pricing. so the it not just for me. >> it's not just supply chain issues it's also fuel prices for transporting some of those because they have to be flash frozen in many cases or fresh and then flown out >> with the wishing fleets who are going out there, they're paying more for gasoline and so on and so forth. >> be creative with tilapia. >> but you don't fertilize the fish >> thank you very much and thanks for watching "power lunch," everybody. >> "closing bell" right now. the summer rally proving resilient here as stocks bounce back from a premarket dip. we are sitting near session highs. the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen take a look at where we stand right now in the market, up almost half a percent on the s&p. we were down as much as half a percent on the s&p 500 so 1% move there the dow up about half a percent, 172 points again, at the lows of the session he we were down almost 180. and the nasdaq up .6 only two sectors are lower right now.

that's energy and materials. everybody else is higher staples are actually leading along with consumer discretionary. so it is kind of a mix of the defensive groups and the cyclical groups as well as technology nasdaq 100 up almost 3/4 of 1% chart of the day, the oil complex. look at oil prices down 3% at least energy stocks are getting slammed. concerns are mounting about china's recovery some weak economic data we'll talk about later on. coming up on the show, fundstrat's tom lee will join us with his latest thoughts on the market and whether china's downbeat data poses a risk here to u.s. investors. let's dig right into the markets with the ashboard. mike sanity oli here with a look at the market and back and the sentiment turn we've seen along with this momentum >> it's always kind of a life cycle of a rebound at first oh, the market's oversold, it's just a reflex bounce then it's more short covering. a little bit of a chase higher and everyone was worried about whether we were going perhaps to gain more than half of the total losses of the total bear market

decline. we have done all those things in sequence and clearly a lot of big investors were somewhat underexposed to stocks p they're chasing it, clicking higher and we're now sort of racing to the next test. s&p sitting right around 4300. if you had the 200-day average in here it would come right down there. it's not even 1% higher than this obviously also gets back to the early may highs. a lot of these hurdles that are right ahead of the market might be somewhat telling but so far the market is showing some technical mechanical signs of genuine demand, giving some reassurance that the june lows are pretty substantive at this point anyway another thing to keep in mind right around the 200-day average, that's when you get back to the minus 10% threshold from the all-time highs. so a lot of things come together right there. usually it's not a v you have to shop around a little bit and give back some we'll see if that happens. in terms of the risk appetites a lot of what you'd want to see is a broad rally, a lot of participation among a lot of stocks one way to look at that is the equal weighted russell 1000.

here it is down less than .6% from its all-time highs this is high beta stocks now outperforming the s&p 500 on a year-to-date basis that was certainly not the case a little while ago those are the more volatile, more aggressive lower-quality stocks to some degree. and that's the rest of the world. that's the all country world index except for the u.s and it has not really done a whole lot. it's kind of flatlined and that's basically where the dollar peaked as well in mid july that shows you a little bit of that separation there also as u.s. growth stocks started to take some lead the thing that distinguishes our indexes from the rest of the world largely is those big mega cap growth stocks. >> there are some clues there but how ultimately do we know whether we're just in a really impressive bear market rally or the start of a new bull market >> it sounds simplistic, but if it continues this way is one way to know. credit markets are somewhat confirming what the equity market is telling us but not entirely p it's not exactly like back to the best levels that we saw

earlier this year. and clearly technicals and market action precedes fundamental confirmation so at some point you need to see that the economy's going to hold up maybe that the fed is going to be less aggressive all those things are now built into the bull case >> our next guest does have an opinion on the matter. mike, thank you. we'll see you later. mike santelli. let's bring in tom lee from fundstrat. it's been a good call so far, your bullishness, especially when you were out on a limb and everybody was so bearish but now that a lot of investors have caught up with you and we've seen sentiment turn as momentum higher continues here, are you still feeling as bullish? >> in short, sara, yes i think most of our clients think this is just a bear market rally that will fail and we're going to retest the lows in fact, there's quite a flub who have been sitting out this rally waiting to short because they think we could move toward 3000 so i think there's a bias right

