200-day average price. i posted them on my twitter feed >> thank you very much thank you very much for watching "power lunch." >> "closing bell" starts right now. so much for a comeback stocks are falling hard giving back yesterday's gains as the sell-off intensifies looking at session lows for the nasdaq and s&p. most important hour of trading starts now welcome to "closing bell." i'm sara eisen take a look. the dow down 666 points. hard to find a winner today, the s&p 500 down almost 3% you've got every sector lower, the hardest hit is consumer discretionary, carmax is a part of that story. ugly results, down 23% but its weakness across the board. utilities at the bottom of the list, so is information technology, energy is faring the best as a group. it's down 1% as you can see, yields are higher again the two-year note yield almost

at 4.2%. small caps down more tan 3%. they rose more than 3% yesterday. our chart of the day apple getting slammed as bank of america cuts the stock to neutral from buy we'll talk much more about the reason in just a bit. also coming up today, he's been calling for a fall in the fall for a long. now it is playing out. tony dwyer will join us. plus, key insights into the state of the consumer in uncertain times when we're joined by max levchin from affirm whose stock is getting slammed. straight to the overall market with david rosenberg from rosenberg research you've been negative for a long time on the market, on the economy. is this how you expected it to play out >> well, broadly speaking, sara, the answer, you know, would be yes. and, you know, we have the fed -- really what's happened in the past 24 hours now that we

have the bank of england behind us is the fed has been relentless in its hawkish rhetoric and to an inverted yield curve, surging dollar, contraction in the monetary base and the onset of recession and so that just has precipitated this ongoing risk off trade and it's probably not going to end "nightline" the fed embarks on the next cycle which is probably at least a year away >> but here's what's not playing out exactly as you forecast. the economy is not weakening that much. i know you think there's a recession and a lot are jumping on that bandwagon but the data today, did you see jobless claims, well below consensus, now a low -- it gives fuel to the bears who say the fed has the green light to go more aggressively >> yeah, you know, well firstly, sara, we did have back-to-back

quarters of negativereal gdp and it looks like we have basically roughly flat for the third quarter. that condition and we can talk about gdi, that's income but gdp is spending. that's been flat to negative so it's debatable as to whether the economy is in recession. that much is true. when the conference board's leading economic indicator is down six months in a row and that database is back to 1959, the die is cast for the recession. a matter as to whether it starts in the fourth quarter or first quarter next year. your point on jobless claims, 100% true and very interesting labor market and the claims numbers tell you about firings and pink slips the firing rate is coming down companies are hoarding labor because we've come through the past couple of years through acute worker shortages look beneath the veneer, the hiring rate is coming down

jobless claims don't tell you about hirings. they tell you about firings. but we know, for example, everybody loves to focus on the data and everybody focuses on job openings but people don't talk about the fact that since february, new hires in that survey are negative 450,000 that's since february. heading to a stage where firing rates are low but hiring rates are dropping and roughly matching now awhat firings are doing so i think we'll head into a situation where we probably don't get contractions in employment but will probably flatten or stagnate. if the participation rate continues to go up like it has this yore, even with a flat employment profile, the unemployment rate by this time next year is sitting above 6%. and thatis going to be disinflationary as far as rates are concerned. >> you think the fed is making a big mistake continuing to hammer

the markets with this higher rates holding at high for a longer time? >> it became apparent to me in the past couple of months, especially post jackson hole that they actually are intent on generating the conditions for a recession. so it's not a mistake. i think this is deliberate you have jay powell is comparing himself to paul volker and paul deliberately created conditions for back-to-back recessions. all you ever hear is comparisons not to arthur browns or martin or bernanke or greenspan except paul so i don't know if it's a mistake. they want to see asset markets crack. that's happening and part and parcel of weakening the economies efficiently to get that holy grail inflation. this could be exactly what it is they want.

