we know what's happening with crude oil prices they have been on the decline as well if you look at some of the market predictors, the bond market is showing on a ten-year basis, inflation expectations, 2.54%. we're drifting lower on the 10-year break evens. that could be a sign, guys. >> anything lower relating to inflation feels good. >> great to be with you. thanks for watching "power lunch. "closing bell" right now. >> thank you, taylor and courtney stocks are off the best levels of the day still pacing for some solid gains on the week. the nasdaq is up a percent the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen we're about 0.4 of a percent on the s&p 500. it's a defensive led rally you've got the leaders, utilities, health care, consumer staples right on top of the market worst performing sectors energy again, crude oil taking another big fall as you can see at the bottom of your screen, down 2% materials, financials and industrials. so the cyclical groups are

leading us lower technology hanging in. check out some of the most actively traded names. you've got nio at the top of the list it continues to be among the most active. so is ford there's revlon, the bankrupt company that as soared even after announcing bankruptcy. palantir and at&t. coming up today we'll talk to jeff sherman about the latest signals today from fed chair powell and the best way to play the bond market as yields pull back again here. we've really come down off that 3.50 on the 10-year. plus more from my interview with cliff from capital a management including his criticism of the private equity industry and why he says he's got professional jea jealousy first up we'll begin on the developing story surrounding intel. the company warning its ohio factory project could be scaled back or delayed if funding from

the chips act doesn't come soon. >> it's been over a year since the senate passed a bipartisan measure to subsidize chip manufacturing and research on u.s. soil. despite other countries providing subsidies, that's why companies like intel are raising the alarm. they said unfortunately the chips act has moved more slowly than we expected and we still don't know when it will get done my colleague, ylan mui has confirmed intel has cancelled its ceremonial ground-breaking next month and pushed it back to this fall. intel, though, is still committed to spend $20 billion on two leading edge factories. but plans to spend up to $100 billion are uncertain if they don't get the subsidies. the thought process is if europe can offer subsidies, why can't the united states? and it's not just intel.

global foundries just sent me a statement that they are concerned stating for global foundries the passing of chips funding would affect the rate and pace at which we invest in expanding our u.s. manufacturing capacity globalfoundries just opened a new fab in singapore so the pressure is on or as globalfound rries ceo said, congress, it's go time, especially as congress breaks for recess. semi conductors are a notable laggard, even though there's a 1% gain for the nasdaq also a quick programming note, next week i'll cover the aspen ideas festival and we'll speak with ceo pat gelsinger on tuesday right here on "closing bell." for now more on the chips act let's bring in pimco's head of public policy. libby, what is the status of this legislation there's so many different forms and names it's hard to keep

track. >> there are lots of different forms and names, sara, that's right, and good afternoon. as the previous reporter just said, the chips act was passed in a broader bill called the united states innovation and competition act last june on a bipartisan basis in the senate another version passed the house earlier this year. congress cannot do anything without complicating things. and now those two versions of the bills are being reconciled in a very big conference committee which, you know, has taken i think a lot longer even by their open admission, both chambers of congress the bottom line for markets is that there is a lot of bipartisan support for this bill it is basically the closest to industrial policy that the u.s. congress has gotten in decades in terms of redirecting public monies to domestic industry, including semiconductors it also authorizes $200 billion outside of semiconductors for scientific and technological

research so the bottom line is this is very likely still to get done, it's just going through the very long and tedious machinations of the congressional process. >> do we have to wait until after the midterms >> we may. it could be passed in the lame duck session of congress democrats want to get this done before august recess and i think that is the deadline they're working towards. >> what about the gas tax, libby, the fact that the white house seems to be the only one in favor it didn't even really get broad support from the democrats does anything get done here? and what are the implications for the biden administration it seems really like a political move, the fact that he wants to do the gas tax holiday for three months which basically takes us into the voting period. >> yeah, exactly, this is absolutely the political tail wagging, the policy dog, so to speak, and even the politics around this are not all that straightforward. president biden and his administration are clearly desperate to do anything they

can to be giving the voters perception that they are doing what they can do to bring down the price of gas but you said it, i mean this landed with a thud on capitol hill predictably among republicans but then also maybe not surprisingly among democrats speaker pelosi months ago said that this is basically very showbiz, sort of writing off this as more of a gimmick than really substantive and i thinkthat's where member will land on this. it is unlikely to get a vote in the house and in the senate and will probably go nowhere i think it underscores just broadly the fact that the white house has limited tools here as it relates to the price of gas >> so i talk to investors and, you know, it's bear market kind of mood out there. one thing that they're a little hopeful about is the midterm elections, especially if republicans sweep. where are you on that? i saw that president biden's

