we also own a big chunk of target in our equity strategy. these are the two best retailers, i think, in the world, and they're going drawing down inventories by christmas. >> nancy, thanks very much, nancy tengler, we appreciate it. frank, great to be with you. >> always great to be with you >> that'll do it thanks for watching "power lunch." "closing bell" starts right now. >> stocks are staging quite a dramatic comeback today after a hot inflation trend initially sent the market tumbling, but a major mid session reversal has the s&p 500 on track to smash a six six-day losing streak. we are at session highs up 3%, this is the make or break hour for your money welcome, everyone, to "closing bell." i'm sara eisen take a look at where we stand right now in the market in a very different place than where we stood this morning after that pretty disappointing hot inflation rate the dow up more than 3%, every sector higher in the s&p 500 right now, 2.8%.

the nasdaq composite is up 2.3%. today at the lows of the day, the nasdaq was down 3% that is quite a wide range in fact, it's the s&p 500's biggest trading range, widest trading range since march 2020 it's been like a 5% move al together take a look at the s&p 500 sectors that are leading this rally as we speak. you've got energy, financials ahead of bank earnings which kick off tomorrow, technology, materials, and utilities it's a mix check out the moves in the british pound. one potential reason behind this staggering intraday reversal a lot of people are watching this it's trading like a stock, not a currency you can see earlier in the session where stocks turned around, buying in the british pound. this has been at the center of the market worries lately. there's speculation that fiscal policy, they might walk it back, that disastrous stimulus they announced in the form of tax cuts and also potentially extending the bond buying

program beyond tomorrow. that's going to be a big question but the opt muchimism there cerl helping our markets. we've got a great lineup of guests for you including liz ann saunders from charles schwab former treasury secretary jack lew, chart expert jeff degraph, and mary phillips from dm dimensional. mike, british pound, i talked to the head of a big trading desk also just said a lot of people were prepositioned and hedged for a bad cpi report we got that, they cashed in. they took off those hedges, and then the market took off. >> there's no doubt about it the plan was the play book was set, and you saw this, people saying it ahead of time. if you got a hotter than expected cpi, we'd probably trade down 2%. last time a month ago we traded down 4% in the s&p i don't think, though, it's just the lifting of hedges. here's the last week, the five days in the s&p 500. it is not just the fact that we

went down, it's how far we've gone down in the last month or so, in the last few days, and the level we reached so we were under pressure here the slingshot gets pulled back right there in the morning trade. we got to 3,500 almost exactly on the s&p 500 a lot of folks stalking that area because it has some significance in terms of, you know, it's sort of halfway back from the entire post-covid crash rally, and you got some buying, short squeeze, british pound, all of it feeding on itself in the short-term but look at this, you're basically barely where you were when we opened a week ago, right? so that just shows you the version was very violently to the upside i mentioned where we are relative to the entire, you know, early 2020 low right there, 2,200, right? you go up to 4,800 and you gave back half of it at 3,500. that's the whole story there's no grand significance to, that except psychologically

you're done. that's the median bear market drop it just seemed like enough for now is all i would suggest plus, i said this facetiously, but i mean it. we're past the cpi number. it's four weeks until the next one. that's been the scariest thing in the market all year at least we have some breathing room take a look at the u.s. dollar, the overall dollar index move in sync with what you were saying this is a year-to-date, and it shows you that you had these two little curldowns here that suggest at least the pressure for the moment is taken off there. this reflects the fact the fed has been operating on the assumption that inflation is going to be stubborn and sticky. they weren't planning on today being a real reassuring number and we didn't get it we'll see. >> we also got talk from fed members and other news outlets that they're not going to pay attention to one cpi report even if it's softer today they're going to keep going. that was in the market a lot of this bad news on rate hikes is in the market, and to see the dollar weakening on a really hot cpi report is very telling and potentially

reassuring to the bulls. >> down 15% in a month at the lows this morning in the s&p 500. it's a big move no matter what is going on, and you've actually had almost no net downside from the june lows to today, and think of all the awful news that was in there earnings are going to matter, recession whether it happens in the depth of it, all of it's going to matter. there's no such thing as an all clear at the moment. reality is not quite as bad. >> the macro funds are doing well this year you've got think with all these moves, strong dollar, strong yields, so another number to justify that and they can take some of the positioning. mike, thank you, stay close, mike santoli for more on the market reaction to the inflation numbers, let's bring in charles schwab, chief investment strategist liz ann saunders, what do you make of this stunning reversal >> i think mike had it right a lot of this was technicals at

