now you have the issue do you have enough training pilots? that's not something the public thinks about we think only about the person who's flying us somewhere. you need training pilots to get these guys through the training is it many. >> fascinating stuff. >> tyler could do it >> all right, thanks phil, thank you. everybody, thanks for watching "power lunch." >> the dow is up 732 "closing bell" starts right now. thank you, kelly stocks at session highs here firmly in the green as the shortened trading week kicks off on a high note we are sitting up 755 points right now on the dow the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen take a look at where we stand broadly in the markets s&p is up 2.75%. keep in mind we're coming off the worst week for stocks. having a nice big bounceback today. the nasdaq up 2.8% the dow is up 2.4%

look at the s&p 500 heat map right now. you'll see every sector is seeing nice gains. energy is leading. we've got a 1% rides in crude oil prices consumer discretionary, health care, is up there. materials the worst performing sector but it's up 1.6%. you've got a mix here, everything that's been beaten down in the last week or so. coming up, tony dwyer breaks down today's bounce. whether he thinks it's the start of a broader market comeback he's been calling for a summer rally. all week long we are taking a look at where americans are spending their money this summer we're starting off with danny meyer for a look at the state of the restaurant industry. let's begin with the rally, though mike santoli with a closer look at the action and the s&p. >> yeah, we talked last week there was a chance we'd have a little tension release coming into this week, mostly because we got through so much ecb, fed meeting, big options expiration on friday

then historic oversold conditions very rare extremes we've been worse than we got to after this 11% drop in the s&p after two weeks but we're in the zone where the market should have responded with a bounce the first step is in the books we did respond to oversold conditions this is a one-year chart we've risen to this point. we're still below the levels we were hoping we would hold going into last week 3810, something like that. so you still have plenty of steps along the way before this is anything more than a bounce i would say 4000 area is probably the minimum to say that this is maybe the start of something larger, because that's where a lot of things come together technically and also again it gets us back before this breakdown zone right there. so take a look, though, at this historical comparison of what we've been going through this year compared to two other bad bear markets in midterm election years, because that cycle sometimes seems to matter. obviously we're underperforming

to this point in this year but here's the reason that a lot of folks look toward the bang h back half of a midterm election year is where things firm up the fed was sort of mission accomplished back in 1982, august of that year. that's the great bull market took off this is a somewhat maybe reassuring comparison. if you go a year later, you were kind of higher no matter what. coming into these calendar years the market was already going down for a year. we started this year at a peak nobody says it has to match up but it's an interesting comparison cycle >> some people think that could be a bullish catalyst if we really get a divided government. >> more than 80% of the time after the election in a midterm year, you're up the 12 months later. >> 80% of the time >> for a given year you're up 60% of the time on average or

so but it's still better, though. >> better with the midterms. let's talk the fed, another 50 or 75 basis point hike at the fed's july meeting feels reasonable that's according to thomas barkin who spoke earlier today his comments come after a weekend of statements from other fed officials. everyone comes out now after the june meeting at a conference on saturday, federal reserve governor christopher waller says he supports another 75 basis point hike at the july meeting next month. on "face the nation" loretta mester said it would take a while to get inflation down but noted inflation risks are going up joining us is chief market strategist tony dwyer. good to talk to you. can you buy into this rally with fed officials still coming out like that and sounding very hawkish, talking about three-quarters of a percentage point rate hike again in july? >> sara, thanks for having me. great to talk to you

you've got to be the most nimblest of traders. as you know, we expected a summer rally or pretty good bounce, as mike said, so appropriately. you have this historic oversold condition. but ultimately when i think back to when i got into the business in may of 1987, i can't remember a for real market correction, not just a couple of weak kind of crashy type things where the fed was getting more hawkish as the market was going down. typically we try to differentiate between a bottom, quote, unquote, and the bottom until we see the fed signal, not necessarily change interest rate policy but signal a change is coming, i think we'll just stay on the sidelines unless you're super nimble >> so what about that summer rally that you were excited about? >> it's still -- i think it's happening. there's a bunch of stocks that are up from where they were two weeks ago. it's a pretty broad rally. but like i said, the question

