great cash dividend from a strong balance sheet great place to hide in the weeds. >> another asset manager, okay finally? short term off two-year treasuries. likes of people liking that two-year good to see everything here. i'll see you in the o.t. "the exchange" is now. >> thank you, scott. everybody, welcome to "the exchange." two big stories today. rates and the markets. with you for the entire hour is the perfect person to talk about it, literally the biggest name in bonds scott miner. we'll talk about his famous prediction for a 20% drop, and whether the fed will go for a fun percentage hike on wednesday, will it be less this time and why you need to care and there's always opportunities somewhere. we're going to try to help you

find some as well. let us get started of course, mr. dom which you >> red and green red and green today. its a burl ives market. >> make not as good as burl ives, but the markets are higher, but it has been an interesting move with regard to the timing of when it's happened we've seen both sides of that unchanged line 3876 the last trade there. we were up 13 handles, so just about tilting toward the higher end, so a pretty decent decline. dow industrials up, the nasdaq composite 11,456, just about flat the trading range has been relatively muted it's about the general trading range that we say on the friday session. a very about ig part of the

story, we saw rates spikes in a pretty decent way, about 11-year highs, got above 3.5%. 3.47% right now. the highest levels going back to 2011 this kind of general trend higher has taken its toll on many growth-oriented stocks. those mega cap names are driving a lot of down side then, some of the individual movers have -- health care is a big laggard today. one of the reasons why is because many of the megacap names, that deal very much with covid-19 vaccines and treatments, have taken a big hit. moderna is down 9%, biontech, the partner of pfizer, is down 8% this as president biden,

during his "60 minutes" bur view said, you know what, the covid pandemic is over we'll send things back over to you. pandemic is over, great to hear. dom, thank you very much outside of that, it is a huge week for your money with the fed decision on interest rates just two days away. you may have heard something about that on this network we have scott minerd on the set in the company great to see you in person, my man. >> this is an exception. this is great. i'm heard i'm the first person to ever come in. >> well, but halftime, we're happy to have you. i'm just filling in for kelly, anyway you heard about this fed meeting. >> when? >> wednesday, 2:00 eastern time, by the way we'll get the decision i've got to ask you the most basic question i'm sorry to even do it 0.75, 1%

or more? >> they're not going for more. i think 0.75 of a person is most likely the outcome i heard somebody the other day make a comment about 50, and there's no way because of where we're pricing fed funds futures. on the other hand, we can't rule out a full 1% increase i think 1% would be better than 0.75%. there's more hiking to come. they might as wet get it behind them and get it over with. >> you talked about with us about this tess milkin conference, and it's like they're going 100 miles an hour and there's a wreck ahead, but it feels like they're trying to slow down at all once, but too slow at the same time. how does it end? >> this is going to end in tears. >> for who >> investors, people with

long-risk assets. >> this year has been awful. >> it could get a lot worse. i commented a couple weeks ago i thought we had another 20% to stocks by october. brian, when you look at the stuff that policy makers should look at, the money supply is contracting. we have -- we have enflay that we're looking at the rear-view mirror there's a very good chance in the attempt to prove their credibility, that they're going to overdo it i think alternate some point here, as i said back in april, you know, they're goods to push it unit something breaks i think the break will probably come through equity prices, but it could come in the emerging

markets. eventually it will end in tears. people talking about a stock market bottom, i would just point out one thing. that's that we have never had a bottom in a stock market without the fed while the fed is still raising rates. >> never >> never >> never had a bottom in the market while the fed is stale raising rates. >> that's right. >> the question is how much longer do they raise is it now in november and that's it then you could make the case for the market bottoming in december. >> well, look, i think the latter part of the fourth quarter could be a very good time to get in >> into equities >> into equities >> but, again, the fed isn't necessarily thinking of this the same way i am, and they're certainly not focused on the money supply numbers

those are really disturbing. >> there's your view maybe we get frosting, a quarter point in december. you are on the record we get a little interest rate objective here we need to talk about money supplies if i over -- it looks like twins. if one is going down, maybe that's why we're down 15%, 20% on the s&p this year all of these things are money is like any other commodity if there's more of it, it's

