now. and "power lunch" does begin, kelly, thank you very much i'm tyler mathisen, welcome to a busy thursday on "power lunch. we have a sell-off on wall street amid an aggressive inflation fight if it is not just starting, it is really getting some power behind it now. the risk of recession, it is rising, say most people. stocks falling, the dow breaking below 30,000, the lowest level in more than a year. so what is ahead for equities, for bonds and e market as it undergoes this great re-set with new opportunities potentially. we have a big hour ahead as we track this continuing sell-off, kelly. >> thank you and just to your point, let's look at where we're session lows right now. the dow is below 29,900, we're down 788 right now and we're 19 -- these are the in blue the percentages that each of the

major averages is off the recent all-time highs the dow is down 19% and ths&p is down 24% and the nasdaq is down almost 35%. it is trading at 10,600 and change it is lowest level since september of 2020. now the blue chip names are getting hit by the recession concerns home zee pot, intel, walgreens, hitting 52-week lows every member of the vanguard semiconductor trading lower including on semi down 10% and amd down 9%. those are some of the biggest laggards what is holding up, walmart and proctor and gamble sand colgate sand palmolive, known to be recession-proof. these are gaining of only about 1%, tyler. >> what seems to have investors spooked today, kelly, is that a growing number of economists say a contraction in the economy next year is going to be difficult to avoid if it is not already taking root right now. wells fargo now calling for a

mild recession following the fed's three quarters of a point rate hike yesterday. the largest since 1994 new stata this morning reporting to a slow down housing at a two-year low, by 14% down for a second straight month. the philly fed factory activity index, that manufacturing contracted for the first time in two years and yesterday we learned that activity in the new york fed also contracted new york state of mind, not so hot. all right. to fight inflation, the bank of england hiking rates for the fifth straight time by a quarter percentage point and the swiss central bank surprising the market with its first rate hike since 2007 it is all playing out, folks, in the bond market where rick santelli is tracking the action. rick, yields are lower than they were at this time yesterday. explain why. >> indeed, they are. and there is a variety of

reasons. not the left of which is that many investors think whatever the ultimate terminal rate is for the fed, that ultimately that when we get there, the rest of the curve is going to be lower because the economy is going to be stalling listen, i know the definition of two negative quarters. is it really the definition of recession. but try to tell that to a trader who sees first quarter was negative and the second quarter isn't looking a whole lot better look at a two-day twos and tens in the u.s. and you could see what tyler is talking about. two-year note yields are under yesterday's low yield. why is that significant? because it is pushing curves steepening and even though stocks aren't all off their bottoms, it is definitely getting more buoyant when that occurred, just like it occurred yesterday. the minute we started to see steepening post fed announcement at 2:00 eastern, we did see the equity markets have the rebound. it didn't hold today but the real tug-of-war is what the fed is going to do, how long

and how hard it is going to be for them to get there versus how much damage is done to the domestic and global economies. and as tyler pointed out, the swiss, yes, they raised rates a half a percent and it is still minus .25. it is the minus one quarter of 1% and it is hovering at the highest yields in ten years and in u.k. after the fifth quarter point increase, it was largely expected but yields, they're also just above 250, hovering at eight-year highs, very similar to the bund yields so what investors need to do is they need to decide which is more dangerous, trying to pick bottoms in the treasury or yields or getting juicier or trying to pick a bottom in equities where recession talk is making them much more squeamish. kelly. back to you. >> rick, thank you very much. as global central banks move away from easy money, is a recession inevitable our next guest said that is the

re-set underway to bring prices to back to reality let's welcome jim grant, founder of grant's interest rate observer it is great to see you again. >> thank you, kelly. nice to be here. >> i have a feeling in an unfortunate way the world is starting to make more sense to you that it did the past couple of years. >> yes well, kelly, this is interest rate liberation day. the japanese peg on this 10-year yield, 25 basis points appears to have been broken or is breaking and the swiss just observed and moved a way a little bit from deep zero to sli slightly more or less than zero. so let me, my take on this, this is fundamentally to the good interest rates being the most consequential crisis in the capital, they ought to be market determined and we've been living since the great recession of so long ago with markets not

