libre. check them out by the way, the rest of those 14 stocks on my twitter feed. >> i just tweeted it out, dom. thanks for joining us. >> and thanks for watching "power lunch." >> "closing bell" -- >> starts right now. stocks pulling back sharply as a new trading week gets under way. we are sitting at session lows the most important hour of trading starts now welcome to "closing bell." i'm mike santoli in for sara eisen. let's get straight to today's sell-off down more than 2% on all the major averages the s&p 500, if you look at the year-to-date chart, obviously a very aggressive rally off the june lows really accelerated in july it's folded back on itself and here's the area that we were all last week pointing out a normal pullback would get you down here that would show you that it was a

pretty strong, persistent rally. also, we've gone back to the levels that we were at right before, just about right before that cpi report august 10th where the market gapped higher and we went on to fresh highs for the rally. we've unwound that just a little bit. take a look at 10-year treasuries, above 3% again the stock market has not easily been able to digest 3% yields this year and last year as well. you see there going back to july, mid, late july levels last time we were here, 3.4% is the high the 2-year yield above 3.3%. so clearly the idea that the fed will keep tightening at the same time inflation remains an issue along with growth, those are the issues let's get more on the market and how things are set up. let's bring in liz ann sonders great to have you today. i wonder what stands out to you

in terms of this action? clearly there was a pretty heated bull/bear debate in recent weeks about whether this was just a routine reflex rally or the start of something more has that been clarified for you? >> not really. the only thing that was interesting about the rally as it relates to this one versus the couple that preceded it in the current or prior bear market, however you want to define it, is that the breadth was healthier this time at the recent highs you got to 93% of stocks trading at their 52-week leading averages but it was not indicative of a move suggesting better economic prospects to come you saw month-to-date august utilities were leading so i think that underlying message of more defensive leadership was probably telling a more accurate economic story

with yields having backed back up again that is a basis for the yield peak back in mid-june for the rally and the inability to move above the 200-day moving average last week. i think some of the technical triggers kicked in as well. >> for sure. i guess i wonder where you think we are in this process of sorting out where the market belongs relative to the economic situation. we've spoken before, the most bullish thing for the market might be that we've been in a recession and it's almost over or it's a technical recession we're coming out of and opposed to the fed having to fight inflation and cause a further economic downturn. it says we're on guard for all those scenarios. do you think that's just the way it's going to be for a while >> let me talk a little bit about what was also the basis for the rally, this notion of a fed pivot. first of all, there's a huge difference between a pause and a pivot. what i couldn't understand about

the pivot narrative was it was this sort of broad, really, really optimistic narrative. but to me the only way the fed would go from the aggressive tightening campaign they're in right now to a cutting campaign early next year would be economic deterioration already from these weak levels that is significant. this idea that just inflation having peaked and come down would be sufficient to give the fed the green light for rate cuts, i think there is a point where they feel they can pause, take a little bit of a breather. but i think a pivot to rate cuts only comes if we see more economic deterioration from here i still think we've got more weakness or the start of significant weakness in the labor market ahead of us and i think the rolling over of earnings estimates for the second half of this year into 2023, there's still more of that to come.

so the market may have priced in fed tightening to some degree, maybe even mild recession risk i think it's earnings and the labor market that is probably not yet in the market. >> right clearly the market is aware that fed chair powell will speak at the end of the week at the jackson hole conference. presumably he will speak to this idea of they need to be vigilant everybody from the fed has told us that, they want to see multiple months of declining inflation before they consider any kind of a change but this idea of higher for longer, which you allude to, a pause and wait and see if the fed funds rate is 3.5 or higher is a different equation for the stock market than turning around and cutting rates, do you think that that's not going to be enough to satisfy equity investors that we sort of know that we're near a pause point in the fed funds and we can get valuations in line with that >> i don't think we're going to get any hint that we're getting

near the pause point from powell or any other speakers at jackson hole maybe in large part due to the fact there's another cpi report, ppi report and labor market report between now and the fomc meeting. suggesting that they are getting close to a pause would be counter to their data depending aens sort of guide posts for this particular cycle. they're not on a predetermined set course other than what they have established so far with the reduction of the balance sheet but, you know, if he starts to be more explicit about whether their comfort zone is something higher than the still stated 2% target and they maybe start talking about 3 and change being the comfort zone, that could potentially be market moving and would be the fed conceding that the inflation plane, whenever it lands, might be landing at a higher elevation i'm not suggesting i think

