at why mike novograt says the fed can provide a bump to crypto that's coming up next on "power lunch," which begins right now welcome everybody to "power lunch. i'm tyler mathisen, welcome once again. here's what's ahead, the hawks are circling jpmorgan now calling for the fed to hike by 75 basis points, 3/4 of a percent tomorrow adding that the real surprise will be a 100 basis point, a full point. the economist behind that report is here, but bank of america's ethan harris who called for a more aggressive fed earlier this year says that 3/4 point hike won't happen tomorrow. he's also with us as we get set for tomorrow's big fed decision. kelly. >> looking very much forward to both of those discussions, tyler, thanks. hi, everybody, stocks little bit all over the place, mostly in a holding pattern ahead of tomorrow's fed decision at 2:00 p.m. eastern.

the dow is down 250. we're down 194 we had been up as much as 170. the s&p's down 60 to 3733. the nasdaq hanging on to some green today, but it's back to 10820 as the fallout from the deep selloffs the past week continues. a lot of the action today is in the treasury market. the ten-year yield has reversed higher really climbing this afternoon, kind of what tyler said the speculation about a full point rate hike, 345, we even hit 346 a moment ago. you can see here again the firmness that i mentioned, the two-year yield, its highest since november 2007. 3.408. now, red fin and compass are also laying off workers. we got wind of those reports today, 8 to 10% of staff, redfin down 4.5%, compass down 7.5% redfin around an $8 stock, compass around 4 .40 clars $4.4. the rate on the 30-year mortgage

is 6.25% >> if that doesn't slow the housing market, i don't know what will. the fed decision, it's now just 24 hours away. we will now what the fed did by this minute tomorrow growing number of economists say that a 75 basis point rate hike is in play, which would be the biggest rate hike since 1994, and that was one of the worst bear markets for bonds in recent memory the forecast change has been very swift jpmorgan one of the banks now calling for such a hike 3/4 of a full point also telling investors that one might wonder whether the true surprise, the true surprise would actually be hiking a full percentage point, 100 basis points, something we think is a, quote, nontrivial risk the economist behind that report, mike feroli is here. welcome, it's good to have you with us. >> it's good to be here. >> why the change of mind to the

75 basis point hike? what has changed, even after fed chief powell said at his last meeting responding to our mike -- to steve liesman, it's off the table. >> yeah, so i think the proximate reason is that yesterday several well-placed media sources including your very own steve liesman indicated that the fed had, you know, sent out the smoke signals that 75 was very likely -- and again, in contrast to the earlier guidance that we heard from chairman powell, which you just mentioned, the proximate reason was what we heard from these well-placed media sources, i think the more fundamental reason may have been i believe that upside, that surprise on inflation expectations that we saw last friday morning on the university of michigan survey of consumer sentiment i think that probably is something that really spooked a lot of senior fed officials and probably led to this rethink over the weekend >> the fed as it is wont to say

has a dual mandate, one is full employment that is consistent with price stability the other is price stability right now it's not worried about employment particularly, even though we're hearing about some layoffs. it is worried solely and fully, wouldn't uyou say, mike, on crushing inflation and doing whatever it takes to do that >> yes, entirely, and if anything, chair powell recently said that the labor market is tight to an unhealthy degree i don't think they want to see mass layoffs i do think they want to see a little more balance in the labor market in terms of vacancies and unemployment right now, at least for the foreseeable next couple of months let's say, there's really no conflict between their full employment and their price stability goals. both, i think, lean in favor of more aggressive policies. >> so let's just -- let's just spin the clock forward to the next several meetings and months let's assume that they raised by 3/4 of a point tomorrow. what happens then in july, what

