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tv   Closing Bell  CNBC  August 9, 2022 3:00pm-4:00pm EDT

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>> if i touch this device while they're around, it's over, so i was forced to take a true break. >> forced sabbatical i'm pretty -- what is that oh, she's talking -- our producer was checking the 2/10 spread kelly take us out of here. >> thank you for watching "power lunch, " everybody. >> "closing bell" right now. another choppy session on wall street as investors await tomorrow's key inflation report. nasdaq is under pressure down 1.2% as we head into the close the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara ieisen. we're down half a percent on the s&p 500. you've got strength in groups like energy, utilities, real estate and financials. everybody else is down and tech is being hit the hardest the nasdaq is down 1.1%. consumer discretionary and technology weak. a lot of the apparel names in
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retail under a lot of selling pressure also the cruises are hurting the consumer discretionary group bath and body work and norwegian at the bottom of that pack the small caps giving back recent rally, down 1.6%. here's a look at the biggest decliners in the nasdaq 100. a lot of the semi conductors are selling off again today on the micron warning yesterday it was nvidia. you can see the reaction and the damage lam research at the bottom of the pack along with applied materials. some of the stay-at-homes like zoom video also weaker. coming up we'll talk to commerce secretary gina raimondo on the c.h.i.p.s. act which was signed into law this morning by president biden. in just a moment liz ann son derz will join us on her latest thinking on the market and how the cpi report could inform the fed's next move. mike santoli is taking a look under the hood at the summer rebound and whether that's wrapping up today
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>> the better part of the last two weeks, the indexes have been sideways now, it was the big growth stocks that did outperform off of the lows, but on a year-to-date basis i think it's relevant that the equal-weighted russell 1,000. so if you owned a little bit of the 1,000 stocks in the market vastly outperforming the s&p that's because they have remained underperformers most of what's been going on, yes, we're pricing in a slowdown, potential recession, f fed tightening you're down less than 10% year to date in the equal weighted russell 1000 whether that's a selling opportunity or just a sign of traction is the debate take a look too at the s&p 500 advance/decline line this is the running tally of stocks going up versus down in a given day. it sort of broke out a little bit. this is coming into today. it shows you better breadth off the lows
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again, it doesn't mean that the markets proved that that low will stick and we're up and away from here, but it does show you there's real demand that has gotten in. >> the cpi report tomorrow will be huge, for stocks, for bonds which are apparently at a head and shoulders critical level what is the field position for the market into this inflation report we're expecting a drop because we've seen that in energy prices so hot number the market does what cool number the market does what >> hot number would seem to catch the market off guard because i think peak inflation is part of the basis of what we've seen in terms of this rally. we know what gasoline prices have done. that's the biggest headline. >> but core inflation will be key. >> we were looking for that. i think we'll say we've seen progress but one month is not necessarily going to be decisive because the fed has told you we need multiple months also we don't know what level we're trending lower to.
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we get down to 4% core, that's great, that's progress is it enough >> mike santoli, thank you we'll see you later. for more on the market, let's bring in liz ann sonders liz ann, what are you telling your clients about what to expect from tomorrow's report and how that might influence fed expectations and the summer rally we've had? >> so i think one of the things we learned from friday's jobs report is that a significantly outsized print relative to what was expected could be a volatility needle mover. what's interesting about tomorrow's report is that headline inflation is actually supposed to come down relative to the prior month, but core is expected to go up. i think we're now at that point where it's not just what powell is looking for, a series of lower readings, but the drivers of headline versus the drivers of core. and given that the shelter components, the combination of owners, equivalent rent represents about 40% of core
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cpi, and they tend to be stickier when they move up, i think the question near term is how much of an offset is that to what clearly is some downside associated with commodity prices >> so you've been pretty defensive, right, in your overall positioning and recommendations, liz ann has the summer rally changed anything for you >> so we've had a definitive focus on quality areas of the market we actually went to sector neutral many months ago feeling like factor based decisions made sense than just trying to make a sector call or two i will say that this rally in many ways has looked better from a breadth perspective, from an internals and technical perspective, leaving aside some of the low quality pockets that have not only also rallied but have rallied to a significant degree you guys have been touching on it, whether it's the meme stocks or negative earnings areas, heavily shorted stocks so to put my trader's hat on for