now for investors to think we're in the early cycle of a recession, markets making new low. i think the signaling coming from equities, especially sector leadership, is arguing that this is proving to be maybe a growth scare and as the inflation data weakens and economy data softens that actually makes the fed's job easier and then i think in the second half we're going to get quite a lot of p/e expansion and better earnings. that's why i think all-time highs is possible. >> but already we've added what, three points to p/e? we're around 18 right now, the price to earnings multiple just in the last few weeks. >> yes, that's right i think what investors have to ask themselves is if their view is correct and we have an inflation problem, why is the ten-year at 2.75%? that's a 37 p/e for a ten-year bond with no upside and losing you money owning it. and if that's -- if the ten-year's anchored correctly, i think the s&p p/e is going to

drift back toward 20 to 25 times. and at 20 times you get toward s&p 5000 i think that the burden is on the market to prove that the ten-year has to move to 4% or 5% before they can be bearish on equities >> there are bearish investors, tom, who say that the bond market has become too dovish here and that it's ignoring what it's hearing from the fed, which all the messages from even the most dovish fed members are that we still have work to do on inflation. >> that's right. that's a great point there's a divergence between what the fed is saying and whants and what the bond market's doing but asvolcker says, if i che cod be reborn he'd want to be born as the bond market because the bond market really tends to signal where the fed should go i think you've heard that from a lot of your fixed income and macro investors, that the bond market is telling us the fed might be done sooner than they realize. and again, it's whether you're looking at ten-year or the two-year, it's telling us inflation's not as sticky as

people perceive it to be >> another argument that i hear from some of the folks that you say are a majority of your clients, that think we're going to retest the lows, is that we've almost become complacent about the bad news look what happened this morning. we got a sharp drop in new york empire manufacturing the chinese data was really weak and the market did not get any comfort in the rate cut that we got out of china the increasing recession risk. just the idea that we've become complacent the vix going below 20 and that that is actually not a good thing >> i mean, it is certainly signs of complacency but there are also signs that investors are positioned for far worse. i mean, as you know, this is bad data on an absolute basis but this is maybe not surprising markets. i just think too many folks think we're heading for stagflation or years of inflation or depression. that's what we hear from even our most fundamentally focused

clients. they just have a lot of fear and lack of visibility i just think the market's reaction to all this bad data is really the signal. >> so you think the bad news is good news ultimately for the economy? which i think you have to if you want to be bullish right now because we are expecting more down side news on the economy. >> that's right. and as tom demark likes to say, markets bottom on bad news so we're rallying in the face of bad news i think investors have to respect that and realize that's usually what happens at a bottom >> so what part of the market do you want to be in? because i'm looking at the last three months the best parts of the market are the most beaten down not just consumer discretionary technology but some of the most speculative, some would call junky stuff has rallied so far is that bullish? and would you want to continue to buy into those areas? >> i mean, i just think the leadership in the second half's going to come from faang because they're going to outgrowing gdp and they're below market

multiples now and their ownership has almost collapsed from the institutional side. so i think that they're going to be the first liquid groups to really relate. but the meme stocks i think it's a good sign, it just means investors are back i don't mean stay at home names. but they're down 90% they could double and then they'd only be down 80%. i don't think it's a sign of where institutional money's going. it's just a sign that when you've fallen 90 or 95% you can bounce for a long time and it's still off the highs. >> final question because we're expecting earnings this week from home depot and walmart and target and obviously we're going to be wondering the state of the consumer after some of those profit warnings from some of that group what if the recession, what if it's worse than feared even on some of these -- whether it's these numbers, commentary, the economic data, at some point doesn't bad news have to be bad news and get factored into earnings multiples

>> sara, i think that there is continued weakening coming, and so i expect some negative comments to come out of these companies. but i think investors are taking a step back. this is very similar to 1980 this was a recession dynamic created almost by -- because monetary policy triggered and flipped and there was a huge announcement this is what the fed wants to see. and of course because that's the dynamic under way the markets are, i would believe, are going to go vertical when the fed actually pivots. so i just think people have to be careful this is not a business cycle where there's a lot of leverage that has to be fixed and we have to rescue banks. this is a slowdown engineered by monetary policy almost by announcement so we want to see this happening. that doesn't mean we have to have a recession >> tom lee, sticking to his guns thank you very much for joining me today >> thank you