happens in september, what happens in november? >> yeah, so what i'd say first of all is that i think tomorrow, a lot of tomorrow is about tching up, right so i think everyone, almost everyone i talked to understands that the fed is well behind where they need to be. so after they've caught up, which i don't think that happens necessarily tomorrow but maybe after the july meeting, then i think they can be a little more data dependent and start seeing whether the job market is loosening up a little bit, whether inflation is coming down i'm not sure they want to give as specific a signal as they did in the may meeting as you mentioned after that meeting chair powell was pretty specific in the next two meetings ahead and that didn't work out so well, so i think th they're maybe a little more mindful of the uncertainties here in terms of the type of guidance they give us tomorrow i do think they're going to definitely point to the need to expeditiously get back to

neutral, call it 2.5% on the short-term territory i do think they signal something like that. i'm not sure they give us specific basis point moves for the next few meetings. >> has the fed lost control of the bond market? i mean, there's two ways to look at this. one is the people who will blame them for the market turmoil that we're seeing the spike in mortgage rate and everything else, t bill action yesterday didn't go very well. could be more to come. we'll see. are they causing all of this, or did they lose control and this is now happening to them and they're trying to get control back >> i think they're causing it. inflation doesn't come down magically. it comes down through people spending less, and that's going to happen with tighter financial conditions, and one of those is higher mortgage rates, stronger dollar, weaker equities. so all these things aren't great, but that's -- no one said this is going to be an easy path to get inflation down from these

pretty elevated levels so that's i think part and parcel of what they're doing. >> let's talk to people who are exposed to the bond market as many americans are both in their 401(k)s and in mutual funds. the last time there was a 3/4 point hike in interest rates was in the mid-90s, and i remember it, and it was a period where the bond market, as i recall, had its worst response in a generation do you expect that that's what we're in the middle of now >> well, it's already been pretty bad, right? >> yes, yes, yes >> and we can all say how bad that blood bath was in the bond market in '94, but that did set up, i think, another half decade of prosperity in the real economy, so some pain in financial markets may be what we need to see to ensure that the expansion, you know, doesn't end after just a few short years, so i think by the fed's reckoning, that mid-'90s episode was a

success definitely >> yeah, yeah. mike, thank you so much. we appreciate your time today. we'll be talking to you again, i think. >> sounds good. >> mike feroli. >> and as more economists call for a 75 basis point hike, investors are bracing for more volatility >> i would just say in bear markets, you never know how low is i'm assuming by the time this is over if we fall into recession that the market could have declined 40% from its peak that's my basic modus operandi. >> where does that leave investors? joining us now is crescent capital's founding partner and cio. good to see you again, jack. do you agree with lee? >> i have to agree with lee. lee is such a great investor and actually he's a friend of mine you know what? i've looked at a lot of the bear markets related to recessions,

and in many respects he's right. although i will say i point to really two, the 19 -- i'm sorry, the 2000s and then the 2008, and both i would argue -- i think what he's looking at, i would say both i would argue was more than a recession it was really a systemic problem. of we know what happened with the great financial crisis and the banking system and leeman and all that even in 2000, if you remember, yes, the fed was behind the curve because greenspan didn't know if we were going to be able to turn the lights on after yy2. he was flapping his arms until 1996 with a rational exuberance and he didn't raise rates until 2000 same sort of thing, started to raise rates. we saw the tech crash. then what happened was remember in 2001 we had 9/11 and then we had world com and enron. those two pieces together caused

investors to really wonder how real and how sustainable the equity market was. so i don't think we're in that kind of position i don't think we're in the 2008 position and that's really where lee is drawing his 40% downdraft conclusions. if you look at all of the downdrafts related to recessions, we're pretty much right in the middle of it right now. we're kind of median level and even the 1980 with vulcar, market was down 15.5%. so i think we're pretty well into where we need to be. >> so if we are and we're down about, what is it, 23, 24% in the s&p from the recent high back in early january, if we're at the middle point, that puts us at 40% off the high it puts us at 40 or even more. would you be surprised, i guess, is what i'm asking if we go down