approval rating dropped again this week, 36% according to reuters/ipsos, matching the low that we have seen. on the other hand we have not gotten the roe v. wade decision out from the supreme court which could boost democratic turnout so where are you on the odds and what investors need to know? >> obviously the impact of roe v. wade is the open question but if past is prologue, the party in power almost always loses seats in both the house and in the senate. since world war ii, the average loss in house seats have been 25 seats for the party in power in the senate it's been four seats. so just -- if it's adhering to historical trends the democrats may at least lose the house. the senate is much more candidate specific and state specific but i think from a markets and investors' perspective, the impact is basically the same if democrats only lose one chamber as if they

lose two, which means that biden's legislative agenda is basically dead so if we don't see a revival of build back better any time soon, we will not see that in 2023. >> and that's a good thing for investors or not >> well, i think that there's some investors from a tax policy perspective in particular who would welcome that i think on the flip side, though, sara, this is a nuance i don't think people are thinking about, if republicans do control at least one chamber of congress, they may be more reluctant to provide fiscal support, especially if the economy is slowing down because they're not going to want to give president biden a win going into the 2024 cycle. so i think that is a nuance that markets may not be considering but overall, i think they would be welcomed and would welcome the fact that there would be less progress iive policy headln risk and much less chance of tax increases if that plays out. >> but the old bullish gridlock. thank you, libby

appreciate it. still ahead, billionaire investor cliff asnes has some choice words. >> i have a nasty term for it. i call it volatility laundering. >> up next hear his criticism of private equity, plus his thoughts on spacs and more looks like we're up 57 on the dow. you're watching "closing bell" on cnbc. your shipping manager left to “find themself.” leaving you lost. 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 ♪ ♪ well would you look at that? ♪ ♪ jerry, you've got to see this. seen it. trust me, after 15 walks it gets a little old. i really should be retired by now.

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he's handily outperforming the market with his value focused strategy asness was also critical of the private equity industry. here's his latest thinking on a topic we haven't aired yet on cnbc >> i'm not a cynic on private equities reason for living i think that we need that as part of theworld, part of the ecosystem. a lot of firms, be they public firms that have fallen on hard times that they take private, it helps value managers that there's a bit out there. younger, smaller firms private equity pretty much has to exist in a functioning capital market you can't say that about everything i don't think spacs had to exist. they may be a good idea, they may be a bad idea, but you can't say that we needed that desperately. >> it seems like a bad idea lately >> your words, not mine. but empirically true back to private equity, i think there's a reason for it to exist

and i think -- i know a lot of private equity managers. they're among the best investors i know they really do know their businesses what i think has changed a lot is 20, 30 years ago, famous david swenson pioneering this, it was about the returns it was about an ill liquidity premium that if you locked up your money for a long time, that you got paid extra for that and he monetized that in a brilliant way. over time, and i served on a bunch of investment committees and have seen this live and an anecdotally, it is much more apparent of the dampening of volatility that comes. i have a nasty term for it, volatility laundering. >> they're benefiting from people not wanting to be in the market. >> now, their stuff literally goes way down and way up with

the market they're not just equities, they're levered equities as a rule 1997, a lot of my stories date me the head of goldman's private equity came over and asked how we were doing, the daily s&p was down 7%. this was the asian debt crisis i said we're flat and we're very excited about it because we're market neutral and holding up in a crash. he smiled and he said me too and i had hair back then to rip on i'm like you're not flat what if you had to sell today, would you get less than yesterday? he said, oh, way less, but we don't have to sell so i think to the extent people value the returns, that's great. to the extent people are mostly valuing the we don't have to look at this or don't have to report it or don't have to have angst about it, that bids up the price. they're now paying for a characteristic that wasn't the original idea. and what used to be an illiquidity premium, it's hard to put an exact number on it but