3517 on the s&p. that was the point at which half the post-pandemic rally, and i think that probably triggered not just taking off of hedges but probably some short covering, which tends to sort of fuel an intraday switch on the upside i think it's premature to judge anything beyond that if you wanted to find something more fundamental to explain it, you did see a reversal in the ten-year yield you saw a bit of a reversal in the dollar in the case of the yield that jumped back over 4% that's been a short-term driver and trigger for the equity market, and then maybe the thought is such a hot cpi reading, does that -- is it sort of a last gasp does that put us closer to the point where we can start to look at the peek in the rearview mirror that's best guess as this is happening as to what the fundamental reasons might be. >> yeah, the rally in the british pound also that has been such a big focal point for the markets lately

so you don't seem quite convinced that now would be the time to buy? >> i'd be really mindful of chasing what at this point looks to be a huge technical surge on the upside, but it's also the case, as i know i've talked to you guys on this program, i don't think anybody should be trying to pick individual days investing is not about getting out and getting in at moments in time that's just gambling on days and prices, and investing should be a disciplined process over tomb, and it's also a function of where your allocation is you know, if you have allowed yourself to get way under in terms of equity exposure, yeah, we're probably closer to the bottom or maybe the bottom is in and you want to do some buying, but that's not an appropriate recommendation for everybody it just depends on risk tolerance, time horizon, et cetera, et cetera. >> what fundamentally needs to change for you to like the

market in a more -- in a broader way beyond just technicals and positioning? >> yeah, so i would say the collection of sentiment, technical and breadth indicators all look pretty good for the market if you have, say, 6 to 12-month time horizon. most of the studies are -- as i think mike said, there's no such thing as smooth sailing or a complete green light in this business, but most of the sentiment breath and technical studies look pretty decent a year out but still pretty bumpy in the next couple of months i think we need to see further stabilization in yields and maybe the dollar as well we'll get a little bit more color on what the trajectory for forward estimates are going to be, i think a stabilization in forward estimates is probably a key. some stabilization in housing and pmis, at least on the manufacturing side, which is a leading indicator, have sort of

finished their descent and start to stabilize so that would be the collection of more macro fundamentals that i'd be looking for but we're in much better shape from a sentiment, technical and breadth perspective than we certainly were even at the lows in june. >> in other words things have just gotten more negative. >> yeah, certainly the attitudinal measures sentiment we haven't quite got ton that sort of capitulatory phase in some of the behavioral measures, even including the vix not having any spikes above 40 versus unbelievably high volatility in the bond market and the fx market. we haven't seen sort of a washout in fund flows, but on the attitudinal side of sentiments things like aaai investor intelligence, i think we have hit that washout phase and that's part of the reason for a better setup if you're looking beyond the next few months. >> i feel like that's more

constructive than i've heard you lately, liz ann, on the market, am i right >> in mid-june i was probably on at some point right around the lows talking about the lack of the technical term puke phase that was being displayed at that time there's a little bit more of that in these recent lows, maybe not quite the extremes of, say, march of 2009, but whether it's panic euphoria model, that sentiment trader sort of adapted from my friend's model, i mentioned aaii hitting an all-time low in percentage of bulls. those attitudinal -- i get a rot lot of anecdotes from our investors. those definitely suggest washout phase. maybe you need a little more washout in the more behavioral measures like fund flows, but the setup looks healthier than was the case when we hit those

lows in mid-june >> glad you mentioned tobias, miss him too i know he would be remarking over these extreme levels in his panic euphoria in terms of panic. thank you, liz ann perhaps why we're seeing that bad sentiment, such a big rally right now. the dow just hitting a fresh high nearing up 1,000 points we're going to be all over this rally for you throughout the show after the break, former treasury secretary jack lew joins us with his first reaction to the hot inflation number whether he thinks the u.s. can avoid a recession. up gagain, 945 points. s&p up 3%. you're watching "closing bell" on cnbc. (vo) while you may not be a pediatric surgeon volunteering your topiary talents at a children's hospital — your life is just as unique.