another 20 percentage points from here? >> i would you know, i'm looking at the s&p, you know, peaking in january, so i'm looking at, you know, pretty much like you said, you know 20, 22%, somewhere in there, but it's really -- you know, it's funny, we put a model together that just looks at changes in interest rates, changes in earnings growth expectations, and we're right on target we started the year at 1.5 we're now at around nearly 3.5, and we have a 9% earnings growth expectation, and our model suggests s&p should be off about 25%. so we're very close to what the -- you know, the textbooks would say. i guess, you know that's good news perhaps because things are behaving themselves, but maybe we need to go farther, you know, to just kind of wash out if you will >> yeah. >> there really hasn't been much

selling. that's the interesting part of what i'm seeing going on right now. >> we don't like to hear that, if that shoe was still to drop four stocks you like, they've been kind of stalwarts relatively speaking, chevron is up big obviously in the energy space. mcdonald's one of the only stocks that was in the green yesterday. johnson & johnson, coca-cola, would you just kind of clip your wings and stick to these quality names? >> that's it i mean, if you look at quality as a factor relative to the rest of the market. it's trading at the biggest discount i've ever seen on a relative valuation basis these stocks have one other feature going for them they're dividend achievers these are companies that continually maintain and grow their dividends over time, so they're part of the dividend aristocrats so to speak, and when you see, you know, a company like fedex raising the dividend, and they're up pretty dramatically today, clearly investors are gravitating to

quality, and they're gravitating to dividends, that's what we're going to stick with for the time being. >> jack, thanks for your time today. >> thank you. we've got a news alert out of washington, and ylan mui has the details. >> the head of the senate finance committee is proposing a massive new tax on big oil and g gas companies. he's proposing an additional 21% tax on the profits of oil and gas companies with at least a billion dollars in annual revenue. now, this tax on so-called excess profits would be applied to anything above 10% of return on expenses and it would come in addition to the regular corporate income tax that these companies would have to pay. in addition, widen is also proposing a 25% excise tax on any stock buybacks that are completed by the company his office specifically calling out exxon and chevron for announcing $40 billion worth of buybacks over the next two

years. the bill would also close counting loopholes that his office says are letting these companies lower their tax liabilities. the in a statement, his office says that the tax code is working for big oil but not american families, so, again, senator ron widen, the head of the senate finance committee proposing a 21% tax on big oil and gas companies. >> thank you very much and we'll see what happens on that one. coming up, tech stocks vulnerable to higher rates the tech etf down 28% since the start of the year. why a few mega caps might be your best bet for the next two to five years. plus, rising diesel prices ripping through the critical transportation sector with the large players like u.p.s., fedex, are elevated prices actually beneficial. as diesel prices surge, nat gas prices plunge, a look at what's

behind today's selloff in natural gas when "power lunch" continues. hey businesses! you all deserve something epic! so we're giving every business, our best deals on every iphone - including the iphone 13 pro with 5g. that's the one with the amazing camera? yep! every business deserves it... like one's that re-opened! hi, we have an appointment. and every new business that just opened! like aromatherapy rugs! i'll take one in blue please! it's not complicated. at&t is giving new and existing business customers our best deals on every iphone. ♪ ♪ this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done.

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these names could be the single best investments you'll make over the next two to five years. joining us boris schlosberg, managing director of fx strategy and a cnbc contributor, and i dare you to try and say all of, that boris that's a lot of stuff right there. >> that's a mouthful that you survived, yes. >> yeah, i guess i think i take comfort at a time like this, rightly focusing one's target down the road two to five years. why do you think these blue chip tech stocks will be the winners. >> so warren buffett once said that i would rather own a wonderful company at a fair price than a fair company at a wonderful price, and that's really my thesis here. basically the idea here is if you own these three bluest of the blue chips, microsoft, apple and google for the next two to five years, there's little i could think of that could go