>> there is an argument we might have -- we'll have a recession the fed is trying to engineer that but it would be shallow we don't have the kind of leverage built up during the great financial crisis or great recession, household balance sheet, corporate balance sheets are in pretty decent shape and just need to take this medicine to bring inflation down, which is starting to happen and on the other side, things will look all right. do you disagree? >> yeah, i mean, i'm not going to dispute that but i think the big risk is we went into this year, went into the bear market, the bear market in equities and starting to see home prices go down we've gone into this year with households more naked long, long duration assets than they've been in the mooft and gone in with the household sector, $43 trillion -- $45 trillion of so-called wealth built up into the housing market so the

question you have to ask not about the liabilities but what happens if we get asset deflation. we get asset deflation because, you know, outside of the dotcoms in late '99 we did go into it with the biggest equity market bubble of all time and this housing bubble by the way, the price bubble, not talking about leverage but the price bubble in residential real estate was bigger than it was in '06 a and '07 when i was pounding my fists on a table when i was at mother merrill what happens if you get double deflation in two critical assets in the balance sheet that come to $90 trillion. equities and residential real estate and throw through through on spending. so that's what i'm talking about is that the prospect for this to be a more deeply rooted recession could rely on the asset side of the balance sheet and the implications it has on confidence and spending over the next 12 to 18 months. >> i knew that was going to be

too rosey of a scenario for you so, david, you have recommended bonds and that has not worked out on this view that inflation would come down quickly and we'll be in a recession and it's not happening. bond yields to rise. when does that turn? >> well, so bond yield, so let's take a look and see why they have gone up because it's not been about inflation we know that commodity prices have been coming down very sharply in the past several months we now know seeing some cracks emerge in the rental story, the price index came out for july, it was negative. that was a bit of a surprise and you're taking a look at market based inflation expectations and survey data on inflation expectations and even powell has said that they've been remarkably stable and actually have come well off their peaks what caused the run-up in nominal yields has been the real rate and term premium and that comes down to the fed and i'm with a lot of other folks, i say probably including yourself, who

thought that, you know, this time last year the fed's stop plots are 0.25 and all of a sudden everybody is at 4% plus so the fed has reset interest rates accost the curve and across asset classes that's one of the things the fed has done to the stock market to some extent is they've taken the "n" out of tina. there is an alternative. you got attractive yields after tax and munis, 4% front end yields in the treasury market. look, something that never gets talked about ever on business for financial media shows is the 10 trillion bz market called the market for corporate bonds which have been reset very favorably here you've got, you know, talking about high yields, talking about single "a" corporate bonds yielding 5.25% so without talking about what's already happened in the past 12

months and not been about inflation expectations for the economy. i'd be thoroughly embarrassed if i got the economy wrong and bond yields shot up the fed giveth the fed taketh away. i'mencouraged from the bond market standpoint as to how well behaved inflation expectations have come, so on the day where the fed stops taking the carry away and they pause then pivot and that day will happen we will get a monster rally in the treasury market. >> you still like them. >> places to put moaning in the fixed income, not just treasuries but munis and corporate bonds, especially in the investment grade market. even in tranches like the triple b, double bs for people who want to focus on getting attractive -- even in real terms i'd focus my attention there. >> got it. david, thank you for joining us today. david rosenberg, always good to check in we've got a more than 630 point sell-off

amid the sell-off the best performing sector is the energy despite being down nearly a percent. joining is paul sankey of sankey research, paul, with reports that opec plus looking to cut production, wti back at $90 a barrel where do you think we're headed? >> feels pretty good the opec meeting next wednesday, the 5th of october and it looks like it could be a 1 million barrel a day cut that will be announced. that's not actually going to come through because of the total mess that is opec production levels but the other thing, sara, is the strategic petroleum reserve, it's tapering now and getting people excited as we head into wednesday. >> should have mentioned it was brent that hit 90. it's key, right? we're monitoring this hurricane. it looks like the oil facilities and production is okay, paul,

not as disruptive in past hurricanes. >> yeah, there's been some talk about fertilizer imports into tampa but as you know, florida doesn't really have any oil and gas and the gulf coast stuff which is obviously off shore louisiana and texas seems unaffected, absolutely >> so what do you do with oil companies right now? the sector is still up 31% year to date. only sector that is still in the green. is that a good place to hide in market turmoil it worked earlier. now with the recession concerns and lower oil prices, hard to know >> yeah, it is hard to know. we worry about it because it's a high volatility sector so that means in a bad market typically it's going to want to perform but as i've said and you said heading into winter and have the opec cup coming up and spr, the margin has been an enormous pressure on oil markets. as you said whether you look at brent or wti it's remarkable given how weak china demand has been this year and how russia