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a minute, we've been saying you want to sort of fade the rally down the quality spectrum. there are times when you want to go down the quality spectrum that's where the leverage is to an economic upturn in that no earnings, weaker balance sheet part of the market i don't think that's the part of the cycle we're in right now so we've been saying lean in to the quality areas for leadership, but you want to fade down the quality spectrum. and i think that's the best way to approach this somewhat unique move off the mid-june lows. >> i know quality, you don't want to go sector specific, but just thinking about the cyclicals here, this is the second day in a row that we had a downgrade of earnings expectations yesterday nvidia, today micron that's a cyclical group, it's tied to the fate of the economy. so what does it make you think about when it comes to some of the cyclical parts of the market that have rebounded? >> well, again, i think if
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you're really down the quality spectrum, sometimes it makes sense if the market is pricing in a significant inflection backup in the economy. similar to what happened when we got the news, the positive vaccine news toward the end of 2020 that was when it made sense to go down the quality spectrum to what had been hurt most significantly to where there was no earns because theleverage o the upside was there i think what traditional cyclicals are telling you depending on what sector of the market they are, are they global or domestic, is that we are in a weakening economy, if not a weakening economy from here. and that is additive to the message around be careful about moving into segments of the market that really do require a turn back up in the economy. i don't think friday's strong jobs report is a reason to really take a significant cyclical approach under the belief that we are going to see a turn in the economy.
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we think weakness is going to continue to be the trending near term. >> so are earnings expectations still too high given your outlook there? >> so earnings ended up being slightly better than expected, at least so far. we're about three-quarters of the way through. you are in negative territory. but given the weak data confirmed today with the second quarter release, that bodes somewhat ill for profit margins. i do think the second half of this year could be a year where the downgrades to forward estimates start to pick up that is typically the case when you see a weakening in economic growth the profit deterioration tends to lag that, especially when you've got an inflation driven deterioration in growth. we have to remember that earnings are more correlated to nominal growth, not real growth. it takes a while for that growth slowdown to show up in either profits or profit margins, but i
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think that will increasingly be a story for the second half. >> liz ann, what would change your view? what would make you more optimistic or feel better about getting into the market or riskier parts of the market? some people thought peak inflation and that's one of the catalysts for this recent rally we've had on hopes that was happening. what would do it for you >> some hopes for peak inflation i think has been part of the rally, but i think it's more than just a peak to reiterate what powell has been really pounding the table on, it's a series of lower readings mesters has talked about several months of lower readings it's not just looking back, we're lower than the month before but i also think a basis for the rally was about a day before the s&p low in mid-june, you had the peak in the 10-year. from around 3.5, you went down to 2.5 i think that that was a huge tailwind behind stocks the thing that makes me more
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nervous in some of the all the macro stuff we've been talking about is with this rally has some frothy sentiment again. i think part of the reason why we're seeing weakness today, even if you don't have some fundamental driver to point to, is we maybe have gotten a little over our skis from a sentiment perspective. so from a trading standpoint, i'd say watch the sentiment data i think that has a tendency to be a bigger needle mover and helps to explain some countertrend moves that might not otherwise be explained by either the macro environment or some particular set of data points. >> or you could just watch gamestop, which is still positive for the week, even though it's given back today amc, bed, bath and beyond is the current mover du juor in the meme world. shares of sofi have been on a hot streak but getting hit today on news that softbank, its biggest shareholder is looking to sell some or all of its stake
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in the fintech company we will talk to anthony noto about that move and the company's investment products focused on clean energy. the dow is down 83 points. it is off the low of the session. at one point we were down 119. the high, though, was up 45, so right in the middle of the range. we'll be right back. power e*trade's award-winning trading app makes trading easier.