really wrong in this position. these are companies that have massive market dominance over their spaces their products essentially have a perpetual demand, and they're huge cash cows and effectively for all intents and purposes, they're averaging right now at around 20 to 25 p/e with a 20% growth some of them are growing faster than that. some of them have a little lower p/e, but it's essentially the buy. to me that's an incredible value at this point. having said this, though, i will say one thing. nobody knows where ther we're a the bottom or not. to me the way i would trade all of these companies is a scale in basis. dollar cost average into the position for the next six or seven months and build a position of both of these stocks there's obviously no way to know if we're at the bottom of the move here or not my point is we're at a fair valuation. if you look two to three years forward, the growth in these companies is almost certain to surpass where we're at at this point, and it should be a very

interesting compounding effect. >> i think it's not exactly coincidental that even though these companies are down from their peaks, they are down a little bit less than the nasdaq as a whole. >> absolutely. they have a huge cash cushion. they are massive profit generators people are talking about high interest rates, higher cost of capital. none of this matters to these companies. these companies have internal rate of returns, they're not -- they have no need to borrow funds. in fact, you know, the funds that they borrowed were basically essentially to buy back stock i think that's the other interesting thing. because they're so cash rich, they can afford down the road to issue buybacks, and that should also serve as a good support for them going forward or increase their dividends. >> i beg your pardon, i'm sorry to interrupt you, i believe i saw on your list a stock that some people might be surprised to see, and that is zoom >> yes, so zoom to me sort of was an outlier

so obviously a much more speculative bet, but my view on zoom is that work from home is here to stay we've seen a thousand stories where employees, employers have been begging employees to come back to work, and we see that almost everybody is resisting it if everybody, mostof the kind of information technology, you know, white collar work here can be done 90% of it can be done from home, and i think the pandemic just completely radically changed behaviors. so to me, zoom becomes just stock and parcel of our life going forward in a business environment, and i think that's why it's come down so much off its parabolic highs. i think on a long-term basis it becomes an interesting trade. >> does it have enough of a mote around it? >> i think it does it's kind of like first to market dominates the market, right? we don't think about any other tool than zoom when we want to try to share our conversations.

>> i'll zoom you. >> yeah, when you get verbed, you know you've made it, right >> yeah, once you go to verb, that's exactly it, yes >> thanks, boris, good to see you. and ahead on the show, the $5 dilemma while consumers are shocked by these high gas prices, transport firms are somewhat used to pricing diesel, but how high is too high s by. bits coin dropping back to 20,000 fed weakness could be good for crypto before we head to break, throughout the month cnbc is celebrating pride month. here is cnbc's senior director of diversity, equity and inclusion. >> the most important thing i want people to know about the lgbtq community is that we are everywhere we are ceos, cfos, actors, doctors, lawyers, football players, and we are journalists. we are also so appreciative of the many lgbtq trail blazers and allies that continue to help

create change in our community we are not going anywhere, and we will continue to stand united in the face of injustice until we are all treated equally under the law.

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bitcoin down 3% falling to just over 21,000 earlier in the day. that's a potential problem for companies like microstrategy, but there you see it, it's p been stockpiling bitcoin on its balance sheet, then borrowing money to buy even more it warned that it could face a margin call if bitcoin did fall to around 21,000 coinbase having a wild day after saying it would cut 18% of its work force, about 1,100 jobs it cites the possibility of a crypto winter. but michael novagrats founder of galaxy digital seems to dismiss that possibility saying on "squawk box" today he thinks crypto is close to a bottom at these levels and when the fed stops raising interest rates, that he says is when bitcoin will explode north let's go to frank holland now for the cnbc update. >> i'm frank holland

here is your cnbc update at this hour the house committee investigating the january 6th capitol attack has been postponed. the hearing was postponed due to scheduling conflicts and production challenges. the committee will meet on thursday for a previously scheduled hearing. canada announcing its suspending the covid-19 vaccine requirement for domestic travel. that mandate may be reinstated later, especially in the case of a new surge. and authorities in tennessee are warning locals not to pick up folded money after two people found dollar bills laced with fentanyl the sheriff's office shared the warning saying the small amount of fentanyl laced powder is more than enough to kill anyone that it comes in contact with. the u.s. open allowing tennis players from russia and belarus to compete this year despite russia's ongoing war in ukraine. wimbledon has banned those athletes the u.s. tennis association saying he did not want to hold those individuals accountable for the decisions of their government that's the very latest.