that's what he's going to say, but that may be one of the next things to listen for. >> yeah, that would seem to be maybe one of the few ways to suggest more flexibility, i guess, in their policy outlook and you've been pretty consistently saying what you think makes sense is looking at quality factors, earnings reliability among companies. does that remain the game plan >> yes, especially given that a lot of where we saw the most robust rallies was well down the quality spectrum as everybody now knows looking at the carnage of some of the meme stocks, the rally preceding that had gone parabolic. you saw it with other narrative driven, weak fundamental segments of the market the undershorted stocks, the nonprofitable stocks there are times where it makes sense to go down the quality spectrum because that's where the leverage is if you've got a meaningful pickup in economic growth like was the case in late

2020 into early 2021 when we got the positive vaccine news. i think this time it was just pure short-term speculation without that basis being a coming improvement in economic activity and now we're seeing the other side of that with what's happening in the last few days so i think it reinforced the need to be quality based, fundamentally based as opposed to chasing some of these speculative areas in the gambling den. >> yeah. certainly they have started to unwind plenty of that bounce already. liz ann, appreciate the time today. thanks so much. >> thanks, mike. good to see you. let's now get to steve kovach at headquarters with a closer look at the sell-off in big tech hey, steve. >> yeah, i'm at headquarters, mike let's compare the move to the rally we've seen the last three months let's kick it off with apple apple slipping 2% today but it's

still up over the last three months and now 5% for the year and still flirting with that all-time high it hit back in early january. microsoft now, microsoft is down about 3% today and up almost 10% over the last three months doing pretty well there. amazon is underperforming the group today, down nearly 4%. that's on that report, mike, that it's bidding for signal health, which may be valued at $8 billion amazon getting into health care even more there. and alphabet is down 3% and up 4% for the last four months. the worst of the group, meta it's down more than 3% and it's the only mega cap resisting the rally this summer, down 16% the last three months, mike. >> yeah, steve just a massive spread between apple and meta, but even most other of the big faang stocks. appreciate it, steve we'll have much more on the market sell-off throughout the show after the break, we'll talk about one name that is bucking

the downtrend. signify health is getting a huge boost as amazon joins the group to bid for the company you're watching "closing bell" on cnbc. at cdw, we get that your world is always changing and you need to adapt to support your digital transformation. we can help you achieve your business goals by streamlining your data across cloud environments with netapp cloud services orchestrated by cdw. with greater accessibility and control, you'll be able to accelerate innovation, bring the flexibility of the cloud to your environment, and reduce your infrastructure footprint to contain costs so you can be prepared for whatever is headed your way. 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

millions have made the switch from the big three that to xfinity mobile.tten, or reverse orders that means millions are saving hundreds a year on their wireless bill. and all of those millions are on the nation's most reliable 5g network, with the carrier rated #1 in customer satisfaction. that's a whole lot of happy campers out there. and it's never too late to join them. get unlimited data with 5g included

for just $30 a line per month when you get 4 lines. switch to xfinity mobile today. indexes remain sharply lower. the dow is down 628 points right now, the s&p off more than 2%. just a few points up off its lows for the day let's now check out today's stealth mover. it is vf corp.

it was downgraded related to management's guidance for fiscal year 2023 and increased competition in the footwear space. google's search for vans are significantly below 2019 levels and its exposure to china and europe creates more uncertainty. shares are dragging more than 5% 5.3% lower on the back of that downgrade. another big mover today, check out shares of signify health the stock up more than 30% "the wall street journal" reporting amazon is getting into a bidding war along with cvs and united health. cano health is also moving on the back of this news, up nearly 15% today. 14% right now. cano health ceo dr. marlo hernandez joins us now to talk about this doleeal and the spac. dr. hernandez, great to have you here maybe just give a little bit of the backdrop of this potential