cheaper. the piece i wrote back, which was not, shrinkle balance sheet, and let the market find it i think it's putting -- we went through this before, and it's amazing how short people's memories are the fed was raising rates, shrinking the balance sheet. at the december meeting chair powell made the comment that the balance sheet reduction was on autopilot. anybody who was in the market remembers. then the next day they were say the balance sheet mattered and the fed reserved course in the first quarter. >> here's the thing about you. i posted this on twitter, people are saying the biggest bear in the world is coming on

you make these big calls bit counsel down 50%, which, by the way, it did. you're not going to be right 100% of the time why come out with a down 20%. >> yeah, i wonder, why >> you obviously believe it. >> yay. >> you don't need twitter followers. >> no, you get -- look, you -- >> how much are you overseeing >> $300 billion. >> you're not looking for more money. >> well, it always would be nice it's interesting, our clients and investors out there, you know, they get upset when i don't communicate to them. so i try to find a happy middle ground, where i write comment tears, but also where, you know, when i become aware of something and i don't have time to write a commentary, i can get the word out quickly, and i have a lot of twitter followers. >> if you say stocks crashes 20% is a happy middle ground, i'm

not sure i want to party with you. was there a worse ground >> i often tell people don't ever hire an optimistic money manager. i got a comment the other day, somebody said, boy, scott, nobody is ever going to question all the great investments you have made. i looked at them and said, to be honest with you, most of our returns doesn't come from all the fantastic, it's been avoiding the disasters >> i was very, very bullish in march of 2020, but right now, you now -- maybe those were some good rears if you bought near the bottoms

we gained a little more. >> we have to with multiples. >> it's way too high that's where the idea of a 20% correction comes from. but, you know, the -- the other argument is that earnings are going to improve i don't see where that's coming from look at fedex. >> that was a one-off, though. >> u.p.s. didn't warn dhl, but there's more and more surprises coming out not just fedex when you look at the growth in earnings that we got and how earnings have held up, most of it has come out of energy.

now we're going to give it back. >> so the least meaningful -- contributing in -- maybe that's why one guy you know has been talking about energy for a couple years what i worry about, there's a huge percentage of a big-cap revenue that comes from europe europe is in big trouble really big trouble so is part of the thesis that it has to come down, europe that is their own problems -- >> want some water i have it. >> one thing that helped us with european earnings so far is the depreciation of the dollar in the translation coming back, you know, we're -- sorry, the appreciation of the dollar eventually this will catch up and this is all going to. >> how much more could we see earnings estimates come down

strategists on wall street, and they come on this show, they come on this network, we like them, we appreciate them, they make changes midyear you expect them, some of these earnings estimates that are the basis for the multiple numbers and bases for the price targets, those have to come down? >> yeah, i think 5% would be easy 10% not to be unexpected i would be surprised if it would be 20%, but, you know, the nature of the severity of the downturn in europe is really bad. despite what policy makers are saying, i think next year will be a tum year for europe, and they have storage, which is great, but they have to exist on storage, and we have got a lot more to do you're going to be co-piloting the whole hour, and talk about some things you like i mean, you do -- there are things that are not terrible.

>> exactly. >> you won't say you love them, but they're not terrible. >> i think there's a once in a generation opportunity right now. >> that's a great tease. you should be in tv? >> i am. don't say what it is once in a generation from the biggest bear on weight scott, stick around, get some water aren't we'll be right back we're 48 hours from the decision by the fed we get the first full point, i.e. 100 basis point hike, since the paul volcker era plus two martz of the market most impacting, housing and tech we'll look at the fallout from each sect ore "the exchange, lots to do, we're back right