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stocks rebounding sharply in the middle of the day today despite what we got this morning, a hotter, worse than expected inflation print we wanted to point out some of the most interesting parts of that report. the government saying housing, food, and medical care are what fueled the big rise. shelter, which makes up about a third of cpi rising 0.7%, up 6.6% over a year ago then there's food up 0.8%, the same as august, and up 11.2% from a year ago, and look at some of the increases in food prices at the grocery store. overall food at home was up 13% over the last year seeing it in dairy and meats and fresh vegetables, which were higher it shouldn't be surprising as we've heard from companies lately like mondelez saying they knead to keep up pricing in this

environment. gas prices did fall in september, but they have been creeping higher in recent weeks. the national average now stands at $3.91 it ups the odds for a 75 basis point rate hike in november with some traders starting to price in 100 basis points. joining us now former treasury secretary jack lew secretary lew it's great to have you, especially on a day like today. are you surprised at how stubborn and persistently high these inflation readings are coming out >> it's good to see you, sara. and look, obviously it's not a great cpi report, but i think it would be easy to overstate how much changes where we are. i actually don't think it changes the course of what the fed needs to do from where it would have been a good report. they have been clear that they need to make sure that they're dealt with inflation they're going to get to a certain destination, which, you know, is going to be higher than

it would have been a year ago. and then they're going to see how it -- the economy looks after things settle in for a while. i think the markets are anticipating bigger moves in response to each report than i would think is likely, and i think that they're hoping for quicker reversals of interest rates than i think is likely it's -- you know, they're going to want to be sure that inflation is under control, and i think they've been very clear communicating that, and this report just makes it more understandable why >> where do you think interest rates are going? how high >> so i, as you know, try to avoid point predictions because nobody really knows. you know, the markets certainly are suggesting that there's some number in the fours where they think the interest rates are going. if i were on the fed, i would

answer that i don't know it depends where we are when we get to the current destination whether inflation is under control. i don't think there's any great desire to slam on the brakes so hard it would drive unemployment up to a truly painful level. on the other hand, unemployment tends to lag you know, there's no mystery to what happens when you raise interest rates over time, it slows the economy. it's only a question of how long it takes and there was a chorus for a long time that the fed should move faster and farther in order to make sure inflation is under control. i think they moved in a pretty cautious way, but they made clear their going to keep going, and i don't think anyone should be surprised if the number has a 4 in front of it before they take a breath to see where they are. now, i spent a lot of years where 3 and 4% interest rates didn't seem like an abnormal number, and i don't think it's something that's necessarily a

shock to the economy over a period of time, but it does make it more expensive to borrow money than when rates were zero. zero was not sustainable, and we obviously are getting to a much higher number. >> so the question is what happens to the economy, and what is currently happening to the economy. i did speak this week with secretary yellen, who now sits in the chair that you sat in as treasury secretary, and i asked her about how the u.s. was doing. she characterized the economy as strong just listen to what she said >> i remain encouraged the u.s. economy is strong and, as i've said on other occasions, i think there's a path through obviously inflation is too high. it's a priority to lower it, but i think there's a path to accomplish that while maintaining a healthy labor market >> does this feel like a strong economy to you the nasdaq's 34% off the highs

s&p's 25%. people are hurting with inflation. does it feel are strong? >> yeah, look, i think if you look at the typical measures of a strong economy, the lowest unemployment rate in a very long time you know, job creation that's staying stronger than expected th those are signs of core strength in the economy, at a time when you're trying to push inflation down and you're raising interest rates in order to accomplish that goal, one has to wonder how long that can last i think it has to slow down. the job creation has to slow down, unemployment is going to have to creep up, but i agree with the basement assessment that the core economy remains quite strong in some ways that stubborn strength is what's making the fed's job more challenging if unemployment would just creep up a little bit and job creation would creep down a little bit, there would be a sense that they're getting closer to the

