for and that's a great way for them to fund that additional rollout. >> clever if it works. >> andres, thank you very much have a good holiday season, my friend. >> thanks very much. take care. >> thank you and thank you. yes, thank you for watching "power lunch." >> we've got some great arrows hand it over to dominic chu for "closing bell. dom? >> no, thank you, tyler and kelly. well, stocks are searching for direction early right now before picking up some steam as the bulls hope to break a four-day losing streak. this is the make-or-break hour for your money welcome to "closing bell of." i'm dominic chu in for sara eisen today. the dow industrials up by one-third of 1%, the s&p up by 0.2 of a percent. small caps up half a percent and the 10-year benchmark treasury note just a hair below 3.69%

check out the action in the yen. the japanese currency surging to its highest level against the dollar in months following a bank of japan policy tweak, so dollar weakness, yen strength to the tune of about 4% we'll talk much more about that move when we're joined by former fed governor randy kroszner. michael santoli is here with the action mike, what is catching your eye? we've got a lot of stuff going on today. >> for sure, dom we came in modestly oversold in the s&p 500. the market getting a little bit of a bid on that weaker dollar and the sense that, hey, if there's going to be any late december seasonal strength, this is about when it might start but more broadly, the range remains interesting. one week ago we got that really well received cpi number, popped to 4100 on the s&p in the morning. that was an intraday number.

it's not really here on the chart but it's essentially right in that zone we touched it briefly. on the downside it's been 38 or so so this is a narrow band and we've been above and below it but really in a big picture term it's where we spent most of the last six or seven months it's interesting that you can broaden it out and say it's been a really tough year. yeah, the average stock peak to trough down 41% but it's been churning as we work through the peak inflation and then the recession fears both take a look at global bond yields, specifically u.s. treasury 10-year yield and the german bund 10-year yield. both higher to that bank of japan move, releasing japanese government bond yields higher. you see how synchronized this move has been all year the scales are slightly different but the movements are quite similar in the sense that we got the surge to the peek in a while. maybe we see a fed pivot

basically came back to those midyear highs and now it's off again. maybe what it means is we put in a floor for the moment in yields that might not be the terrible thing in the sense we're still below the highs but i think it's a delicate relationship. how low is too low because it means global recession how high is too high because of what it means for fed expectations >> it was 24 hours ago we were talking about some of the cline and some of the charts we talked about how this is a possible pivot point or line just to watch, not just for the stock market but interest rates as well. we said, hey, if this holds this may be some support. do you think this is a level where they're scrutinizing the levels a lot more because of the levels you spoke about yesterday and again now today? >> there is a hyperawareness of it i think it's maybe not purely random that we bounced around

some round number levels the intraday lows today, to your point, in the mid-3700s. that brings you around that point right now which means you're staying out of the trough one day doesn't decide whether in fact you've held that support or not obviously it's been a pretty twitchy market even though it's a narrow range today it's not by any means that you have buyers rushing in at those levels we basically just of a little stabilization so gaur. >> let's talk about the action by the bank of japan and perhaps leading to some of the churn mr. santoli was talking about. joining us now is former fed governor randy kroszner. thank you very much for joining us, randy, for this. this is a curious scenario this is again the bank of japan seemingly joining the party, so to speak, when it comes to interest rates and moving them higher, but it's not as simple as that. there's nuance in what the bank

of japan did what is on your radar, so to speak, with regard to what the boj did and how it factors into the fed and everything else around the world right now >> it's never simple when it comes to japan so they did a very interesting move of saying, well, we're not abandoning our framework which keeps the short rate slightly negative and keeps the -- i think echoing here >> it sounds like we've got some audio issues we'll try to get randy back once we get those technical difficulties sorted out. but with regard to some of the those questions that we were asking randy with regard to the bank of japan, this idea of moving interest rates higher but at the same time expanding or getting some of these bond

purchase programs. randy, are you back with us? >> i'm back. i'm sorry about that. >> no, no, no. no worries what we're trying to address, there's this ceiling of bank of japan. it's expanding its purchase loan program and it seems like it would cancel each other out. >> as we're saying, it's never simple when it comes to the bank of japan so they're allowing the 10-year rate to go up a little bit more than it had been before and that's gotten markets very excited. the 10-year yen in japan has gone up 10 to 15 basis points.