hasn't come out of the market from an oil supply point of view it's quite remarkable arguably looking at near a floor of 80 that has been established because this year it's kind of been barren. important. if the floor is 0 then the m midcycle is 100 and peak is 120, you want to buy all these stocks so the timing into winter is getting exciting for some people in the face of a market that's terrible for a high volatility group so it is tricky but i think on a one-year, five-year type thing, this is a great group to be in >> got it. paul sankey, paul, thank you very much. appreciate it. with the dow down about 568 point, we've got about 46 minutes left of trading. the s&p 500 is down 2.5% the nasdaq down 3.4% just a few minutes ago we were down about 3 3/4%. everything is getting hit except

okta the biggies are weighing on it meta, alphabet, all fouling hard is this the apple buying opportunity you've been waiting for. an expert weighs in as bank of america cuts its rating on the stock which is falling almost 6% while rosenblatt upgrades the stock, kind of a battle ground up next tony dwyer joins us with his latest message calling for a fall in the fall for some time certainly feels like that's what we're seeing right now

check out today's stealth mover, millerknoll you may want to take a seat if you're an investor in this missing revenue estimates issuing weaker second quarter guidance the company says it is taking steps to improve profits and cash flow by reducing spending and initiating a voluntary

retirement program stock obviously hit. had a good run during covid when everybody was buying office chairs for homes and apartments. giving back some of that now. let's get to the broader market weakness we are seeing across the board, another sharp day with us is canaccord genuity chief strategist tony dwyer. david rosenberg who is pretty negative said we have to wait another year for the fed to start cutting for this to be over what do you think? >> i don't -- as you know, we've been kind of cautious throughout the year but i think it's going to be quicker than that. sara, we've done this a long time the fed always before they cut is the most aggressive in terms of tightening so the fall we've been talking about is wrapped around the two-year note yield and the question that i'm most frequently getting, what bottoms -- how do you create the low versus a ow? and what i found is since 1960, i looked at since it's been a

500 stock index, there has never been a time where the two-year note yield made a new high for the cycle and the s&p bottomed before it or simultaneous to it. the median delay is about 37 weeks. the shortest is two. so, in other words, what the data is telling us is that, you know, we were going to go make new lows and at some point, you know, i'm sure the uk and bank of england didn't think they would do quantity tative easing a week ago and things unraveled quickly and when they do the central banks tend to capitulate and that will be the case as we move into the end of the year. >> to be clear, bank of england had to step in because they were dealing with some market dysfunction and trying to bail out the pension funds that were going to face margin calls we're talking about the fed -- you're saying the fed is going to have to blink, why, because of market turmoil or the economy? >> there's always two reasons, they break something through

their tightening or you get into a severe economic weakness now, david was talking about hiring plans if you look at the national federation of independent hiring plans index that leads the unemployment rate by four months it's been deteriorating significantly suggesting you will have a nice bump up in the unemployment rate while inflation is already especially durable goods and under is coming down so you'll be in the situation with a tumultuous market in the fall, weakening inflation, the one-year, two-year, five-year break evens are coming down and unemployment rate is spiking. that's hard for the fed to not at least make what i would call a neutral pivot but just to be clear there's two reasons that the fed capitulates -- remember the christmas eve massacre in 2018 orange county declaring bankruptcy in 1994 long-term capital in 1998. asian economic crisis 1997 european debt crisis 2011, et cetera, et cetera.

it always comes from somewhere when they tighten like this they break something. >> so what is your advice to people, just to sit it out, wait it out and wait for a signal change from the fed to put more money to work? what do you do >> i'm sure the story is annoying but each time i talk about my dad coming into the basement and looking at my brother and i, don't just sit there, do something. the opposite, don't just do something, sit there you really need to have a high conviction level to withstand the volatility you can buy at any given point but will you stay with that buy when it goes against you and that's where our core fundamental thesis comes into play it is, of course, we use technical analysis and market analysis you know that but when you have -- if you don't have it rooted in a core fundamental thesis, you get whipsawed and the core fundamental thesis is historically let's get emotion out of it. it always comes with a fed pivot

in this kind of environment and that is preceded by a peak in the two-year note yield which we only saw a couple of days ago. >> i guess some assurance from bank of england on that front that they were there they were still in the game i guess to bail out investors in some way or another even if something has to break. >> it's the playbook they know that works the global central banks have done this because when you -- listen, the channeling your inner volcker was bad enough when you were at a generation aloe to gdp which we were at the time and you got to be careful you get what you wish for, mr. powell when you're channeling your inner volcker shutting down economic activity with generational high in debt to gdp with rising inventories and slackening demand especially globally there's a lot of risk that comes with that that's beyond -- especially in the private credit market that's been the driver throughout this entire last ten years.