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welcome back to "the exchange." the inflation data for august erasing most hopes that the fed will slow down the pace of rate hikes for the rest of the year, .morgan by another 50 basis points, half percent, due to sustained pressure on

tightening now expect, followed by 50 in november, 25 in december, another 25 in january. mike, did you hear the interview with scott >> i'm sorry, i missed it why does that matter to the federal referring. >> so until we start to see payrolls sustainably well below, i don't think the fed can feel that wage inflation will decelerate so i think that's -- i think that's pretty much the stopping rule for the fed they need to see convincing evidence, that a few quarters

out is moving toward 2% labor market, perhaps corporate earnings, it feels like, to scott's point earlier, the fed is almost trying to prove a point by showing the market how tough they are it's like they've never been in a fight. what's the chance of them getting knocked out? >> well, i don't know about the psychology there i think they have a simple mission, which is to get inflation back under control they have one tool to do that effectively, which is interest rates. i don't think there's any macho thing going on it's a simple job with one tool. >>. >> they also have reducing money supply. >> i don't think the blight will be used to actively here they have a lot of experience with using interest rates to slow the economy i think that will be the tool of

first resort the balance sheet is on a autopilot. to start messing with how they reduce the balance sheet could cause some unwanted disruptions in financial markets that wouldn't necessarily further their goals of slowing economic activity, but just would cause, again, you know, kind of diversioniaries distortions in markets. >> the president was on "60 minutes last night he said, number one, the pandemic was over. but number two, he said he thought the economy was not going to get worse from here on out. obviously his job is projecting an optimistic tone he's the commander in chief. would you agree that the economy will stay the same or get better. >> i don't think so. i think the labor market will slow the gdp numbers were obviously very quirky.

you've had a big move up in the dollar i think with a delay of a few months, it will have an effect on people's spending that should slow the overall pace of the economy. whether or not you measure it in gdp or other terms the consumer has certainly been out there spending if housing even staying the same or slows down a bit -- it could change, but it's looking that way. if housing slows, what happens to consumer spending >> we have already seen housing slow home sales have been down for several months of the year we're only more recently seeing house prices go down that could have an effect on slows consumers if they're

feeling less house wealthy, but the consumer has a nice tailwind from lower energy prices that should keep the consumer, you know, looking relatively okay, even if overall the economy may be slowing a bit i think consumer will be able to eke out positive spending gains in real term. >> michael feroli, no sleep for the next two nights for, awaiting that fed meeting. 2:00 p.m. wednesday, we get the call michael, very much. >> thank you. still ahead, are stocks headed for a reset of the summer lows one technician says keep a close eye on the megacap names he'll chart them, the names you care about trust me you're going to want to hear thiinrvie hear thiinrvie dow is dow

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we say, that way is onwards. viking. exploring the world in comfort. all right. let's talk about the markets here the screens behind me are not showing a lot of going on. basically unchanged. the nasdaq is down one point the fed meeting is on wednesday. there are, though, some individual movers at this hour array technologies moving higher, bumped up the target to 28, that implies, more than 28% up side wix.com seeing a nice bump reuters reporting that the company is not seeking board seats at this time airlines, they're outperforming, travel, the big three carriers,

seeing some gains of about 3%. they're all still low over the past week. bitcoin falling to the lower level this three months, down more that much 7% this month ether not doing much better. traffic deaths fell slightly in the second quarter, but still remain high. however, federal officials estimate more than 20,000 people died on american roads. ukrainian officials say a russian missile exploded barely 300 yards from the reactor of the a nuclear pow are plant. they're calling it nuclear terrorism. the plant is still online and

reportedly suffered no damage. hurricane fiona has slammed do the dominican republics. roofs have been torn off homes in some towns. flooding has collapsed roadways. in puerto rico, the first death from the storm has been reported dozen of rescue operation are underway as the island remains largely without power. on "the news" team coverage of the queen's funeral, and the remarkable spectacle that some 4 billion people are believed to have watched that is tonight at 7:00 eastern. brian, back to you. still ahead here on "the exchange," housing and tech. through hout hispanic heritage month, we are celebrating some of our teammates and contributors this is the guy in my ear right