deal for amazon buying into this part of the industry clearly amazon only looks at big potential markets where maybe they can be disruptive and bring efficiencies. >> thanks for having me on what you're seeing here with signify health much like we saw with the amazon purchase of one medical is another validation of how attractive health care is today, particularly value-based health care that rewards quality over volume. what you're seeing more broadly is a continued paradigm shift or evolution from that transactional system of health care that we have, which is broken, inequitable, to one that is more relational and has a more comprehensive way that we treat patients amazon and many other companies are recognizing that importance. it's not like we go and buy a car and just call up allstate or state farm and say, hey, pick

one for me or we go to a grocery store and, hey, this is the place where i'm going to entrust my life to and share my secrets. people need retail, but in health care what patients have been demanding, what they have been clamoring for is that integrated platform where they can build relationships with trusted professionals and systems and that they can no longer be a number where they can actually get measurab measurably better care at a lower cost. >> your shares had a tough time and you did have to lower guidance earlier this month. where does this leave your company? does it make sense for you to participate in any of this consolidation? clearly some running these businesses believe having more scale on a bigger platform could help. >> well, what we're seeing is the market today is about $1.8 trillion it's going to be about $3.7

trillion by 2030 and what we're experiencing is very rapid growth. growth ahead of our expectations and as it relates to the different alternatives to create long-term shareholder value, we are always looking out for these and evaluating the different opportunities. >> always looking out. as a general matter, i guess you'd say. would you be concerned about a big tech company, cloud software, e-commerce company like amazon becoming a large presence in this market? >> it's a -- it's an enormous and growing market you've got all the societal tailwinds. a growing population, the silver tsunami. you've got government pointing right to value-based care. you have a scarcity of primary care physicians and systems in general that can provide that

holistic value-based care. you're going to see a lot of folks step up in order to provide that value, which patients and businesses, governments are looking for. there's just not that many out there that have those unique differentiators, that care platform that puts the center of care where it belongs, which is squarely with the patient, and then designing the programs and the products and services around that patient on a budget it's going to be a heavy lift for many companies so what they are realizing, to their credit, is that they need to invest heavily in the management teams, in the infrastructure, in order to get them up to where they need to be for this enormous market so there's plenty of opportunity for many players, and we feel great as to what our position is in today's market. >> all right we will see how things go with

this bidding and beyond. dr. marlowe hernandez of cano, thank you very much. >> thank you. let's check on the markets the dow is still down about 640 points the s&p 500 is just 4140 is about where it's been the last little while, down 2%. the nasdaq slightly underperforming. the russell 2000 had a rally attempt but is still down 2%. up next, barry knapp just put out what he calls his first cautious note in months. he'll join us with the red flags he sees in the market. as we head to a break, check out some of today's top search tickers. you've got the 10-year yield on top, followed by ape as well as amc, bed, bath and beyond and tesla. we'll be right back. what do ? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to...

nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.

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

the major averages are sliding hard as investors look ahead to the fed's jackson hole meeting later this week. joining us now is barry knapp to

handicap things for us barry, good to talk to you we mentioned that your note over the weekend, you said it was your first cautious one in several months put some context around that i know you still think the stock market might be able to reclaim its losses for the year, but what gives you a bit of pause in the near term? >> sure. to begin with, with the context, mike, that you referenced, i do think we've hit the twin peaks we hit peak inflation. the market expectations of that actually peaked in april but the numbers, goods prices, energy prices have clearly peaked we also hit peak hawkishness or peak tightening expectations it's not when the fed actually pivots if we consider '94 as a great example of this, the fed's peak hawkishness point was when they hiked 75 basis points back in november of '94.

they didn't pivot until june that was the inflection point of the markets, waiting for the pivot was too long however, i think we're in a position for an aftershock of what i've been describing as the mother of all taper tantrums i would describe what happened in the first half of the year probably as more of a fed policy correction but we can think of it as a taper tantrum. the reason i think we're set up for an aftershock here is there's three channels that qe and qt affect the markets through. there's liquidity and reserves we had a real shock in the first four months of the year due to the actions of the treasury, even more so than the fed so i'm not concerned about the fed draining $60 billion of liquidity through maturing treasuries then there's the fed buying treasuries and forcing people into riskier asset classes the taper tantrum is the qt side of that equation, the portfolio balance effect but the final piece is the