determination, but prices being administered largely by central banks. these are important prices being administered by the central banks and it is given us, you know, lovely bull markets but most i think to wholesale this allocation of our resources of time and power it is given us a great crypto delusion it is given us the immensity of private equity, highly leveraged. public venture experiments and on and on. so i think that we are leaving the all of mirrors and the interest rates just to the extent they will be determined in the market place will be the guide for the future -- >> jim, you could sum it up, payback is rich. but it could make you poor in this case. how much longer does this re-set need to play out and how much

lower than should we expect for example the stock market to go how much -- how much recession risk is really baked into this re-set as we return to a reality where the markets determine what rates are as opposed to policymakers or artificial depressing them. >> i think the way to think about the degree of difficulty now, with fed undertaking as to what we call the world fraternity trick in which the pledge is tasked with pulling out the table cloth from the table set with the fine crystal and glass ware and that pledge is likely to be unsuccessful and there will be a clattering sound followed by the too timid yank at the table cloth. and i think that is not a bad

analogy. inflation is a complex phenomenon we've all been able to observe so few predicted it and now money-m are rushing to predict its end. so i think it will persist and i think that the central banks will probably be calmly recipients of this -- events will be leading the central banks. we're accustomed to having central banks in charge. events now i think will be in charge and i'm for it to exceed reason. it will go too deep. the stock market perhaps too high in interest rates but this is part of what we here at grants call the value restoration project and it is painful but it had to happen and there are opportunities in the wings. and i think we ought not to get too discouraged. >> let's talk about those jim, for a lot of investors who are not in agreement with everything that you've said

some of the markets are back to pre-pandemic levels. do you buy equities in general here, and feel okay about it, are there specific stocks sectors or strategies that you would recommend? >> kelly, let me tell you about a very small and kind of quirky but i think quite inspirational small cap fund that goes by the name of the palm valley capital fund and it is -- it is to buy a small cap stocks over the course of a complete cycle and generate double-digit returns doing so. and it is managed by some people very doughty value-minded people who have in their determined way refused to buy until, in their judgment, valuations return to levels at which they can do what they pledge to do with stockholders so this is $160 million fund, it is a very small.

mostly in cash not trying to predict the future, which certainly have proven collectively. we are -- but rather waiting for valuations to meet their criteria and they're up a little bit this year like 125 basis points post everything being down a ton. but i think what i say inspirational, i mean that there are people who refused to contract fomo, who have stuck to the gospel of graham and dodd and i think they're a beacon for people we ought not to be discouraged we ought to recall that stocks are not pieces of paper, but evidence of ownership and operating businesses those operating businesses operate over the course of a cycle. human affairs are jagged and at once pleasant. but it is a great country, a great economy and now tyler and kelly, we are looking at the

promise of the liberation of the most important prices in capitalism from the midst -- >> do you think even think -- >> from the hands of the central bank. >> do you think there is going to be a recession, it sounds like you're more bullish and think this is a valuation re-set. >> if i had to guess, i think there will be a recession. but i think that -- much of the big money in the world is made in times of adversity. >> yeah. >> so again, be bold america, and not the way we used to be. but in the way that value shoring -- >> i would love to spend another hour talking about crypto but we don't have that amount of time we'll have you back to talk about that jim grant thanks. >> maybe the next crypto night in america. >> all right so if the market is re-setting should you change how you invest let's bring in our friend and cnbc contributor michael far,

from high tower advisers and ceo of far miller and washington good to see you. what do you think of what jim grant just said? >> i think jim grant is a wise man. has been and a friend for years. yeah, you have to start to begin to think opportunistically after a while when prices pull back and things go on sale. i thought the introtoo, when you talked about that new report out of wells fargo, dr. jay bryson was one of the best interviewed i've seen on television with kelly evans. kelly, absolutely one of the finest interviews i've seen you do you nailed it and it was -- >> credit it to jay. he was spoken. >> jay was good. but you were better. that is a great, great interview. >> oh, you flatterer. >> watch that. you know something, mathisen, you you could learn from watching that interview and i don't say that lightly >> you're still not guesting on the christmas card list, michael

farr. >> she nailed it i'm telling you, she nailed it and markets are pulling back and we're down 24% and the average bear market is 30% so i'm not feeling polianish or good about things but we are historically a lot closer to a bottom than we are to a top. things were high they are no longer high. this recession that i think will likely come could take months to play out so if we go down that 30%, then the next 6% of kpitulation could be painful and pain at the pump and grocery store for several months but as jim grant said, this is when you start to look and bear marketers are where long-term investors make their money and when you see big cap names that are really pulled back that have solid balance sheets. i think you have to begin to nibble i never go kind of all in. i'm a very patient investor.