end. i think because we've come out of a very odd period, the covid shutdown caused changes and disruptions that we still haven't fully understood what it takes to transition out of, history doesn't really help you that much to know exactly what it's going to take to get to a more stable inflation rate and without the economy sending some signals like slower job growth i think that a goal ought to be a soft or a bumpy landing, not an unnecessarily hard recession. all the fears of recession are kind of predicated on the fed has to go farther than they may end up going you know, the forecasts are quite divided in terms of whether it will be a recession this year or next year and if there is, whether it would be a very shallow one or even a technical. >> and now we have this added worry about market dysfunction,

about liquidity, a lot of the concern now stems from the uk, and i started off the show by looking at the intraday rally and the british pound because that does appear to be leading us here with questions over their fiscal policy, their fiscal credibility, what the central bank has been doing to try to clean it up what do you make of what's happening over there >> credibility is so hard to earn and so easy to lose i think that what happened in the uk was, you know, extraordinary error in policy that cause ad a trigger which is now being reversed the policy is now being reversed with a reversal of the policy there seems to be a rally and hopefully some restored confidence in the way policy will be made policymakers have to be extremely careful not to lose credibility. i think that is one of the reasons why in my view we

shouldn't expect sudden, you know, shifts in direction from central banks, you know, and markets want to see, you know, things happen more quickly and to understand what's going to happen more quickly, and they don't think you can read from the markets whether or not the policy is necessarily on track or not i wouldn't read from the uk example into what to expect in the united states. i think policymakers got a wake-up call that it really does matter what you say and do, and i don't think there's core weakness in the u.s. treasury market demand for treasuries remains high there's not another currency anywhere in the world that's ready to compete with the dollar or with bonds, and i think there are mechanical plumbing issues that you do have to worry about, and as a treasury secretary, i always worried about them. when things come up that might be kind of sudden events

but, you know, that doesn't necessarily reflect underlying weakness >> secretary lew, really goodt have you here today. thank you so much for weighing in on all the hot topics appreciate it. >> always good to be with you. >> jack lew, the former treasury secretary of the u.s take a look at the market right now, strong rally up 3% on the dow. this doesn't even tell the full picture of where we've been today. it has been a stunning range we were down at the lows of the day 550 points after that hotter than expected inflation report this morning, and now we are up about 3% almost a 7% range, a swing here that we've seen in the markets today. the nasdaq up 2.3% it was down more than 3% at the lows we've got every sector higher. it's broad it's the defensives. it's technology. it's growth. energy is the leading sector right now along with financials, both are up 4%. coming up, paul hickey says there are two positive factors

for the market that investors should be paying attention to heading into earnings season oh, yeah, that kicks off tomorrow he's going to join us to explain. and check out the chip stocks as we head to break looked likth we adg e eyerheinto another down day but now moving higher with the rest of the market and leading the nasdaq. we'll be right back. you'll always remember buying your first car. and buying your starter home. or whatever this is. but the things that last a lifetime like happiness, love and confidence... you can't buy those.

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our next guest is drilling down into a couple of sectors that could look attractive with us is head of technical research, jeff degraff it does feel like sort of a historic day in terms of how much we were down on bad news for inflation earlier and how much we're up, and what that tells you and what you're seeing in the levels. >> well, absolutely. i mean, these big reversals this is called an outside reversal day. we'll see if it closes here. i think it will. good volumes, good breadth, and i think it's a reflection of

sentiment. sentiment has really been one of the primary bullish or persistent bullish attributes of this market. and we had a pretty low volume decline over the last two weeks, and the sentiment has been as bad as i can remember it over a long, long time. one of the things that we try to remind clients about sentiment is that sentiment's a reflection of the concerns du jour, right that is the fed. that's inflation if you have bulls as low as they are here, it really means that usually historically the concerns, at least temporarily from a tax perspective have been relatively discounted and that's always the challenge in this business this is 3d chess you have to worry about not only what's happening is and likely to happen, but are people positioned for it. i think people were positioned pretty bearishly coming into this number. >> okay. so let's talk about what you like i found this interesting in your notes that restaurants are one of your favorite groups because it's a group that's been hit pretty hard on concerns about a