setting and level of long-term rates. 5 and 10-year real rates, the noninflationary portion, are still way too low. we went from 110 basis points, plus 80 and backed up to 30. i think they're vulnerable to a move higher partially because of seasonality and partly because i think the fed could start talking about talking about selling mortgages. and that piece is the only part of the qt story that really isn't adequately priced. so if you think back to september of 2018, for example, we started to move those real rates higher and the markets reacted to that. the same thing happened in january of '18 so i don't think we'll get back to the lows or close to it, but i am concerned that this move higher in rates, the real rate portion of it in particular, could cause a broader risk-off event. >> so that would essentially be essentially a jolt in real rates that gives the equity market an

excuse to have a bit of a gut check or how does it play out across markets >> well, we're already seeing it in currencies, right we have the dollar hitting a yearly high against the euro, the yen and the chinese so that's a potential source of macro instability. as far as the equity market goes, i would view it as likely to cause a decent retracement of the bounce that we had, but could we go back to 4000 or so on the s&p absolutely i think tech would lead it i don't understand utilities, where they are, but the cyclical pieces i think will hold up okay i like being long energy because that's another point of instability. but it could be the setup for, as i said, an aftershock of the mother of all taper tantrums. >> all right we'll brace for it certainly 10% downside in the s&p before we get to those lows

could test folks barry, thanks a lot. good to catch up. >> all right, mike, thanks. after the break, the memes lose steam in a major way. shares of amc are tanking as the company debuts its new ape class of stock we'll tell you what that means for shareholders, next

bubbles bubbles so many bubbles! as an expedia member you earn points on your travels, and that's on top of your airline miles. so you can go and see... or taste or do absolutely nothing with all those bubbles. without ever wondering if you're getting the most out of your trip. because you are.

the indexes sitting just barely above their lows. the s&p 500 down 2%. on august 9th it was down about 2.5% it's been a wild ride for meme investors after there was a big sell-off amc shareholders are feeling the heat to some degree as they debut their ape class of stock kristina partsinevelos has the details. to sort of think about how to assess the impact of this new share class. >> yeah. it's a little complicated. we'll get into it because amc's new preferred equity unit is known as ape it's also a special dividend and could provide much-needed capital to the largest movie chain in the country which is

amc. so every amc shareholder as of last friday were issued new ape shares instead of a stock split where you'd have amc split into two shares, instead they now hold one ape share for every one amc share they own both of which are trading in the red. amc shares plunging, down even more down 42% there's several reasons. you've got the ape issuance dragging and then concerns about cine world bankruptcy, and lastly the general sell-off in tech prompted by rate concerns but amc is also having its worst or third worst day, i should say, in history. you can see down 40% very close to the second worst day at 41% and if you were an amc shareholder on friday and are still holding on to your stocks, you're technically losing money. that's because you combine the price, the share price of amc, which let's just say it's about

$11 and ape's price of $6, that's $17 so adam aron, the ceo, is adamant shares will not be diluted going forward but the company holds the right to issue over 480 million new ape stocks. the key, whenever they see fit or whenever they need cash or when it's in their best interests. the list goes on. >> right and of course if they're not going to dilute by issuing new preferred shares down the road, it's almost like what's the point, unless you wanted to do this synthetic stock split for, i guess, cosmetic incentiving purposes. >> you don't have any extra voting power you can't easily convert these ape units into common shares because you need approval from the board. the perk would be preferred status in case of insolvency maybe they're a little worried

especially with cineworld, the fact that -- amc issued a statement over the weekend that they warned q3 might be weaker as well. so they're acknowledging weakness going forward and they need to raise cash and ape shares could help them do that even though shareholders voted against the issuance of new shares being released at the last shareholder meeting. >> so potentially kind of a work-around. kristina, thanks for breaking it down for us. >> thank you. turning back to the broader market, the major averages are sharply lower still as we approach the close the dow and s&p on pace for their worst day since june joining us now is keith learner and jim paulson. keith, i don't think you were necessarily heartened too much by the rally we got, believing it was not going to be a new uptrend. how does this feel to you today in terms of the reaction of