you can imagine it being a discounting now where people so value this option of not reporting it that they're overpaying anecdotally if you talk to private equity managers, give them two drinks, they'll tell you, yeah, there used to be three people bidding on this deal, there are 15 now and the irrs are much lower. >> you think it's getting too expensive. >> i think the chance people are now paying up, not getting a discount to be in illiquid things because it does allow them to be better investors is real now that it doesn't allow them to be better investors is also real i'm not discounting that my compromised solution where i can be at peace with private equity is if they simply will say, yeah, it's not about the returns. we actually expect to do slightly worse than equivalent levered public equities but you people can't take the truth. a little jack nicholson. so we're providing that kind of volatility laundering for you. then we're all copacetic

but i do think too many investors, too many boards, too many even long-term investors are looking at something that used to be a return enhancer and now using it as a volatility dampener and that works if markets reverse and fix themselves on a timely basis if you get a five, ten-year bear market, which we haven't seen in quite a long time but we have seen in history, it no longer works and you discover that you bought what i would argue maybe even overpriced levered equities. >> so is there a way that you're manifesting this view? >> no. >> or you're warning about it? >> i'm whining about it. a lot is professional jealousy on my stock. >> carlisle, kkr, they have been slammed this year. >> professional jealousy is not that i'm getting slammed, it's i love to have people judge us only on ten-year horizons. if we had private equities deal, we've only made money long term,

maybe we reported a small mark to market dip in 2020 and we're back and no one ever noticed so there's definitely professional jealousy they also have 19 different kind of fees where we only get one fee. so i am talking as a jealous man. >> and a man in public equities. >> cliff asness there warning about the premium fees on private equity and saying maybe that's really the benefit of them, especially right now i hear so much anecdotally and we see reports from private managers saying that the money is flooding in right now. >> for sure. >> people don't want to deal with these daily fluctuations. it's painful, it's nauseating. put it in a private equity fund and we'll see it in 10, 15 years. >> it's a packaging thing, and allows endowments to say we have

a smooth ride here we know that's an illusion private equity picks its entries and exits. it only picks the exits if it's advantageous. >> what if we have a 10-year bear market, though? >> eventually they'll get marked down or the returns won't be good or it's so crowded they pay up front and aren't able to redeem the hopes of the clients. it's a very fair criticism i don't even know if private equity firms would deny it they're saying we're forcing people not to look at their statements if you own public stocks, you can simulate this by not looking every day or every month or every year at how they're doing. >> we also have to mention one part of the conversation yesterday in particular that's getting a ton of buzz today where asness revealed a previously unknown short position and called out the meme trading crowd. listen to this >> i didn't know this until i was coming on tv, but we have a very tiny short of amc

so we've got a meme stock short. now, again, you might laugh that i don't know this. i don't know it because it's never mattered we had it throughout the whole meme stock craze we don't notice it at the size we take positions. >> that's surprising when you want short high valued stocks. >> no, because it's terrible on everything we care about this is scary. i dare all the meme stock mane yaks to hurt us on that. let them come. they are crazy people and i will not notice them, but they can have their fun. >> well, the meme traders picked up on that challenge with a boatload of tweets aimed at mr. asness the stock is lower, down 7%. asness did heavily couch all of the stocks he mentioned, saying he may have 750 longs and 750 shorts in his portfolio at a given time and any given name represents such a small part of his holding. that was his point come at me, it's like no

exposure for me. but clearly that impacts -- >> and i'm not somehow trying to step on this stock i have no nefarious motivations. look, the firm's name stands for applied quantitative research. he's just doing whatever the screens give you, that's what we're going short. but it does show you that there is a faith-based cohort that still wants to play the meme game with amc. >> but are they in the market still? >> you have to go bankrupt to restart the meme excitement. >> mike, thank you we'll see you soon. coming up, a gut check on whether or not the u.s. is really heading toward a recession. we'll break down what the latest data and what e ndart gnaling, next.

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is well positioned to take advantage of structural demand drivers for the office industry. they also noted new product innovation and also improved focus on the bottom line the stock is up more than 13%, but it is still down about 40% or so since it went public last year via spa. time for mike santoli's dashboard. it shows the economy growing at its slowest pace since 2008. >> this goes back more than 70 years and it just really plunged in a hurry to this slow growth mode so it's a precursor to being right into recession risks. not that many times it's fallen to this level and avoided a near-term recession. this really says what the market is up to you said cyclical stocks are lagging today. it is a defensive rally. one thing that's missing is employment is holding up that has to get worse to get a real recession

