk off. but you remember what i said when i was on with you before. in circle, we want to be the

most conservative, the most regulated. we only operate within the perimeter of the u.s. regulatory system we're applying to become an occ bank and since kind of the crypto winter, as they call it, has begun, the outstandings of circle have increased. and people can take confidence that a dollar is a dollar is a dollar in this stablecoin as we have only u.s. treasury short-term, 3 month and less u.s. treasuries and cash standing behind every usdc so as a payments platform we're pretty positive on this. you've seen the private round of funding that's happened just more recently. >> all right, bob, conversation for another day, how stable those stablecoins are after some questions earlier this year. we've got to get to the sell-off we're down 900 on the dow. bob diamond, thank you. let's get a closer look at some of today's biggest losers pippa stevens is here and deidre

bose ar bosa >> energy stocks down 4% despite oil ending the day modestly higher the services companies are leading the declines with the ohi down 7%. the xop falling 6.5% the refiners are holding up slightly better. looking at individual names, eog, halliburton, apa and devo are the biggest losers giants exxon and chevron are down 4%. both stocks did hit all-time highs last wednesday now, joseph secor said this is thanks to indiscriminate selling across the market. he said since mid-april energy is up 30% against the broader index so profit taking is to be expected now, turning to renewable energy stocks, the ishares global clean energy fund down more than 6%.

sunnova, plug and sun run down double digits. no surprise here that they are selling off. over to deirdre bosa who has a look at the gig economy stocks >> pippa, thank you. they are getting hit hard as well in today's session and took another leg lower. uber, lyft, airbnb, take a look there, all off between 10 and 12%. doordash off around 6% didi is starting its plans to delist it has been a very rough ride for the chinese ride hailing company. for years, gig names could focus on growing revenue while burning through billions and billions of dollars. now that has put them in a very tough spot investors, they want real profit, not adjusted ebitda. they're looking for free cash flow some are getting there quicker than others. airbnb had about a billion dollars. dash has been positive for the

last two years uber just had its first free cash flow positive quarter but there is a lot of grounding to make up. lyft hit a new 52-week low and uber is just a few cents off, i believe. both those names are also well below their ipo prices from just a few years ago. lyft went public at $72 a share. it's now around $14. uber went public at $45. it's now around $21 and change back to you. >> deirdre bosa. we're going straight into the "closing bell" market zone mike santoli is here to break down these crucial moments of the trading day. plus kate rooney steve kovack we are in sell-off mode all day long there's the dow, down 961 points we're now at the lows of the session. took a little spill, mike, around that time when "the wall street journal" article did come

out saying increasing odds for 75 basis point hike this week, even though powell last meeting did say that it's not under consideration right now. you've got one dow stock higher, mcdonald's how much credence do you put in that story >> i put plenty of credence in the story that it's now under heavy consideration. obviously "the journal" writer very plugged in, very well sourced. the fed itself is in a blackout period the more important thing is whether it's going to happen or how the story came about almost doesn't matter based on how the market reacted the 2-year note yield already in massive sell-off mode was liquidated further you went on 3.28 on the yield up to 3.40. the market seems compelled to widen out the possibilities and say that's a possibility even if it doesn't happen, the fed wants to put investors on notice now that's the scale of what's being considered. that might be useful for the fed to both not necessarily seem

like they're panicking and going 75 wednesday but also saying, look, we have to catch up here the s&p is down about 10% in three trading days that's very significant. you have massive, massive downside volume skew so that's somehow getting to a point where people are giving up on the near term that doesn't mean it's hit the low but that's what you get before in fact you find your footing. >> also we've got a more than 1% move on the dollar index, dxy. you don't see that too often we're up almost 10% for the year on the dollar index. the 10-year yield is near 3.40 which means we're on the brink of inverting again. >> we are. obviously 3.25 or so on the 10-year was considered a v and was a pain threshold for equities it's where they got to in late 2018 when the market couldn't really handle it to me it's all happening on the shorter end, though, because the