thank you very much. ahead on "power lunch," the fed day forecast tomorrow is the day. some experts are demanding steeping rate hikes. will the fed bring brighter days or a hurricane we'll take a look at what tomorrow's decision means for the financials in particular and we will get a final take from b of a's ethan harris. n better, we listen. like jack. he wanted a streamlined version he could access anywhere, no download necessary. and kim. she wanted to execute a pre-set trade strategy in seconds. so we gave 'em thinkorswim® web. because platforms this innovative aren't just made for traders -they're made by them. thinkorswim® by td ameritrade ♪ in any business, you ride the line between numbers and people. what's right for the business

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welcome back, everybody. it's that time, 90 minutes left in the trading day, so let's get caught up across the markets on stocks, bonds, commodities, and the bank trade as we await the fed tomorrow let's start with bob pisani who's got the latest on our markets and a little bit of a holding pattern, but some green out there, bob. >> it's sort of indeterminate trading. let's take a look at consumer staples, coca-cola was a big stalwart for a while, procter & gamble, clorox interesting that they're down notably today, there's some debate about how expensive they are. most of these are trading in the mid-20s, maybe for some there are alternative brands that might be available for people who are more inflation conscious, but that's weaker today. another sector that's weak, the defensive sector is health care.

look at united health care this is a real stalwart. it's a high priced stock so it really influences the dow jones industrial average that's almost 75 points on the dow. it's been down three or four days as well these are defensive sectors. i want to show you how interest rate sensitive stocks are getting affected by the dramatic rise in treasury yields. utilities have been getting clobbered. most of these big utilities, these are the biggest utilities out there, down 12, 13, 14, 15% in five or six trading days. they compete against treasuries. when treasury yields go up, these go under some kind of pressure finally, you do not want to be a mortgage company you heard about mortgages towards the 6% range, invesco's out there. they invest in mortgage backed securities these have been dramatically to the downside, kelly, in the last few days, and of course you've heard diana talking about mortgage rates in the 6% range, and they were 4% just a couple of months ago. >> now we're seeing some layoffs

as well. bob, thank you very much. let's turn to the culprit behind all of this, the bond market, the ten-year yield reversing higher this afternoon, and rick, what 3.46. i mean, we're hearing 3.5% these days >> yeah, yeah, but you know what let's not point the finger at the treasury market. treasury market's not the culprit. they're the messenger. the culprit's the federal reserve and overspending and over stimulating now, look at these charts of two-year note and ten-year note yields since thursday's free cpi close. wow, we're up 60 basis points in the two-year at 341. we're up 40 basis points in the ten-year hovering right under 345, and it just -- and there, these numbers are unbelievable as were cpi on friday, as are ppi today, even though every number virtually is not at the cycle high with regard to inflation. the issue is it's coming down

snail type slow, and if we look at what's going on in foreign exchange, wow is all i could say. here's the pound versus the dollar okay, granted right now it's at the lowest level versus the dollar since march of 2020, but we're just not far away from taking that chart all the way back to 1985 when it comes to the end, we're talking about one of the largest economies in the world and its currency now is at a 24-year low back to 1998 against the dollar, okay and their stock market peaked in 1989 at 39k, currently at 26,600 ponder that and every fed fund futures contract, kelly, for all of the rest of this year, they have won every month, all the way through september of '23 is that lowest prices ever, which means 75 in my book for tomorrow back you >> wow, just incredible, incredible moves to talk about