>> from fundstrat. and speaking of walmart, we've got some news on that company along with paramount julia boorstin with the story. julia. >> both walmart and paramount have reportedly reached an agreement to bundle paramount plus together with walmart's subscription service this according to a report in the "wall street journal." we've reached out to both companies for comment, have not heard back yet but sara, just to put this in context, i have talked to various sources who told me that walmart is talking and had been talking both to paramount as well as some other streamers with the idea that offering an additional streaming service as part of that walmart plus membership which costs about $100 a year would help bolster it, make it stickier, make it more appealing, and then for the streamers of course this would help expand their reach. paramount plus does have a version with ads and so this could help generate more ad revenue there as well. but it's all about the new bundle it's all about locking people in to subscription services and minimizing churn we'll get back to you when we hear more from those companies but as of now paramount shares up about 2 1/2% on that report

back over to you >> julia, thank you. julia boorstin up next we will talk to the chair of the national bureau of economic research, nber. remember the group charged with designating when a recession actually begins. for his read on the current state of the u.s. economy. you're watching "closing bell" on cnbc, up 142 on the dow

new data out today showing china's economic activity slowed across the board in july, prompting an unexpected rate cut. pretty different picture than what we've seen in the u.s most recently with cpi and ppi

heading in the right direction and the labor market holding very strong. joining us now is john lipsky, the chair of the national bureau of economic research, who was also the former acting managing director of the imf. it's good to see you again, john welcome back >> thanks, sara. nice to be here. >> i wanted to start with china because even though we knew that china's been in lockdown mode and the economy's been weakening i think the news still came as a surprise and we're seeing the reaction in commodities markets and investors who typically cheer rate cuts and stimulus from central banks actually sold off on that news because it was a sign of trouble. so what's happening with the chinese economy? >> well, that's going to be a very, very good and important question in the coming months. but it seems clear that first of all the zero covid policy which has produced lockdowns and added to uncertainty about the outlook have had a near-term impact. but at the same time as you're probably aware there have been troubles in the very important

property sector in china in which there are estimates as high as 65 million units, housing units that are unoccupied that are owned in the anticipation of capital gains as a form of investment and these typically, the builders that build these kind of investment properties are very highly leveraged. and we've seen problems in many developers as demand has softened and housing prices have weakened if this continues, this is going to have some bad news for the chinese economy more broadly when the consensus view had been that in the coming quarter it's going to be accelerating now the question is is that really true? >> is there a recession in china? what does that even look like? >> well, it's clear that the government has in its hands a lot of policy tools that they can start using. the rate cut is a sign --

today's unexpected rate cut is a sign that authorities on the one hand are cognizant what's going on, are concerned and want to show they're willing to act. but the financial side, certainly the central bank will support chinese banks if they run into trouble however, if the trouble is broader, in the property sector, for example, in non-bank financial institutions and in local governments whose finances depend on land development and the income they derive from that, this is going to be broader and more difficult for the policy makers to counteract. what is potentially at stake, i don't think a recession. i don't think a big downturn but it is entirely possible to think that the next few years the chinese economy's going to need to be delevering and it's going to grow quite slowly for an extended period of time which is not what most people

expect >> no. and certainly not what investors are used to. kind of u.s. investors brushing it off except for in the commodity market what about in the u.s. i know you can't give the official nber answer today on the show, although we would welcome that if you have a call. but how likely is it that we are in -- or looking at recession? >> if you look at the business cycle of the national bureau of economic research website, you can see in detail the definition of what constitutes a recession. i'm not a member of that committee. it's leading academics and scholars but it seems clear that it needs to be broad and diffuse slowdown or downturn in the economy the latest data of course, as you pointed to already, jobs data and others, certainly suggests that the economy continues to expand. but we've been through an absolutely unprecedented period