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all right. welcome back to "the exchange. yields continue to rise today, with the ten-year being the highest in a decade, but the pressure on the mortgages rates keep going up, and homebuilder trade and sentiment may be coming down, down, down. diana, these moves are stunning. >> i would stick with the up, up, up, because the average rate on 30-year fix hit 6.42% this morning according to "mortgage news daily." that's well above the peak in

june, when the market slowdown began, and we started this year at 3%. rates are the primary driver in another drop in builder sentiment, on the nahb index that's the ninth straight month of declines sentiment was at 83 just this past january of the index's three components, sales expectations in the next month fell, and buyer traffic really down nearly one quarter of all builders -- and more than half reported incentives. despite all of this, they're

crichton an early pain/early gains -- we have scott minored back with us on set opendoor, that stock is getting crushed. i saw a story on open door today which was unbelievable. >> that's on the heels of a record from a research company that tracked the sales of open door homes what it found is profitable in august reached a record low because over 40% of its homes sold at a loss now, i called open door. they had no comment on this, but they did point to the last shareholder letter, where they did kind of guide to this, saying we made the strategic decision to close on the homes and not reprice or cancel contracts, obviously knowing that home prices are softening we're seal incredible volatility in the market with this quick

turnaround in home values. scott minerd, how important is the housing market? >> very important. two things are critical. one is the activity in the housing has a disproportionate affect on gdp. if you have housing come down dramatically, it's easy to shave one or two point the second s. unlike equities, where people like at equity price increases as being transitory and, you know, it's not something you can bank on -- >> like inflation, transitory. >> exactly they tend not to spend the wealth effect. they spend about 2% of the appreciation. >> if they make a bunch of money in stocks, they spend about it%. >> exactly in homes the gains are seen as more permanent people will spend about 10% of their home precious in

consumption. >> so snazz interesting. the home goes up $100,000, they may spend ten grand on improvements, which hopefully increasing the value >> exactly going to vegas. >> they can get zero or another couple thousands that is key. in the commercial break i was just calculating what an average -- these rate rices -- >> thesis massive. >> somebody's got an a.r.m., or they want to purchase a new home, these are show-stopping numbers. i don't mean show stopping in a good way. >> brian one of the things people didn't seem to understand it's not the price of the house that so much is driving the purchase decision, it's the monthly payment. >> theres in chance the not 2007 which we talked about a lot, is

there any chance of a credit event in housing that we're not thinking about it, or is it different this time? >> well, look, i don't see housing being the linchpin in a major credit event i think there are places in the market where investors should be more commercial. >> cmbs. >> i see a bunch of empty buildings in l.a., san francisco, new york and chicago. i wonder what is going to happen to those bonds >> the mortgage loans, a lot of buildings will get turned over to the lenders when you look at the real estate cycle, which is pretty predictable. if you go back to 1990, the real estate crisis came in xhevt. when you go to 2007, it came in

residential the big real estate is we're going back to commercial >> that's a much smaller impact. remember, the 1990 recession they had established resolution trust corporation that had to bail them out. >> i was told it was no big deal. >> that's because you didn't live through it. >> no, i was being facetious enterprise and cloud stock, valuations come down, frank holland, and some of these names are pretty big impacts now, they expect these names to trade based on the moves of the ten year with a negative correlation, at least in the near term. earlier in the month, cloud was

able to rise with the rate hikes, but hotter than expected cpit high valuation, high-growth names, a dev-op, and viva some of the showing how broad all this rate pressure is it will be washed very closely. tomorrow, the annual conference a real inflection point. it's seen as a read. brightening, back over to you. everyone thinks of you an a bond

guy. do you feel like some of these stocks are getting attractive? >> it's like catching a falling knife. i think there's some stuff out there interesting. i don't think we have reached prices that make sense as an entry point. >> what is interesting >> well, you know, some of the stuff that was done that were unicorns, you know -- this looks a lot like the internet bubble. >> what does >> this current correction we're coming out of on the nasdaq. we have a lot more ground to cover to the down side but you remember, i'll never forget saying to people a lot of these internet companies are going away, but can you tell me, is amazon or pets.com going to be the winner? i because amazon at $9 a share i was a genius when i sold it at 14. >> you made 50%.