we've seen a pbig knock in the u.s. but the bank of japan said we're not abandoning our framework because we'll buy more bonds to make sure to keep the 10-year rate in the same range one of the challenges they had is that their yield curve control focused on the 10-year, not really on the whole yield k curve. so because inflation is much higher than it has been in the past in japan, 3 to 4% which by japanese standards is very high. we haven't seen that in 30 or 40 years there. the 8 or 9-year yield is much higher than the 10-year. anything beyond the 10-year was much beyond that so they're trying to get a little bit better market functioning. they're going to bring more firepower to try to smooth that out but i really do think this is a step towards tightening. >> randy, what's interesting about this, for the longest time now we've been trying to see if there's been any way, and i say

it rhetorically, if there's any way to jump start price movements higher or inflation in japan. it's been nonexistent for maybe even decades at this point is it all a bad thing that we're seeing the kinds of movements that we're seeing in prices an interest rates in japan? isn't it more normal for us to see those kinds of moves doesn't it bring japan back up into somewhat of the same realm as other developed economies around the world >> you're certainly seeing inflation be much higher than it has been before. they're at 3, 4% which is much higher than 0, which is what we've been, 0 to 1% for a long time it is above where their target is the key question is, is it much like in the rest of the world moving much beyond their target and how difficult will it be to bring it back down that's why they're taking this first very gentle step in this direction. it was a surprise move

i'm sure we'll get more surprises before he finishes his term in april. >> this is an excellent point. before we let you go, randy, this is a preeminent central banker in japan that will step down in the spring of next year. what exactly will the next bank of japan governor be facing? >> i think what he's trying to do is provide an easier pathway for that next -- for the next governor to be able to just tighten if need be we would be delighted to have only 3 or 4% inflation right now. in japan, that's considered a very high rate of inflation. people have gotten used to inflation being roughly around 0, s0 to 1 so there's a lot of political pressure to do something about what is perceived as high inflation. this is a step in that direction that will make it easier for the next governor to try to deal with the issue. >> randy kroszner, thank you

very much. we appreciate it, sir. >> thank you wells fargo is moving lower today after the bank agreed to a record multi billion dollar fine from the consumer financial protection bureau, the cfpb. up next we'll ask an analyst if the settlement marks a turning point for wells fargo, or if there are more headwinds to come keep it right here you're watching "closing bell" on cnbc.

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our shares are wells fargo are lower today after the bank agreed to a settlement with the consumer financial protection

bureau over customer abuses related to bank little, mortgages and auto loans as a result, the bank is expected to see a $3.5 billion operating loss as part of its fourth quarter overall results so joining us now is jason goldberg from barclays who covers the bank. jason, i wonder the big question is given the size and scope of this fine and thchl overall action by regulators, is it fair to say that wells fargo is finally ready to put this to bed and move on? >> i think from a dollar standpoint the company has the bulk of the fines behind it. it's going to take a $3.5 billion charge this quarter as you alluded to it took about a $2 billion charge last quarter. so from a dollar perspective we think the bulk of the consent order is behind it from an operational standpoint it still has other consent orders outstanding it needs to deal with. over the last few years we think it's made material progress in dealing with them.

>> how long does it take for a bank the size of wells fargo to work through the kinds of issues that it has tied to the allegations and now admission of some of these fraudulent happenings with regard to account openings and everything else. >> one of the consent orders resolved today went back to 2016 it's still operating under an asset cap from a consent order received from the fed in february 2018. i think when that first came out the prior management talked about it getting lifted 2018, 2019 and here we are in 2022 and it's still in place. so it takes a long time to turn a pbig ship they brought a new management team in that's made meaningful progress and we think they're on the road to getting that asset cap lifted but not quite out of the woods yet. >> jason, there was a time when some traders and investors looked at wells fargo and almost

put it in the same category as a jpmorgan chase, bank of america or citi. we know they're not exactly alike, but how long before some investors can treat wells fargo as truly one of the big banks in america? it's the amalgamation of so many different banks already. when do investors feel as though this is something that they can say, hey, we can say this is a big money center bank to go back to >> i think investors get it. i think all the issues that the company has dealt with and kind of resolved were from many years ago. if you look at performance over the last few years, you've seen pretty good revenue growth, kind of an improvement in market share across the businesses they choose to compete in they're making an investment in key product lines like investment banking and credit card and there's a medical expense opportunity to deal with these regulatory matters we think expenses will decline