of the lockdown from covid of unprecedented fiscal stimulus. so the economy is certainly difficult to call right now. >> but i think the other big question, john, is we're dealing with pretty historically high levels of inflation. and while we've seen a turn in that it's still kind of a question mark as to how fast it can come down if that's the route we're headed what do you think? >> that's certainly the question what is clear is that the run-up in prices so far has been led very narrowly by -- in fact, if you look at the data, about 33%, a third of the increase reflected energy prices. more than 31 -- 30% reflect an increase in motor vehicle prices and about a quarter represent an increase in food prices. those aren't likely to continue. they're going to fade away so the question really is is the aftershock of those -- that inflation surge going to spread through the economy to a degree that is going to produce

inflation persistence. and most important is in the labor sector so far increases in wages have lagged inflation in other words, real incomes have actually been falling and the latest data, if you look not just at the employment figures but if you look at the initial unemployment, the weekly claims for unemployment insurance, you'll see signs that suggest that the labor sector is beginning gradually to soften. labor demand is softening despite the last month's very strong employment. so the key is whether wages are going to reflect the softening in economic growth >> john lipsky, good to get your perspective. thank you for joining me >> nice to see you >> okay. let's give you a scheck on where we stand right now in the markets. going strong into the close. near the highs of the day, up half a percent on the dow, half a percent on the s&p with most sectors positive

staples, consumer stip lz and consumer discretionary leading tesla's having a nearly 4% rally day. only energy and materials lag. the nasdaq's up 3/4 of 1%. still ahead, walmart and home depot kicking off a huge week of earnings when they report results tomorrow before the bell we'll talk to top-ranked analyst matt boss from jpmorgan about what he's looking for from the retailers. and as we head to break check out some of today's top search tickers on cnbc.com. ten-year yield right on top. treasuries continue their rally with the ten-year yield lower today. it's at 2.79%. there's tesla, i just mentioned having a good day. oil prices lower along with a lot of commodity prices copper's down 2% that weaker china data brent crude down but wti is giving back 3% right now. below $90 a barrel apple and walt disney, stay positive disney with a new tistacvi investor dan loeb backing the stock. i'll tell you what he wants back in the show. we'll be right back. and thanks to voya, i'm confident about my future.

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mover. it is green plains, which is solidly in the red today bank of america downgrading the ethanol fuel producer to neutral from buy, citing valuation shares are up more than 30% or so over the last month amid the big rally we have seen in clean energy stocks giving some back today there's been no dip in consumer spending for salty snack maker utz. up next the company's ceo breaks down a very strong quarter and whether he sees any siphon pushback against higher prices when "closing bell" comes right back with the dow up 160

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last week we saw inflation cool down a bit in july. but food inflation remains high, especially at the grocery store. food at home rising more than 13% from a year ago. despite rising prices demand for snacks is holding up well, at least for utz. the company beating earnings last week, seeing an increase in sales for the second quarter and raising guidance joining us now is utz ceo dylan lissette dylan, it's good to have you so no recession for salty snacks no recession for cheese balls, huh? >> no. it's been a fantastic category it typically grows about 3% or 4% a year. this year the category itself in the last 13 weeks grew about 15%. our overall portfolio grew about 16%. our power brands grew about 17%.

so we're really seeing a very strong consumer snacking, traditionally has been a fantastic category i've been here for 25 years at utz and it's grown almost every year i've been involved in the category itself. >> what about you clearly have pricing power. what are you doing with that you've raised prices is more coming >> well, we did. we raised prices if you go back in time a little bit in 2020, when demand just sort of surged at the beginning of kind of the covid lockdowns, the supply chain was really great, things were working out very well. as we morph into 2021, the supply chain got a little tighter. people problems, labor problems, supply problems. that sort of brought on some cost of goods inflation. we were a little bit slow last year in 2021 with raising prices we had some technology we

implemented. we had some people and talent we implemented. and really this year we were able to increase pricing to offset inflation ideally at the end of the day to beat inflation but also to allow us to reinvest ultimately in our business >> right but i'm just wondering if you're planning more because we've heard that message from a lot of the food companies that's why for those following these packaged food companies not so surprising to see the cost of food at home actually rise in july but i wonder if that's peaked out as well or if that will continue to rise >> we had two series of increases in 2022. we started in february with some we quickly came behind in may as we saw more inflation. what we've basically organized around for the second half in 2022 is to really do selective and strategic pricing. not a large wave of pricing across our entire portfolio. we think we've got the changes in place today that as they sort of make their way into the