there,ing rick thank you for all of those headlines. speaking of headlines and culprits, let's get to oil pippa stevens at the commodity desk >> oil dropping here into the close but still holding right around 120, and today ubs raised its forecast saying it expects brent to trade at 130 this fall, and then average 125 bucks for the next three quarters. so basically high prices for a long time, and this comes down to demand rising all over the place. in china, as mobility restrictions are lifted in the northern hemisphere with summer travel, and in the middle east with temperatures spiking, let's check on prices, wti at 118, 67 down about 2%, brent crude down 1% at 120.93 energy stocks are in the green although down from earlier highs. occidental is today's winner with philips 66 marathon oil and valero also registering gains. and take a look at shares of continental resources up 13.7%

afternoon founder harold ham launched a bid to take the company private. the ham family collectively owns roughly 83% of outstanding shares, and their bid is for 70 bucks per share. that's about 9% above where the stock closed yesterday continental kelly said it will establish a committee to consider the proposal. >> and pippa, meantime, let's talk about nat gas where we are seeing huge swings in prices today. what's going on? >> yeah, nat gas is down sharply and on track here for the worst day since november 2018, down 16.5%, this after freeport lng said that its facility that caught fire last wednesday will be offline for longer than initially thought. the company said it's aiming for a partial restart in at 90 days but that a complete return of operations is not expected until late this year and freeport represents roughly 17% of the u.s.'s lng processing capacity,

so why are prices plummeting well, the u.s. market will now be temporarily over supplied, a whole bunch of gas that was slated to be exported is now available here, and his managing director noting that inventories will increase, which will push down prices, but even with today's drop prices are still up about 100% for the year. kelly. >> yeah, just incredible information there, pippa, thank you very much, our pippa s stevs one of the sectors that could be most impacted by rate hikes tomorrow for instance, are financials in past the group has traded in tandem with yields not happening this year, especially if rates are rising and a potential recession looms, the narrative for banks could be changing joining us is a portfolio manager at angel oak capital advisers cheryl, we have some picks here that you're saying for the financials people can look to ahead of the fed meeting, but i'm not sure many people really want to get in front of this thing. why should they? >> i think the way that we're

really positioning it and where we see the best relative value in banks is really in the regional and community bank space, and the rationale there is these are really your pure play spread-based lenders, so they're making their money off the difference between loans and deposit costs and with rates moving up, that's the purest play way to play that relative to some of the big banks that have more diversified models, have exposure to capital markets, which have clearly seen some volatility and frankly have more exposure to the consumer, which is one area where we do expect there could be some pressure on the lower income consumer. >> right, i ean, some of the picks here that you like, pinnacle for instance down 24% this year, signature and svb down 40 to 45%, a little different story there. south states only down 5%. how do people find a south state versus a pinnacle and in general, they might just say, you know what? i don't really need to get in now. i can just wait a few weeks or

months maybe do you really think prices are going to get away from them if they do that >> i think we're seeing valuations kind of move towards trap levels for the banks. what we've seen in sort of the types of names that we recommend are ones that are in higher growth, whether it's the geographical area they're in or by business strategy a lot of these are serial acquirers, for example, and have a demonstrated track record. so i think there's a lot of upside to the fundamentals, but also i think what we've been hearing recently at industry conferences is that banks really focusing on protecting book value in this type of environment too. so, for example, you're seeing a lot of the securities portfolio moving to held security, so you don't have that mark-to-market volatility and you sort of take that off the table, which i think was an unexpected surprise m in first quarter that we're largely through looking ahead to second quarter earnings.

>> you describe these companies as classic pspread-based companies meaning they acquire money at a cheap price and lend it out at a higher price a lot of people are depositors who depend on return off their savings. is there any sign that banks like these will increase what they pay on deposits or for cds or -- >> i think where we're -- yeah, i do think we are starting to see -- the quickest move will be on the online account, so names like ally, capital one that have an online presence, and that's where they really draw their deposit base we've seen those rates move up quite significantly somewhere around close to 1% now, so that's been a pretty big move. cds is also the other place where you'll see that move up more quickly, and again, it depends on the mix, but you know, the types of names that we're looking at have more of a

