resorts, wendy's, so they could be more susceptible to an economic downturn and rising interest rates. >> the debt matures, they got to roll it at higher rates. oops dom chu, thank you very much we begin with dom, we close with dom. thank you for watching "power lunch." >> "closing bell" starts right now. kelly, thanks so much. welcome to the "closing bell." i'm scott wapner from post nine at the new york stock exchange we begin with stocks in major sell-off mode. a direct result of what fed chair jay powell told congress today that the central bank might go faster, higher and stay longer than originally thought if the economy remains too hot and inflation remains too sticky look at your score card with 60 minutes to go. the dow is sliding, down just about 600 points the s&p has been around that key 4,000 level for much of the session. a little bit more of a sell-off

of late, so it has some work to do to close back above there bond yields are the story of the moment the two-year, 5% above it, first time since june of '07 keep your eye there. as the two-year was rising, the stock market was falling and that leads us to our talk of the tape how long can stocks remain resilient as they have of late given all that lies ahead for your money we have all hands on deck this hour to discuss that very question j joe terranova joins me here live, and steve liesman and senior markets commentator mike santoli. everybody is here and for good reason, joe. the market did not like what powell had to say today, and we talked about what happened with bonds and stocks are still reacting. >> i guess it is the pace of rate hikes that traders have to be concerned with, not the duration, which is inconsistent to the message that the chairman delivers to us in the prior months clear that the markets are pricing in a potential for 50

basis point hike on march 22nd it is being reflected, i think, at 1.25% move in the u.s. dollar it is a very strong move higher. the inversion for a 2 to a 30 at 111 basis points, that's a report 2 to a 10, 104 basis points, that's the widest since 1981 and i think the fact it was fascinating the sell-off yesterday in the russell, late in the day, it really telegraphed and messaged exactly the type of market that we have here today you see a little bit of slide out performance from growth. and i think what that is signaling is the belief that they're not going to bend it, but they're going to break it. if they break it, it is going to be growth where you might find the highest degree of resiliency real quick last point on that, no one is positioned for that. i'm not positioned for that. financials, healthcare, sectors where the overwhelming consensus was going into 2023 they're all down, underperforming, consensus

is getting there. >> lauren, all about that move in rates the two-year that jumped today is really disconcerting to the stock market. >> yep that's what it is all about. and frankly i think that chair powell has been speaking truth to the market today. this data we're going to get on friday with the jobs report and on tuesday of next week with inflation, it is the big test for the narrative that the market has been putting forward for a soft landing with inflation being sticky, the fed just doesn't have the luxury to wait and see what already incredibly fast and incredibly strong interest rate hikes will do to the economy. they have to keep inflation expectations under control. >> steve, let's refresh our memories here, let's listen to what powell said today that seems to have so unnerved this market, we listen to it in real time here is powell's message >> the latest economic data have come in stronger than expected which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated if a totality of the data were

to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes >> steve, you talked about this in recent days as to whether the fed chair himself would endorse this higher, this faster, and stay longer than people thought narrative. >> and he did it explicitly, scott, today both of those things, really three elements to it, the duration, the length and the level, sorry the pace and the level and so the duration is restrictive, sufficiently restricted for some time the level is higher than we thought for sure in the december summary of economic predictors from the fed and the pace now, this is perhaps the big reversal here, scott. remember the fed stepped down from 75 to 50 to 25? and the idea was they were going to go by 25, they said, hey, this change in data in january,

two parts to it, was so profound that we need to perhaps thinking about going back to that faster pace, 50 if you look at what happened to the probabilities of 50 in march, we started the day at 23%, scott we're now at 60% and just to get to the two elements that were the big change obviously we know about the faster economic growth that we got. we also got bigger inflation, higher than inflation data than expected the big change was the revisions that kind of wiped out the dovish case. i got to think the dovish fed trade now, those who are doing that are kind of suffocating for air right now, scott. >> yeah. maybe so and mike santoli, on this idea of what lays ahead now for the fed, as a result of the data that came in recently, i want to read you something that jeffrey gundlach said a few moments ago, the two-year treasury yield is up 90 basis points since february 2nd, the day after the fed's last meeting that was only 21 trading days