marketplace will not need for us to do another large-scale increase in the second half of 2022 we're going to work really hard on productivity aspects of our business that can save some money as well which we can reinvest. >> that's good news for shoppers at least so dylan, what changes have you seen if any from the consumer? because we got some warnings ahead of walmart's quarter and target's quarter this week that consumers are shifting their priority, they're having to spend more on groceries and less on discretionary what have you seen within your power brands over the course of the last few months and coming ax r months? >> yeah, what we've seen is across the club channel, mass channel, food channel, convenience. every one of these channels for us for the category and for us has been double-digit strong so i think if the consumer is making a choice as to where they're spending their money, i think you heard when you referred to target and walmart

and general merchandise issues, and i know they'll be reporting this week and we'll find out a little bit more about where they are. but ultimately at the end of the day a lot of that consumer buying power has moved into the staples. food, beverage and we're really seeing a continued spike in our sales and demand as well in both dollars but also in, you know, strong units and volumes. >> you've been one of the more successful spacs out there as well thank you for joining me appreciate it. >> thanks for having me. >> dylan lissette, the ceo of utz. here's where we stand overall in the markets. up half a percent on the s&p, holding those gains into the close. almost 3/4 of a percent on the nasdaq small caps joining the party too. about a quarter of a percent so lagging a bit but quite a turnaround from what we saw earlier this morning where stocks were under pressure following that chinese data. after the break we back.

wework founder adam neumann is making a comeback with a new company and a big new financial backer and wall street is buzzing about that we'll tell you the story next. and a reminder you can listen to "closing bell" on the go by following the "closing bell" podcast on your favorite podcast app. up about 164 on the dow. we'll be right back. [ "back to life" by soul ii soul ] what if you could change your surroundings with the touch of a finger? now you can. biometric id... inside the innovative, new c-class.

what is wall street buzzing about today? all the money flowing into adam neumann's new company, flow.

the former wework ceo and co-founder receiving a $350 million check from venture capital firm andreessen horowitz it's the largest check the firm has ever written in the funding round according to the "new york times. that brings flow to a billion-dollar valuation prelaunch. the business aiming to disrupt the residential real estate market by creating a product consistent with service and community features although compact details are not known. andrieessen horowitz was an eary investor in names like facebook and airplane bb. and co-founder marc andreessen writing in a blog post today, "we think it is natural that for his first venture since wework adam returns to the theme of connecting people through transforming their physical spaces and building communities where people spend the most time their homes. our deirdre bosa, who's covered wework for years, joins us for more and deirdre, my question is did marc andreessen not watch "we crashed" he must have he got a little jealous he didn't have a part in it, sara it's a lot of people, not just

wall street buzzing about this a lot of of people in the bay area are kind of scratching their heads and thinking okay, adam neumann may be still this kind of incredible founder and entrepreneur a lot of charm really good pitch man. but if you think that he's been humbled from the experience with wework, why throw another $350 million at him for a company to value it at a billion dollars prelaunch? it feels sort of like deja vu all over again in terms of what the actual business is, flow, we don't know a lot of the details but it does sort of feel like similar to what he was doing with wework. that was for offices but with flow he was trying to bring that same concept to residential living, which is what he was trying to do with welive remember, sara, there was the education part, the living part. that never got off the ground because things fell apart. so now he's doing it under a different name with different investors. >> and he's been buying up land to do this, right? we know that especially in the southern part of the u.s >> yeah. some 3,000 apartments reportedly and you have to wonder, in the

same sense that we asked was wework ever a technology company, certainly it got that valuation with backers like masioshi san and softbank. but that came down in remarkable fashion. $4 billion at its peak it was $47 billion similar question here. okay, adam neumann is rethinking the residential experience again. that's interesting but should it command a tech valuation? and at a billion dollars prelaunch it certainly seems headed that way. but is this just, you know, multifamily reits by another name always the questions plaguing wework i will say, though, sara, having covered it and going to a number of wework events at its peak and even interviewing adam neumann, he is this really grand thinker. he does have the ability to create a community in a way that few entrepreneurs can. i guess the main question is is he humbled enough? can he do it this time around? or is this more money being thrown at him that will lead to the same corporate governance problems the thing is we just don't know. we don't know what lessons have