pullback in spending, people are still eating a lot at home, and they're spending big to do that with these high food prices. dominos out today, that stock is rallying nicely. why do you like the group? >> it just looks good technically. honestly from a relative strength perspective, it's been leading in the discretionary space. and the reason, as you point to, you know, restaurants are important. they really are a bit of a window into what's happening to the consumer, but discretionary broadly is important because when you go through and look at historically sectors that lead the market after a growth trough or after a bear market, discretionary is usually not always number one, but it's usually in the top three so we paid particular attention to what's happening in discretionary on a relative basis, and i'm encouraged that the relative performance of discretionary has held up pretty well above their lows they made at the beginning of the summer even though the news has incrementally felt like it's

gotten worse, the discretionary performance has held up well here. >> wanted to also highlight industrials because you've noted some strength, even with some of the headwinds that these companies are facing, like a global slowdown, strong dollar, et cetera. >> yeah, i mean, look, it's not that i'm building some bullish narrative. i'm reporting what the market is telling us, which is the relative performance of the industrials, particularly the machinery names, the aerospace and defense names. it's been really, really resilient here we look at it on an equal weight basis so we get a better flavor of what's happening. probably the biggest head scratcher here is how well this group has done in the face of strong dollar, in the face of higher yields as you point out keep in mind, real yields are well above 150 basis points here that historically is a point that has choked off any type of recovery or any economic activity for that matter, so it's really encouraging to see that the relative performance of

industrials and, frankly, discretionary has been able to hold up in spite of those tight real yields. >> jeff degraaf, thanks for joining us with some of the notes on the chart, appreciate it especially on this big market day where stocks have staged a huge comeback. look at the market reaction earlier this morning, down 550 on the dow on that hotter than expec expected inflation report. up 900 points almost on the dow right now. the s&p is up 2.8% up next, we will discuss whether the market will keep rallying as we head into the uncertain waters of earnings season. "closing bell" back in a moment.

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breaking news from the january 6th hearing, let's get to shep smith with the details shep. >> hi, sarah, the committee investigating the insurrection at the capitol on january 6th has just voted to subpoena for documents and testimony former president donald trump there had been discussions throughout that they might invite him to testimony, to give testimony. today they made the decision to subpoena him to make it official the chairman of the committee representative bennie thompson, the democrat of mississippi said he must be accountable, speaking

of the former president. said he must answer to the police officers who put their lives in harms's way on that day, and must answer to the millions of americans whose votes he wanted to disinfranchise, our obligation is to seek his testimony the vice chairman, liz chaeeney said we must seek testimony under oath of the january 6th central player, and that she said was donald trump. the vote was unanimous we don't have a time frame on when they would seek that testimony. we're guessing that donald trump could certainly push back or if he felt like it at the time could invoke the 5th amendment, but he would not be the first american president subpoenaed by congress or a committee of congress in this case. previously abraham lincoln was sea se subpoenaed, woodrow wilson and gerald ford to testify before congress this time he would be the central player at the center of their investigation. they've made that perfectly clear.

the hearing has dismissed for the day. we believe that that was at least presumed to be the final committee hearing of the january 6th committee. i suppose if they were able to get testimony from the former president that might change, but for today subpoenaing under oath documents and testimony from former president trump sara, back to you. >> shep smith, thank you very m much we'll look to you tonight of course for more analysis and news on this the huge news day today, the dow is up 800 points, quite a comeback after this morning's big selloff, following news of hotter than expected inflation numbers. joining us now, paul hickey from bespoke investment group and mary phillips from dimension nam. you're the stats guy, when was last time we saw an intraday reversal like this quite a wide range. >> yeah, so i mane, ean if you