take a look at how bonds are dealing with this. this is a story that's under way for a couple of months now corporate bonds really lagging governments right here this is the investment grade index. it was going tight with the government bond index but it's fallen away here this is the story. spread widening, macro increase in the market, it's moving in that direction. >> weaker oil and commodity prices and lower treasury yields, all part of the story today. mike, thanks. after the break, the yield on the 10-year treasury falling hard today 3.07 on the 10-year, down sharply from the peak in mid-june we'll ask doubleline's jeff sherman what kind of signal they're sending when "closing bell" comes right back (dad brown) i thought new phones were for new customers? we got iphone 13s, too. switched to verizon two minutes ago. (mom brown) ours were busted and we still got a shiny new one. (boy brown) check it out! (dad allen) so, wait. everybody gets the same great deal? (mom allen) i think that's the point.

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the big picture, is food inflation finally cooling down prices are high but we've smeen pullbacks. wheat futures hitting a low of 9.46 per bushel, lowest level since march 1st. the agriculture etf which is comprised of computer contracts for wheat, corn, soybeans, coffee and more is down more than 5% on pace for its worst month since 2020 are we really out of the woods on food inflation? the pandemic and ukraine are not only factors causing a spike in prices, disease, extreme weather and policy choices are also to blame along with ongoing transportation and supply chain bottlenecks and elevated fertilizer prices. barclay's predicts prices will remain high and risks are skewed to the upside. as inflation continues to dominate the conversation around the world, fed chair jay powell calling his commitment to taming

inflation unconditional in his testimony to congress earlier today, despite attempts from central banks to tame inflation. joining us is duoubleline's ceo jeff sherman natural gas prices are down pretty sharply we've been faked out before, but do you think we've seen peak inflation? >> yeah, it really doesn't look like we've seen the absolute peak in inflation. everybody was talking about that last month and we got surprised by the last print. but if you go to the cleveland fed that puts out a realtime indicator of estimated inflation, if you look at their forecast for the next month's inflation, it's forecast using these realtime indicators that you mentioned to be almost another 1% month over month growth rate. and so that would put us at nearly the highest levels we've seen in this part of the cycle unfortunately, it doesn't look like it's behind us. but what you've seen from a lot

of the markets is that what you're seeing is that the inflation isn't just this u.s. phenomenon we've been talking about this all year this is a global phenomenon. the things you mentioned are commodity prices, things that are consumed by the entire global economy we're taulking about energy prices which are inputs to everything and lastly the supply chain issues what you find is that the market is reacting very negatively every time we get an inflation printing bonding yields tend to spike and the fed comes with this reaction function that they're going to be on top of it and raise rates considerably and quickly and all of a sudden we get -- now there's fearsof a recession. so it's a very reflexive thing going on in the marketplace right now. >> well, it's like one day we worry about inflation and higher rates and the next day we worry about recession. today is a recessionary kind of day where the cyclicals are getting hit and we're seeing the strength in treasuries, jeff, because the 2-year yield went below 3% that's the first time we've seen

that sinceearly june what are you guys at doubleline doing? do you think that rates have peaked >> no, i don't think rates have peaked at this point it's when we get inflation data during a week we get the sell-off in yields then all of a sudden we get kind of a low amount of economic data this week. we got some pmi data that essentially the manufacturing and service sectors are slowing down, but they still are somewhat in expansionary territory and this goes across the globe. what you're seeing is a very highly correlated market across the entire sovereign yield space. and really this reprice in the 2-year, what it's done now is saying, okay, the fed is going to be aggressive they're going to get to their plan of hikes. but at some point late next year or early '24 they're going to be cutting rates again. so the market is having these

ne neurosis -- >> recession. >> yes. >> it's the old bad news is good news for the market. the worst economic data looks, the better it is because maybe the fed will take its foot off the gas. is that a bet you guys are willing to take on what do you do right now >> right now you don't want to bet against the fed. you may want to fade it and say they're going to have to cut rates and not be committed to this plan for the next two plus years. we heard jay say they'll reduce the billion sheet $2.5 to $3 trillion and i don't think we get there. what you want to do is build portfolios that have essentially very diverse credit risk as mike was showing prior to this segment, you've seen corporate bonds being hit but they have recession risk in there. but there's government guaranteed debt that yields a comparable spread on a risk adjusted basis when it comes to