i own stocks for a long time and i love those proctor and gambles and pepsi cola and the names that you were mentioning but i think there are others that you could add now. >> so bad times are good you could make good money in bad times or you could begin to do that so let's nibble at some of the names that you do like right now and explain your reasoning for them let's begin with amazon. and i'm amazed that -- not amazed, but look at three businesses and the one we associate most with it which is retail is sort of your after thought here >> well, retail is kind of a looser and it is the way they buy market share at amazon they buy market share and a customer base by flat to losing money on their retail. the cloud, and their cloud services are hugely profitable and so are advertising and the more users and the more market share they soak up, the better they've got a aa rating from s&p

500. they're down 40% off the high. 40%. so for all of the people who have been telling you for years you have to own amazon, i didn't own amazon i thought it was too expensive down 40% i think i start to nibble. i look at a company like disney. disney is down about 50% from $185 to $93. 17 times earnings. 15% growing those earnings they've got disney plus that is still increasing the subscriber base, the theme parks are coming back strong. we've lifted the vaccine requirement for folks coming to the u.s., so europe is coming to the u.s. they're going to disney. the park prices and ticket prices are high. so, you don't go all in but i like these companies even goldman sachs at one time's book, you get to buy goldman sachs at one times book. i don't mean it will go up next month or the month after that, but for the long-term, you're very happy if you add to these positions at these levels and are patient because five years

from now i think you'll be exceptionally happy. >> my big takeaway is that stat that you said that we're down about 23%, maybe a bit more today on the s&p and that the average from peak to trough is about 29%, 30%, which tells us maybe we're in the sixth inning of this ugly game. if you thought kelly's interview was good, you should see the interview i done with my son over his grades. so michael, farr, my friend. >> i would have bought a ticket to that. >> they're good. by the way i'm happy to say they're good. >> thank you >> attaboy. >> i was going to say was he plain spoken but he had nothing to hide coming up, with the dow breaking back below 30,000 in today's session, should investors step no too to buy. a look at what the charts say could look at next and a billion weather telling you where we're going. plus recession-proof your

portfolio. two names that could do well and one safety play to avoid as we go to break. the home construction stocks are down sharply tripoint and taylor morrison off 12%. we're back in a moment what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create ♪♪ making friends again, billy? i like to keep my enemies close. guys, excuse me. i didn't quite get that.

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welcome back to "power lunch," everybody. the dow dropping back below 30,000 today for the first time since january 2021 and the nasdaq low rewinds the clock back to september 2020 these round numbers get a lot of attention like 30 k but for technical analysis, that is not necessarily what people are watching for the key numbers for investors, let's bring in rich ross, the director and head of technical analysis at ever core isi. does today's trading have any significance to you? >> yeah, i think it reinforces the kufrnt themes and trends that we've been working on here for weeks and months look, let's be clear, this is a financial crisis chart book in search of a crisis and if we don't stop going down soon, it is going to find one, kelly. >> so talk through what the implications are for investors we spoke to carter worth last hour who was starting to sound a little bit more constr

>> yeah, well i'll tell you, we're seeing historic moves across asset classes vis-a-vis, in irates, mortgage rates and gasoline and inflation and when those things go up in a straight line, stocks and consumer sentiment have a propensive to go down in a straight line. as a habit, i don't buy things that go down in a straight line nor sell those that go up in a straight line until the trends have displayed evidence of exhaustion which is not in the charts as we speak so i'm not quite as sanguine as we speak her today. >> and he wasn't going off the charts, but a hunch. and dow and k web and apple. we have the market overall particular segment of it of and a stock that you're watching here so for the dow 30, what do you see? >> we know that the dow has held up better than the s&p by virtue

of the constitution with less technology and growth. when we consider the two of the top stocks in the dow which make up 15% of that index are united health care and mcdonald's, they have a more defense, down 9% and 11% year-to-date, compare and contrast that to the s&p which is still very tech heavy dominated by apple, microsoft and google i think we're familiar with technology in the stocks that dominate that. so again we could take the dow versus the s&p, but when i took a look at the sum of the chart as it were, this is not a world in which the dow only goes down 18 percent and that is where we are today. so again, 29 is a line in the stand. 29,000 that is but i do not expect it to hold here if we continue down this course across asset classes and my work would suggest that we will continue to go down this road. >> how long and how far? and i think you make a critical point that we have to remember, the dow is a price weighted