ago. so the yield is rising at a price of 4.3 basis points per trading day. never forget the fed follows the t two-year it is between slim and none gundlach said to me. should the employment report this friday meet or exceed expectations, slim is leaving town what is your reaction to that, this idea we need to and do we need to get our arms around the idea of 50s coming >> i think you have to absolutely, you know, leave that as a very open possibility and by the way, you know that move in the two-year yield happened really since the employment report. yes, it happened that the fed meeting was two days before that but it has been because of the date it has been because the economy has proven stronger. the market today, there was this possibility. i don't think this was anything radically different than what was anticipated, but what it was is it got us off that mode of thinking and as i've been saying, all through the first part of this year, okay, the fed is going to 25, that means

you're six or seven weeks between every quarter point raise, no big deal, we're slowing down, coasting to the end. this interrupts that idea a little bit it causes you to revise the probabilities that the fed, therefore, could be moving faster, going higher and therefore overdoing it that's what you see when regional bank stocks are cracking, when you see a lot of that inversion of the yield curve get more dramatic, that's implicit in that trade as saying, like, the more they have to do now, the higher the risk to ultimately a harder type landing down the road. all that being said, the s&p, backing off today, clearly was wrong-footed for this testimony, but it is back in the testing zone we were in last week. we're still above last week's lows, trying to figure out if that's going to matter it is a little quick for another test all of the confluence of support levels and everything we were talking about for a few days, but that's essentially what it -- this has brought on. >> steve, your reaction to what gundlach has just told me? >> i disagree with jeffrey on

the idea that the fed follows the two-year i think the two-year as much follows the fed as the fed follows the two-year that's a long-running debate i have with jeffrey, but i think he's right in the sense that the idea of a 25 is leaving town, but it is data dependent we're going to see the jobs number on friday, and the key there is going to be wage growth, which powell has keyed as the most important element of the jobs number. and then the inflation report next week. i think where we have been, scott, is this situation, think about a wrestler, you got a guy pinned one, two, and then gets up again and that's what inflation is it gets up to the point where we can't count. the fed's metric here is to be confident that inflation is heading back towards its 2% target and we just can't seem to string together those three months or so of good inflation data to give the fed that confidence and that's why i think we're heading higher. >> well, the fed's problem to continue your wrestling analogy

is inflation is not following the script depends what kind of wrestling we're talking about, steve. >> it is not wwe >> i don't want to laugh too much about it. you're right it is not -- it is not scripted. this is a real wrestling match here. >> yeah. and, you know, joe, i thought steve made an interesting point too, this idea that the bullish narrative, this sucking wind big time right now, is it dead >> i think it certainly is teetering. i think right now positioning is very important to understand and mike brings up a good point. the market was on the wrong foot for this and no one really is -- >> how how is the market on the wrong foot for what powell said today? how? what did we expect >> because the market wanted quality. the market wanted a degree of defensiveness. the market wanted cyclicals, wanted industrials, healthcare, it wanted financials >> i'm talking, joe, what do you base that on joe, what is the basis for that -- the leap

i can't come on more and say, powell may bless a 50, he may bless a higher rate. you had waller, bostic, daly, the dove of the fed telling us all that stuff how do you go out and take that position i don't mean you, obviously, i mean -- >> steve raises a good question. how could the market possibly be surprised with what powell said today? >> steve, that's been the consistent positioning for the better part of the last six months and that positioning is reflecting the narrative, what happened to the soft landing the soft landing is now out the window so we're no longer positioning the books, expecting that cyclicals might work in that environment. that just is what it is. that's the narrative, that's been what everyone has suggested, the right way to be allocating in 2023 not towards beta, not towards growth, not towards long duration assets, how are long

duration assets actually outperforming in the last week in an environment where now the federal reserve potentially is talking about the terminal rate approaching 5.5% so, you have to look at the positioning to answer your initial question where is the market right now and understand the market is teetering in this consolidation zone because no one is critically positioned for it the degree of frustration really comes to those who are positioned this way, back be to the federal reserve, if they continue to raise rates, and inflation doesn't come down. what do they do in that instance finally turn towards fiscal policymaking and say we need some help here do they keep raising rates if inflation doesn't come down? when do they stop? >> your point coming in today was the whole soft landing narrative to what we have been discussing is debt. >> it is it should be the data evolved actually in a really typical year for the late