on a core basis in 2022 with improvement into 2023. so i think, listen, the bulk of the issues are in the rear-view mirror and we expect improved performance relative to peers looking out. >> if you look at the chart of wells fargo, you're pretty much right in the middle of a trading range so if you take a look at wells fargo, jason, it's a game of would you rather. would you rather be in banks like jpmorgan chase or bank of america or is it going to be wells fargo and others, maybe super regional banks >> i think looking out over the next year or so, i think some of the regional banks are more exposed. we do expect interest margins to peak or plateau at some point in 2023 additionally i start to see the credit normalization process i think commercial real estate probably becomes more in focus so that's something to be mindful of the bigger banks continue to

take share from some of these regionals. >> before we let you go, if there is a hypothetical recession that's perhaps on the shallower to midlevel range, is wells fargo in a position to withstand it, is it on a relative basis better off than, say, a bank of america, a citi or jpmorgan chase? >> i think with wells there's more meaningful expense opportunities. we think the new management team has a plan in place to address that from a capital perspective, they have relatively more excess capital than peers so there's room to put that to work and, you know, just given their asset capital the last several years, the deposit base is probably in better shape than most other banks, you know, to with stand the current interest rate environment coupled with a valuation that's below some of the other big money center banks, not a bad

place to be on a relative basis. >> thank you very much, sir. we appreciate it. let's check on the markets right now. the dow just about up 105 points, the s&p up about 5, the nasdaq flat on the session so far. mark zuckerberg is in court for the latest ftc antitrust hearing surrounding meta platform's virtual reality acquisition. we'll bring you the highlights coming up next. later on in the show we'll ask an analyst why general mills is selling off today, despite a strong report for earnings and solid guidance as well e ar o 4ff%. we'll be right back after this ♪ ♪ a cyber-attack can grind everything to a halt. cisco security keeps your company moving forward.

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welcome back to "closing bell. mark zuckerberg in court for a hearing against the antitrust suit against the company against a virtual reality. steve joins us with the latest good afternoon, steve. >> mark zuckerberg taking the stand today in a san jose court

and making the case that the ftc should allow meta to buy the vr studio they make a popular fitness app called super natural ftc is arguing meta would have an unfair advantage in virtual reality if it's allowed to buy, arguing that it's already the leader in the vr market. but zuckerberg was downplaying the importance of the deal in his testimony saying fitness is only the fourth or fifth case in vr behind activities like gaming and social networking. he also saidmeta doesn't need to own within in order to make meta successful in the metaverse. the ftc tries to paint meta as a behemoth that could become even bigger if they're allowed to buy rivals they're trying to avoid another situation when meta was allowed to buy instagram for a billion dollars. broadly this shows the biden administration's towards tech m & a. they are also trying to block microsoft's $69 billion acquisition of activision.

but this is a tough one for the ftc because it has to prove meta has dominance in an almost nonexistent virtual reality market. >> steve, you just opened the door for my next question and point here. >> i read your mind, dom. >> exactly so this is a situation where regulators are almost acknowledging that there is a future, possibly massively so, for the metaverse when a lot of investors have a lot of skepticism over the investments that mark zuckerberg is making billions of dollars worth. and whether or not it actually leads to significant gains in the metaverse, right >> exactly and that's the irony here because mark zuckerberg has to convince the ftc this is not a big deal, it's just a small acquisition. fitness isn't that big of a deal in virtual reality but at the same time he has to tell investors i'm building the future right here, right now this is going to be the biggest

thing ever and unlock trillions in value we do know he's willing to spend whatever it takes to make the metaverse happen. >> apparently the government is scared of metaverse right now. general mills shares have gone to the dogs today following disappointing pet food sales a top analyst discusses whether this is a buy opportunity and reveals his top three consumer staples picks for the coming new year that's coming up