becomes -- we always ask what's good for the average investor? and what's good for the average investor is to have some kind of confidence that there's a significant, sustainable turn. i think that only comes with money availability improving and it's gotten worse lately and not better and another rate hike is not going to help. >> tony, what if the market gets ahead of the fed again what if inflation numbers start to come down would that be enough to convince you? >> i think you have to see a clear change in tone by the fed and that's our call going into end of year. >> but that happens when >> yeah, the fed is in a box they're working on lagging indicators so you're already starting to see some pretty dramatic weakness in economic activity, especially in interest rate stuff as rates go up, that's not going to help it but the good news for that, probably post election into the end of the year, that's going to really create an environment

where the fed will start focusing more on the economic weakness if you follow the national federation of independent business plans, that's having a pretty dramatic downturn so unemployment into the end of the summer should be starting to pick up. inflation should start to come down we're already down 22 to 24%, so because the fed is tightening monetary policy, you don't have to do something until you figure out -- until we see signs that the fed is actually changing their tune which will allow for that money availability to improve. >> so what do you tell investors to do now besides sit and wait is there anything? are bonds attractive this rally is happening alongside another sell-off in bonds. >> and bonds are attractive. what's very interesting is guess when the inflation break-even made their peak? that would be march. so the market and the inflation

break-evens believe that the fed will be successful and that inflation will be coming down at some point later in the year but the actual bond yields have gone up. >> what about recession, tony? how far along do you think the market is in terms of pricing that in? and what will happen if we do start to see more recessionary indicators >> i think you're going to get them i think, again, we go by the data, sara, as you know. when we see the core pce which is what the fed say they use a 16 multiple is average so i think the price-to-earnings ratio is about right given the trajectory of inflation as we see it going into year end but the fed is raising rates and tightening financial conditions in an extraordinarily levered system with bloated inventories and slackening demand. so that's why it's so important to see a change in the tone of the fed so that the market can

look through it, see money availability improving at this point with the fed governors each talking about 75 basis points, it's pretty hard to imagine that that's going to be good for money availability. >> jay powell is up on wednesday. he's going to be testifying. tony dwyer, thank you for jumping on the news line with your latest thoughts appreciate it. up 757 on the dow. tesla, diamondback and exxonmobil leading the market. next we'll look at the restaurant economy danny meyer will join us to break down how he's navigating all the headwinds and the spending trends that he's seeing from consumers you're watching "closing bell" on cnbc. ♪♪ making friends again, billy? i like to keep my enemies close. guys, excuse me. i didn't quite get that.

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session highs, up 750 on the dow. what is wall street buzzing about? kellogg will become three public companies. you've got snacks and the global business in one, u.s. cereal in another and a pure play plant-based food company as a third. the stock was up 9% in premarket and it's lost a lot of those gains. ceo steve cahillane will lead the larger snack company moving its headquarters to chicago. i spoke with him earlier today on "squawk box" and he called it the growthy company. the u.s. cereal company has been a drag overall on the business and cereal in general has been in a longer termdecline. here's what he said about the prospects of that one. >> when you have a kellogg

company that is 100% focused on cereal and just its cereal brands, it doesn't have to compete with pringles or cheez-it for resources and its management team is focused on the industry and its place in the industry, you'll see greater innovation, more brand building and bright days ahead of it. >> i asked him about m & a and he said it's possible the plant-based company gets taken out, the smaller of the three. as for the others, he said the goal is to unlock value and operate with sharper, independent focus. we've seen splits by j&j, ge, ibm, xbo the last big food split like this was kraft and mondoles. this one will take about 18 months to move forward and get done no word of the names of each of

the another companies or the management teams for the cereal and plant-based business we don't really have proof of concept of some of those recent splits they take a while to get done and are all ongoing, but clearly the goal here is to unlock value sort of in a sum of the parts kind of analysis what do you think about that >> in general, it's a pretty well provenmaneuver over time, especially when you find that the parent company trades at a bit of a discount. so this is not a unique solution but it usually is pretty effective over time. the other problem is you don't always know which companies are going to be the ones to be in favor afterward. if you remember when viacom split into viacom cable networks and cbs, years and years ago, everyone said cbs will be the boring, slow growth dividend company. viacom is the sexy growth company because it's cable guess what, cbs was the outperforming stock after a while. you never know how it's going to