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its own, announcing the launch of two new etfs, sofi web 3 and sophi smart energy the ceo, anthony noto, joins us here on cnbc it's good to see you, anthony. i definitely want to talk etfs but i feel like we have to start on the stock move and the softbank news which is overshadowing things what do you know about this sale why, any conversations >> i really can't comment on softbank's decision to drive liquidity. those results speak for themselves, as to sofi's results. we've been able to deliver record revenue the last four quarters in a row, really strong positive ebitda. our first gaap profitable quarter for the sofi bank in our
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first full quarter there and strong growth in members and products accelerating. what often gets overshadowed is our technology business that accelerated. so we had a strong quarter in terms of our operating metrics, and validates our strategy to be a one-stop shop and diversification of our business so i'm proud of what the team has accomplished and that's really what we can talk to and those are the facts. >> do you have any indication of whether sofi will -- excuse me, softbank will sell more of its stake and get out of the name? >> i do not. all i know is what the rest of the public knows which was what was in their public filing about the losses they generated. investors have a lot of different needs for liquidity and that may be tied to their decision but i don't have any more information than that of. >> no, it was a doozy, more than a $21 billion loss etfs not a huge revenue driver for you. is it growing? do you have plans to change
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that >> we know it's a really critical element to our strategy we want to be a one-stop shop for all of your financial service needs, whether that's buying a home, paying for college, investing, using a checking and savings account, credit card or insurance we're the only digital platform that offers you the ability to buy, save, spend and protect in the invest category, we also want to differentiate based on selection. within invest we think there's an opportunity to be a one-stop shop to give our members access to investing at an earlier age so we've done a number of things since we've launched invest to give great selection but also access to americans that typically haven't accessed investing at a young age we launched single stocks without commissions. we pioneered fractional shares we launched four of our own etfs to give our members an opportunity to invest in a diversified portfolio like an s&p type of index, the ability
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to buy 500 diversified companies at a $10 price point so they could diversify their investments and dollar cost average their recurring investments. so what we're adding here today adds to the selection so we'll have eight sofi etfs that's why we came out with t web. in addition to the emerging new technologies in energy and that's why we came out with smarter energy today two new themes to invest in, in a diversified way and responsible dollar cost averaging way. >> the t web one, i find the timing a little bit interesting right now, just given the fact that the market has soured on a lot of these themes, blockchain, the metaverse, which is what this etf is all about. >> one of the things we've seen over the last three decades of investing is that the emergence of new technologies goesthroug a boom, bust, boom cycle and so it's very clear that blockchain is not going away it's very clear that
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cryptocurrency is not going away big data is not going away the metaverse isn't going away nfts and tokenizations is not going away they have come back to reality the market is trying to figure out what's fact versus fiction, what are the real sustainable businesses and what aren't the benefit of an etf that cuts across those four themes is it gives you the ability to diversify your risk by investing in this etf as opposed to one or two companies or one or two cryptocurrencies and so these companies four into these thematic areas in a diversified portfolio under the ticker tweb and that comes at about $20 a share so it allows you to get started if you want to invest in that theme at a low price point in a diversified way. of course you want to invest over the cycle, set up recurring investments you can do on our platform and invest every week or every month so you're dollar cost averaging into the
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portfolio. >> i know, anthony, you started off by talking about some of the strong fundamentals that you're seeing we've seen that in the stock rebound. i know you were on cnbc talking about that as well but then you look at a company like upstart, which last night it's just gone from bad to worse. the ai lender. and now expects bigger losses, bigger slowdown in revenues. why should investors looking at that and skeptical of the category growth not worry about you? >> sure. we're a diversified fintech. so we operate in a lot of different businesses we have three segments that we report lending, four different products, home loans, school loans, student loan or financing as well as personal loans. to the best of my knowledge, i believe upstart is only in unsecured personal loans or unsecured personal loans here are much higher quality. the income of an individual on average is $140,000. the credit score is very high,
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an average of 740. so we're servicing the very high end within that one product they're operating in and have seen strong credit performance there. we also have a segment that consists of checking and savings. checking is the only place you can get a 1.8% interest rate with no minimum deposit or restrictions also our credit card product as well as some other properties. then we have a big technology platform business and we're biddle out the fintech so we're a fairly diversified company. it's what's allowed us to deliver strong growth. as i mentioned four consecutive quarters of revenue, eight consecutive quarters of positive ebitda and now we're gaap profitable at the bank for the first quarter. >> addressing some of the concerns about the economy, what is the health of the personal loan business right now? >> you know, as we discussed in our earnings over the last two weeks and since then is we raised our outlook for the year.