been learned but clearly marc andreessen thinks enough. >> that's i guess a boost here for the credibility. thank you, deirdre that's a to be continued deirdre bosa up next, one of the top retail analysts on wall street will be here to unveil his best stock picks ahead of earnings season for retailers. tomorrow we'll hear from walmart and home depot that story plus dan loeb's new stake in disney and a big drop in home builder sentiment when we ke u si t mkezone autonomous vacuus work continuously around the house, but when your team has to work seamlessly around the world... you need more than technology. you need cdw who can help transform your organization with built for performance lenovo thinkpads. pre-configured for management flexibility and equipped with the intel evo platform. responsive collaboration tools give your team effortless connectivity to stay focused wherever they work. fetch. lenovo makes seamless productivity possible. cdw makes it powerful.

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lavler tengler investment ceo. leslie picker on disney. and jpmorgan's matt boss on some retail picks we'll kick it off with the broader market right now and what a turnaround we saw down 180 with the dow at the lows of the day. market was in a bad mood earlier on the weaker than expected news out of china, off its economic data and a weak read on new york area manufacturing we turned around and continued the rally we've seen over the last few weeks with the s&p up half a percent nancy, have you been buying into it if it is a bear market rally, it is resilient, impressive and broad. >> sure is, sara thanks for having me we've been adding risk back into our portfolio in june, which turned out to be a good near-term decision at this point i'm not really willing to chase the rally we're adding small amounts to some specific names. but i think you're going to get another chance i don't think we're going to retest the lows, but i do think you're going to get another chance to step in and pick off some of the names that maybe you didn't finish buying in the

summer >> what's been your biggest purchase over the last few weeks? >> we've been adding to cloud names. and we've done that in june and then we continue to kind of top them off and we've also been adding to consumer discretionary so a name like chipotle that has pricing power, has demonstrated they can maintain their margins, and stands to improve their margins through improved efficiencies we like that name a lot. it's in our 12 best ideas portfolio. as well as amazon. i think that's a name that demonstrated and might be good news for walmart and target. but they demonstrated that they could execute in this environment with a weakening consumer or at least a consumer who's shifting from goods to services, and their cloud business of course has been really driving the story and then lastly we added to disney >> disney. let's talk about that right now because it is one of the biggest gainers in the dow today investor dan loeb taking a new stake in the company and in a letter to ceo bob

chapek urges disney to spin off its espn business and integrate hulu directly into its disney plus program leslie picker joins us leslie, loeb previously held a stake in disney, sold it why is he getting back in now? the timing is interesting just as disney was sort of of on the upswing again. >> yes i was doing some comparisons here, sara because the disney stake actually dropped off their 13 just in the first quarter of 2022 we should get their second quarter 13h filings to see if they're in there as of the deadline tonight inter interesting enough they traded pleat well if you ballpark when they entered versus sold off some of it roughly, say, 17%. missed some of the flattening of the stock over the course of the most recent quarter. again, depending on when they may have gotten back in. he may have also held beneficial exposure in the form of derivatives and things like that

that don't have to be disclosed. but in terms of a strategic emphasis here, the first iteration of his stake in walt disney, loeb's stake in walt disney, had to do with a couple things that are pretty similar very, very focused on direct to consumer via streaming he initiated that back in q2 2020, which is when the whole world was basically falling apart from covid the shares traded down on fears that the closure of theme parks and movie theaters due to covid would cripple the company. he believed that the company should really double down on direct to consumer streaming, emphasized that in a letter in october while also saying the company should permanently suspend its $3 billion annual dividend a lot of those themes are present in this most recent letter that was out today. he reiterated that the dividend suspension should remain he reiterated this focus on direct to consumer but had more of a strategic focus to it. this idea that disney should be