index so a highly priced stock like united health counts for a lot more than a lower price stock. >> yeah, you know, tyler, you've hit the nail on the head here. any bottom is a function of price and time in the old time days it was a function of price, time and fed policy which has essentially marked the low of every major market decline in recorded history. but in the absence of said policy support, of course in the presence of inflation at a 40-year high, price and time are going to take longer in terms of both magnitude and duration and i would put forth that here we are just six months from an all-time high and went up for 13 years and gone down for six months so the punishment still doesn't fit the crime. this one is going to take a little longer to work itself out without the help from the fed. >> and you would still be a seller of apple but you were a

buyer of the k web, is that right? >> yeah. this is really interesting in this macro -- china has been a port in the storm and consider if we think back to '08, and no one likes a sentence is that started with '08, bottomed before '09 and history repeated here as it pertained to chinese internet names you saw the call from a kettor and again we come back around and retest that low only to put in a critical double bottom which provides the catalyst for a break out above the 20 week moving average and coy tell you that what gets you out of a trade gets you in. look at the break below that 20 week that came early last year. here we are 18 months later reclaiming the level this defined resistance for the trend. i like the idea of that which led it lower and china now leading us higher but don't came comfort in that as a u.s.

investor, but do take comfort in that if you buy chinese internet stocks. >> i'm go fog leave it o-- goin leave it on that glimmer thank you so much. up next, tech rec taking the biggest hit in the group cathie wood's ark down -- noah, anybody out there? down 6%. we'lbrk wnhel eado t biggest declines next. but all my empls 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.

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welcome back to "power lunch," everybody. broad sell-off on wuls today tech getting hit the hardest nasdaq down 4% and then some and cathie wood's ark innovation down 16% kristina partsinevelos joins us with the biggest holdings in that ark etf. >> it is on pace for the eighth monthly loss in a row inching closer to the march pandemic of about $34 a share and yet cathie wood doesn't appear to be too worried. she in an interview with goldman sachs said that inflation is beginning to ease. she thinks the current inflation is a one-time shock and that is because of a drop in shipping

rates and discounts at retailers due to higher inventory, aka, a drop in prices risky though earlier stage tech companies and these are the ones that are in the ark innovation, rose to fame in 2021, rates were at record lows but it is the same companies that are struggling today. constituents unit software leading to the down side and followed by road blocks and the ticker on your screen. and then the biggest like zoom, tesla, roku have dropped more than 30% year-to-date. and about a week ago cathie wood's predicted that zoom would have an upside from today's price and another kcatalyst, crypto the holding of coin base has seen a significant decline in cryptocurrency the tock is down 80% and wood bought 300,000 shares of coin in just the past month.

>> kristina, a question here last year, as the fund was losing, going down after its time in the sun. it turns out that wood was adding risk. what was she doing and why >> well, just within the last year, she slashed the number of holdings in etf and went from 60 to 35. so what does that do that means that you have more stocks specific risk and less liquidity. >> and more vulnerable to severe losses but there is talk of succession in may, ark, the fund named t current analystsas portfolio managers and cathie wood have been in charged nine etfs under the ark fund maybe that gets a change >> we'll see thank you. let's get to contessa brewer now for the cnbc news update. >> good afternoon, here is your news update. the january 6 hearings are continuing right now retired judge michael luttig

accused president trump and his allies of launching a war on democracy. >> that declaration of donald trump as the next president would have plunged america into what i believe would have been tant amount to a revolution. >> he said in a constitutional crisis two veterans who volunteered in ukraine have been reported missing by families. alex burqa and wynn have not been heard from since last week after going on a mission u.s. officials are in contact with ukrainian authorities but those are all of the details we know wnba sue bird will retire at the end of the 2022 season

she's a four time wnba champion and leads the league in all time assists and played her entire 21-year career with the seattle storm. no doubt a big loss for that team kelly, back to you >> so wnba news in honor of our producer paul ammon who is the biggest fan. thank you. ahead on "power lunch," there is more on the market sell-off is there any where in the sector that could be safe the dow is down 804. and are there recession resist ant names out there. we'll lay them all out there is a hint. when "power lunch" returns and vanguard retirement tools and advice can help you get there. that's the value of ownership. (mom allen) verizon just gave us all a brand new iphone 13. (dad allen) we've been customers for years. (dad brown) i thought new phones were for new customers? we got iphone 13s, too. switched to verizon two minutes ago.