adjusting for the interest rate sensitivity. so all of a sudden now you can take some of these calculated bets in corporate bonds, take them in parts of the high yield market and bank loan market and sprinkle them together with non-agency mortgages, create this diversified credit pool and barbell yourself with this rate risk as well so what you've seen here with this type of portfolio is if you can build portfolios that yield in the low 5% range and give you some protection from both, the deflationary risk from the recession as well as having economic volatility in there. >> yeah. a little sophisticated, jeff, but we get the point thank you for joining us jeff sherman from doubleline. stocks are gaining a little bit of steam here. we're up now 179 on the dow into the close. nasdaq is up 1.6% and the s&p is up a full percent so we've just taken a little leg higher. again, it's still being led by more defensive sectors like utilities, health care and staples. but you do have technology very

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welcome back to "closing bell." check out some of today's top search tickers the 10-year yield holds the top

spot and today we're seeing pretty strong buying of treasuries 3.08 on the 10-year. tesla is not participating in today's tech rally crude oil gives back about 2%, down 11.3% the last week or so the s&p, though, managing to rally and climb in the last few minutes. so is meta which is popping 2% coming off of multi-year lows. perhaps after that interview of jim cramer with mark zuckerberg. plus, the news sending snowflake higher today and a preview of fedex earnings coming after the bell when we take you inside the market zone

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we are now in the "closing bell" market zone. paul hickey is here to break down these crucial moments of the trading day, plus frank holland with a preview of fedex earnings and seema mody looking at the travel stocks it's been an up-and-down session for stocks, near the higher ending right now, paul what are you seeing in the market action? you always have a good handle on the stats and how this final hour of trade has been going what do you see today? >> well, today is a pretty big difference from the norm lately, sara, where we're actually sort of rallying into the close here, which is pretty shocking relative to what we've seen in recent weeks i think there's a general tone that's improved this week. we've gotten to such washed-out levels as far as market internals were coming into this

week that i think the only direction for the market in the short term is higher whether or not that is -- lasts for more than a few days remains to be seen but there's generally these type of oversold extremes that we saw late last week and usually see at least a short term bounce as the markets revert to the mean as of last friday only 2% of stocks were above their 50-day moving average which is practically unheard of. >> washed out. >> yeah. we were down 5% back-to-back weeks. that's only happened about six other times going back to world war ii you don't see these kind of sell-offs often and there are some of the worst market periods in history this is a rough time we're in right now but i don't think it's really comparable to the depths of the financial crisis and other really extreme periods throughout history. >> i want to zero in on one group that i know you're watching carefully

we've all been watching it carefully because it's a source of big pain and that is the home builders they're all surging today, up 9.5% or more all in the crosshairs of higher mortgage rates and the fed what's important to know about this chart >> when the market is going to rally, it's going to be the most washed out groups that tend to bounce we sent out a note yesterday that home builders had dropped 40% from their highs if you look back historically, it doesn't happen very often most of the periods you see the sector bounc quickly the only exception was coming off the 2005 high where it was several years before we bottomed but even if you look closely at that period in 2006 when we first hit the 40% threshold, the home builders did see a short-term bounce. what's important to notice here

is every time the sector has dropped 40% from a high after not doing so in the past year, at some point over the next year it was up 25% or more. >> so you're a buyer >> what's that >> so you're a buyer >> yeah, so for the home buyers for a short-term trade here, at least there's fewer people positive on the home builders today than there were on the energy sector two years ago. everybody thinks the sector is going down and thinks there's nothing but bad to come for the home builders going forward. you have sentiments so offsides that you tend to see the market revert to the mean again. >> well, there's buying out there for them today check out shares of snowflake. cloud infrastructure providers up sharply jpmorgan movedt stock to overweight, $165 price target and cited strong results from their chief investment officer survey frank holland joins us frank, this is a stock down

almost 60% this year, falling harder than some of the other cloud names. what is the bull case that jpmorgan is laying out >> here's what the upgrade is spelling out, that snow flange is the growthiest of these high growth names now, according to jpmorgan, right now snowflake's cloud data management business is a 67 to $87 billion total addressable market jpmorgan says it's lls laying the groundwork for something it sees as something bigger and better in data cloud that lets companies use one copy of their data across all networks so it has the ability to grow its revenue significantly under cloud data management and also move into that emerging business now, back to that survey, i want to make sure i'm quoting it right. jpmorgan calls it its massive scale read of chief information officers it also found almost two-thirds of companies that use snowflake expect to increase its spending,