market is implicitly saying the fed will have to rush to get restrictive or near restrictive or neutral and that's going to create a slowdown or tip us into recession. in all those scenarios you're not going to get the longer term yields up quite as much. honestly to me the volatility in bonds, the 3-month t-bill is up almost a quarter percent that usually doesn't happen so that kind of instability in your bedrock ballast of your portfolio is not going to be overlooked when it comes to riskier assets. >> we've got a 4% decline on the s&p 500. it is a sea of red with the dow down 980 points or so. cryptocurrencies are also getting crushed with bitcoin falling to its lowest level since december 2020. meanwhile celsius, which had been offering a 17% yield freezing its customer withdrawals, raising fears about solvency kate rooney joins us how is celsius offering 17%

yields and who else is exposed here >> a lot of this on the back end was through lending. step back a second hedge funds, who are deeply into crypto often don't want to hold that cryptocurrency on their balance sheet. they don't want the risk they'd rather borrow it and pay a pretty high yield. celsius was taking customer funds and saying we've got all this crypto, why not lend it out and get paid by the hedge fund with the customers so that was one way to add some yield. you might be surprised how many other ways there are to get really high yield on crypto. some of these early stage projects, international projects in a lot of cases, use high yields to attract customers to get that customer base it's seen as an incentive to buy in there's a lot of questions on where they're getting the money but celsius was dipping into some of those projects as well the borrowers that i just mentioned, the hedge funds at this point, may be exposed here

and you've got a lot of retail investors. celsius had as of mid-may about 2 million customers they say who right now cannot access their funds, buy or sell or transfer to anybody so that is another customer base who's really going to be exposed here anyone who holds their money at celsius right now cannot move it >> disaster. kate, thank you. kate rooney. look at big tech, underperforming the broader market the nasdaq composite down 4.7% steve, amazon getting hit especially hard. why is it getting hurt worse than others. >> we heard from amazon about how they're having trouble managing their inventory and warehouse space. so that's a big thing investors are watching for to fix before things start to turn around. we already heard a report last week that they're going to start subletting about 10 million square feet of their up used

warehouse space. we have prime day coming up. how are they going to manage that i was looking at the other big mega cap tech stocks what needs to change before we consider seeing a turn-around. in apple's case it's the covid lockdowns in china tim cook warned it could be up to $8 billion negative impact to sales. we'll see what happens when they report next month. and microsoft, can they stop flattening cloud growth and get into the hypergrowth we saw in the middle of the pandemic and then on the meta and alphabet front with digital ad sales, there's a lot of concern about the changing consumer habits as we talk about the shift from goods to services and what that looks like in the digital ad market so just a lot of factors playing in between all these big tech companies. at the end of the day it's really boiling down to shaking off the rest of the pandemic and covid, sara. >> and just a valuation reset off these higher interest rates

and potentially slower slowdown. steve, thanks. look at the home builders, they continue to significantly underperform the broader market. both interest and mortgage rates are spiking. diana olick joins us how are these impacting sales? every time a number flashes on the screen, it's a wow number. >> we crossed 6% for the first time on the 30-year fixed since the end of 2008. mortgage rates basically doubling what happened to the housing market is it has done the sharpest u-turn i think i've ever seen. even in the great recession it took several months to slow down and we saw this in a matter of four weeks what does that mean? a much slower summer than anyone expected realtor.com put out a revised forecast home sales will be the second highest level since the recession in 15 years and that's with last year being the strongest home sales year. they're saying that inventory

will be up 15% this year compared with last year. and originally they expected it to be up 0.3%. some of that will be more existing homes but also it could be new build that is new construction from the builders that may not be sitting or may be selling longer i think what you've really got to watch is the lenders, names like loan depot and rocket which are going to get hammered by this slowdown in mortgage demand but the home builders and you look at the etf itb, that one is down really significantly and that includes not just the home builders but the home remodelers, home depot, lowe's, et cetera. >> we'll hit all the carnage in the markets. travel stocks are tumbling today. booking holdings, expedia, airbnb and the cruise lines. the cruise lines are at the bottom of the discretionary sector that sector down 4.4%. we've got real estate and technology moving even lower as