stocks in response to the yield and what's happening with the fed. >> great to be with you. as far as the market reaction, it's a sharp sell-off after a really strong rally. we have been discussing with our clients the last few weeks in this 4200 to 4300 range, we thought the risk/reward was less favorable. as you hit the high ending last week, you hit the high end around an 18 multiple, that would be the highest multiple outside the pandemic that we've seen over the last 20 years. then we had this confluence of technical resistance it almost seemed too cute that we went right up to the 200-day moving average and then came down as this market moved up, you went from pricing in a recession at the lows to pricing in almost no risk and we just think that environment is less favorable. we're not too surprised by the pullback, though it was sharper than i think anyone expected on a monday >> jim, that is the thing, right? even if you thought you were

going to respect the rally and thought that maybe it could be somewhat consequential, you might have said we should probably pull back and chop around a little bit given how much we were up in a short period of time but just talk about what the market has been contending with. as we go down the list of obvious macro pressure points, they're the same ones we've been talking about for eight or nine months right now and i just wonder where we are in the process of the market sorting all that out >> i kind of agree with you, michael. i look at the bond -- take the 10-year bond yield at 3.03 today. it's been in this same area for four months. the entire -- most of the free market yield rates have stopped tightening over the last four months look, over that period of time they have been battered by hawkish fed talk, both coming from inside the fed and outside the fed. they have been bothered by bad and hot inflation numbers. cpi, core cpi, wages and the

like i guess at some point what new are we going to learn this week from the fed in jackson hole that they haven't already discounted and adjusted for, if you will this is like another fed, you know, meeting, just an extra one with jackson hole. every fed meeting we tending to have pullbacks the vix goes up, we get pullbacks in the market and once the meeting is over we regain footing. what i am focused on is, look, i think inflation is clearly headed south and it's going to continue to do that. every time we get out a few more months it will be lower than this today and i think that's going to be more and more optimistic for stocks in general. it's very encouraging to see the economic surprise index jump from minus 80 here at the end of last month to minus 10 today, where we're seeing economic

momentum come back they stopped going down on estimates this month after falling last month and improving the idea that we're not near term to recession. if earnings hold together and inflation keeps coming down, i think we'll regain footing yet in the balance of this year. >> keith, how would you specifically look to approach it i guess no matter whether you believe the valuations really haven't reset enough to the downside, that's certainly plausible there, or you want to just be open to whatever outcomes we have here in a very unusual situation where you have high nominal growth. again, companies seem like they navigated it okay in the last quarter. how would you want to have a mix of exposures that doesn't leave you betting too heavily on one scenario >> we published this last week the momentum off the lows has been typical we actually think that central bank policy, all that tightening globally that's in the pipeline

we think will slow numbers later on this year so we're still more defensively postured, michael. we're looking at staples, health care, the one hedge would be energy more importantly looking beyond just the u.s., we actually think the u.s. is the best place globally look at emerging markets, developed international markets making new lows on an almost daily basis. and the debate whether the u.s. will go into recession next year but i think it looks like in europe a recession is here or will happen soon so we would be more defensively inclined the last thing is i think this market will require us to be more tactical than we have been the last couple of years there's so much scar tissue with this inflation that even if the fed stops, i think it will be where the fed holds its line for a while. and i think these v-shaped recoveries are a thing of the past. >> jim, presumably if in fact we're going to get toward the

end or make some peace with where the fed sits with tsits policies, you probably have to get lucky on the inflation side and see a pronounced downtrend in the inflation readings. if you're trying to look at the forward indicators of where inflation is going to settle, can we take any comfort in what that looks like? >> let me just say two things, michael. one of the things happening in the background of the jackson hole meeting is that inflation expectations are plummeting. if i look at the break-even rate, that hit 260 this morning, which is down 1.2% just since the end of the month it's down from 5.5% in mid-june and 6.3% in late march that is, it's back with a two handle on it, almost a mid-two handle and at the pace it's falling, it will be at the fed's 2% level by their september meeting. so that across the curve break