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we're cautiously optimistic. we've definitely been a belt tightener the last two and a half years since a moratorium was put in place it took that business from over $2 billion of origination a quarter down to less than $500 million. we've been able to diversify away from that and still deliver record growth, up 50% year over year in revenue again. so we're watching all the statistics and macroeconomic statistics for early warning signs, but so far that business remains strong and the behavior of our higher end credit person has performed well as well as our credit statistics. >> really good to get an update, anthony. thank you for the time. >> thank you, sara >> anthony noto, ceo of sofi, which is off the lows. after the break, bank of america saying one group in particular is getting squeezed even harder than the rest by rent inflation we'll bring you the big picture on why that matters, next. later, tom lee will join us
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for the market zone with his latest thoughts on stocks, inflation, coinbase which reports after hours and much more wee t 'vgothe dow coming back a little bit, down 60 points
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in today's big picture, the u.s. consumer is hanging in there. despite worries about recession and inflation. bank of america institute just released a new report based on data like debit and credit spending money flow increased 7%, about the same as june meantime card spending per household is up 5.3% from last year when you factor in sky-high inflation it's actually under pressure so those higher prices are driving it higher. higher rents are hurting, especially younger consumers the median payment for gen z is up 6% in july and just 3% for baby boomers bank of america is still pretty positive about the steady
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resilience of u.s. consumers and the lower gas prices in july certainly helping. while inflation is hurting, they also say consumers have not yet shown signs of increased borrowing, something we're all watching we'll get more read on inflation tomorrow when of course we get the cpi report in the morning. when we come back, the stock market -- the dow is down about 41 points. take a look at the semiconductor space. it's the hardest hit in the technology area today. president biden signing the c.h.i.p.s. and sciences act into law on a day the space is getting wrecked from that warning we got from micron up next we'll talk to commerce secretary gina raimondo about the bill and the concerns in this sector. we'll be right back.
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welcome back chip stocks getting hit hard after micron became the second semiconductor this week to warn about earnings micron also announced a $40 billion investment in u.s. chip manufacturing, which of course comes on the same day that president biden signed the bipartisan c.h.i.p.s. and science act into law sigh poke with commerce secretary gina raimondo from the noisy white house lawn she was at the signing and i asked her how the administration plans to hold these chip companies accountable to use the billions of dollars the way
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they're promising and follow through. >> we will hold them accountable. this is not a blank check to industry this is us partnering with industry we're going to make sure that the money is used to build factories in america, hiring american workers, and we'll take money back if they violate any of these rules this isn't for stock buybacks or investing overseas, this is for investing in research and development and manufacturing in the united states. by the way, the president and i were just with the ceos of intel and micron, and they are being true to their word they said that once this bill was passed, they would have the confidence they needed to make these investments in the united states, not in europe, not in asia, and that's what they're doing and that's what this is all about. >> as it relates to american manufacturing and jobs, we talked to the national association of manufacturing ceo jay timmons yesterday, and he said the c.h.i.p.s. act is two
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steps forward but the inflation reduction act is one step back he's concerned about the higher taxes and says it's going to hurt economic growth and hurt manufacturers' ability to pay higher wages and invest. how do you respond to that >> i could not disagree more and i think he's out of step with most business leaders. the president and i were just within dozens of business leaders. they are for the inflation reduction act because it's the biggest investment in climate that we've ever had as a nation. it's going to bring down prescription drug costs. it's not only going to reduce inflation over the long run, but will increase productivity you know, i think some folks who aren't for it, they believe in an old-fashioned outdated mode of economic theory, which says all you have to do is cut taxes and you'll have prosperity it's not true, it's wrong headed what we believe, and the president's leadership is of course you need competitive taxes, but you need investments, and you sure as heck need to
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fight climate change so i'm confident that pelosi will get this done in the congress on friday and we'll have another great bill signing soon. >> you mentioned that you've just been with the ceos of micron and intel both of them -- micron today and the announcement alongside the investment warned on the current quarter. they cut their guidance and warned about negative free cash flow intel had an awful quarter i'm wondering if you're concerned about what you're seeing right now from america's semiconductor industry it doesn't paint the picture of the healthiest, most vibrant industry right now >> well, look, the supply chain challenges are affecting every industry, and especially affecting them so they have their work cut out for them they also need to continue to invest in innovation and research and development but that's another reason this bill is so important you know, it's a multi billion dollar investment in this industry where we plan to work with them in partnership not
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just to build a few more factories, but to invest in training partnerships, apprenticeships, basic research and development. this is -- this is really a new day in america, investing in ourselves, our r & d and manufacturing and partnering with these companies to do that. >> a big part of the framing of this bill, madam secretary, has been to counter china and all the money they have invested in the semiconductor industry i know the lobby that would prohibit them in investing in advanced semiconductor production in china, is that final in the law and do you expect china to retaliate, respond to that >> it is final in the law. as i said, it's not a blank check. the purpose of this money is for these companies to invest in the united states of america there are prohibitions companies that take this money cannot make leading edge investments in china and we plan to be very strict about that look, this isn't about hurting china.