we speak airlines one of the worst performing industries on wall street with the major carriers under a lot of pressure. phil lebeau joins us phil, what is the biggest concern now facing these investors and the airline stocks >> well, do we have a potential recession in the fall, sara? and if there is, if we slide into a recession, what does that mean for demand for bookings come the fourth quarter? we know that the airlines are very bullish not just on the summer but they say it's going to extend the remainder of this year we haven't seen all of the booking data come in so that's the big question you combine that with jet fuel prices surging to all-time highs and that is not a good recipe for the airline stocks and that's why they're getting hammered today. >> i just saw a headline, phil, but boeing's ceo is bullish on the industry airplane demand as robust as i have ever seen it's just strange to get these headlines out of this industry with what's going on, the juxtaposition in the market.

>> well, he said that for some time so that's not new news in terms of his position on the demand for aircraft that are out there. so i'm not surprised to hear that headline. the question is will that match with reality let's say over the next six months or a year. will there be as many orders as he expects them to be right now. they haven't put a number out there but he's very bullish on the market, has been for some time does that change if we see a recession come in. >> right it's so strong right now and the straux are so rough. phil, thank you. we're down a thousand points on the dow, first time we've seen that today s&p 500 trading now more than 20% from its all-time high, which is a technical definition of a bear market, though it's felt like that to everybody for a long time now. the nasdaq composite down about 5% in these final minutes of trade. it is off about 34% from its highs. joining us now is ubs private

wealth management's alli mccartney and phil camparelli. alli, what are you telling your clients right now? i know you're a fan of energy, but energy today not faring too well, down 5.6%. >> look, sara, on a die like this, nothing fares well we have had two really tough days i think the subtle change in what we saw friday and today comes from the fact that we have had a lot of mixed data. it depends on what you're talking to, at what point in time and how you can interpret it the data that we got last week, everything from the lowest consumer index level ever at the university of michigan to something from the cpi that confirmed that the narrative that we hit the peak in march is not in fact the narrative. so everything that has been priced in based on interest rates, based on the expectation of inflation is now undergoing what is the new normal and where are we going to be

so this is just a risk off day i'm telling clients to try to just hurry up and wait and understand that this is going to be a long process that took 14 minutes of a lot of money and a lot of free money in the system and we all just have to practice humility and discretion and discipline when it comes to investing at this point in time. >> bill, it does raise the question as to how long this type of bear market we're in for. what does this look like to you? is there any historical comparisons you can give between maybe the hiking cycle, the economic cycle and where we are with stocks? >> yeah, sara, we need to stop meeting like this. the historic meeting is the late '70s with the volcker moment or 1994 over the past couple of trading days this sell-off has entered a new phase. the conventional wisdom as we came into this month was that

the fed would hurry up and get to neutral, so 50 basis points the next couple of meetings, stop at about 3%, look around and hopefully at that point they would see that meaningful reduction in inflation that's out the window now, sara. we've seen an additional 70 basis points of tightening over the last two trading sessions priced into 2022 alone as alli was saying, there's absolutely nowhere to hide sara, do you realize that the worst year bonds has ever had as identified by the bloomberg average, it was down negative 9.2% we're down 11% in the aggregate year to date nobody has ever seen anything like this. what we're telling clients is if your time horizon is long, you're going to be fine. over the next couple of quarters, this is not the time to be a hero we do not see a bottom in the equity market. there's nothing that tells us