evens are coming down quite rapidly. even the new york fed's expectation of it coming that says something about where the markets are thinking inflation is saiheaded but i think inflation is coming down not because they raised the fed rate since march, but it's because fiscal stimulus has been slowing for a year the dollar went up 20% bond yields, free market yields have been rising for a year. and policies have about a one-year lag until they really impact inflation for us. regardless of what the fed does, that lagged effect of past policy tightening will continue to put downward force on inflation all the way until early next spring. so i think the fed, what it needs to do, is maybe look ahead a little bit about where the puck is going to be at the end of this year as opposed to where it is right now. and the market from stocks to

bonds to break-evens are really telling you that inflation is going to continue to move lower. >> interestingly, keith, it's the one thing that fed officials have tried to tell us not too believe is that they're going to get proactive and project ahead to get help on inflation and they kind of wanting to see the data come through okay though if you go back to jay powell's last press conference, any time he mentioned we front loaded some of the hikes or talks about rates already being neutral, the market will probably seize on something like that to say they recognize that policy affects the economy with a lag. >> that's right. that could set ourself up for a rally. but even with that, let's just say they pivot what's the incentive for them to start cutting rates aggressively again? we think they have scar tissue from what's happened let's say everything works out perfectly and the economy is a

soft landing we're already at an 18 multiple. and you look at technology shares which have benefited, they're trading at a multiple of 23 again, a pretty elevated level about a 30% premium to the s&p so where's that leadership going to come from to drive this market up? it's plausible but get there's pretty optimistic scenarios to see that upside, even if that inflation comes down in our opinion. >> yeah, jim, the cyclical parts of the market, there's a mixed message i would argue. industrials have acted pretty well transports had a good run. but it seems not to be where the excesses have been leading into this period. can it somehow work that we're doing okay because the economic cycle is fine and those stocks tied to it can hold up and maybe not get a lot of help from some of the other areas >> i think it's possible this looks -- i think whether we have a recession or not, we have

in most people's minds this market rally looks like the beginning of a brand-new, fresh economic cycle, even if it isn't. you're being led by cyclicals, consumer discretionary, which is often what leads out of the the end of a bear market i think growth will play a role. to your point, cyclical areas, industrials i particularly like and financials i think will do okay a couple of things we didn't do. we never had really an animal spirit period where there was just sheer optimism yet. but as inflation is coming down, you're reviving consumer confidence and ceo confidence. and i think that's going to -- maybe for the first time this could be driven with a revival of animal spirits and there's untapped potential we never used our household balance sheets, corporations still have excess cash flows, and some of that could be realized, if you will, once we get beyond pandemic and inflation fears.

maybe we'll see old-style animal spirit-driven recovery yet i'm not saying it's the panacea, but i think it's enough for higher highs in the stock market overall. >> yeah, it's interesting. keith, we certainly did come out of the pandemic period with a cushion in terms of corporat and consumer balance sheets. and really even during the current calendar year, stocks had traded almost the inverse of gas loline prices gasoline prices keep going down so that benefit i guess is still with us? >> i think that's with us. i think sentiment is still somewhat negative. there's a lot of folks that are negative the position in the futures market is net short this market. so i think that will help buffer the downside as a whole. so again, maybe that cushioned the downside, but i think again a lot of the points that were brought up i think are plausible. but do you want that as your base case scenario when you've add lei down five months in a

row, you've had existing home sales down six months, you have the deepest inversion in the yield curve since 2000 and the market that is pricing in or has little room for error as far as valuations at a time when we think the best forward earnings will do is be gflat, we think the risk/reward is somewhat unfavorable here. >> look, it's an ambiguous period there's a lot of opposing currents and you guys captured a lot of them there. good discussion. keith and jim, thanks very much. all right. let's get straight into the "closing bell" market zone joining us are john chapel, bertha coombs and rishi deloria. a kicouple of big talls in the

transport sector evercore writing that the uncertain consumer backdrop would hurt volumes while noting the stock is trading at the high ends of its historic average fedex shares are sinking 4% after evercore added the stock to its tactical underperform list but keeping an outperform rating joining us is the analyst behind the call, john chapel. it seems like a macro driven shift in posture >> that's absolutely correct, mike thanks for having me first of all, we're seeing that the stocks have really run along with the market. the fundamentals at best are status quo and at worst are a little bit worse we looked at the two macro drivers of this report first inventories. we were on your show on april 8th talking about inventories well below the major retailers started flagging this as an issue as a yellow flag to