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take a look at shares of general mills. the company reporting an earnings beat but shares are taking a spill thanks to unexpected weakness in its pet food categories. joining us is arun who downgraded general mills to a sell rating and cut the target price as well. this morning it was a profit beat, revenue beat, upping of the forecast for the full year why are people so focused on what's happening with the pet food side of things overall? >> hey, dom. yeah, you think it's a sure recipe for a good quarter, good top line beat, good bottom line beat and the guidance raised but if you dive a little deeper into the results, you saw significant weakness in their pet segment which has

historically been general mills' fastest growing segment. they bought blue buffalo in 2018 for $8 billion a big acquisition there. it's really been a really top performer since the acquisition. and this quarter we saw flat sales growth volumes actually declined 11%. and, you know, what's also equally concerning is that profit margins in the pet segment has significantly deteriorated although general mills is pretty confident that sales will bounce back next quarter in the pet segment, they didn't sound as confident that the operating profits or margins would bounce back a lot of it has to do with what we've been talking about, cost pressures, supply chain pressures, lots of ingredients in dog food, so those things -- there are more supply chain challenges there for this company. so that's one of the reasons that we did lower our rating and our price target today it's ongoing weakness that we're

expecting in bet and we think in general these companies are entering a much more challenging operating environment next year. these package food companies haven't had to work that hard to generate sales growth the past few years but that's starting to quickly change i think we saw that this quarter. so i think the next year is going to be a little more challenging for general mills. we're advising clients to take profits now and wait for a better entry point. >> if you look at the chart the last year, general mills has been an outperformer compared to the rest of the market there's been a lot of focus on consumer staples i'm the owner of multiple dogs in my household. we know what we spend on pet food, it's going up on price we also spent a lot on packaged goods during the pandemic. how much is this notion that it's a tough comparison going forward versus the spending on packaged food and specifically pet foods over the last few years during the virus pandemic? >> it's a combination of both. 2020 and 2021 we saw really

strong demand that boosted sales for general mills and packaged foods. 2021 and 2022 it was really higher prices that boosted sales. it's the combination of higher prices and relatively strong demand meaning elasticities are relatively strong for all these packaged food companies. that's what i meant, these companies didn't have to work that hard to generate sales growth over the past two to three years but that is starting to change. demand is moderating starting next year, they're going to be lapping these price increases from 2021 and 2022 so it's going to be much more challenging to generate top line growth i think a lot of these companies, general mills included, will have to increase advertising, mpromotional spending, focus on innovation. these are the things companies need to invest in to generate top line growth, which will -- could impact the bottom line so one of our thesis for our downgrade today is the whole

profitability and margin side of the story. even though these companies might generate single digit sales growth we don't necessarily see that flow to the bottom line because of all the cost pressures and investments these companies have to make. >> all right so general mills, it's now sell rated in your universe that means that there has to be a favorite pick in packaged food or consumer staples. what is it >> so our top pick in packaged food is mondelis international they're predominantly a snacking company. if you're a packaged food company, you want to compete in snacking that's what every packaged food company is slowly gravitating towards. mondelez is the leader in snacking the other reason we like it is they have relatively low private label exposure so right now with consumers trading down to maybe store

brands, that isn't impacting mondelez because of their relatively low exposure to that. they mainly sell products at the grocery store so that's a positive given recession risk in 2023 and another reason we like mondelez international is they're predominantly an international company. only 25% of their sales are in the united states. now that we're starting to see the u.s. dollar kind of slowly come back down to earth -- >> right. >> what was a headwind last year could turn into a pretty sizeable fx tailwind in 2023. >> thank you very much we'll talk to you soon. now here's where we stand in the markets right now. we are in the green, but we've been losing a little bit of steam. the dow industrial is now up one-half of 1% the s&p 500 up one-quarter of 1% the nasdaq just about flat, up 0.1 of 1% 10,558.

nike has been one of the biggest losers in the dow this year coming up, we've got a top analyst on whether investors should buy this beaten down name ahead of earnings after the closing bell and by the way, you can listen to "closing bell" on the go by following the "closing bell" podcast on your favorite podcast app. closing bell in audio format we'll be right back. power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities.