putting it right up there in microsoft. the other thing, the interest rate pressure. part of why snowflake is doing well today, it's hard to ignore this, but if you look at the movement of 10-year versus cloud names and snowflake,the white line and the orangest line, that's the cloud etf then you see the 10-year any time the 10-year degoes dow, those names go up. >> frank, thank you. it is interesting to see, paul, datadog, zscaler and snowflake rallying alongside health care, utilities and consumer staples that is a slow growth or recessionary type trade. what does it tell you, are these stocks ripe for buying >> well, i think again, these software stocks have been absolutely destroyed this year when you are going to see this type of market bounce from extreme oversold levels, these are the types of names, names that are down the most like the home builders, like the software

stocks, that tend to get the biggest bounce what frank was saying, there's a very strong inverse correlation with the direction of interest rates. so if you're going to see interest rates go down, and we've seen a big decline in interest rates inside the largest five-day decline since the covid crash in the 10-year yield, these stocks in a group like the software sector are going to get a bounce, and bouncing they are today. >> total addressable market, though, it doesn't feel like that's what investors want i get why it's a bullish case for the stock, but that was the same case a year ago when the stock was rallying and then it fell apart i want to hit the cruise stocks because they are underperforming. names like carnival, royal caribbean and norwegian are now down 50% on the year as this industry faces headwinds on a number of fronts seema mody joins us. seema, are these specific to the cruise industry which are underperforming other travel names? >> they are, sara. it's two things. the concerns around bookings as

well as rising debt levels in this environment where interest rates are moving higher. that doesn't bode well for the cruise lines that's why when carnival reports earnings tomorrow, the focus will be on how much revenue it's able to generate even though it's discounting rates, fares, and if it can resist further debt raises, that will be the topic du juor. and if that predeparture covid test is providing a boost to bookings we know that has been a source of anxiety for travelers what's interesting, though, if you take a step back, this recovery in travel is very uneven hotels posting their highest occupancy since the pandemic of 72%. the cost to check into a hotel continues to rise along with airfares new york city now in the top five most expensive markets. yet there is a new study from morgan stanley this morning that shows that the desire to travel over the next six months, according to americans they surveyed, did tick down slightly

from 58 to 53%, sara so that tells us that over time these inflation concerns could start to weigh on demand >> yeah, i do wonder about the demand destruction in this industry in travel, because prices have gone up so much for airfares, for hotels what about cruises is there a school of thought that we could see some of these prices getting lowered to keep demand intact? >> you're exactly right. in fact the average cruise fare is down versus hotels and airline fares, which have been moving higher. so there's one thesis out there that over time if this economy continues to soften and we see travelers become more cost conscious that perhaps this creates an opportunity for the cruises because on average it's a cheaper vacation than other land-based vacations yes, they have discounted their fares and brought them down to incentivize bookings tomorrow we'll get the first read from carnival whether it's working.

wa wall street is skeptical that it is. >> seema mody. also don't miss our exclusive interview with arnold donald after the earnings news comes out. also we'll talk to airbnb ceo on "closing bell" and get a great read of what's happening with travel demand and whether it's holding up amid all the concerns about the consumer and inflation. i want to hit shares of fedex today because they're lower today. they're up about 14% since announcing that dividend increase new board members and other actions to increase shareholder value earlier this month on the back of activists. we're expecting to get its fourth quarter results after the bell today frank holland is back with another stock that he covers, fedex. what do we expect, frank. >> first and foremost this is the first earnings call for the new ceo so a lot of interest in his commentary and what he's going to spell out as his agenda going forward. the second thing to talk about here is pricing power.

they're curious what kind of pricing power fedex still has. one of the areas to watch is express. that's where fedex gets about half of its revenue. revenue per piece hasincreased double digits over the last three quarters revenues forecast increased by 9% year over year, but earnings, eps is expected to increase or forecast by analysts to increase 37% year over year that infers that a lot of people still believe fedex has really good pricing power but people are spending less on e-commerce and going to the store more and spending more on services and things like that. and you mentioned in addition to the new ceo, fedex announced the plan to increase its dividend. that came from pressure from an activist investor, d.e. shaw and want fedex to focus on shareholder value. one area that could allow fedex to return more money to its shareholder is reducing its capex spending maybe they spending a little too much on planes and vehicles.