at days where we opened the day down 2%, there's been four other days it happened twice, 1997, the fourth one's escaping me over the next week or month, if the s&p was higher all four times one week later and one month later. so that's something to be encouraged about as we near the end of this day. there's only a little time left in the day, but we've seen the market has a way of moving a lot. we'll see what happens by the closing bell. >> i knew you would have a pearl of wisdom there about what happens next mary, over the next week and month, we're going to get a lot of earnings, and that could be the next driver until we get another inflation report and a fed meeting. so far it looks like the market is reacting, i don't know, in an orderly way to earnings down on the negative preannouncements. delta had a good number up today. what do you think we're going to see here >> i think we're going to see all this information get into

prices we've seen that so far today, always a surprise to see it so down early and up later whachlt we what we'll be looking at is staying the course the way we do focusing on high profitability stocks, value stocks and small cap stocks a lot of folks may be tempted to lean into quality going into this, but we would like to caution folks, quality is more than just a term you want to focus on what's going to drive -- what's going to drive a stock return. that's going to be looking at what their expected cash flows are. >> really interesting because we hear a lot about quality, and it's good to get a definition. you're emphasizing profitability over quality what do you mean, and where can you find that? >> yes when we think about profit shlgt ability we're looking at operating profits.

that's to focus specifically on the expected cash flows from a company, and looking at that on a relative basis a lot of folks when they say quality, they're blending together a lot of different metrics. it's sounds nice, quality sounds very comforting when you're looking at a tough market, but i would say it's not getting at what may drive a stock's return. profitability drives return. >> paul, how do you approach earnings season? what's the strategy? >> well, i think what mary was saying is that the market's going to price in a lot of the news coming up, and so what we want to look for coming into earnings season is what maybe is priced in. everybody's expecting a terrible earnings season. we saw the same thing last quarter in the last earnings season very low expectations. market during that earnings season at its best performance during an earnings season going back to 2009 so you want to look at where expectations are very low right now, and this comes back to, you know, i always like when

different segments, you know, a similar message, and a prior segment you're talking about industrials being an attractive sector that sector is the second most ha highest pace of negative revisions of any sector going into earnings season when you look historically when expectations have been that low for the sector going into earnings season, there's been about ten other times where you've seen this degree of negativity or more, during earnings season the sector was up nine out of those ten times for a median gain of about 6% during earnings season that's one sector where a lot of the bad news could be priced in already based on what we're seeing in analyst revisions. even more down beat than the industrial sector is the material sector. we've seen a very high degree of negative revisions there, and for the broader market in general, we've seen a negative pace of revision so the results this quarter probably won't be nearly as good as they were last quarter, but expectations in the face of

revisions have been much more negative heading into this earnings season than they were last quarter as well >> mary, paul, we'll leave it there. i thank you both for joining me. we're up about 814 points just off the highs. what is wall street buzzing about today? beyond the market comeback necklace, the streaming giant announcing its new add tier and the stock is jumping steve ckovak with the details. >> shares are up 5% now, netflix revealing its plan for ad supported tier here's the breakdown of what's new. the ad tier will cost $6.99 a month, will launch in the u.s. and 11 other countries on november 3rd the commercials will run between 15 and 30 seconds long, and you'll see four to five minutes of commercials per hour. advertisers will be able to broadly target subscribers by genre, meaning horror or drama

and so forth netflix says it has nearly sold out of inventory for launch. declined to say how much they're charging or how they're sharing ratings with the advertisers this is the new trend among streamers to get subscribers offering a free or cheap version of their services with ads, hulu, peacock, and hbo max all offer ad-supported plans and disney plus's is coming in december as for growth expectations from this, expect more on what netflix reports earnings on tuesday. we're hoping to get some guidance from them, sarah. >> after back to back subscriber losses. >> indeed. >> clearly they want to improve that with this urgency of the new ad tier. thank you, steve kovach. check out shares of albertsons, the grocery syriaing today on a potential acquisition by kroger. up next a look at what this could mean for the entire grocery industry and those stocks which are both working today. that story and much more on the big rally and the big reversal

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react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity we are now in the "closing bell" market zone, cnbc senior markets commentator mike santoli here to break down the crucial moments of the trading day we've got leslie picker joining us on blackrock and the bank and ethan harris joining us from bank of america to talk about what the fed will do next. let's kick it off with the broad market we've got a lot to talk about here it's been this stunning intraday reversal we thought it was going to be a very ugly day in the market.