play spin-off stocks tend to be good outperformers. that's because when they do the spin, they're orphaned nobody wants them, the indexes get rid of them. so you have to go through this period where they don't do well before they start doing well often. >> also i'm thinking of kraft. remember when there was so much excitement about warren buffett and 3g and merging it with heinz and that's been one of the worst performers. we will be joined by the ce o of mondolez. we'll talk with him. the marks are up 741 right now on the dow every sector higher and s& energy leading the way tesla is the best performer. the nasdaq rallying almost 3%. coming up we'll talk to michaela edwards, partner at capricorn, about why she says a recent crackdown on esg funds could

actulyal be a good thing for socially responsible investing we'll be right back.

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all this week we're looking at summer spending and today we're diving in the restaurant sector with danny meyer, ceo of the hospitality zone which owns some of the most popular restaurants. he's the chairman of shake shack and joins us now danny, always good to take your temperature on the spending environment. i want to mention the restaurant etf eats is down worse than the overall stock market this year, 27%. are you seeing any big changes in spending? >> well, the irony is that in the full service restaurant industry, at least from the new york standpoint, we're seeing more demand today than we've seen for well over two years

it's a weird thing because there's no question that we are probably the third tick on the inflation train and we're absolutely experiencing inflation and the prices have gone up across the board in every single restaurant i'm aware of and yet there seems to be just so much pent-up demand and especially in a city like new york where that was not really possible over the last two summers. tourism is up right now, the demand -- the telephone lines are ringing like crazy private party demand is up like crazy as well, so we're trying to make heads and tails of it. we think it's the social emergence after two years of really not being able to be with people. >> what about the labor shortage that's been a big problem for you over the last year is it getting better are you having an easier time bringing folks in? >> it's something that we call a talent shortage. the reason is while so many

restaurants talk about trying to tap their labor costs, we talk about a talent investment so i want to use that expression from now on but the talent is coming back right now. that's another good thing. and possibly -- again, it's another thing we're scratching our heads over it could be that because the costs are going up in everybody's day-to-day life and because perhaps some of the stimulus has run out, that there are more people joining the labor force. let's be candid. our industry led the league, unfortunately, in the great resignation. we had more people leave the hospitality industry than any other industry we've also been slower to come back so to the degree that we're not just crushing the numbers right now, it's generally because we'restill a little bit short in terms of the number of talented bodies that we can staff in the restaurants but it's definitely at a better pace we just hit the exact same employment numbers in my company

as we had right before coronavirus started. so that's a hopeful sign. >> it's good that it's getting better i did want to ask you about shake shack. i know that you're not involved in it day-to-day, you're chair of the board and founder, of course but that stock has gotten hit so hard, more than 60% over the last year. more broadly about the recession and expenses and the changing market dynamic i'm wondering if the growth story is hurt, is still intact for this stock >> yeah, the growth story -- the first thing you said is true, that's just a fact the stock market has not been kind to shake shack over the last several months and/or just about the entire food industry and of course it's going to come back this is a great moment for a company like shake shack that is actually poised for the greatest growth we've ever had with a strong balance sheet and i often remind myself that in the very, very early days of

shake shack, back when i was running the company, back in the late 2008, 2009, right when the great recession hit, that's when shake shack first started to grow for the first time. we didn't have a second shake shack until about 2009 and it was the recession that somehow brought people out how was that it's because shake shack's price point, while definitely more than fast food, it's a splurge for people who wanted the inexpensive calories that you get from fast food but for somebody who's used to eating in fine dining restaurants, it's a big, big discount for the exact same ingredients. >> so sort of a value play that's interesting finally, danny, on the markets, i know that you launched a spac last year. what's going on with that. is that still happening? >> as soon as you open up the markets for us, i'm sure it will be ready to go. >> the ipo market just closed. no insight into when that might

happen >> it has not been a lot of fun watching no ipos for the last few weeks. panera is a great company and we hope themarket will reopen quickly. >> danny, thank you. danny meyer. coming up, is the esg love affair over? esg funds seeing outflows in may. it was the first time in years, and a majority of those funds are lagging their benchmarks this year. we'll look at what's behind the change in sentiment for esg next the dow is up 750 at the highs of the day we'll be right back.