right now fedex has different vehicles delivering its ground packages and different vehicles delivering its signature express service. a lot of people wanting the new ceo to combine those two and have one set of trucks delivering everything. so a lot of questions about how fedex moves forward. but the real question is pricing power. does it still have the same pricing power that it had in the midst of the pandemic and showed the last three quarters. >> frank holland, thank you very much paul, the market has moved lower on valuation concerns as interest rates have moved up the next potential shoe to drop is earnings weakness earnings expectations we've all been talking about have held up relatively well. i feel like there's going to be outsized focus on fedex today and nike on monday that's the official start to earnings season. if we see weakness on the economy and out of corporate america, it could be a bad omen for the broader market what do you think? >> that's a great point, sara. today we got a couple of earnings reports and half the companies raised guidance, which was pretty surprising, or

reaffirmed guidance. earnings estimates are going to come down. you know, we were talking about the homer builders before. the home builders are trading under four times earnings. nobody expects these earnings levels to maintain going forward so those numbers will come down. when everybody is expecting something, that tends to be a little bit more priced into the market the home builders, for example, you could have earnings cut in half for the group and they'd still be trading at a below average multiple relative to the last 30 years. so in that respect there's probably some room built in for disappointment here. obviously i don't know -- we don't know what's going to come out of these reports we've seen economic data showing signs of weakness, so we're going to see lower numbers, we're going to see more companies lowering guidance than we've seen in prior quarters but again, i think people are expecting a lot of this, so the

market -- i mean we're down 11%h people have started to price this in. no one was talking about a recession six weeks ago. now everybody is talking about a recession. >> fedex always gives some clues on the economy the other thing coming out after the bell, results from the fed's annual bank stress tests we are awaiting those. the results will dictate how much capital banks can actually returning to shareholders in buybacks and dividends the fed checks banks' balance sheets against ahypothetical severe economic downturn however, this year's test was devised before the war in ukraine and the current inflationary environment, which is very elevated but it will include heightened stress tests in two key areas, commercial real estate and corporate debt markets paul, what do you expect and could this be a catalyst for the financials, which are underperforming today andhavin a tough month on these recessionary concerns, down about 12%. >> yeah, so i mean the stress tests have become taking on less

importance in recent years it's financials and the banks that are in better shape now than they have been in several years. when we look at charge-off data on credit cards monthly numbers, we haven't seen a real meaningful uptick in those numbers. again, a lot will depend on how the economy plays out this year. we don't necessarily know what those results are going to be. nobody knows and has a crystal ball again, stocks like bank of america trading under ten times earnings they're relatively cheap, they have attractive dividend yields, so i don't think it's a major -- these results are a major worry in the short term here >> really quickly, paul, can you just talk about energy it's the worst performing sector, down about 4% today. crude oil is down and you guys have been putting out some stats on how steep of a drop we've seen from the peak in oil prices and the energy sector. >> yeah. so we've just seen -- in the

last, you know, week or two, we've seen massive moves lower energy was the one sector that was holding up it was up 20% quarter to date. now it's down on the quarter, so it's back to pre-ukraine invasion levels. this tells you either one thing, that there's going to be some sort of resolution on the geopolitical front or that there's going to be a lot of demand destruction going forward. but again, this is for the broader market overall, energy has been a big weight. seema was talking about it in the cruise lines earlier, so lower energy prices are a positive for the market going forward. >> the only stock in the s&p 500 energy sector is occidental after berkshire hathaway upped his stake in that stock. everybody else is lower. the s&p is good for about a 1% gain we're up 3.3% heading into friday we're still down 8% for the

month but a comeback week. it is defensive groups, utilities, real estate, health care and staples leading the charge technology is playing a role a lot of those beaten down software names are leading today. semi conductors are sitting out the tech rally but a lot of the mega caps are in it, like apple, microsoft, amazon and meta getting a boost today. not so much nvidia or tesla. that's going to do it for me on "closing bell. into "overtime" with mike santoli. welcome to "overtime." i'm mike santoli in for scott wapner you just heard the bells, but we're just getting started we begin with our talk of the tape the big pivot, investors shifting their focus away from inflation panic to growth fears. the market is navigating it reasonably well. stocks posting gains on the day. but our next guest isn't calling an all clear from the recent sell-off just yet. joining me is avery sheffield,