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let's check out today's stealth mover. we're talking hostess brands and the stock is leaving a bad taste in the mouths of investors today. morgan stanley downgrading the maker of twinkies and ding dongs to equal weight from e iing a b price target the analyst citing tough sales comparisons and valuations as well hostess has seen sweet gains over the last year, significantly outperforming the broader market, as you can see up 19% year to date versus down 16% for the s&p. by the way, the ticker there, twnk for twinkies, obviously but jpmorgan cutting its iphone shipment estimates for a second time this quarter. what that means for the most important stock in the market. that's coming up straight ahead. we've got that story plus the key numbers to watch when fedex and nike both report earnings when we take you iidnse the market zone. that's coming up keep it right here

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and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity all right. you know what that means, we are now in the "closing bell" market zone we've got cnbc senior markets commentator mike santoli here to break down these crucial moments of the trading day plus we've got steve kovach and kevin mccarthy on what to watch when nike reports earnings after the closing bell today now, stocks bouncing around, mike, looking to snap a four-day losing streak. so can we figure out whether or not this is a directional bet right now or if this is still that churn that we've been talking about for a couple of weeks now?

>> yeah, it's a little tentative, dom obviously the fact that the market was able to withstand a little bit of a jolt overnight from the bank of japan, in fact when that news hit that they were allowing longer term bond yields to go a bit higher, they say dow futures dive on bank of japan. it didn't really last. but it has not necessarily translated to a tangible impact on u.s. stocks the market sort of rotating away from danger in some respects today. you see tesla down 6%. there was a time that might have really undercut the broader market right now it's just mostly a weight on the nasdaq 100 basically it's kind of banks getting a little bit of a lift and small caps doing their part today. >> mike, it's also a point about whether or not there is a fear of what's going to happen in the marketplace going into the next week or so this is always the time when we talked about seasonal tendencies they tend to be positive for the markets this time of year, but there seems to be less, i guess, enthusiasm about that particular

seasonality trade this time around is there hope for that santa claus rally as we head towards the beginning of next year >> there's certainly hope. i think everyone knows the historical, you know, patterns on this. but i think you're also seeing people say, well, this is the worst december since december 2018 that was a washout month and i think it's not so much about people losing faith that we might get a lift, but if you don't get a seasonal lift, that's often a sign that the market just remains weighted down with bigger issues as opposed to being able to capitalize on those general tendencies when you do have a good seasonal window. >> maybe trading a little heavy right now. jpmorgan cutting its apple price target today the bank is moving its december 2023 target to $190. it was $200 before the stock has been bouncing around in the session so far today. steve kovach, we turn to you what's the reason for the price target cut with those particular analysts >> yeah, it's the same story we've been hearing the last six

weeks about apple. they don't think they're going to sell as many iphones as we originally thought because of those protests and lockdowns that we saw throughout china the last several weeks now, look, it's really hard to guess, dom, where they're going to land. i'll point to this quote from tpi international securities who says it's going to keep getting worse into the spring as far as tech demand. he had a similar tweet back in march of this year saying demand is falling off a cliff for smartphones, and boy was he ever right. he's hearing from suppliers over in asia, it's going to be the same thing too and maybe people are not baking in how bad of a quarter it could be for apple because of these shutdowns and supply problems they have been having throughout china, dom. >> steve, we know just how important the iphone is to the health and well-being of apple as a company it contributes a lot to revenues and profits over there but i wonder whether or not there is even more of a macro or bigger buzz about apple products this holiday season. they release these new products

in the early fall so that they can capture some of the holiday shopping season. are apple products hot this season can we expect any kind of a tailwind when we see earnings results next quarter >> yeah, there are two things here, dom. if you askapple, demand is incredibly strong. when they issued a warning back in early november, they said we're not going to sell as many iphones as we anticipated because of the issues making them in china. but even the more expensive $1,000 phones, yes, they are saying demand is still high. that's what they're telling investors. meanwhile the big question everyone has is will this carry over into the march quarter this next year if people can't get the phones in time for christmas. if you try to order an iphone 14 pro today, it's not going to arrive in time for christmas will people give up or buy them in january or february of next year. >> or wait for the next phone iteration. >> that's a long time, though. >> next fall possibly. mike, i'll turn to you on this trade. apple you could argue is the