>> tony, thank you for joining us good to have you on a day like today, of course. >> great to see you. >> tony dwyer from canaccord nike plugging more than 40% this year a bull/bear debate on whether investors should buy this beaten down stock before earnings are reported after the bell. later we will discuss the outlook for the ipo market among other things with max levchin who knows a thing or two about taking companies public. we're down on the dow about 535. we are off the lows at this point but still a broad-based sell-offment only two dow stocks higher, traveler's and visa. we'll be right back.

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stay in the home and life you've built for years to come. call... to receive $1500 off your kohler walk-in bath. and take advantage of our special low monthly payment financing. nike reporting earnings after the bell a lot of bearish sentiment on wall street. at least eight brokerages cut their price targets on the stock in the last two weeks so time to sell or is there a buying opportunity? two sides of that debate joining us is adrian yee of barclays who downgraded it adrian, what is the big problem here and is it already in the stock? >> so there's two big issues here the first and foremost which is the uncertainty of the china market that is in the stock so the street consensus china

expected to be down again. everything we're sharing after the quarter end is that china is improving so this could be the quarter, this coming up quarter could be the one where they approach flat or positively. the second piece of it is, you know, future demand, potential recession. particularly in the north american market where we're starting to see a lot of inventory in north america growing about 40%, up 38% faster than sales those are the two big ones >> why are you not as concerned about those issues >> yes, we had the opportunity to look at this with a fresh pair of eyes and some of the noise, right some of the negativity and stock down 40% year to day on a multiple in line with its ten-year historical average and fundamental rhines to own this haven't changed. if you were medium or a long-term investor, you are

buying into an attractive sportswear industry that has long run fundamental growth support behind it. there are stock specific drivers in nike related to marginal opportunity and the sector bellwether but also arguably the consumer discretionary bellwether but a lot of negativity in the short term if you're willing to take a slightly longer term approach we're probably getting closer to points or levels where it's starting to look attractive. >> interestingly you guys aren't that far apart on your price comparison, price targets. adrienne, you're at 110 and piral outperform at 125 so when would you step, adrienne, to buy this when you've heard the inventory problems are worked through or longer term worried about demand here? >> so i would say our price target is fiscal year end at the end of calendar next year. i'd say we kind of pressured the downside and been a downside

analysis, you know, case study on what eps could be the over/under heading into this for fiscal '23 ending may is probably 3.50. there are some estimates that are kind of negative estimates as to below that around 3.30 but it's the outyear fiscal '24 year that the over/under is $4, eps. if we have constant pressure from uncertainty from the demand and promos coming back which we are starting to see some of that in the north american market and earnings can't go up, stocks go up when earnings are consistently revised upwards that will be a pressure point on the stock so what we're looking for is an easing of that kind of inventory spread that i just mentioned. so if the inventory spread starts to contract then they are moving through inventory and demand line is flat-lining that's what we're looking for. >> piral, is nike in worse shap

than others in north america -- >> yes, we covered nike in the sports brand sector. i would say due to a sliding scale in absolute volume terms we have to take that into account so, you know, a market level problem here, but i think that a lot of the concerns that relate to inventory are more focused on a peril and broad-based apparel not just in sportswear when we look at nike's business, 60% or two high pressure thirds of it almost are foot -- related to footwear and footwear arguably has less competition, it has less, you know, brand in the space, so to speak so, you know, we understand and recognize the concerns on the inventory side and we're not saying footwear will be immune but so far what we've seen is apparel related and add, one of the key debates as my colleague rightly mentioned is on china.