checking deposit base versus some of these higher cost products. >> right >> interesting, though, so if you're looking for a higher savings rate, you suggest looking at some of the online banks, do i have that right? >> that's correct, yes. >> cheryl, thanks very much. we appreciate your time today. after the break, fedex raising its dividend even as it faces higher gasoline and jet fuel costs sending the stock higher and not by just a little bit. as we head to a break, this month we have some financial planning tips to help protect your money during market turmoil, and here is senior personal finance correspondent sharon epperson. >> here's a tip for your money, your future. contributing to your 401(k) even when the market is vol atile allows you to continue to take advantage of dollar cost, no matter how the market is doing ask that means when the market is going down, you're buying more shares with the same amount

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welcome back to "power lunch," everybody. rising fuel costs really hitting the economy hard, and they don't only show up at the gas pump of course they trickle down to everything we buy virtually. frank holland here now with a look at how the ransports are dealing with the jump in gas and diesel frank. >> transports are up today, but actually down over the past week as investors have become more and more concerned about rising fuel prices. $5 a gallon is nothing new for trucking and logistics prices for diesel, the fuel, the supply chain crossing that mark weeks ago and rising even more than consumer prices have. the biggest publicly traded players they can actually benefit. they charge customers a fuel surcharge based on retail prices while they pay pretty close to wholesale. two of the largest truckers, night swift, jb hunt, they reported 10% of their revenue or more from those surcharges last quarter. fedex and saia also have a fuel

surcharge in place, but the rising cost of gas can hit consumer spending and therefore inventory demand i spoke with the ceo of supply chain tech company zebra technologies they say their customers are still acquiring inventory to meet changing trends >> having the right inventory is probably the challenge for most. if you look at retailers, for a lot of retailers have said in the last month or so was that the demand pattern changed quite a bit. >> so rising prices of fuel can also benefit public players as the increased costs can be a headwind for independent truckers and is just one of the factors pushing orders of new big rigs 35% lower year-over-year that's also lowering competition for publicly traded players. >> let's talk about fedex, the stock up double-digits today tell us this story. >> a big historic day for fedex, adding some new board members.

one of the reasons the market is excited about this stock, it's up 14% right now that dividend raised is a sign of confidence and the strength of their business. when you raise the dividend, it's a sign the revenues are going to be stable going forward. when you look at some of the other companies they compete with, especially u.p.s., we all know u.p.s., fedex, u.p.s. has a dividend yield of 3.5% one of the focuses of these new board members is to increase total shareholder return, management compensation has been tied to that shareholder return, and now fedex after its dividend raised is going to have a dividend yield of just about 2%, putting it on par with a c.h. robinson, and again, returning more of that money to shareholders one of the big criticisms of fedex is that they were spending too much money on planes and facilities and not returning enough of that money to their shareholders. >> thank you very much frank holland, appreciate it. coming up, the fed's quarter pounder, the market getting a rate hike tomorrow, but how many

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welcome back to "power lunch," everybody. we are less than 24 hours away

from that big fed decision on interest rates our next guest was just about the first to make an aggressive call on fed tightening earlier this year, but he doesn't right now see that three-quarter point hike tomorrow. he's sticking with his call for 50 basis points or a half percentage point ethan harris is like bank of america securities ethan, welcome your calls earlier this year were prescient why are you sticking with that half point and not running with the crowd saying three-quarters is likely tomorrow >> well, i don't think it's out of the question. i think it makes sense for the fed to think about doing 75, not just at this meeting but at the next meeting after that. they are behind the curve. the recent data has been quite ugly i think the main argument for 50 is that if you think about it, the fed has moved from being really very slow and behind the curve to actually moving pretty quickly. the may, june and july meetings

are only three months. this is a very tight fed calendar right now, so over a three-month period if they're following what they say they're going to do is hike 150 basis points that's a pretty aggressive movement app and the other thing to keep in mind here, of course you can argue the fed needs to do more rate hikes but they're not going to go all the way to their terminal rate in a quick set of steps. they need to give themselves at least a little bit of breathing space to see how the economy is handling the shock you have to admit, the financial markets have taken a pretty big hit in recent months i think appropriately the fed is really trying to cool off the markets. so i'm not pounding the table that they're not going to go 75, certainly they could, but i'm leaning towards 50. >> one of the things that occurs to me is that i think chair