more strategic with that minority stake in hulu and potentially spin espn as you mentioned. >> nancy, it's an interesting set of ideas given all the changes happening in the streaming world and people constantly wondering about espn, ever since it started to post losses a few years ago what do you make of loeb's proposal as a shareholder yourself >> well, i love that it served as a catalyst. this is a stock we were arguing about internally when it was threatening to break below 100 great company, but there was nothing really going right in the market in terms of looking at the businesses. so when the streaming numbers came out, i think that was an opportune time for him to say hey, here we are, we're back again. i'm not really crazy about the spinning out espn idea, though i get it i understand why he thinks that would be important but as a shareholder i'd like to see it stay intact i would also like to see them reinstate the dividend, which chapek has promised to do. but you think what loeb has done is lit a fire. this is a management team that seemed to me -- i know others

disagree with me but seemed to me to be adrift and got distracted with all the issues in florida. i want to see them focused on growing the business we know consumers are returning to services over goods and this is a great way to play a resilient consumer that's going out and spending money >> well, it certainly represents a new test for mr. chapek after the florida debacle and covid. now he's got an activist investor to contend with leslie, thank you very much. leslie picker. home builder sentiment falling into negative territory. first time we've seen that since the start of the covid pandemic. the national association of home builders chief economist saying the federal reserve's tighter monetary policy and higher construction costs as well have brought on a housing recession diana olick joins us diana, could this lead to more meaningful price reductions now for homes, which has sort of been the last piece of this that the fed and others have waited to see >> yeah, actually, sara that's what we've all been waiting to see.

and in the builder's release this morning they said builders have been lowering prices not only to get more buyers in the door but to slow down cancellations. we've seen cancellation rates for the builders double just since april. and that's according to john burns real estate consulting so by lowering by 5% that's what they said they were doing on average, is that enough? you know, when you look at prices for newly built homes they're up close to 40% since the start of the pandemic. and the same thing for existing homes. so lowering them by 5% might help a little bit but i don't think we're talking about these really meaningful price drops or -- it's just really a shrink in the gains year over year rather than actually dropping. so i think you will see home prices in the next couple months just kind of flatline for a while but stay at these very high levels. they may fall back a little bit. but it's going to need a lot more you're going to need to see home sales and demand fall back a lot more to see prices come down really meaningfully. >> is that what we're calling it now, a housing recession it's like the nber declaring a u.s. recession, which it has not

done >> yeah. that was rob dietz, the chief economist for the nahb, he declared a housing recession and look, sales are down, no question, and the builders are not building as much it was barely six months ago they said they were slowing sales because they couldn't keep up with demand, they couldn't build houses fast enough now it seems that the demand is no longer there, it's been wiped out, and so i believe we are in a housing recession. does that necessarily mean that we'll see this big drop in home prices no, not necessarily. i just don't think we're going to see any kind of the crazy gains that we've seen over the last couple of years those gains were unsustainable anyway, though z >> a lot of people called it bubblicious. diana olick. huge week for retail we're going to get home depot earnings tomorrow, walmart, target, lowe's, kohl's more than tripling the s&p 500 so far in the month of august. pretty sharp comeback. joining us now is jpmorgan's head of department and specialty soft line retail

good title matt boss. which means that you cover all of retail. what do you expect first, matt, from the department stores, especially walmart and target, where expectations have been lowered all year long? target's down 25% this year off a few warnings >> so thanks for having me on, sara look, i think what you're seeing is the consumer picture as a whole i think is stable. you're seeing pockets, though, of cross-currents. so i think the lower income consumer, more so on the discretionary front, that's where you're seeing the primary pressure and that's really what you've had intraquarter with some of the discounters. it's not all the discounters the dollar stores, dollar general, dollar tree have seen much more robust results and that's because they're selling need-based food at roughly 80% of the mix which you saw throughout the quarter at walmart and target is a little bit different where it's much more of the discretionary, the larger ticket consumer electronics home. and i think that's what we're

seeing in our work is pandemic benefit categories, soft home furniture as well as consumer electronics as well as stay-at-home apparel those are the softer areas but things as you've cited before, the shift towards travel and leisure and some of the service elements as well as some of the key destination brands. those are holding up very well in our opinion >> i guess what i'm trying to figure out is what to do with those stocks because all those issues that you mentioned is why we've seen some trouble in walmart and target do you expect more bad news this week or do you think it's been factored in? >> i think the key to this week across the retail spectrum is going to be inventory control. so we cited in a note this morning that the wild card in our view for the retail earnings season here, i think the can has been kicked where retailers had said some of the excess inventory that entered into the second quarter, they believed would be cleared by july