transports these inventories continue to be very bloated you're seeing it with walmart and target last week they have both talked about billions of dollars of order cancellations which cannot be good for freight demand. the other thing we looked at for the first time was the empire state manufacturing survey which has a really tight correlation with transport stocks in the four prior periods of going from peak to trough as you probably know, the empire state survey is a leading indicator to the group we're not going full bearish or going to the mattresses here, we're just saying that we want to move to the sidelines on some of these stocks that are getting much closer to our price targets and stick to our valuation principles. >> you know, it's interesting, jon, because there is a line of thinking that you want to look for stocks with defensible, competitive positions and pricing power and things that kind of say that they have some sustainable advantage.

u.p.s. and some of these companies are ones that rise to the surface on those screens is that not relevant at the moment >> no, it's still relevant the hardest part with the u.p.s. call it is is it's been good in choppy cycles. evercore hasn't really had the volume tailwind yet with auto production recovering, with their service inevitably getting better at some point so we like the rail csx within that group. >> got it. jon, appreciate you walking us through the call thank you. >> thank you, mike all right. stocks now near session lows, actually making new lows the dow down 670, 2% the zs&p 500 down a bit more of that with us is malcolm etheridge malcolm, i know you've been a little bit on the cautious side. i guess not too surprised we're

retracing some of the rally. does it seem like it has much more to go to you? >> i would actually not be surprised to see us continue in this direction, just because it carried over from last week, which tells me it's not a blip today is actually a little bit of a warning maybe people came back from the weekend, the last good beach day, and decided to come back and do some trading. this week i expect the trend will probably continue. >> it's a tougher seasonal period, the jackson hole meeting ahead of us. lots of excuses not to add new risk shares of health care platform signify health are surging, bucking the market downtrend after a bidding war could be brewing between amazon, cvs and united health. signify is up for sale in an auction that could value the company at more than $8 million. bertha coombs joins us now bertha, where do things seem to stand in this horse race for the

company? the journal reported sometime back it was likely in play. >> bids are due by the end of the month. if you want to handicap the different players here, for amazon this would be transformative it would be the second deal in a row that goes into primary care. signify specialize in value-based care that's where the whole industry is moving, to pay more for quality of care, keeping people healthy rather than each individual thing that a doctor may do cvs health, cvs is in the hunhunt for deals. they wanted to make a deal in primary care by the end of the year it would be ironic if once again as we saw with one medical last month amazon would swoop in and get this primary care deal out from under them. in addition to the platform, signify has some 10,000 doctor the interesting player to me in here is united health, because united health has more than

50,000 doctors that they either employ or are closely affiliated with, so they already have the pair piece and are in value based care as well the idea that they might get into this deal even at a price of $30 a share which is much more than others are offering at the moment is something that i think would meet with pushback from regulators and others in the industry as well so that's one to watch as to why they're in this deal. >> yeah, interesting wrinkle, bertha thanks malcolm, this general area, is it appealing at all in terms of either a long-term play or just on the deal dynamics >> yeah. so the interesting thing about an amazon type of company or company the size of amazon, it's not really too many places that they can go to find opportunities for real growth. if you think about the industries out there that are as

big as tech, it's autos and health care. unless amazon wants to compete with tesla in the auto sector, health care is the only place to go to make a meaningful difference and show double-digit returns over the next ten years. so they have to figure out a way to get into that space and get it right just in case so they can hedge their bets in case the retail business is really decelerating for them the way it's seemed to the last couple of years. >> biggest on tap markets always come back seemingly to health care and payments. probably ripe in those areas bertha, by the way, thank you very much for bringing that to us. rbc is downgrading two names. first up coupa software. rbc moving to underperform and a $55 price target they called the stock disproportionately recession prone. docusign also falling, down 4%

the turn-around path will be long and not helped by the lack of a ceo at the helm at the bottom rishi joins us now on the software calls talk to us about how you're trying to draw distinctions between companies that have taken the pain and downgraded their outlook and ones that seem like they might be more resilient. >> look, my approach is first we have our own frame for how we think about companies in a recessionary environment what's interesting across the board is companies haven't taken the lumps yet. we've advised all our management teams to do that but remember software is on a model and there's a long lag time between actual business and new business and when it shows up in your revenue numbers i think there is a lot of room for downward revisions i think the other thing is we talk to these management teams and try to think about how are