china is currently a negative sentiment driver for now but fairly guided to head winds for china are going to be and by the end of the second fiscal quarter that should be in better shape. some of the indicators we look at do point to an improvement in the china market and assuming that china recovers, then i think that can be a significant inflection point for the market and investors' view towards sporting goods stock which at the moment sentiment is very low. >> we're seeing this big sell-off, adrienne that's kind of my other question which is to what extent is nike a bellwether here because we're going into an earnings season. nike is always out of sync and reports first and dealing with the fx issues and with the mac joe head winds and got the china exposure, inventory problems earnings expectations overall for the market are a little bit of a wild card in a debate and wondering what we can glean from nike and how much of it is nike

specific >> yeah, they're the latest, right? they'll be the most recent touch point we have on the overall consumer and global consumer at that i think, you know, just generally speaking global macro, not looking that great, right? fedex, ford, a lot of these big company global numbers are coming out and not looking really great so i would say that the -- what we're going to get from them, two critical points are what are they saying about sort of global demand. what we saw during the quarter from the retailers is strength right? so whenever we're looking at inventory, always remind people that the point on the balance sheet, three, six, nine months down the road is what we're worried about. demand that comes after, right, in the coming months and so forth so i think the two key things here are any commentary on kind of what they're seeing, we would expect them to say that things are good today from the retail partners but the key thing that will tell you and trigger kind of whether or not we have inventory issue, we did

notice they pulled minimum advertising price, so you could always mark down the price behind the scenes but you could not advertise it so that's a sign that things may be a little bit, you know, over the season inventory. >> got it. adrienne and piral, thank you very much. here's where we stand, we've come back a little bit off the lows and when we started we were down more than 600 now down 471 on the dow. s&p is lower by 2 1/4% it was 2 1/2 moments ago and nasdaq still down 3% and still every sector down, broadbased weakness in tech but all over the market again up next an interview with max levchin on whether he's starting to see any signs of slower consumer spending and a reminder, listen to klose on the go by following the klose podcast on your "closing bell" app. we'll be back.

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as the fed keeps raising rates and talking about it to combat inflation fears of a hard landing are growing and investors are not looking kindly on affirm. down 80% year to date. joining us in an exclusive interview with max levchin thanks for joining us. always good to talk to you. >> thanks for having me. >> it's been brutal for your stock and others like that newly listed companies, you went public january of last year. do you regret taking this company public >> no, i cannot say i do i think part of the calculation was making sure we were well capitalized to weather any sort of storm and lucky enough to have our investors trust then

and we intend to deliver on the promises we made, so, no, i think the current turbulence notwithstanding i'm excited to continue delivering on the promises we made >> yeah, i ask because you've taken companies public before obviously and we're in this period right now, this bear market where investors are wondering if these new industries like buy now, pay later, newly listed stocks, certainly the unprofitable ones are going to be around during the next recession and they'll come out of this cycle and who is going to come out as a winner how are you talking to investors about those tough questions right now? >> i think the proof is always in the pudding so intend to to show much more than tell but are certainly well capitalized and have our eyes on the most important metric that matters to us and that is credit performance. we obviously have partners that relire on us to deliver yield so we want to make sure we keep those partners very happy. we have a lot of merchants that

rely on us for incremental sales and intend to make good on that and consumers probably one of our most important constituents rely on us for incremental purchasing power, especially in inflation aerovironments where that power disappears right before their eyes as prices go up so we have a lot of people who depend on us, our shareholders included and we are very excited to do exactly right by them. we are quite confident we'll emerge as victors from the current downturn >> well, the credit cycle i think is what also has investors worried right now and everyone wants to know about delinquencies. what can you tell us about how they're trending why shouldn't investors be worried? >> i think the real answer here is because we are firmly in control of our fate there. there are average life of loan is just north of four months so we have quite a lot of structural flexibility and control. we never have to go back many years and sort of regret

decisions made then. we also underwrite every single loan precisely to the current economic condition and what the former rate curve tells us so we're able to control our destiny quite precisely and never have to commit to lines of credit and regret the choices we made so in terms of ability to control for credibility and manage it, credit delinquencies looks good and we absolutely have been keeping our eyes very much on the road ahead and hands firmly on the steering wheel so far incidentally u.s. consumer is not exactly stressed out. the employment is still nearly full people are generally speaking paying their bills just on time and we are seeing tiny signs of stress at the most vulnerable demographics, people traditionally in the harder time holding on a job even in the best of times but generally speaking u.s. consumer is still quite healthy. >> really? so tiny signs of stress. where are you seeing that and i

wonder what you're seeing on the inflation front as well and purchasing power >> the inflation front is very predictable. there is more demand for credit than ever. i think you can see that in our stats and stats. folks are still shopping and buying things and having a slighter harder time buying as much as they could a year ago for the same price and, therefore, they're asking themselves is there some way to pay for this overtime? ideally without interest and without hidden fees or gotchas which credit card companies are famous for so i think we are delivering on that squarely for all of our consumer constituents. in terms of the stress question, like i said, just the lower credit tiers are seeing some degree of deterioration which is easy for us to control for but, again, very broadly speaking the u.s. consumer is healthy and paying their bills on time. >> do you have any issues yourself getting money from banks or the market?