most important stock in the market, it's the most valuable and carries so much weight in so many indices is there a fear about apple generally speaking >> there is a fear that it's conforming to a lot of what's been plaguing the biggest of the nasdaq stocks. apple clearly with the heaviest weight, which is a broad giveback of this huge premium that was given genuine concerns. you have a lot of iphones out in the market that are due for upgrade that maybe there's no urgency to do it because they don't break. but what are you paying per dollar of earnings apple is not supposed to grow very much, like 1 to 2% earnings growth are you going to pay 22 times earnings for that? so not just the business performance but exactly what the company is worth given that before the pandemic this was the ceiling on the valuation, not a floor. >> so that apple trade key for the markets right now. fedex also one of the big names set to report after the closing

bell frank holland breaks down the key numbers to watch for so, frank, this is obviously one we watch for because of the economic implications. what should we be keying on? >> well, dom, the big thing here to watch is the latest on fedex's plans to cut 2.2 to $2.7 billion in costs of course this follows fedex doing an earnings warning last quarter. their ceo coming out saying we're on the precipice of a global recession that's hitting its volumes both in asia and europe of course here in the united states $700 million of that is supposed to happen in the quarter that is reporting after the bell so a lot of questions about where those cuts come from they're supposed to come from reducing worker hours and also reducing capacity in its warehouses how does that also work with the holiday season of course e-commerce ramps up there. we're also looking for any guidance about the next quarter and of course for the full year. in the current quarter, it starts on december 1st and ends

on february 28th during that time we have christmas here in the united states, lunar new year's and fedex is a very big business over in asia, both air freight and regular freight. looking for any commentary about the details of the covid situation in a is it as bad as the reports that we saw today are there signs that china will reopen and things will get back to normal. a lot of the things that he'll be asked is not only about the freight market but also about china. michael san ttolism, the transportation stocks seen as bellwethers for global trade fedex a severe underperformer with regard to u.p.s almost double the losses on a year-to-date basis what's the difference between fedex and u.p.s. and what can we glean from the numbers today >> mainly it's the global exposure to air freight and directly to the china market for fedex relative to u.p.s. which is much more domestic focused. there has been a bifurcation

there. until recently the road and rail stocks were working fine it seemed like the u.s. economy was at a high level. that's come in for a little give-back given that people are bracing for a recession. fedex, a bit of a management and execution story. new management are they going to be able to get costs in line. they were a bit of a serial disappointor in recent years. >> we know you have to get prepped for the overtime trade so thanks for that we'll see you at the top of the hour. nike shares are loeg in trade today. second quarter results are due after the bell investors will be closely watching things like inventory levels and any commentary about china, one of its biggest markets out there. with us now is senior research analyst kevin mccarthy he's also portfolio manager for the connected consumer etf, the ticker there is nbcc so kevin, niengy is a key story. it has a lot of consumer o

overtones. whether china is an overtone there. kevin, what exactly is the biggest thing to watch is it going to be those china results? >> great to see you, dom thanks for having definitely goe important but the bar is low there. the two topics that shareholders are going to be most focused on are, number one, progress with the north american inventories and beyond that i think they can speak to some of the discreet margin recapture opportunities >> now, this is also a stock that trades at a significant premium to the overall market. it's a brand name. we know that it's a brand people love but it trades at 33 times forward earnings is this a scenario investors are trying to grapple with whether you should pay that much in price for a dollar of ant anticipated earnings in the

coming months? >> i don't think the valuation properly reflects -- it looks expensive, but this is an underearnings story. inventories last year, they're up 44% that will be a high point. it should be a high point. we think the management team has eyes wide open at the opportunity and we expect to see good progress bringing it down into the mid-30s so we think that's good for the stock and momentum in the stock. and then on the margin front like i mentioned, there's significant recapture opportunity. about 200 basis points with the disruption from freight. and then if you think about the resets that occurred in china and north america on the inventory front, there are about 150 basis points there so there's significant -- there's a significant margin opportunities. and for them to claw back on the earnings. >> kevin, from a product mix stand point, is nike in your mind positioned appropriately with their mix for shoes versus athletic apparel versus

everything else? and within shoes, are there enough models that are hot out there to capture consumers' attention and get them to spend out there? >> nike has done a great job keeping their foot on the innovation pedal as we look into 2023, we're going to be facing a consumer that is going to be having to make decisions as we look at the key inputs, wages and employment, that's going to be the contribution from growth from those factors is going to be coming down however, when we think about all the essential spending that occurred, the growth in essential spending in '22 in the 10 to 15% range, that's going to be going down to something where flat to 5% so as we think about consumer wallets for discretionary items such as footwear, nike stands out as being a winner in that situation. >> and last but not least, kevin, is nike or another company your best pick when it comes to athletic apparel and footwear >> nike is our top pick on