economic cycle you have interest rate sensitive indicators topple first, and then you start to see leading economic and manufacturing indicators topple and then you get profit margins, which we have seen, in this earnings season start to topple and only then will the labor market fall. in every other soft or softish landing in the last 100 years, unemployment has been higher and wage growth has been lower the fed is fighting an uphill battle, they know it i would put forward that recession is and has been the policy, they can't forecast it, but they know that we need a hard landing in order to cut inflation off at the knees >> mike, you know, i'm looking at, joe is mentioning cyclical things in the market i'm looking at industrials, okay in the green, for the year, some of those stocks have been either at 52-week high oz s or hittingw highs. comp services and technology, maybe they'll weigh that this

year started out is the right way. if you have a recession or get close to it, do you really want to be in industrial stocks do you want to be in more cyclical areas of the economy or not? >> well, you know, i think to me the market's message was regardless of where we're headed, if, in fact, the fed has to engineer a recession, what they're seeing right now is reason to think that we were in an acceleration phase in the global economy that that could be proved wrong but i think it was hinging on something and it wasn't just a bet that the fed was going to engineer the perfect soft landing. i realize i did say that the market was wrong footed this morning. i think i only meant that in the shortest of terms. there was a line of thinking that said, look, the stock market had this two-day rally off of support and we tolerated an increase in the implied terminal rate. maybe we already got priced for

what powell was going to say even if it included being open to a half point. all that being said, we're above last wednesday's lows. if we're wrong right now at this level, we were wronger then or vice versa, right? i don't think you want to make too much of why were people thinking it at 9:30 this morning that things would be great and now they're terrible as opposed to we're all figuring out where in the gray we're going to come out. >> i'm just wondering in part, steve, as we asked the question almost daily, is the stock market not listening is the stock market delusional does the stock market not believe what the fed chair is saying well, maybe it just boils down to the fact that the stock market doesn't think that the fed is going to be able to do what powell says, regardless of what he says and where he says it, and they're going to have to cut rates at some point. and the market is keeping its arms around that idea. >> look, i don't think a bullish outlook is totally irrational.

if you have a better idea for how inflation is going to turn out, and you have a more dovish view on that, that inflation is going to work itself out in the next several months and either by hook or by crook and by that i mean either because inflation is going to calfall or the econ is going to fall so precipitously, you can have a more dovish outlook on the fed what happened today, i think, scott, is powell came forward and said very clearly, if we're going to have higher inflation, here is rather precisely how i'm going to act remember, it is still data dependent. so if you have a bullish outlook on inflation, you can have a bullish outlook on stocks. you can't have a bullish outlook on the fed not reacting to high inflation because they are going to react and you're going to be wrong-footed, you're going to bang your head against the wall again. >> i don't mean to call him out

personally, i don't bring his name up to do that, but you are on "halftime" earlier today with joe lebenthal who made the point he doesn't think the fed is going to be able do what it says because of increasing political pressure, that you really think that powell is going to push the economy off a cliff and risk the loss of a couple million more jobs is that really a tenable position to be in? how would you address that >> i think it is i think it is. i think the problem for the fed politically gets to when they get to 3 i still believe, by the way, there is a political consensus around reducing inflation. i think if they can get to 5 to 3, and then they have to keep pushing and keep rates high from 3 to 2, that's when the pressure happens. i believe and then by the way, you'll get more splintering in the fed, but i still believe that the fed is going to try to achieve that 2% inflation target because the downside for the fed, as an institution, probably the downside for the economy of

upward shift permanently in the target inflation rate is one that probably warrants getting it back down to 2. >> you know what you get when you get a two-year at 501.5 where it is now and ten-year where it is, you get people like you said, that's why i like bonds better than stocks that's where the opportunity is. you don't have to take as much risk. >> it is where an opportunity is we have a completely different market environment than we had a year ago not only market pricing, but also expected change in the correlation environment this year gives us as investors an incredible opportunity to rebalance. and a big part of that rebalancing opportunity is from stocks into bonds. we get so focused, especially in the last decade, on bond and stock prices moving higher as the way to add value in a portfolio, building income is so important. and, you know, looking even past long-term treasuries and cash opportunities, credit environment and many fixed income asset classes is looking