i do not believe that the inventory position across the apparel side of retail on the discretionary front, i don't believe that we've seen that cleared. so i think you're going to hear retailers talk about the actions needed to clear inventory as you move into the third quarter. so we're expecting highly promotional back to school season as well as third quarter cuts now, i think one of the things you cited in terms of performance for the grum, i think the e that the buy side is using and that investors are using is much lower than consensus. across the board we're almost 20% below for earnings in the third quarter. so we've taken that cut i think second quarter rough and third quarter cuts are in these stocks but i think if retailers have a game plan to come into holiday with their inventories clean and they speak to a robust consumer, i think the group can work from here >> what about athletic now, you've been doing a ton of work lately on nike and lulu, which i know are two of your favorite stocks, but on what we

can expect on inventories and profits and how that might not be lining up with what the street is expecting. what have you learned? >> i'm glad you ask. look, i think they're kind of a tale of two worlds right now lulu i think the business is stable, and if anything has a tremendous amount of momentum. they fit squarely into the lifestyle hybrid wardrobing, more casual. all the tailwinds i think right now in favor of lulu we're expecting a strong quarter and continued momentum nike has two issues. you have number one, the issue in china and they have concentration in that region. that's obviously something that i think's at the forefront for investors with nike. secondarily, 65% of nike's inventory right now is in transit. now, the clarification that we had from management was they remain in a pull market, meaning inventories are clean today for nike in both north america and europe but what you're seeing on the promotional front is as this inventory arrives if the

seasonally non-relevant products, so if shorts arrive right now, they open up a container, that inventory will immediately be marked down it's disrupting the athletic backdrop right now, but it's all planned and it is all in nike's guide for the year it's just a matter of the first and the second quarter where our models are anticipating a bit more pressure to clear that excess inventory but we are in a pull market in north america and in amaya, which i think sets up very well for the athletic companies as well come the back half of their year >> so you like it but you see more earnings risk than what is priced in. matt boss. for nike yeerks that is. thank you very much for joining he m from jpmorgan we've got two minutes to go in the trading day. nancy, your final thoughts as investors try to figure out whether they should get back into this market >> yeah, i think people need to be disciplined and patient but if you just can't stand it and you have to buy something focus on companies that have reliable earnings growth, that have

dividend growth if possible and really strong free cash flow and stay with the industry leaders because i think we are going to get -- we've to get some sort of a pullback. we know market sentiment straight up. so if you can remain disciplined or just work over time, i think we're going to have very strong equity markets in the coming years and i think you want to be positioned that way. >> long-term smerkt there. nancy tengler, always good to have you thank you. for subbing in for mike santoli. 143-point rally. most dow stocks higher visa disney coca-cola and procter & gamble leading the way today on the dow chevron, dow, 3m not playing a role those are the biggest drags on the dow. the s&p 500 is up a third of 1%. we've lost a little bit of steam into the close but we are still looking to end higher. and that is a reversal from where we started the day consumer staples are your best performing group 1% gain there. monster beverage, hershey, lamb weston those are some of the winners. consumer discretionary up .6

you can thank tesla for that along with some other names like nancy's favorite chipotle which is almost flat on the year it's been quite a comeback story. technology is also doing quite well it's why the nasdaq is going to end with a gain of more than half a percent small caps also up about a quarter of 1%. the only sector to close lower today, materials and energy. with oil prices sliding more than 3%. that's it for me on "closing bell." i'll see you tomorrow. into "overtime" with mike. welcome to "overtime." i'm mike santoli in for scott wapner you just heard the bell. we're just getting started and we begin with our talk of the tape could it really be this easy, all three major averages posting gains today with the dow up for four session naz row that is its longest win streak since late may the bulls making a strong case that the bottom is in. but is the market already getting ahead of itself? let's ask richard bernstein, ceo of richard bernstein advisers. rich, good to see you. >> mike, how are you