>> awesome, right? so it's hard to sort through the winners and losers right now, but there were a lot of companies that were de-spacced -- i know too much, so i don't want to name names. >> we don't care. >> the s.e.c. does so i think there's some interesting things there i've talked about paypal before, micron technology. i think those are interesting companies to take a look at. paypal stock is traded like it's going away you either believe it is or not. a lot of discussion centered on cryptocurrency, and the fact you could transact for zero. i don't think that's happening next week. i think a lot of these companies

are well established and will continue to make props one i'm looking at, now buying yet, fedex. >> looking, but not buying it. i think it can still come down quite a bill, but a trail p.e. under nine, which is well established, i don't think its critical involvement in the economy is anywhere near over. >> so you're not just the biggest bear you're intellect we have more to do with scotts minerd the next guest says the index could even break that low. he will make the technical case. that is next

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fomc decision on wednesday why wouldn't you wait? the s&p 500 is coming off the workweek since june, but your next guest checked the charts and says we could reat the time that level or maybe head lower the bears are growling in this show, ari. don't add me on this but scott's been negative. you seem like you're backing that view up with the tech always i want to make clear, we did not plan this. >> right we didn't plan this. i think it's also important to distinguish time horizon here. we probably side more positively longer term, being of the view this is a final leg lower of this bear cycle. i think we're getting close, but not there yet. i think incremental change in recent weeks is just the rollover in these megacap tech

stocks that dominate the cap-weighted indexes we have been -- we were previously of the higher low camp that was a key level for us, and now with the rollover in megacaps, i think there is a possibility for a less intense test the the priors low, or even a lower low, the key point being the weakness in the megacaps is masking some internal improvement that we're seeing underneath the surface again, the case this could be the final leg lower. >> well, i think scott actually did say -- i don't want to quote him, but you were a little more optimistic in december, right? you're neck tiff between now and then >> yeah, somewhere in here, october, when i put a date on it, the market will flush out, and that would be a buys

opportunity. >> does it sound like it matches up with the technicals >> that follows the seasonal road map as well we're not going to use them in isolation, but when our other indicators are confirming that, it makes for a compelling argument it was compelling into the worst stretch of the four-year presidential cycle, the first half of the midterm year again, with that improvement we are seeing underneath the surface with the new york stoke advance/decline line, in august coming off is highest levels, i think as long as that is still the case, you do have that set up for a strong run at the year end. >> i'll do it now, because i'm going to be off on friday. next week is historically the worst week of the year for the

stock market next week. do you think there could be a big flush coming >> there could be. there could be the day to day, the week to week is always tricky when you have a poor trend, and not being -- building a base is difficult. this is not the time of year to expect that upturn yet history could suggest that i think it's important to understand your time horizon i'm making the case it could nap back squibbly a few weeks post that. >> well, oppenheimer on the tape ari, thank you very much still ahead, earlier in the show, if you missed it, scott teased, when i was teaing him about being the world's biggest bear, there's an opportunity of a generation out there we'll learn what that is, right

after this

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yes you can! i can do better, too! now you really can do better! switch to the fastest mobile service - xfinity mobile. now with the best price on two lines of unlimited. just $30 a line. welcome back, just because the market has been volatile doesn't mean there aren't opportunities for investors, because you want to buy low.

that's the idea. let's bring back scott minerd. you said there was a generational opportunity here, what is it what are you talking about. >> remember back when drexel failed i was 5. i'm not that old, but, well, there were a lot of great companies that had been financed by drexel that had their debt outstanding that had to be basically cleaned up and, you know that's where executive life and apollo got their start. we have a very similar situation right now, and that is there a lot of companies out there that i mentioned earlier, some are unicorns within the next year, two years, three years, they have debt they issued at ridiculously low levels. they should have never been able to issue at 6% their debt now is trading at 13, 14, right. these are companies that are going to end up in one of two