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we have a little less nan 90 minutes left if the trading day. we want to get you caught up on the sell-off stocks bonds and commodities, and the two tech stocks are next guest said were bought just today. let's begin with dom chu on the market action. >> it is a down day. no way to sugar coat it. the last half hour, what you're see pg on the screen is a retest of the session lows with the new lows being set on this basis that percentage wise move is a 2.8% decline for the dow

3.5% plus for the s&p and 4.5% for the nasdaq composite it puts it down at 19% from the dow, 20 below the s&p and35% below for the nasdaq and deputy. now the losses today being led by the energy sector followed up by tech and communication services and the outperformer is consumer staples they are seeking less economic sensitive sectors like those staples, but only about a dozen stocks in the entire s&p that are positive on the day. you have consumer staples like proctor and gamble, church and dwight, colgate and palmolive and keep an eye on the gold miners on rise alongside precious metals like gold and silver as inflation factors into the broader market story and some the biggest loser in trading, economically sensitive ones consumer focus names

norwegian cruise lines royal caribbean, cesar's entertainment and american airlines and ralph lauren as they stoke worries about the health of the consumer spending picture. so these are deeper in the red than others. back over to you. >> thank you very much let's go to the bond market. rick santelli tracking the action talk to us, rick >> if you look at two to ten spread over the last couple of days, you could see it is had bouts of steepening. why is this important. because as two year note yields sink faster, it is a proxy for not only the terminal rate of the fed but trying to pick bottoms in the equity. if you look at the two day, it is getting hit hard and it is coming off a 20-year high and dropping because other central banks from a peer pressure standpoint are playing catch-up. week to day, the euro currency case in point as other central banks tighten, it is putting more pressure on le guard to get more aggressive.

pound versus dollar after the tightening, it had a nice bounce but it is from a wo-year low tyler, back to you. >> oil is bouncing back after getting as low as $113 a barrel in early trading today pippa stevens joins us with the details. what is going on in oil. >> green on the screen for oil which is hard to find these days in the market. we did actually get as low as 112 on wti, before prices reversed course. that reversal came after new comments from u.s. officials around iranian sanctions as well as russia's deputy prime minister alexander novak saying that he is not ruling out $150 oil, a weaker dollar is helping out. let's check on prices. wti around $118 and brent around $120 and both up around 2% turning to natural gas, on the move in u.s. and spiking in europe off the highs of the day but still up more than 40% this

week russia has further reduced the amount of gas flowing there the nord stream pipeline and they say it is from equipment germany said the move is political saying the situation is serious and that companies and citizens should save energy tyler, a lot to watch. >> thank you very much. as technology basically tanks. our next guest said she's finding opportunity. buying a couple of names today, amid the pull back let's bring in victoria fernandez, at cross mark global investments. victoria, before we declare you a wild child buying all of this technology let's point out that you've already been adding to some more value names including energy, including companies like cvs, including companies like lockheed martin. >> you're absolutely right because we think this market is continue to be quite volatile

for the rest of the year so you want to have a well positioned portfolio, a balanced portfolio. so are we buying some tech names? we are we're not saying go into the tech sector and buy everything there. what we're saying is look for those quality tech names strong balance sheets, strong business models, you look at a name like nvidia, it is down 48% year-to-date they have had strong earnings. their a data center business is continuing to grow as is their gaming section and so they're going to continue to do well this is a name where you could go in, buy a little bit and into your portfolio with prices down where they are because, look, tyler, when you look at tech space, especially some of these names like an nvidia, companies are really using their capex right now for tech they need to have the cloud space. so you want names that have that like amazon, with aws as well. they need to increase their productivity and they have more remote