>> on the equity side of the house we are very capitalized. you can see our cash position is extremely healthy. in terms of our funding of the loan volume, we have a very wide and largely diversified set of sources of funding and on the order of 20 plus, most of these folks have very long-standing relationships with us and commitments that make us feel very good about our source of funds. we are well funded for all of the growth we expect for this year and beyond and so, no, i think so long as we continue delivering on the credit quality that we have promised our investors we have nothing to worry about there, as well >> certainly appreciate you coming on and sharing all the information, all the color, max. thank you very much. >> thank you. >> good times and in bad max levchin, ceo of affirm the travel stocks getting hit hard in today's session. seema mody here with some of the names and details. seema. >> hey, sara, consumer facing

names including travel and hospitality stocks are trading down at this hour. names with an international tilt like booking holdings, you'll see trading down more than its counterparts and expedia down as well the cruise lines off sharply carnival down about 7.4% ahead of its q3 earnings report which is out tomorrow morning where analysts are expecting the cruise line to report its first rise in quarterly revenue. this will also be the first report under new ceo josh weinstein after arnold donald stepped down all of these are trading down right now but i would point out for the month royal caribbean and norwegian cruise line are among the few gainers in the month of september after royal caribbean released some data, sara, last week saying that bookings are starting to accelerate as covid restrictions ease now allowing unvaccinated passengers on board so that has provided some relief for these stocks we'll see if those gains can hold on as we wait for carnival's report tomorrow

>> seema mody, thank you. watching the chip stocks as well among the big losers on wall street today, a closer look at those names and especially the apple suppliers, christina, getting hit. >> you know i'll talk about it semiconductors biggest losers. amd, share price, we'll show it on your screen down 8% followed by nvidia. microchip. big names like qualcomm aren't too much as well the reason why you're seeing the nasdaq 100 down, amd and nvidia, the two names the farthest from their 52-week highs down over 60%. and we have a few drivers, sara, like you mentioned, apple's weakness worrying chip investors as companies like qualcomm and micron, when apple is not doing well it has a ripple effect and bloomberg report stating south korean manufacturers saw inventory rise at the fastest pace in a decade as of this

september. so that fast pace could have a ripple effect down the supply chain and it raises the question for american companies, is it going to get worse and that's exactly a question we want to ask when it comes to micron's earnings out. look at that coincidentally in 15 minutes their guide likely proves not conservative enough after shares have dropped, what, by 50% just this year alone, worse than the s&p 500, worse than the s&p i.t. index and worse than the semiconductor index. several themes i want to pay attention to for micron, memory pricing that has been decreasing and that's -- we want to see how long that will go on, any comments about that and it's not only because of weaker pc and sm smartphone sales but now we're starting to see the slowdown in auto, industrial and data center chips and what that means for respective inventory levels, so these are all themes we'll be paying close attention to in 14 minutes, sara. >> all right, we will see you

then kristina we have 14 minutes left of trading. we are monitoring this broad and deep sell-off. the s&p 500 down 2.2% right now. the nasdaq comp is off 3%. we are off the worst levels of the session but it's still a pretty ugly day. here to break down the crucial moments plus charter equity research's ed snider is here to talk more apple and diana olick on mortgage reits. energy about to go positive in the s&p 500. everybody else is down the s&p almost 25% off highs how much more pain are we in for? >> yeah, great to be with you, sara another challenging day after a really good day yesterday. we continue i think to have this very complex global backdrop and that, you know, it may make

sense to be upping quality and defensive but more of a short-term perspective in a little more positive short term and even today i know looks ugly but watching a couple of small positive divergences, yes, you know, apple is down a lot. utilities are down and towards the end of at least a market decline you bring down the winners as well. we're seeing that today. and then you see like as you mentioned energy a little bit as well and most of our technical indicators are the most stressed to the downside we've seen since the mid-june lows and before the pandemic lows, i want to be clear, we don't think it's time to be on offense we thought the market was closer to 42, 4300 and recommending to reduce risk but we're down 15% off those august highs, we don't think this is the time to press to the downside. at least not short-term. >> so but everything you're mentioning is sort of technical or positioning or sentiment related. so you think we're due for a