really sharp while we talk about a hard landing, it is what i expect from the economy so many good investing opportunities, we can't lose sight of that. >> joe, that's been one of the biggest issues for stocks x, all the other issues out there and environment for a minimum of the past decade has been there is no alternative, has brought many alternatives. many more deemed to be safer alternatives where you can make more on your money with less risk than you can by putting it in a stock market, current environment, inflation is running at a 40-year high and the fed is embarking on this regime of rate hikes, the likes we haven't seen in arguably forever. >> that also requires you to a certain extent you can effectively manage the market like david tepper. i don't think this is 1973 to 1981 where inflation ran at annualized 9% and the stock market gave you 4% and in that environment, the attractiveness of cash, that's

present. i think in this environment, where there is -- it is pandemic-induced, the inflationary environment, steve might disagree, i think the federal reserve needs a little help from fiscal policy here in resolving the inflation issue. >> i agree. >> what kind of help from fiscal policy >> i agree >> the chairman did not -- >> look -- >> yeah, go ahead. >> i agree with joe. everything i've ever read in economic text books, authorities have a role in bringing down inflation, i think powell should have gone after congress and the administration on spending. >> and you actually think that they would do something, they would listen to the fed chair? >> no. >> at this point >> well, i mean, look, look, you know you want to go to powell and say do the best you can, bring down inflation, that's your mandate and you're counteracting what they're trying to do you could reduce the inflationary impulse in the

economy if you reduce your fiscal spending. >> you approach the next selection cycle, which isn't that far away, that's part of what you saw today with some of the questioning, steve, from the likes of elizabeth warren, for example. >> let's be clear, scott >> that's what you're waiting for. >> yeah, let's be clear. one of the reasons we have the fed is so that it can be a political punching bag that's one of the explicit purposes it serves, the idea it is there to be blamed by congress whether it deserves it or not, in this case perhaps it does, in that it was late to the game in raising rates, but the fiscal side has done its share. people don't have all this spending money because it appeared in thin air it appeared the government gave it to them we could argue whether or not it was warranted at the time, but certainly there is an argument for fiscal rectitude at this point in time to help the fed with inflation. >> yeah, once you open the

spigot to the degree they opened the spigot and all the water rushes out, you don't put it back in. it takes a while to clean that up, even if you turn it off. it has its residual effects. mike santoli, looking at a note from jonathan krenski, one of the biggest stories in the market in the last ten days was the bounceback above the 200 day moving average it is what got you feeling better to begin with here we are, teetering on this 4,000 level, how important do you think that is? >> it is important i think mostly because it has the look of a fed breakout if you do go below that decisively. i don't think it is really make or break despite the hour we're speaking in. i think it is much below there 39-ish matters a little bit more that was the level going into last week, we are backing off, that's where people said we want to see that zone hold. probably is the same

but it doesn't help. by the way, what we did today is we sort of added a potential quarter point at some point along the way in the next several months to what the fed is going to do if that's the straw that breaks the camel's back, we'll have to see. i want to remind everybody, we did 4.75% nine months last year. have to keep it in perspective that's why the market has been able or trying to say maybe we can absorb this, if it is for the reasons the economy has not quite buckled yet. >> liesman, i'm looking at comments that ken griffin of citadel has made in an interview in the last few moments where he says the variance of the fed's message has been counterproductive and, quote, we have the setup for recession unfolding. take the first one first for me. has it been counterproductive, have they been reacting to data, have they been inconsistent and is that part of the problem? >> well, there is certainly

changing regimes back to the old regime i'll tell you the tale of the tape here. they were in this attempt to catch up and then try to front load that's where the 75s were about. and then they went to a regime of 25 as the data came in the idea that now they're switching again, i think that came from the idea of what i talked about in the top of the show here, scott, the idea that not only was january data and february data stronger than expected, but it was the revisions to the december data and the november data that really wiped out the -- some of the progress they thought they made on inflation. so all of that, the facts change, scott, and it made the fed's move to a reactive regime premature. so that's why they're considering going back to it, to try again to get in front of what they see to be a persistent problem. the issue here, scott, is that the facts change and so they're going to go back to the old regime that was more suited to the data as it came in, that