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sentiment for esg funds may be shifting. seeing outflows in may for the first time in more than four years. pippa stevens is here with a closer look at what's behind the change. >> flows and performance are down across the market but for esg funds it's notable given how much money had been chasing the space. investors yanked money from esg and sustainability focused funds in may for the first time in years. this follows a period of what rbc calls weak relative returns. the firm found 18% of global large cap sustainable funds are beating their benchmark this

year compared to the 44% of traditional funds that are outperforming their benchmark. in the u.s. about one-quarter of large cap sustainable funds are beating their bench cap while half are beating theirs. esg funds have outperformed but rbc says the gap has narrowed meaningfully much of this is because of minimal exposure to areas of the market that have surged, moat notably oil and gas companies as well as overweight to underperformers, including clean energy stocks. regulators are also pushing for more scrutiny of these funds, which is no doubt playing a role here as well sara, back to you. >> pippa, thank you. a lot to discuss there joining me is michaela edwards, a partner with capricorn investment group and the sustainable investors fund capricorn manages $10 billion in multi asset class portfolios it's great to have you here. welcome. >> thanks for having me, sara. >> so outflows and

underperformance it makes you wondering if the tide is turning for esg. >> well, we've been through a period of a few years now where we've had record growth in esg flows. the last numbers i saw from jpmorgan was 40% growth in the dedicated esg universe in the past year, so that means we're having thousands of funds managing trillions of dollars in esg. >> so you're saying it was bound for some sort of correction? >> i think so. another point to that, though, which is a bit concerning is that we saw from goldman sachs that about 60% of the esg growth has come from existing funds being relabeled or rebranded so in my opinion clearly there is some level of issue on the supply side as well as a likelihood of green washing. >> so this is what the s.e.c. is now going to look into, when it comes into some of those goldman funds. do you think that is important

for the growth or could it backfire and make people more skittish around esg? >> well, i welcome the scrutiny. i think we as an industry should be confident with what we're doing and how we're doing it i can't comment on goldman sachs in particular. but regulation needs to come to bear here because there is no standard for esg, how to report it, when to report it, the frequency or materiality across sectors. so i would welcome more regulation, more scrutiny, and hopefully we can get to a standard as we're seeing with the accountancy rules where we're having the gap in the ifrs coexisting. >> so you want to see a world where the s.e.c. will go after companies and fine companies for misinforming, misrepresenting information around esg is that the goal >> well, i think there needs to

be a global standard and consensus about what esg really is but beyond that, there's an opportunity here to integrate sustainability in a broader sense, and that goes beyond just using third-party data we've seen low correlations between the largest data providers on esg, which shows that even the data providers can't agree what is material. >> elon musk called it a scam after he was kicked out of one of the prominent esg, i guess, funds. is that legit, because they are such a clean energy company? >> well, what i can say is that i think tesla has been just a revolutionary company to push all the incoumbent automakers to jump on the ev bandwagon and the impact of that in the broader auto industry and bringing down global emissions in the transport industry will be huge. but i think the point you're

making is around the differences between the esg data providers on how somebody sees a tesla versus an oil and gas company and that they can be so divergent on those views, so how should investors tackle that. >> what is the right answer, and just to add to that, this war is also making us rethink what esg is because the dependence on fossil fuels is creating huge problems for europe and our dependence on russia now we need the oil companies to pump more. >> if anything, i think this is a great opportunity to secure our energy supply and not just be reliant on oil and gas. so how can we secure renewable energy sources across the u.s. to not be so reliant on oil and gas going forward. >> we need it fast, though michaela, thank you. >> thank you for having me, sara. take a look at where we stand in the markets still up more than 700 on the day. we're having our best day in about a month but coming off of

our worst week in two years. we're still down 8% or so for the month of june. energy is leading, up almost 6%. speaking of, oil prices rising then, consumer discretionary right behind it. you're seeing broad strength in retail as well coming up, shares of the home builders is also higher lennar topping estimates we'll talk to an analyst that just ran a home builder stress test about the names most exposed to an economic downturn when we come back.