short-term bounce, nothing fundamentally changed as far as the inflation and central bank and global economic environment, has it is that what it's going to take to really find a bottom? >> yeah, well, probably the market is all about where things are relative to expectations and we just think on a short-term basis that things are getting a little bit one-sided here and, again, i mean the negativity is pretty wide but fundamentally, i mean the global economy is weakening and think it's going to continue to weaken into next year we have not only supersized rate hikes in the u.s. but the tightest global central bank policy that we've seen in decades as well, so, yes, overall that the fundamentals are still relatively weak, the global economy is still relatively weak but, again, markets don't move in a straight line and we are in a more tactical environment so, therefore, again, i mean at this point, we would be a little bit less, you know, defensive or pushing against it when we just went down 15%. >> a lot of bad news in there.

let's talkapple, keith down 5.25% unusual move for the biggest stock, bank of america downgraded it to neutral from buy. the concern there, weaker consumer demand but another firm disagreed. rosenblatt actually upgraded the stock to buy from neutral and raised its price target to 189 joining us is ed snider. where do you come down, ed, between the two on what to do with apple >> we've been predicting this since january to increase down cycle in the recession and only hit the beginning and saw that in spades last quarter, now moving industrial but as far as apple is concerned it was going to get to them sooner or later shocking thing here is that the last time they fell short of unit sales you didn't see it until the launch in september. probably around december, they told the suppliers, back off

now they're only two weeks after launch saying it it's a bit more acute than iphone success >> the thing is when it comes to demand, it seems all very speculative and comes from a report it comes from hearsay and monitoring and sometimes that's right. how do we know it's going on with these new units >> i wouldn't consider these speculative. there's been lots of indication that demand is weakening last year at this time, several of the suppliers in the chain ran into a huge inventory problem. sales slowed down. they thought they would sell a lot. they didn't. they will have a rough time coming up then you started seeing ripples of that hit samsung and retail chain getting weak so lots of quantitative information that suggests this is all happening apple is an elite group. completely different animal. very high premium.

a lot of people really love apple but sales haven't been spectacular in the last couple of years now you're facing a recession and you in my opinion have to deal with the consequence of that and that's what's happening. >> the stock is about 20% down now year to date it's falling still trading 23 times next year's earnings how do you value it? how should it be valued more like a stable stock or more vulnerable discretionary >> it's very -- obviously they're very strong. they have a lot of cash but expectations are everything. right now expectations remain too high especially an upgrade on apple at this point i think it's comical so you'll get an element of investors still believe they'll shake it off and things will be better if you're talking about too little demand two weeks after they launched you're looking at probably one of the worst iphone selling seasons. i don't know how bad it will get. it will last quite some time and expect you'll hear it a lot

about this in the october report from the semiconductor companies so i would not be getting bullish on apple or actually most anywhere in tech at this point because the other shoe is starting to hit. industrial and automotive, micron said that in the preannouncement earlier in august they did so you'll hear again in the report in a few minutes or so so there's a lot more bad news that has to inform the tech valuations and i wait for that and the bottom side of it then i'd start looking into being bullish. >> it's hitting all -- everything is hit right now as kristina said in the chip world. skyworks, nxp. thank you, ed, for joining us. bears are coming out around apple. the worst performer right now in the s&p 500 right there, it's carmax look at that, slamming the brakes on this one down 25%. the used car retailer badly missing wall street's earnings estimates blaming softening consumer demand, vehicle

affordability, rising interest rates and a jump in operating expenses phil lebeau joins us do these results mean consumers have hit their limit how much they're willing to borrow to buy a used car. >> potentially but let's be clear, there are specific issues specific to carmax that are part of the earnings miss for today but with regard to them saying, hey, perhaps we're seeing a softening in the consumer and notice definite softening in the second half of the quarter, keep in mind when you look at the monthly payment for a used vehicle, it has gone up about 18% in the last year look where it is right now the amount borrowed, almost $30,000 just under $29,000 the monthly payment, now over $500 and, look, we'll get the q3 numbers on loans and monthly payments over the next couple of weeks, i wouldn't be surprised if that monthly payment, sara, will be up in the 530, 540 range and have to ask yourself is that