stronger data. >> lauren, i'll give you the last word as we got a little more than 30 minutes here before we close it out. what has been a tumultuous day for stocks given what the fed chair said leave us with a thought, something you'll be watching over the final stretch and in the days ahead. >> i'm going to be looking the most closely at rates volatility we're going to get as steve pointed out a very important wage number on friday, inflation next week, but what is going to matter most for across asset classes is not just what the market thinks, but how much it is changing around expect room for a wild ride. >> thank you i mean thanks to everybody, too, for being here lauren, joe, steve and mike, we'll talk to you soon the twitter question of the day. will the fed hike by 50 basis points at one of the next two meetings please vote yes or no. we share the results later on in the hour we have a news alert on jetblue now. phil lebeau, those details >> scott, i just got off the phone with robin hayes, ceo of

jetblue, he says jetblue and spirit with undeterred despite the doj filing a lawsuit today to block their proposed merger during our conversation, he said that they are disappointed, but that he always felt that the most likely outcome was litigation, which is where they are. so what changes in their strategy at all, scott he says they will be emphasizing a greater emphasis, he says, on what he believes is underappreciated by the doj or not appreciated at all, the fact that they can bring down airfares if combining jetblue and spirit scott, we'll probably see this play out in court later this year, probably in the fall back to you. >> all right, good stuff phil lebeau, thank you very much for that a check on some top stocks to watch as we head into this close. kristina partsinevelos is here with that. >> phil just messengered edmente jetblue and spirit moves evercore upgraded delta to outperform after lagging peers recent pilot contracts should

help lower cost uncertainties. delta shares higher, 2% higher united, 3.5. american airlines, 1.6% higher those are in up sympathy chip names, semiconductors, they're trading on the nasdaq and all in the red with the exception of amd, up .8% right now. a new report from analyst room idc is more pessimistic about personal computer sales. they lowered the 2023 shipment forecast by 26 million this revision pretty much shows that end market conditions have only deteriorated further in early 2023 when everybody was talking about maybe an improvement for chips. that's a negative outlook and why you're seeing a lot of names with exposure like micron, marvel, and the list continues down today >> all right, kristina, thank you. kristina partsinevelos shares of meta well off the highs of the day after climbing on reports that more layoffs are on the way the job cuts will reportedly affect thousands of employees adding to the 13% cut meta made

in november as part of the major cost cutting plan. joining me now to discuss, lo tony welcome back good to see you. >> thank you for having me >> zuckerberg wasn't kidding when he said this would be the year of efficiency what do you make of the latest report >> well, it is clear that he is serious about it and, you know, i think, look, there always is a somewhat of a settling in period after there are significant layoffs. and i think now new information has surfaced and i think in particular we see this move towards flattening, right? i think that's always been a hallmark of the most successful tech companies from inception, even to growth beyond the ipo. and, look, a lot of these companies got a little bit ahead of themselves in terms of hiring from the pandemic tailwinds when that level of activity was not sustained, we now see along with the macro changes a need to

reduce the workforce i think in the case of meta, getting back to that fundamental silicon valley philosophy of keeping things fairly flat >> you know, i'm glad you got a little historical on me because i spoke with brad gersner earlier today, he's famous for that letter, that public letter he released urging facebook, meta, mark zuckerberg, to become more fit he gave me a comment i wanted to read to all of you and i want your reaction to it. lo, he says meta's decision to get fit is not just a cost story, this is a refounding moment for zuckerberg, akin to jobs coming back to apple and realizing the complex management blob had undermined talent, velocity and invention just as apple's cuts simplification preceded the ipod and iphone, meta is on a mission to get simpler and faster because it will unlock the mojo needed to win in the age of ai he's talking about a more minimalist organization, if you

will, going forward. what is your reaction to what he told me? >> look, i think this is consistent with that philosophy within silicon valley of maintaining a fairly flat organization when i had my experience working in big tech, one of the things that was most exciting was that the nexus of power is typically going to be within the product or engineering organizations and when you look at the leadership of most of these companies, they're led by product or technology folks. and they want that connectivity with the lower level, because often some of the best ideas will emerge from the lower areas of the ranks within the organization and as an organization increases the level of layers and higher a hierarchy, those interactions get lost and a lot of the important areas to really understand where to drive innovation and growth is coming from those frontline developers and product managers within the