they addressing how they think their company will do in a recession. if we see a fundiamental mismatch, that sets off alarm bells in our head. >> what about coupa do you think leaves it so vulnerable? >> to me the big thing is i think their core product is a great product. people seem to really like it. the problem is a lot of coupa is dependent on unseating seap. that incumbency bias gets -- this is a product that is long sales cycle, long implementation process. i think it's a combination of those factors that will make coupa more recession prone than other companies. >> docusign, you portray it as a company that's a bit adrift. it's searching for a permanent ceo and coming off of maybe the economics of a pandemic period

that just distorted what the real business outlook was. >> i think that's absolutely fair look, there's a lot that docusign still has ahead of it this isn't a company they fuld forward all of their business. we see a lot of new use cases out there. things like package delivery we've see geography they can expand to like europe, japan, and i would argue india on top of that. so there's a lot they can do but i think it takes really good sales execution, really strong leadership and most of all that takes time until there is a new ceo, none of this is going to happen this is more than a year in the time horizon hence why we shifted to the sidelines in this. we think there's better places they can put their money even if our long-term thesis is still intact. >> now, you do think zoom could have some upside obviously it's taken its lumps in the last year or so but what is right ahead of it as the company prepares to report results? >> yeah, we'll find out exactly

what happens in the next five to ten minutes. but in my mind, zoom still has the best technology. video conferencing is something in a hybrid world and especially a recessionary world companies cannot do without. and they are further along the platform expansion than docusign is i feel good about zoom i think the quarter is going to be just fine today hopefully i don't ending up eating my words but i think the long-term outlook is good because of the technology, because of the management and because of the market opportunity. >> rishi, really appreciate you running through them with us thank you. >> thank you. let's get back now to the broad er market, remains under quite a bit of pressure. malcolm, we were at these level in july and june so it's pretty familiar to be in this spot. anything changing for you in terms of opportunities within the market that you think are worth seizing right now? >> well, i think what's interesting is when we started to have this sell-off, i don't

know, novemberish of 2021, all of a sudden folks started talking about maybe this is the time to rotate away from tech. all of a sudden tech is out of favor. we saw this in 2000, tech wreck, and then rotated into financials and health care. all of a sudden we saw tech being the thing to lead us out of that downturn in 2021 coming into this year that tech trade, folks aren't willing to let that go just yet. the four mega cap tech companies that brought us down and back out through july are also the same companies leading this rally today and late last week that started -- whoever started to go backwards. so i think it's interesting that thematically people wanted to call the end of the tech trade and i think it's still a little too soon i think tech is still the play,

especially mega cap tech, and i think that's what's going to drive this market. >> apple's outperformance has been -- i wondering if you think it's a reassurance or a red flag >> i think apple has become a little bit of an anomaly it's become its own asset class. the reason is because the iphone has proven itself now as more of a utility or durable good. whooup when you think about when it first came out, it was a luxury good in the cell phone space and people saying that kind of price tag, 6, seven, 800, maybe $1,000 level, said no way people will pay that but now apple can sell iphones through a recession if they need to and people will still be willing to buy them, especially since the main carriers are subsidizing. >> malcolm, thanks very much

appreciate it. as we prepare to get into the close, the s&p 500 down 2.2%, 4135 first at these levels back a couple of weeks ago the last time we were here from before the cpi report the dow is going out down 650 at the moment small caps underperforming as well the dollar index hit a new high, that was one of the main pressure points. that does it here for "closing bell." "overtime" with scott wapner starts now all right, mike, thanks very much welcome, everybody, to "overtime. i'm scott wapner you just heard the bells we're just getting started here at the new york stock exchange in just a few minutes i'll speak live to wharton professor jeremy siegel for his view on this market and whether the strong summer rally is in the process of ending. we have a busy hour ahead. zoom and palo alto earnings are imminent, we have all you need to know about those and we'll let you know when those hit. we do begin with the talk of the tape the fate of stocks after