places either they're going to get their bonds taken out or paid off so you can buy a 6% bond it's trading at a dollar price of like 80 and it's going to get paid off or they're going to hand you the keys, and you're going to own the company. >> i assume you're looking for more of the former than the latter, unless you want to run some of these. >> there's management there. they need to be recapitalized. >> where's the opportunity then. >> you're going to buy the bond, your downside risk is you're going to earn 13 or 14% on it, and your up side risk is you're going to end up in a company that you like because the problem for a lot of these people is not the company itself, or the business they're in the problem is that the capital structure they put together assumed that we were going to keep being able to get money for nothing and keep these things alive. and so, you know, you could be for the right person today, they could be the next apollo

and that is an awesome -- >> i don't suppose you can name one of these companies or give us an idea. >> since i'm looking at a lot of them myself, i would say no. >> you're looking to invest in these companies. they're good companies. >> great companies they got stupid on the debt. their capital structures don't make sense. >> how many of these are there out there? >> i would say at least 30 to 50. >> we had thomas tullen here last week, all around great guy, grew up with a single mom in a trailer in el mira, new york, hell of a story. he's looking at opportunities like that. now is the time to have a private equity war chest is that what you're saying >> it's really interesting because traditional private equity is probably one of the worst investments you can make right now. >> right now >> right now >> buying the debt is much more

interesting. you know, a lot of these companies out there, and i don't want to name them. we all know who they are we're going to see their stocks down 50% by next year, and it's because they're going to have market a lot of companies they're invested in. >> you can't give us the names, and we've got 40 seconds and i've got to go host "power lunch" look for companies that have huge debt levels, technology for the most part high debt levels. >> right >> with maturing bonds. >> right >> within the next five years, and these are fundamentally good companies that have positive cash flow. >> what does that mean for the equities most viewers are not going to buy high end debt. >> the equity is going to zero the bondholders are going to own the company. >> wow is it too early for a beer i feel like after this segment. >> if you're serving -- >> i'm driving to philly for the

eagles game tonight, but wow, scott, it was a real pleasure to have you on. i could do it like three or four hours. we should do a three-hour thing together at some point, why not? >> if cnbc will allow it. >> not right now, but maybe we can. >> thanks for being in studio. scott, i have to say my good-byes, and go dodgers. >> coming up, what do you get when you combine high interest d wecoumecord high auto prices anlor nser confidence. phil lebeau will join us on how much weaker next go. go green. go wind turbines. go gorgeous reliable grid. go emerson software. go science people. go breakthrough meds and safe science. go space age welds for super silent cars.

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like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq welcome back "the exchange," automobiles were in high demand post pandemic. it looks like that may finally be changing. phil lebeau has more with that phil. >> we have been talking about demand erosion and when we would

start to see it for some time. lm lmc automotive saying it's starting to creep in on the lower end of the market. lmz automotive has country the full year sales forecast for the united states. it was at 14.1 million vehicles, they have cut that down to 13.8 million in part because there is that demand erosion at the bottom of the market make no mistake, lmc and others say way more demand than supply, but if you look at the lower end of the market, look what you're running into in terms of pricing. average transaction price at a record high, $48,000 average monthly payment now tops $700 if you go to get a deal, not a lot, an average of $894 per vehicle. by the way, that's down more than 50% compared to a year ago. and that's why when you look at auto sales right now, they're going to come in at 13 p.7 milln because the supply is limited. but as you look over the next year or so, the thing to focus on it is what do we see in terms

of demand and how it holds up as you take a look at the auto makers they have 28-days supply, well below normal averages but it is starting to build just a little bit, not to the point that we can say they've got plenty of supply it is starting to build just a little bit brian. >> maybe a little good news for buyers down the road phil lebeau, thank you very much that does it for the exchange. i'm join seema mody on "power lunch," oh, by the way, it starts right now >> yes, it does. thank you, brian "power lunch" begins now, i'm seema mody rattling everything from stocks to crypto. this hour we'll explain the fallout and have a list of defensive names that could work in this environment. and the housing trade, as rates rise, sentiments falling for the 9th month. we'll look at the beaten down builders, lenders and see if