we were down 2.4% on the s&p after we got that inflation number, which just shows stubbornly high prices and continued to come in above expectations it all reversed, and it's not just the stock market. we saw it in bonds, we saw it in the dollar, which is now weaker. we saw it in oil prices, which completely turned around what do you make of why it is and what it tells us about where we go next >> in large part it's because of the lead up to the number, which got all those markets pretty well stretched to extremes, and that's the at least the atmospheric conditions for the kind of snap back like this. at the lows this morning, the s&p 500 was down 15% in the month, 27% from the high and hd given up half that whole rally as we talked about abfrom march 2020 to january 2022 it just seemed like a decent culmination point if, in fact, the ten-year treasury yield was going to respect 4% as the ceilings yes, the two-year yield is up, but it's not really dramatically

so and even the number was not friendly, it wasn't so far out of whack that we had to revise our whole idea of how the fed is going to attack it that's where we sit. we're back to where we were in overall s&p 500 levels around a week ago or six or so days ago you have to basically say to get below 3,500 probably would take an extra macro shock of the kind we haven't yet seen. so i do think that sometimes these one-day reversals are significant, even if they're not automatically decisive in telling you that it's a trend change. >> i think we also have to look at the british pound i just want to pull up the intraday chart of this one again. i can't emphasize how much people are paying attention to it we know it is a highly levered trade, right, mike and is a big source of concern, and there's speculation that this is a sort of longer term year-to-date chart of the collapse of the pound, intraday. it's up almost 2%, which is a big move there's speculation that the new government will walk back their

tax policy, which is what sparked this entire concern and the margin problems where the bank of england had to step in tomorrow will be a decisive day because they're set to end their bond buying program. but clearly, this is where the focus is. >> without a doubt, and i think what it tells you also is a fair bit of the recent downside has absolutely been people being on alert for some kind of a mishap out there, for some kind of policy mistake or some piece of the capital markets to blow a hole, and that's clearly been the conversation for a while right now. so you might say why would the s&p 500 be up more than 2%, just because, you know, there was a policy shift in the uk and the pound got some support well, it's because a lot of the lead up to where it got us down here maybe was overdone or at least people feared even worse. >> a pileup on the downside. we are breaking that six-day losing streak in a big way today. the dow is up 870 points every dow stock is higher at the moment check out shares of albertson's,

the grocery chain soaring on reports of a potential takeover on rival kroger. sources telling our own david faber, the all cash acquisition could be announced as soon as tomorrow morning kroger is the largest supermarket operator in the country, has about two dozen brands under its name, and the company has nearly 2,800 stores spanning 35 states, employing about 420,000 workers. albertson's the smaller of the two, has about 20 brands, 2,200 stores in 34 states. the companies have not responded to our request for comment i think the big question as someone who's paid attention to this sector in particular, mike, is going to be the antitrust litigation certain markets that would box out other competition, they have to make the case that walmart is

still bigger in terms of grocery sales in this country, maybe not as many stores if these two combine, and that there's new competition from amazon and from some of other maybe third-party deliveries like a doordash or an instacart, which there would be impli implications in this deal as well. >> absolutely. it will be combed over if the deal is, in fact, announced. certain markets without a doubt you would imagine they would have to make concessions and sell out skch you never know exactly how the government is going to treat something like this and how they're going to define too big until you try it i do think, though, it's tough when high food prices are a big political issue right now, these are unionized businesses, the administration's going to be sensitive to how the unions might feel about it. you have to consider there's going to be some regulatory ris or hurdles, even if the logic of the deal makes sense

it sort of fascinates me you would imagine kroger maybe could have bought albertson's out of equity. that thing sat in private hands for a very long period of time the business is in a different place right now clearly. >> it's been exploring strategic options for a while. david reporting earlier, these are on and off again talks by the way, use might expect, the options market going crazy on this deal, 30 times surge in normal recent volume for options in albertson's, very bullish on word of this deal. let's get another read on those inflation numbers out this morning with the dow up 900 points ethan harris joins us, head of global economics research at bank of america securities ethan, what does it mean for the fed? >> it means they're going to do more i mean, it's -- i can't explain the stock market today i think it's irrational exuberance or some kind of technical trade. this report confirmed that inflation is more persistent than people have been expecting. we've had repeated upside