powell and the fed in recent years has become much more focused on transparent messaging. and the messaging, certainly at the last meeting and the press conference afterward is that we're looking at a half point rise and that that seemed appropriate for the next meeting and maybe the one after that and he said in response to liesman, 75 basis point is sort of off the table so maybe the argument for the 50 basis points is we want to follow through with what our priormessaging was and not diverge from that and at tomorrow's meeting say, listen, we may go three-quarters of a point at subsequent meetings i just wonder how much messaging consistency plays into their thinking as well >> i think it plays some role. if you think about the recent news, the "wall street journal" report that the fed was considering a 75 basis point

hike, i think one of the reasons he said that was to correct what powell had said a month ago to steve liesman, which is it's not on the table. >> right. >> so put it on the table through the press. the fed has put it on the table. does that mean that there's a hidden message here that putting on the table means they're definitely going to do it? that's where the real debate is here you know, i think that it's slightly more likely they go 50 basis points they have got a long way to go here this is a war, not a skirmish. this is going to take a while. >> ethan, it's kelly again tell us why you don't think this should be more front loaded. so when bill dudley today says or mike faroli was saying the same thing, you can make the case for a full point hike jim cramer has been calling for that if you're going there, why not just go there and maybe this doesn't have to be a multi-year fight? >> well, i actually agree that

if i was made king here, if they made the mistake of making me the head of the fed, i would have gone quicker than they went i think there was a strong case for hiking rates back in october and november of last year when we first started to see sustained high inflation, when we saw how red hot the labor market is becoming i thought in the spring there was a good case to start the hiking cycle with a 50 basis point hike but they have chosen repeatedly to take a more cautious approach so my job as a wall street economist is not to forecast what i think they should do but what they will do. i think it's a close call on 50 versus 75. i think it will be extremely unlikely that they would like 100 basis points that would look like panic the markets are already taking a pretty digood hit here. but yeah, the fed is behind the curve. it's been frustrating to watch

in reality >> yeah. >> ethan, excellent points and we thank you for your time today. we'll know a day from now, won't we thank you very much. >> we will. >> ethan harris, bank of america securities. >> for more on tomorrow's fed meeting, we'll have some charts foe osout here on "power lunch." ffing plan needs to go up a size. 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 you'll always remember buying your first car. but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine.

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let's make graphic for you, i have a toy today let's make graphic for you what's been happening in the bond market this year.

it's the kind of thing we haven't seen in decades. look at where the 10-year began the year at about 1.6% when you get all the way up here to 3.4, it is a gain of 129% it looks like this isn't working, does it draw let me see if i can hit draw when you come over here up to the peak it's more than 130% higher look at the span there it is in january when you come across to march, there you see it let's go to 2/10 year spread the fact that the difference between the yield on the 10-year and the 2-year is 0.04%, that is what tells you right there this doesn't work. rob, get this out of here. i don't need this. but that's the number you've got to pay attention to. 5 and 10-year spreads. >> even authorizmore negative. >> which means the 5-year is

yielding more. >> mortgage rates. >> 10-year still positive. the fed is trying to catch up. there's the 30-year fixed mortgage rate. 6.28% today. >> maybe it works on there no, doesn't, sorry thanks for watching "power lunch. >> "closing bell" right now. thank you, kelly and tyler stocks trading in a narrower range after yesterday's sell-off, but we are near session lows we've given up some early gains as we await tomorrow's big fed decision the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen a few attempts to go positive today which would break a five-day losing streak but we've given up those gains the dow is down more than 200 points s&p 500 down three-quarters of 1% there's one sector that's positive in the s&p and that's technology, thanks in part to oracle better forecast, 30% cloud growth that's h