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that's not what this is about. this is about investing in america. this is about making the necessary investments in america, in our workers, in our research and development, so we can compete, so we can lead the world in this cutting edge technology it's about believing in ourselves and about strengthening american competitiveness. >> but i do wonder if it could help spark a broader battle over technology between the world's two superpowers at an already tense time for instance, taiwan and its semiconductor manufacturing is at the heart of this issue it's not a zero percent chance that china invades taiwan as we've all been talking about lately with the house speaker's visit. so what is the plan then for semi conductors? >> look, that's the whole point. right now we buy the vast majority, as a country, the vast majority of the most sophisticated chips from one company in taiwan. it's very vulnerable
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and that's what we have to fix here we have to make these investments in the united states these chips should be made in ohio, michigan, arizona, pennsylvania this country with our workers in partnership with our research and development institutions so, you know, the best way to compete with china and secure our future and our national security is to invest in our own country. we invented the chip industry in this country silicon valley is silicon valley because of the silicon chips we took our eye off the ball we stopped investing here and everything went to asia. that's why i said this is a new day in america where we're bringing it back to our shores and strengthening our own competitiveness. >> but it doesn't happen overnight, mad am secretary. how long will it take before america gets up and running as a manufacturer for chips in a way that protects our national security we're dealing with some of these
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issues right now >> we're starting right now. i'm leaving you, going back to my office, putting the team in place and getting to work. this will take a long time as you correctly say. it takes a couple of years to build one of these facilities. so it's urgent it won't happen overnight, it absolutely won't we didn't get here overnight but the fact that you've already seen micron, intel, this week making these announcements, qualcomm and global foundries. they have been waiting for chips to get over the finish line, and this is just a great day for america because they are saying we believe in america, we're making investments here, and i think the next decade or more you'll see an explosion in manufacturing and research and development and innovation in the united states. >> but before you leave us, one final question the news today, of course, of former president donald trump's fbi search of his mar-a-lago home, is that overshadowing some
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recent administrative w-- legislative wins for the administration, including this bill being signed into law today? >> i don't think so. this c.h.i.p.s. and science act is a sputnik moment. i think next week there will be a similar bill signing with the climate act and the inflation act, so, you know, the department of justice can answer your questions as it relates to former president trump i'm not -- that's not my lane. but i think these are huge, huge, huge investments and it's a great day for america. >> our thanks to gina raimondo she is the commerce secretary joining us from the white house. we'll talk more about micron and nvidia's warnings this week and the sell-off in the chips stocks when we are joined by an analyst who has a buy rating on both names. plus why the shine is coming off signet jewelers today. that is down 15%3.
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"closing bell" will be right back the dow is down 47
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check out today's stealth mover. it's signet jewelers losing some luster today the company announcing it is buying online retailer blue nile blue nile is a big player in bridal and fine jewelry. signet is cutting its forecast for the second quarter and 2023. the ceo telling in an email the company is seeing heightened pressure on consumers' discretionary spending and increased macroeconomic headwinds. but guidance still represents 25% higher revenue growth compared to pre-pandemic levels, so overall still a win.