workers and they need to continue to do well in this volatility. >> there was probably not a name that coy recall more -- more lauded than nvidia two years ago. in terms of its business and the demand for its products and how solid it really was. and it is obviously been tarred. it is gone down the same way that many tech stocks are so when you're looking at core business, that is what you're do with amazon, just as michael farr did earlier today he's looking at the three parts of the stool there the cloud, the advertising business that they have, which is underrated and third is retail >> yeah. that is right. and i mean, a good example of that, look at oracle when oracle reported this week, they said cloud revenue was up around 20% and infrastructure cloud business was up 36%. so you have names like the two

we just mentioned, nvidia and amazon with the exposure to the cloud space. knowing that companies need to continue to build that out i think those are area where's you could focus on within the larger sector. i don't think you go all in as i mentioned. but find some of those areas look at those different legs of the stool and that gives you some opportunities in this volatility. >> and you're also a buyer of energy still here, victoria? >> you know. we've actually been underweight energy for a while so we've been using some of the pullbacks that we've seen to go in and add to some names so we have energy down, what, 4% this week, and i know pippa just said oil turned back positive a little bit but we want to go in and add to some of these. because it is a supply and demand story right now and i don't think demand is going down, especially as we entering the summer months you have beijing and shanghai opening back up and i don't think we're going to see supply in a significant way come to market so for us, energy still has an

opportunity that crack spread is like the 95th percentile right now so they could take advantage of that spread and continue to have some upside potential >> the only thing that would seem would really chill energy would be a recession and you're not in that camp, are you? >> you're right, tyler, we aren't maybe the percentages or the probability has gone up a little bit. over the last 48 hours but we still think that the economy, the underlying fundamentals are strong enough with the labor market where it is, with corporate balance sheets where they are, we haven't seen really earnings expectations come back in enough to concern us too much and household balance sheets especially for the higher end is still pretty strong. so we think the recession may come second half of the next year but we should be pretty good for the rest of 2022. >> victoria, thank you so much we appreciate your time today. >> my pleasure. >> cross mark global

investments. >> and up next, we'll take a look at one of the worst performing sectors consumer discretionary it is down more than 5% again today and the travel and loseure names are getting hit. it was supposed to be their summer before the break, check out two other major decliners. materials and energy the biggest laggards are names like albemarle, and api and diamondback. "power lunch" is back after this ♪ i may be close to retirement, but i'm as busy as ever. careful now. - thanks. -you got it. and thanks to voya, i'm confident about my future. -oh dad, the twins are now... -vegan. i know. i got 'em some of those plant burgers. -nice. -yeah. voya provides guidance for the right investments, and helps me be prepared for unexpected events. they make me feel like i've got it all under control. [crowd cheers] because i do. okay, that was awesome. voya. be confident to and through retirement. your record label is taking off.

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welcome back, everybody. as we mentioned, the consumer discretionary sector is one of the hardest hit today and it is the travel names dragging the group lower. norwegian cruise lines is down 11.5%. it is down 35% in a month. royal caribbean very similar story. carnival cruises, you could see selling pressure against the sector that was supposed to be one of the big beneficiaries of the summer of reopening. the airlines are under pressure as well. why? it is all about higher ticket prices and consumers trading down delta down 8% today. >> all righty. and after the break, the names that typically perform well even during a recession our trader will tell you which

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welcome back, everybody. we've just hit fresh session lows for the markets, down more than 900 points a moment ago on

the dow. that puts us below 29,800 as we've given up 30,000 today already for the first time since last january the s&p is down 3.8% right now which is worse than the dow's 2.9% look at the nasdaq, down almost 5% it's down 500 points it's back to 10,574. worst performers are the blue chips, including nike, american express and chevron. that brings us to our three-stock lunch. the theme is how to recession-proof your portfolio dollar general and autozone and pepsi. let's bring in jeff mills a cnbc contributor. jeff, let's start with dollar general. what do you do with the stock here >> yeah, hi, kelly whether it's an economic slowdown or recession, we're looking for stocks that are going to do well in those environments and dollar general is one of those names.

we've owned it for quite some time it's just a consistent outperformer when the economy is slowing. 2011, 2016, 2018, 2020, every single time you saw growth slow, dollar general outperformed. i also think in this environment as customers start to trade down because of expensive prices, the customer base starts to expand for dollar general 80% of their products sell less than $5 and 76% are consumer staples or everyday essentials even from an inventory perspective, a lot of these companies like target, consumer spending preferences are shifting their inventory is not matching. dollar general isn't necessarily going to have that same problem. i think it's a reasonable valuation. our analyst thinks high single digit eps growth, an interesting growth opportunity in mexico for the company. so once again i think you get outperformance from a name like dollar general. >> and a lot of people like the auto parts players, and your choice here is autozone.