athletic apparel >> all right kevin, thank you very much kevin mccarthy, appreciate it. markets are higher going into the closing bell, trying to break a four-day losing streak joining us now is ellen lee, portfolio manager at causeway capital management the firm has roughly $34 billion under management, so quite a bit of client money at stake here. ellen, you've been hearing a lot of commentary about after the bell earnings reports. we're anticipating some of the dynamics in the market as a portfolio manager, is this a market where you're worried? >> i think worried is a strong word, but obviously, you know, i'm cautiously tepid on the markets going into 2023. i think there is going to be a lot of negative earnings revision and with interest rates where they are, all the policy measures that central banks have taken, this is going to impact demand remember, there's always a time lag between when policies get implemented versus impact on demand i think that's going to play out in 2023.

the economy is going to slow down globally. >> now, ellen, this is interesting. we've heard a number of sell side analysts and strategists talk about the possibility of earnings coming in weaker, some earnings growth issues coming up you're a person who puts money to work based upon your own valuation and you're saying that you are worried that there's going to be an earnings slowdown how big of an effect will that have on the markets? just how far could we fall if there becomes an earnings deceleration >> at causeway we're looking at companies' valuations very carefully. i think one of the things we're excited about are areas where there is a lot of negative earnings revision. there's always going to be overselling, so we're looking at areas of consumer discretionary stocks where we see good opportunities. obviously there are some we're watching closely but the reality is, you know, when earnings fall, the prices are going to fall. but we want to take advantage of

the long-term investment horizon we have and we want to invest through the cycle. and also remember, sticking to our discipline of looking at value stocks is going to pay off. we believe that the era of zero cost money is over and valuations are going to be really key >> okay. so if valuations are going to be key, what types of companies go on the shopping list there we know value versus growth is fairly large level what types of industry groups and what types of companies are you looking at specifically? >> we're looking at companies, if i look at consumer staples side, we like stocks that trade below 15 times, a french yogurt maker. they have chains it's a great restructuring story so that's one. another one is an italian bank that trades at below a point and a half times tangible book

these companies have a lot of running room in terms of the capital structure that they have so looking at unicredit it is going to be able to give back a lot of capital returns because they're not really suffering from any sort of credit losses at least in the short term remember, during covid people were really negative on these banks, but actually the hit was taken by the central bank, not the individual banks. >> we've got a couple of minutes to go before the closing bell here ellen, before we let you leave, one other value part of the market that's talked about a lot is energy but the way it's run makes it seem like it's not value anymore. do you still think there's momentum for the energy trade or are you staying away >> this is very tricky obviously the reason why energy continues to do well, you cannot discount the factor of the war in ukraine of course, you know, energy prices have fallen i think the view is that with the political headwind, energy

prices won't come down significantly for a while. but at the end of the day when the economy slows down, demand will fall. and i think what you think of normalized earnings for energy, i think they could be vulnerable too if we have a real slowdown in 2023, so we are cautious. >> ellen lee, thank you very much for your thoughts we'll see you soon. >> thank you as we talk about what's happening with the markets right now, we've seen both sides of unchange we've seen red and green so far today. the dow industrials losing a little bit of steam as we head towards the closing bell right now, just up about 90 some points we were just up about 150, 10, 15 minutes ago this s&p 500 is now just about flat on the session. it's been pretty flat marginally so, fractionally higher or lower for most of the session. the nasdaq composite has been kind of the underperformer, if you will it will close pretty much flat on the session as well

10,545 and for small caps, they are the outperformers on the day the russell 2000 up about one-half of 1% so we do have at the new york stock exchange, that does it for us here on the "closing bell." we will send it over to mike santoli with "overtime." welcome to "overtime." i'm mike santoli in for scott wapner you just heard the bell. we're just getting started from post 9 here at the new york stock exchange we are awaiting breaking quarterly results from fedex and nike, two marquee names that could give us a good read on the health of the economy. we'll bring you those numbers appea and the stock reactions as soon as the earnings hit. we begin with the talk of the tape stocks snapping a four-day losing streak just marginally. but it has been