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up next, tom lee is here with a preview of tomorrow's inflation report and how the number could impact stocks, chvd which have had a nice run. plus why ralph lauren is out of fashion when we take you inside the market zone your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire
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power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity we are now in the "closing bell" market zone. fundstrat's tom lee is here to break down the crucial moments of the trading day just took a little leg lower the dow is down 100 points, s&p
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down half a percent and the nasdaq is down 1.25% obviously those semi warnings, including today's from micron didn't help. you've been bullish. a 20% rally or so in the nasdaq. is this rally still intact in your view? >> sara, i think in the short term i wouldn't be surprised if the markets pause a little bit and that's something that our technician, mark newton, is calling for. but i think that there was a fundamental capitulation in june investors panicked, thought this inflation narrative was going to lead to years of pain. and i think that that capitulation is now being unwound. so we think that the bottom is not only in, but that you really want to be buying dips in the second half. i think we'll be surprised how much markets recover before year end. >> why you have changed -- you have actually had a lot of conviction around this bullish narrative, but most of the strategists out there, tom, they're not
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convinced. they say this is a bear market rally and the fundamentals point to a weakening economy we heard it from liz ann sonders at the top of the hour, a weakening economy. even if we have seen peak inflation, it's not clear that the fed is recognizing that or going to slow down any time soon. >> i think there's still a lot yet to be determined that's why when people are choosing how they come out, they're coming out bearish because the bearish narrative works better when you're uncertain. but if we have a softening economy, that doesn't mean we have a recession, we could just have a soft landing. markets have not only rebounded and responded pretty well to inflation, but i think a lot of leading indicators for inflation are telling us that the hard data, like the cpi prints, aren't really reflective of underlying trends. gasoline is an example it might subtract 33 basis points from cpi but on the
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current trajectory it will subtract 80 basis points i think deceleration pressures are accelerating from a duration, i think people think this bear market is too short. we're going to publish a piece tonight for our clients. but when you look at the duration of a bear market, it's typically 21% of the length of the prior bull market. this bear market has already been 146 days or 164 days. that's 25% of the prior bull so we're already in the zone where a bear market could end. we had that type of thrust that took place the percentage of stocks in bear markets was 47%. three other prior times it was this high it was actually a bottom in the market, so -- >> sorry to interrupt, but what about earnings what hasn't come down relative historically to some of these other bear markets is the earnings growth rate. >> yeah. you're spot on i think earnings is a risk
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i don't know if earnings are going to fall as much as people expect because we still have nominal inflation. so i think 250 could be a safe number next year if you look at how markets respond to earnings, we had huge preannouncements from the semiconductors and the stock market is off 1 or 2%. if this was in may or june when positioning was different action we could be down 10 or 20. so i just think what we're seeing on the downgrades to earnings is showing people don't really respond so again in '82 the bear market, the entire volcker era bear market was erased in four months i think that's what could happen in 2022. >> well, let's talk about some of those warnings from the semi conductors some individual stock stories here micron, take a look, it is falling more than 5% after issuing a revenue warning for its current quarter due to weakening demand it came just a day after nvidia's warning
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micron's ceo telling "squawk on the street" this morning about the impact the company is seeing in inventory. >> in the near term, certainly we are seeing due to macroeconomic headwinds as well as, you know, in certain market segments customers not being able to secure components, nonmemory components, that's impacting adjustments which have broadened since we last spoke. instead of just being adjustments on the consumer side, we are seeing inventory adjustments on the data center side and also some adjustments in automotive and industrial >> the company also announced it will invest $40 billion through the end of the decade to manufacture chips here in the u.s. joining us now is -- who likes the stock. do these warnings come as a surprise to you? >> they do come as a surprise. we entered into the week thinking a lot of these
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companies, micron or intel might have kitchen sinked the estimates, meaning that they guided so far below the street in the case of micron there was a 50% cut to the estimates for next year, that the results would be better than those estimate cuts. and then we saw kind of nvidia echoing something very similar yesterday. however, today with micron saying that they're going to come on the low end of the range for this quarter and then the number is going to come down further for the next quarter, i think that's going to retest that idea that a lot of these semiconductor stocks are kind of kitchen sinking the numbers or clearing the decks there could be larger estimate cuts than what investors are anticipating definitely more than the sale side is anticipating. >> so are you still recommending these stocks >> i think what we need to see
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in the case of nvidia, because nvidia will report in a couple of woeeks, same thing micron later this month, is to get a better sense where we are witch hunt overall inventory level situation and where we are with gross margins. semiconductor stocks can work in an inventory correction period we saw this in 2018 when the former president trump started the trade war with china and there was a four to five quarter inventory correction across the semiconductor stocks that lasted almost a year. we saw a lot of stocks selling off in 2018, the end of 2018 yet in 2019, the semiconductor index was up 60% so a lot of the stocks priced in that inventory weakness already. and while the industry went through an inventory correction. but i do feel that there's
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probably more risk to the estimates than what people are expecting. the weakness in demand has been concentrated primarily in smartphones, consumer electronics, but it is spreading to the cloud, to the data center and automotive and industrial. we are sieeeing elevated levels. >> so you like the stocks but think there's more downward estimates to come. >> yes. >> thank you very much for joining us. ralph lauren, shares falling. better earnings and sales this morning, rising 8% double digit sales in europe and asia earnings guidance was lowered on the strong dollar. sales outlook was unchanged. i did speak with the ceo on the consumer, he says our consumer is more elevated and proving to be quite resilient, even in europe where the environment is more challenging.