organization so by flattening the organization, that's how we often see some of the most innovative things happen >> can you see how this would be viewed by some as zuckerberg's quote, unquote jobsian moment and the ability that he now has to really transform his company into, you know, again, as we said not just about cutting costs, but about growing profits? >> right, and, you know, i think what is really interesting is that the dynamics obviously are a lot different, right because zuckerberg never exited and returned but i think this return to the roots is really important. zuck is making an enormous bet on the metaverse they're spending upwards of a billion dollars per month. if it is going to be realized, and the potential is going to translate into profits, there is going to need to be a lot of

innovation that is going to happen up and down the organization and i think zuck recognizes he needs to have that level of connectivity. in that sense, i see this as his jobsian moment. >> interesting what are your thoughts too, i read salesforce is getting into the ai game. everybody under the sun is how much substance is it relative to hype >> there is always going to be a level of hype whenever we see a paradigm shift so, we need to make sure that we maintain some level of focus in the case of salesforce, i do believe that this represents where the near term opportunities exist in incorporating ai look, there are white collar opportunities that i think make the most sense for ai. and in particular, when we think about the more rote activities that white collar professionals perform, the mundane tasks that really need to be done, but they're not really the things

that drive the value so when we look at salesforce, they're talking about doing things like generating draft emails, being able to get customer information, being able to pull in and summarize conversation threads that have been had with customer service agents, those are all things that need to be done, but those can beutomated t ai so that the white collar a degree this could have been done behind the scenes without much fanfare, but given the level of attention that -- and the fascination that everyone has with ai and chatgpt in particular, i think it makes sense. your point is spot on, separate hype >> yeah. i mean, it is obviously not going to be a winner take all thing. is it going to be a few take most or everybody takes a little >> and, you know this is some of the things that we have been looking at

at plexo capital we focus on early stage companies and we look at ai, which has been around for over a decade now the early winners were the incumbents there really were not a lot of breakout success opportunities for startups i think this time will be a little different i think the massive gains will accrue to the incumbents why? because they already have the customer base, they have the distribution, they have the existing technologies that are already being used, and then layering in ai makes business sense. i also think there will be some more vertical or specialized opportunities as well where we could see some breakouts from startups to be able to gain share and to create massive value in the public market >> lo, we'll talk to you soon, so much appreciate your time today. that's lo toney. higher, faster, longer, that was the message on rate hikes from

fed chair jerome powell today during his semiannual address to congress those words obviously having an impact on the markets. stocks lower, rates higher, a trend our next guest believes is only getting started let's bring in cnbc contributor greg branch, veritas financials, good to see you again. stocks going down, rates going up >> as your previous panel said, scott, none of this should have been a surprise. what we have chosen to do and by us i mean the vast majority of us and why there is a disconnect between the market and what the fed intends to do is john hit this right on the head we can't separate what we want from what the data tells us. when we saw that 500,000 jobs number, for january, and saw that pce come in hot, this should have been largely predictable. why the fed futures continue to discount this, i do not know but what i do know is we can continue to look at this from a very myopic perspective and have a negative surprise every two months or we can take a longer

term view of this as i have, scott, and i've been at 6, 6.5% terminal rate for the last three months, and what we want to do is every two months raise it by 25 basis points until we all get there, then i guess that's what we'll do it will be a painful ride. >> you really think we're going to get that high it is nice to throw out a hyperbolic number like 6, 6.5. but that sounds extreme, doesn't it >> does it sound extreme we have seen fed funds rates in the double digits. is it extreme compared to free money? of course. this is part of our problem, scott. we're all -- we're thinking about this from a prisoner of the moment complex is 4.5% unemployment disastrous? i know the politicians will take that red meat to their base, but at the end of the day, the average is north of 5% so we have got to stop focusing on 6.5 or 7 or whatever it is going to be being this