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that's where it's been pretty much all year long interestingly the rally is happening along with bonds 3.30 on the 10-year. followed by tesla on top of the s&p 500 right now. some bullish comments on evs by elon musk at a conference over the weekend and some cost cutting. apple is up 3.44%. all of the tech stocks that have been in the eye of the storm are rebounding today the s&p up 2.6%. the ark innovation etfif you want to look at more growthy, unprofitable tech stocks is surging today and there's wti crude oil up a percent, energy leading the s&p. speaking of oil, this whole sector is seeing a sharp rebound after posting its worst week since 2020 we'll ask a chart expert where he sees the sector headi nt ngex when we take you inside the market zone, next. your why. what drives you? what do you want to leave behind?

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ugh. [ding] we are now in the "closing bell" market zone. aerial investments vice chairman is back to break down these crucial moments of the trading day. plus jeff degrasse and kate rooney on the latest wild ride for crypto we'll start with the nasdaq outperforming but all three major averages are up more than 2% this follows the worst week for stocks since the start of the pandemic the s&p is up a nice 2.6%. charlie, inflation is very much a problem, as you have predicted for a long time. the fed is trying to catch up. are you now satisfied that that's what they're doing and they're going to get it under

control? >> so, i hope you're sitting down, sara, because i am going -- >> i'm standing. >> oh, that's not good for the first time in about two years, i am going to be just a little bit less bearish about inflation. for the last two years we've had nothing but a straight-up line in the money supply. we're up 42% in m2 that was going to have no result other than inflation now finally for the last two months or so, we're seeing that flatten out. we're now getting a fed that not only is increasing rates but is not behind the scenes flooding the market with more cash. you can see on this chart that even in the great recession, the money supply only went up by 9% or so in 2009. right after covid in february of 2020, the money supply went up by 42% it's never, ever done that before and that couldn't have done

anything but cause inflation now it's finally leveling out. the fed now finally gets it. now, there is a lag so this is not going to show up tomorrow. it's typically a lag of six to 15 months, call it half the year to a year and a half over that time i think we're going to moderate inflation. we're still going to have it for the rest of this year, but we can finally see the other side of inflation and that will be very helpful. >> i love an old m2 chart, doesn't get enough air time. so clearly the liquidity tide is changing, right? it's starting to peter out and will come down as the fed tightens policy. isn't that bearish for the stock market, charlie, or is it a good thing because inflation in your view sounds like it's peaking? >> yeah, i still think we have fundamental strength in the economy. the fed can squash that if it's not careful, but the underlying balance sheets of consumers, the unemployment rate is very loelow. there's a lot of pent-up demand for people who would like to buy

cars and houses. i think eventually we get a end to the war in russia and ukraine and that will be good for the economies. there's enough positives, the fed raising rates quickly is not helpful, but i think we have a chance, about a 50% chance to get through this without a bad recession. >> there you go. let's hit the energy sector, up 5.6% shares of exxon in particular are getting a boost. analysts at credit suisse upgrading it to outperform raising the price target to 125. the company is well positioned because exxon maintained investments in oil and gas projects as some of the other global majors cut back let's bring in jeff degrasse as we try to figure out just how much more this sector and names like exxon can run after being up 40% so far this year, what do the charts tell you? >> well, the charts say the

trends are still in place. the relative trends are still in place. they were the only game in town for a while and they're correcting we had over 90% of the energy constituents oversold in our proprietary work so we were looking for some type of rebound. frankly, probably, a resumption of the uptrend i do think importantly what viewers should keep in mind is that the energy sector on a relative basis will peak roughly six weeks prior to the peak of the inflationdata, so it's a really important sector to watch, because it does tend to be a window into the soul of inflation. if we see deterioration in the relative performance, which we really haven't seen yet, that would be an indication that the headline inflation and the thing the market worries about from an inflationary standpoint are probably very close to peaking. >> okay. let's talk broad market because we're seeing a pretty nice,

sizeable rally today, jeff 2.6% on the s&p, the nasdaq back above 11,000 and the dow back above 30,000 what do you do is this a tradeable bounce is there more to it an just a day when a lot of fundamentals haven't changed and they're still feeling very bearish >> the trick here, and this is so endemic of a bear market, you'll get these nasty, vicious rallies that are obviously great if you're long there's a couple of things to watch. one is energy is leading today if we're seeing some type of seismic shift, i wouldn't expect energy to be leading so this makes me a little more comfortable that this more of a bear market rally than not the bearish positioning had swelled to a point if you look at the stats give you pretty good revisionary data and