>> yeah. autozone is a name we're looking at, tyler. i think it's an interesting one here again, you're looking for companies that are going to maintain some semblance of earnings growth in a slowdown. when you're talking about a recession and people's cars, they're going to patch, glue, tape, whatever they can do so it's the fix versus buy sort of argument. i think on top of that again, specific to this environment, you've had a shortage of new cars for over two years now. i think that plays into it you're also seeing the average age of a car on the road over 12 years. that's actually a record so people are holding on to their cars, avoiding higher prices, avoiding that shortage of inventory again, i think the valuation is reasonable for a name like autozone. >> that brings us to pepsi, jeff what do you do with this stock >> yeah, so like you said, kelly, pepsi is a typical name that you would look for in this environment. the chart worries me a little bit. to me it looks like a double top. you break below 153.

you could have meaningful downside and the valuation is what bothers me at 23 times forward versus the sector at 18 times, you're just paying a premium i think all of these companies have the potential to have margin pressure, but margin pressure impacts the stock price more when you're trading at a premium valuation so that's my issue here with pepsi. >> that rounds it out for those three stocks do you want to leave is with a comment with markets, i was going to say puking. maybe that's not polite. but in response, i guess, to what the fed did yesterday what do you think is going on here >> yeah. the market is doing what it told us it was going to do. it's scared about interest rates. i think the fed was sort of maximum hawkish yesterday. we got a little bit of a head fake again this is exactly what happened last meeting but i would anticipate more downside until you see inflation move to a point where the fed is going to be able to put the brakes on. i don't anticipate that happening any time soon, so we're looking for maybe 3500, then maybe 3300. those are levels i'd be paying

attention to at this point. >> we are rapidly approaching 3600 jeff, we'll leave it there thanks for your time, we appreciate it. up next, the debate over market valuations as the dow hits session lows, 921 points off right now. 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... is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you.

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a little bit off the session lows, but who's counting here. the dow down more than 900

points losses have been accelerating this hour, bringing valuations back to levels not seen since the early days of the pandemic dom chu has the charts and the proof and the numbers. dom. >> all right, so what we're looking at is the forward price-to-earnings ratio. what you're going to pay in stock price for every year of next year's expected earnings. it's a more forward-looking way to look at valuation this is what it is for the last ten years for the s&p 500. right now at these levels that you're seeing on the right-hand side, call it roughly 16 times forward earnings that's something to keep an eye on here, because if you go back, we're going back to april of 2020, the lowest level since the emergence of the pandemic bringing some to question whether or not the valuations have fallen enough, given the rising interest rates, for this to be a more compelling trade from a risk/reward perspective something more interesting about this, the reason why this got a

16 level if i can go back to the other one, the reason why it's more compelling for that particular one there is because the average price-to-earnings ratio on a forward basis is around 17 times. so we're sitting right below where it on average has traded over the course of the last ten years. so yes, the market is selling off. there's a good reason why. inflation is a big part of that story. there are a lot of concerns about growth going forward and recession, but these levels here, we don't want to induce panic because some folks are actually saying, you know what, this is a more compelling valuation for the s&p even over the last ten years. >> when you went back to that prior chart if we show it, at the peak what was the forward multiple >> if you go back and look at the peaks, you're talking about 20 some times. about 24 to 26 times forward earnings again, the emergegence from the pandemic as we started to get stock prices up there, you were paying more and more and people were trying to catch up with those

earnings expectations going forward. so you're paying more for next year's anticipated earnings. those valuations got stretched arguably because of things like zero interest rates. as interest rates have fallen -- or risen, rather, you can see the stock valuations have come down. >> got to leave it there, dom. >> thanks for watching "power lunch. everybody. >> "closing bell" starts right now. stocks getting slammed as the post-federall rally evapora. the nasdaq is below 11,000, breaching some round numbers there. the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen take a look at where we stand. look at the nasdaq right in the middle down 4.5% big tech bearing the brunt of the pain as we've seen lately with these big sell-offs due to higher interest rates, the s&p is down 3.7%, the dow jones industrial