disastrous number when in reality it is just not >> easy for us to say. when millions of people are potentially losing their jobs as a result easy for us to sit back and suggest it is not that big of an issue. edgar jennings is joining us now. go ahead. >> do you know what the bigger issue is the bigger issue is we're going into a period a few short months where we had single digit inflation year on top of year on top of year, starting mid-2021 something that cost a dollar in 2021 will cost $1.25 and while that doesn't hurt at the upper socioeconomic spectrum, at the bottom, that is life changing. and we have heard that from the retailers this week as they told us that the shoppers are moving away from discretionary big ticket items that's a little bit more important than an average family of four feeling that type of crunch. >> there is no doubt that's why the fed chair is so

passionate about the scourge of inflation and having to deal with it. i hear you on that edgar jennings joins the conversation ed, i think the takeaway from today in large part from those on our panel thus far is the soft landing and bullish narrative are dead how do you respond >> that's interesting. at the beginning of the year, as you know, the soft landing story is supposed to be dead because we were going to have a hard landing. now because of the strong january data that came out in february, everybody is talking about an inflationary no landing which is a long way to get to a hard landing everybody is concerned that the fed is going to have to raise interest rates a lot higher and ultimately that creates a hard landing. the bears flipped around from an immediate hard landing to a no landing followed by hard landing. i hope i'm not doing too many landings here. >> my bottom line in all this is the economy is doing pretty well i think that the fed still has the notion of getting up to a

restrictive level and just leaving it there while it does its job. they understand that you can't just keep going and raising rates every single meeting and not appreciate that there are long lags in the impact of monetary policy on the economy meanwhile, it may very well be that we'll all get a little too excited about warm weather in january, because even powell indicated he thought the strength of the economic indicators and the inflation indicators may have been related to warm weather. >> yeah, but you got another problem, though, like, okay, let's say for argumargument's s, i'll give you that the economy is still strong. the problem is powell also said today, ed, that services inflation is way too sticky. and the goods disinflation is too slow and we learned that today from used car prices as well, which have turned around so you got a problem in that

regard because that only emboldened them to say higher and faster and for longer. >> yeah. i think all those points you're making are relevant today, what the market is reacting to. but in my humble opinion here, i think what we're seeing is an inflation is coming down and it has come down most rapidly in goods. you know, just february 1st that powell mentioned the word disinflation 11 times in his press conference following the last fomc meeting. now the word disinflation appeared once and it wasn't in a good light he basically said what you just said, we still have a problem in the core rate. i think he's obsessively concerned about that area of the -- of inflation. i think what we're going to find is that rent inflation comes down, and i think we will find the core inflation rates are going to start coming down i think companies -- i think consumers are already resisting some price increases, i think companies are sensing that and i

think the companies are starting to resist some of the wage increases. and trying to figure out how do you make do in a world where there is a shortage of labor i think you got to use technology and productivity. an optimistic outlook, but i think it is optimistic >> why isn't it realistic? >> to have inflation fix itself, what is the question, scott, sorry? >> you just heard, i'm assuming you were listening to what ed was saying, greg i mean, he obviously laid out the bull case of why he thinks that you may have no landing, maybe at worst you get a soft landing that inflation is coming down faster than maybe the fed chair's acknowledging publicly or that people like you want to believe and it is not going to be nearly as dire as you suggest. how do you respond to that >> first, let me just differentiate, there is no want in what i believe. i only follow the data what we have is two years of

data, single digit inflation so, yes, as the easy -- as the low lying fruit been consumed? of course what we're seeing now is that the service inflation component as you rightly said is stickier. we know there is a high correlation between wage inflation and services inflation and it is hopeful thinking to say that companies are resisting wage increases i'm not sure how that actually works. but the supply and the demand drives wage increases. when you create 500,000 jobs and already have two outstanding openings for every available worker, supply and demand will do what it does. and so the data is not saying that we're going to see a degradation in wage inflation. if we're not going to see a degradation in wage inflation, we know we won't see a degradation in services inflation. that is just a scientific fact >> you don't think that the greatest risk is -- forget the landings right? the greatest risk is that if the

fed does what powell suggests it is willing to do, that the economy is going into recession. there is not going to be any way to avoid it. >> yeah. >> how would you respond to that >> it always has been the risk, you know, i have been in the soft landing camp. i was in the soft landing camp at the beginning of the year when everybody was talking hard landing or people were talking hard landing, and then all of a sudden, i'm dealing with the no landers. so, that's fine. i understand where they're coming from. but, look, much will depend not just on the next batch of economic indicators but the next summary of economic projections that come out following the march, the soon meeting they're going to have because i think they're going to, once again, show that they're aiming to get inflation down to 2% by 2025 they're being realistic. i don't think they have this notion they will keep raising until they get it down to 2% by the end of this year they're shooting for 2025.