the limit? is that where people say with higher auto loan interest rates, it's too rich for my blood >> right, and keith lerner, the question is what does it mean for the other automakers getting hit hard because demand hasn't been the problem it's been supply, right, phil. when we talked to mary barra a week ago she said it's a supply problem. do we have to start worrying about demand with rates rising for autos? >> yeah, 100%. i mean, you know, this -- what we're seeing is this rate shock and it's going throughout the entire market so we would still say underweight the cyclical areas, don't want to be in things leveraged to the economy. still more focused on health care, utilities, staples and as we mentioned early on energy because of the geopolitical side and also i think it's a good hedge overall for what's happening in the supply side of things but, yeah, this is not the time in the cycle where you want to lean on cyclicality and that's

where we're positioned today. >> speaking of cyclicality, mortgage rates rising fast reits are among the hardest hit. diana, reaction to rising rates or something else going on. >> first and foremost it is rising rates, the 30-year fixed crossed over 97% line ard could go to mortgage news daily and made headlines, of course, but even before that, last week's mortgage demand was pretty pitiful. applications to refinance down 84% year over year and applications to buy a home down nearly 30% at 7% just 150,000 borrowers could actually benefit from a refinance and that's according to black knight and pending home sales numbers this week showing another drop for the sixth straight month and while sales are newly built hopes had this kind of weird bounce higher in august, it was likely due to a brief drop in rates which, of course, again are now higher if it's any consolation rates did come back just below 7%

today, 6.82% but always a reminder we started this year, sara, at 3%. >> oh, yes painful reminder for those who were trying to buy a house diana olick, thank you. keith lerner, you think stocks are oversold and a lot of the bad news is in how would you positioning right now in the market with -- a lot of people want to see yields peak before they get back into this stock market. we continue to see this rise >> yeah, just to be clear, i mean this is again as you mentioned this is more of a short-term position, sentiment, view, our broader view for the next 6 to 12 months we're in choppy waters likely to continue if we have strength use that to reposition towards more defensive bend so stay with the defensive areas, the fixed income markets are looking more attractive especially with fixed income i will say going back to the interest rates you just mentioned, you know, rates hit 4% earlier on the ten-year, right now at 375

and the u.s. dollar is also, so those are all again incrementally maybe like a little bit of relief and stabilization but ultimately we think any bounce to be used to reposition and doing most of the year and will continue to look to do so because the economy, all these rate hikes are going to weigh on the economy as we look forward >> yeah, okay, so we're not making new highs in treasuries in the dollar today but saw the highs earlier in the week so they're fresh in investors' minds. two minutes to go in the trading day seeing volatility spike. the dollar is weaker on the day. we had this big rally yesterday, keith, off the bank of england stepping in, intervening in the bond market to calm things down. is that a hopeful sign or is that a problematic sign as we go forward and we debate what the fed is going to do, whether it's going to stop? >> i think it's actually somewhat problematic it tells you that the old

medicine, you know, for the market is no longer there. on one side monetary policy restricted and now we're seeing historically if the bank of england or we had a big fiscal stimulus package the market would rally. instead they sold off worried about inflation so we don't have loose monetary policy, restrictive there and the market isn't benefiting from the stimulus from the fiscal side so overall it leads to a more problematic market as we look forward to the next 6 to 12 month, the fed is not coming to the rescue and the fission cal policy isn't so we have to go lew a little economic pain as powell has said recently >> yep, feels painful for investors now. don't have to remind them about the rescues. thank you, keith learn the ten-year at 375 to keith's point off the high of the week which was above 4% still elevated yields. every sector lower in the s&p 500. energy faring the best, barely down the worst performing sector is

actually utilities along with consumer discretionary, carmax a big part of that some of the travel stocks as well, auto stocks getting hit hard as we said earlier and tech is right in the firing line, apple, the biggest drag on the nasdaq and on the dow right now which is down 1.5%. that's it for me on "closing bell." later on nike earnings now in "overtime" with scott. welcome to "overtime." you heard the bells just getting started at the new york stock exchange micron and nike, two big reports giving us a good read on parts of the economy, consumer and spending not to mention china and what is happening there as well we'll have the numbers, the stock moves, everything else you need to know as we await all of that we do begin with our talk of the tape it is this ugly market down again today and sharply