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he said they are not immune to macro challenges but is not seeing much weakness in spending and in fact is seeing increased brand awareness, higher brand scores, more new customers they added 1.3 million this quarter. he said china is starting to rebound and he's optimistic about it and investing in that country. he's been able to offset some of the weakness when 50% of their stores were closed in china with better online sales and increased sales in the region, like japan and korea his main message on rl is he feels good about the stock because it's so diversified. they offer sneakers, everything from that to tuxedos and also in geographies. the stock is down today about 20% for the year but it's actually outperforming the overall retail etf xrt some twinvestors were disappoine by the margin decline. they blamed it on foreign exchange and investment in freight.
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tom lee, any reason to worry about the luxury consumer? the companies keep telling us that everything is fine. >> well, the u.s. economy has always been a world of multiple consumers and demographics i'm not surprised if someone is worried about the upper end consumer being worried because they have been hit by the wealth effect and they are clearly cautious and they tend to be -- even though they have a lot of accumulative wealth, they'll be responding to market conditions. but i mean i just think there is a lot of noise in anything that we're seeing there's also a bull whip effect that's taken place, whether we're seeing it in semiconductors, a lot of durable goods, retail items, so things that might be considered soft could just be other effects. of course with some luxury items, the crypto crash i think has created some weakness in demand because that was a very different type of consumer as well >> we've got a news alert right now on google.
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julia boorstin with the story. julia. >> yes the justice department is readying to file an antitrust suit against google over its dominance of the ad market this could be happening as early as september, this according to a new report from bloomberg. we have reached out to the doj and to google for comment, have not heard back yet but it is worth noting that the scrutiny of google has been in the works for a while. google is by far the largest player in the ad market and it is reportedly looking to sell off parts of its business as it faces this regulatory scrutiny back over to you, sara. >> nothing on size and scope, right, julia, of this investigation? >> yeah. >> all right >> no. we're waiting to hear more we know that they have been looking at the size and scope of the company for a while and this idea that google could be looking -- sorry, alphabet could be looking to spin off some of those ad tech assets could be a way to relieve some of that
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regulatory scrutiny. it would be interesting to see if this pushes a breakup of alphabet assets. looking this past quarter, google search was so successful in bucking the overall trending in advertising and they have all these ad tech tools as well. really worth looking at the reach and scope of that ad business >> got it. julia, thank you alphabet off about half a percent or so. tom lee, quick final word on crypto with coinbase reporting after the bell is it safe to get in >> you know, these crypto equities are beta to underlying bitcoin and the other crypto assets they look like they have bottomed bitcoin is back above its 200-day. i would think if bitcoin makes a meaningful move between now and year end, any of the miners and the exchanges will actually outperform bitcoin so it might be ugly numbers because i'm sure volumes are pretty weak. but i think investors will look forward and realize enthusiasm may be coming back if bitcoin starts to rise. >> it's been quite a nice run. tom lee, great to have you here
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for the market zone. as we head to the close, down 71 points on the dow. travelers the biggest contributor on the upside, sales force the biggest drag s&p is down a little less than half a percent and the nasdaq down 1.2%. it is weighed down by nvidia, tesla, amazon and amd. that's it for me on "closing bell." now into "overtime" with mike santoli. welcome to "overtime." i'm mike santoli in for scott wapner you just heard the bells appeared we are just getting started right here in moments we'll get quarterly results from coinbase, roblox and wynn we have our team of reporters standing by to break in as soon as those numbers hit also ahead we'll speak exclusively with bill nygren where he's finding opportunity in the market right now. but we start with our talk of the tape a great pause. stocks treading water again today as investors await to

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