surprises in cpi releases. this is actually the 12th time in the last 19 reports where there's been an upward surprise in the report, including the last two reports there's something going on in u.s. inflation that doesn't want to go away, and that just keeps the fed moving 75 basis points >> why the fed has already done a lot i mean, maybe historically rates aren't that high, but compared to where we were, mortgage rates are above 7% why isn't this being seen in terms of inflation coming down, which is what it is supposed to do >> so here's the problem, okay the part of the inflation problem is going away. the supply chain issue is improving, and so goods inflation's weakened the part of the economy that has not responded to the fed or to the broader economic slowdown is the labor market the labor market is out of control. it's overheating if you look at the service side of inflation, which is driven

mainly by wage costs, it's extremely high, and it has shown absolutely no sign of rolling over and that's the problem for the fed is they can't really fix the inflation problem with a hot labor market they have to keep going. >> yeah, well, maybe the comps get easier next month around, which is the best you can say for it ethan harris, thank you. good to get your initial take on those inflation numbers. ethan harris of bank of america. look at blackrock, it was the first of the financial companies to report today topping quarterly estimates thanks to strong demand for its etfs and other low risk funds. but total assets under management did fall below 8 trillion for the first time in two years. currency headwinds, rising rates, potential recession all dampening investment activity, jpmorgan, citi, wells fargo, and morgan stanley out with earnings before the bell tomorrow let's get to leslie picker for more what did we glean from blackrock, leslie, and how does it relate to the bank earnings we're expecting? >> yeah, so what we saw with

blackrock and this is what we see every quarter is this a company very much affected by what goes on with market activity i thought this note from evercore isi summed up the quarter perfectly saying nowhere really to hide in this tape, but they did the best that they could. now, you see shares up 6.4%. that's largely just because the broader market is up so strongly today, so blackrock is reacting to that. their big beat stemmed from a low tax rate they enjoyed during the quarter. they did have $65 billion in long-term net inflows. that's pretty decent, although it didn't match what expectations were there. there's still some fx issues, a tough market backdrop despite today's moves. now, what we can glean from this is basically what the banks can see with regard to their own asset and wealth management businesses so you know, doing the best they can. the markets aren't great it's really hard to find a pocket of the market for strength right now, and so, sure, you might see some lower

aum figures, but net inflows are a good sign here >> all right, leslie, thank you. leslie picker, and by the way, do not miss a first on cnbc interview with the cfo of wells fargo off the back of those results. mike cincinnatiomassino on this show mike, we're getting into the two-minute mark here, and the session rally is holding we broke the losing streak and then some, quite an intraday reversal what are you seeing in the internals and what sort of clues does it give us? skpl yeah, so it's pretty strong, although not necessarily the kind of overwhelming rush to across the board buying you sometimes see on a big 2% up day. we started lower, still we're looking at 80% upside volume interestingly, 900 stocks on the new york stock exchange and nasdaq made 52 week lows today, all in the first hour, but still that's going to build up your total of 52 week lows.

two-year note yield, big part to have the story this is a two-day chart. shot up to above 4%. it's still below the highs but pretty much going back to 2007 levels the fed is fully engaged here and the market understands had that the volatility index early on was easing even as the s&p was down we're at 32 right now. we got up towards 35ish. this just shows you that the market has to be really jumpy to keep the vix climbing once it's above 30 so right there, that's a neutral to net positive the fact that we got it easing back on a one-day basis. >> someone just emailed me a fire sales situation and uk pensions is a bigger financial risk than a higher than expected cpi report, and that could be the story of the day today the pound is up almost #2% there's the s&p 500 into the close, up 2.6% every sector is going to close higher, energy the best up 4%.

actually, financials now the best, 4.1% technology not far behind up 3%, materials, utilities, worst performing sector right now is consumer discretionary and it's still up a percent, just a stunning intraday reversal from the market that's it for me on "closing bell." see you tomorrow, everyone now into overtime with scott wapner. [ applause ]