returns. i think we can rally to 4100 without changing anything on the s&p. that's a little more aggressive than what our call is. but i certainly think that the oversold condition that we had is producing this reversion all within the context of this d downtrend. your guest before me was talking about this deflationary period with the money supply. look, we're seeing it. we're seeing it in crypto, we're seeing it in concept capital we're seeing it in these things that it should be happening in i think there's more to that story for 2022 >> we're also below average volumes today, just looking at some of the numbers on this rally. many more advancers than decliners, about 2500 to 800 thank you, jeff. jeff degrass tomorrow don't miss david faine faber's inside look. "exxonmobil at the crossroads"

premieres tomorrow night. bitcoin is getting some relief along with some of the other assets that correlate with risky things like stocks but it's been a wild few days for the entire crypto landscape. bitcoin, the price plunged below $18,000, lowest level since december 2020. even with today's bounce it is still down 50% on the year proshares looking to get in on the downturn announcing the launch of an etf that allows investors to short bitcoin kate, what kind of fees are associated with an etf like this >> yeah, so like most actively managed etfs, this will come with a fee it's less than 1%, about 95 basis points that's higher than most actively managed funds but a lot lower than what it would otherwise cost to short bitcoin or any of the short bitcoin etfs out there. there's the cost of shorting some of the bitcoin etfs to be as high as 13% so it's not easy

to take the other side of the bitcoin trader interesting, though, proshares is the same company that launched the bitcoin strategy etf, bito, the first u.s. linked etf back in october. that was right around the top of the crypto boom which happened in november. who knows, maybe this will mark the bottom, you never know >> i was wondering where you were going with that kate, thank you. kate rooney. shares of lennar are getting a pop after beating earnings and estimates this morning however the chairman telling "squawk on the street" the company is already seeing an impact from higher rates listen. >> as interest rates go up, it becomes a little bit more difficult for people to afford that down payment, afford that monthly payment, so we're going to see some adjustment, some rebalancing between price and interest rate.

as customers process what has been an extremely sharp rise in interest rates, it's almost doubled in six months. as they process that, it's natural that there would be a little sticker shock, a little bit of a pause and some reconciliation. >> joining us is john levalo from ubs who covers the home builders john, what do you make of those comments, including orders, which was also better than expected >> look, i think stewart is exactly right, things are moderating it should have been fully expected when interest rates go up, especially by this magnitude in this short period of time, there's a reset period for investors. our view is that we're going to moderate at a high level and that will allow the builders to have elevated earnings for quite some time. >> so you think the market is overdoing it when it comes to some of these declines d.r. horton down 43%, lennar is down about 43%. >> yeah, 100%.

not to be a sensationalist, but the market is discounting the great recession. we're trading three turns below on a pe basis where we were in 2005 heading into the gfc. 1.5 times on a book basis. the market is running at half the pace we were in 2005 the builders have twice the market share it's a whole different ball game but we're trading as if we're going into the end of the world. >> charlie, how do valuations look to you? any value here >> the market is acting like there's a 75% chance of a recession. and i think that's a little overstated and so cyclical names, housing names are acting like it's a very high chance of a recession. i think that's a little overstated and, therefore, there is value in these names but i'm not going to try and kid you if we do really have a recession and if it's not the shallow one that i'm predicting, then it's not a great time to own cyclical

names or housing names but this is not the same as the great financial crisis retail stwinvestors, homeownersr in much better shape i think any problems in housing will be relatively short lived. >> all right two optimists when it comes to housing, even though the fed is really raising rates that is squarely in the crosshairs john, thank you for joining us shares of target are getting a big lift on comments from ceo brian cornell at the economic club of new york in a panel moderated by my colleague, becky quick, reiterating a strong outlook for the second half of the year listen >> we need to get back to a more normalized environment where we're delivering solid up profit and we'll continue to invest in growth so we're certainly expecting to see strong top line growth, to continue to hold and grow market share and to see our profits normalize in the back half of the year. >> remember, target warned in its earnings report last month that higher costs and inventory