that the equity market has bottomed so it's a meaningful underweight to talks and we're trying to figure out what to do with our corporate credit which is acting a little bit more like stocks than we want it to right now but buying buts on the s&p 500 which we've had in the portfolio for a couple of months as a hedge is the only thing that's working right now. >> alli, i guess the question for investors in the short and medium term continues to be whether the fed can pull this off. whether they can bring down inflation without a hard landing or a painful recession is that still the case do you believe that? >> yeah. it's exactly still the case. and the question is not whether i believe it or ubs believes it, it's whether the markets believe it clearly the bond market has told us in the last two days that it does not believe it. and look, everybody knows that we had hoped we were going to have transient inflation as a result of covid and the

necessary shutdowns that happened what is once transient has become mid to long term. inflation is a really hard thing to combat and we're seeing inflation in so many areas that continues to be exacerbated by continued shutdowns, by geopolitical struggles so there are many, many areas that it's stemming from. i just feel like everybody, whether it's a stock trade or a bond trade, an individual or an institution is quite overwhelmed by the set of options in front of us. you can see that by again what phil was talking about by this move in credit i think this is going to be a very meaningful week in terms of what can the fed say wednesday, what can they telegraph. do they sting to their 50 basis points or go to 75 we need to make sure that we have a path the markets believe is credible. until we can get there and until the data proves it, which is a

number of cpi and fed meetings away, we're going to continue to be in this super tumultuous environment and it just doesn't feel good to anybody right now. >> no, it doesn't, absolutely. mike, credible is one of the words that you hear a lot about with the fed when it comes to inflation fighting, when it comes to long-term inflation expectations you do wonder with this kind of setup going into a fed meeting on wednesday whether if the fed did surprise 75 basis points that the market would like that. would the market rally off of that because then it would show that it was serious on inflation, even more so? >> the setup is there for that the way the bonds have been bucking all over the place in the last few minutes that two-year yield is down over 10 basis points it's just basically become unhinged so yes, if you had some kind of sense out there that there was gaining traction in the fight against inflation, sure. i think everyone is op raegt on the basis that the fed has a

basic problem and that's inflation. so sure, 75 now, front load it maybe so i don't think it's easy to predict the market's reaction function to the fed's emerging reaction function. but i don't think it would automatically be some huge incremental bearish blow to go an extra 25 basis points in two days geiven what the market has done. >> alli, phil, thank you both for joining me there's two minutes to go in the trading session. mike, we hit down 1,000 on the dow. we're now down 800 what do you see in the internals? >> stocks had a minor bounce just as yields came off. it's overwhelming negative breadth. you almost rarely see, 98% downside volume. also a buyers strike as i said earlier, volume is heavy but not really stupendous. so that's absolutely one thing

to keep in minding take a look at crude against energy stocks. energy stocks down 5% today. xle is a little disconnect there. crude is now outperforming on a year-to-date basis volatility index finally responding we're up into the mid-30s. we were here not that long ago a lot of complaints it hasn't gotten to 40 we'll see if this is the start of something or in fact another stall at the top of the range. you have two days until the fed meeting. >> well, it looks like we are going to close in a technical bear market more than 20% off the highs for the s&p 500. we're down 4%. energy is among the hardest hit sectors, along with real estate, utilities, consumer discretionary, technology. everybody is red consumer staples holding up the best but that group is down 2.3% the nasdaq has been pummeled all day. you've got names like apple, microsoft, amazon, nvidia, all weighing on the qqq.

the nasdaq is tracking for a huge loss, 4.7%. the russell 2000 down almost 5% as well. there is the dow down 856 points we were down just a little over 1,000 a moment ago it looks like we'll close just off of those lows. overall just an ugly day i'll send it over to scott in "overtime. that's it for me in "closing bell." have a great evening. >> welcome, everybody, to "overtime. i'm scott wapner we're just getting started right here at post 9 in just a few minutes i'll speak to liz ann sonders about where this market might be going oracle earnings are imminent as we get another good read on the state of corporate spending. we do begin, though, with our talk of the tape this relentless rout for your money and whether there are any signs it is nearing an end eric