issues had weighed on profits sending the stock sharply lower. then there was that additional piece of news, charlie, we got a few weeks after earnings marking inventories down even more >> yeah, he has been all over the place. he's not been helpful trying to figure out what's going on with the market they had company specific problems with employment they had too much inventory after having had no inventory. so frankly, i hope he's right that things are going to normalize, but it's been tough to follow target's outlook it's been changing with the calendar day >> absolutely. charlie, just overall, i'm looking through some of your picks. it doesn't look like you made any changes. still betting on the reopening play with madison square garden. are you still in some of the fertilizer names and smucker anything change for you in terms

of the outlook, given the fact that you are changing your tune on inflation >> yeah, the holdings are actually hanging in there. what's changed is that the possibility of a recession is higher today than i would have said a month ago so while i still think there's value in cyclical names and economically sensitive names, i have toadmit the consumer has gotten less confident than he and she were a month ago so madison square garden is still incredibly cheap but the probability of there being a bump before we get to where i think we should trade is higher than it was a month ago. >> what does that mean for value over growth? you're a value over growth kinda guy and that has outperformed. does that continue if we go into a slower growth period, especially if inflation peaked wouldn't that help growth stocks like tech? >> no. value stocks are incredibly cheap. i was going to be ridiculously cheap but i don't want to be dismissive of the market

we have names like mohawk trading at seven times earnings. we have goldman sachs trading at less than book ave madin square garden trading at less than book. we've got high quality value names trading at very reasonable prices growth stocks have gone from ridiculously expensive to moderately expensive so value is still going to outperform frankly, it's going to outperform because rates will keep going up. the 10-year treasury should be over 4% in this inflationary environment. as rates go up, that's good for value versus growth. >> as we go into the close, we're holding on to gains. the nasdaq is bouncing as well how do you look at this. is this a bear market rally? should you take this opportunity to get more defensive if you haven't done already what would you tell people >> first i would tell people not to focus on one day. i know it's hard to do that, but you have to take a longer term outlook. people always get in trouble by trying to predict where we're

going in the next couple of months the worst thing that you can do after a downturn like this is to now get more defensive the right thing to do is don't look at your portfolio every day. secondly, buy companies that will be fine in the long run third, look for names that have strong balance sheets. they'll do fine when interest rates go up and buy those quality value names that over the last hundred years have outperformed growth even though the last ten years growth has done so much better. >> and your favorite pick right now, the cheapest name in your portfolio is what? >> is actually apache, trading at four times earnings they had a very nice discovery this morning their reserves are going to be heading up there's no reason a quality oil and gas name like apache should be trading at four times earnings. >> i did not expect you to mention an oil name. >> inflation is still going to be with us, sara, for the next year i didn't say it wasgone tomorrow i said we can see the end of the tunnel, but inflation, real

assets holdtheir value in inflationary times that's why our second favorite name is mosaic, the fertilizer company. assets in the ground demand for oil and gas is not going aiwa any time soon if anything, the trends have reverted as china comes out of its recession, we'll have demand for oil and gas. i think oil and gas will be above 90 and a name like apache will make a lot of money at $90 oil. >> energy up 5.2% today. speaking of this whole growth versus value, we have a big interview tomorrow with cliff asness he has very strong views on value outperforming growth it's tomorrow at 3:00 p.m. eastern time his fund is killing it this year, well outperforming the markets, up like 40% as we head into the close the s&p 500 with a solid rally of about 2.4% every sector higher. energy is in the lead.

you're seeing big gains in consumer discretionary, consumer staples, health care, information technology that's all working today what's leading the dow, united health adding 181 points to the dow. only home depot and disney are losers right now the nasdaq surging 2.5%. it is the best day of the month. still down sharply on the month and coming off of a down week but we are breaking the trending at least for today that's it for me now mike santoli in "overtime. welcome to "overtime." thank you, sara. i'm mike santoli in for scott wapner you just heard the bells but we are just getting started coming up, our most valuable pick why one analyst is betting on a stock down more than 50% this year we'll reveal that name later in the hour. first we begin with our talk of the tape. a big bounce on wall street. stocks kicking off the shortened trading week there is doubt over whether th