and i think they're going to do it i think they can get the fed funds rate somewhere between 5 and 6%, maybe 5.5% leave it there and i think it will do its job >> ed, you heard what greg said, 6 to 6.5 is where he thinks the terminal rate is going. >> that's what makes markets, right? different opinion? >> greg, the last word, then i got to bounce. >> sounds good so, look, a world where we get to 2% in 2025 is certainly one that is palatable for some, but i don't think it is palatable for all. i think that the economic groups are already struggling with the 25% price increases they have to deal with from 2021. i think the fed intends to get lower, not necessarily to 2%, but i feel like as that data comes in, that shows them they need to do more, they will i think that's what jerome articulated today because the

market isn't discounted. >> i appreciate it, as always, ed, you as well. we'll talk to both of you soon, good thing for all of us we got 15 minutes to go until the closing bell there is your market picture dow jones industrial average off the lows, down 527 s&p trying to work its way back toward 4,000, 3992 and the nasdaq down more than 11%, a loss of 131. kristina partsinevelos joins us for a look at the key stocks to watch. >> despite the market sell-off, let's talk about dick's sporting goods, still over 10% higher after reporting quarterly earnings per share in same store sales. and more than doubled its quarterly dividend shares are higher. rivian in the opposite direction, sinking 12% after announcing plans to raise $1.3 billion in green convertible notes and they say to help fund upcoming vehicles. recent earnings reports from rivian and lucid reveal concerns

around demand for electric vehicles, some are the worst performers on the nasdaq 100 and rivian is at its lowest level since going public in 2021 and lastly, affirm is deep in the red on expectations for further fed rate hikes a recent report from the consumer financial protection bureau found buy now pay later users have less money and lower credit scores than the overall population, so that could stoke concerns about users' ability to pay. scott? >> kristina, thank you so much kristina partsinevelos the results of our twitter question will the fed hike by 50 basis points at one of the next two meetings majority of you say yes. a big majority 70% of you think 50 basis points are coming at one of the next two meetings we're in the closing bell market zone cnbc senior markets commentator mark santoli back with us.

mike, you get first word i'm looking at two-year at 501, about 5% stock markets, s&p trying to work its way back a little bit toward 4,000 >> yeah, and, you know, the market effectively agrees with the results of that twitter poll we basically lifted the likely cumulative hikes from here by about a quarter point. quarter percent. there is a sense out there that things have been piping hot in the labor market, it has been. and spending held up and you see di dick's sporting goods up and ulta beauty up today and tractor supply up earlier. you see the consumer plays, and it is a matter of how much rates are going to do to all that. my take is still that the stock market has done a lot to absorb this outlook the inflation numbers have been coming in a little stickier than we would like. but it is nothing like what we saw last year when they were coming in way high of the forecast

and still a little -- the aggregate story has changed, raising the stakes for every data release, jobs and cpi coming up. >> that's what i'm thinking about now. leaning into friday and the jobs report and how much more pressure, if you want to put it that way, is now on the bulls >> yeah. tremendous amount. and it is also about, you know, you have to actually see the inflation come down. it is not just like it is a softer than expected jobs number, maybe that offsets some of the sticker shock from the half million jobs that were added in january put if it doesn't come with some suggestion that you're seeing prices moderate, wage growth moderate, it absolutely raises the stakes here. i think it is basically the equation we have had all year. and as joe was mentioning a little while ago, defensive sectors have not provided defense today. they're directly kind of rate victims and just not the place to be in a kind of high pressure economy that we're in.

>> all right let's bring in mark newton now, he joins us with the quote that he told our producers and i want you to expand on this. i don't see today's sell-off as that concerning. okay why? >> well, the s&p has risen 150 points from low it high in the last three sessions ahead of today. we're giving back 50% of that. but if general this is has been a very strong rally, not only from last october's lows, but from late december and most of january. we look at leading sectors like semiconductors, transports, home builders, all up between 12% and 18% for the year we had industrials breaking out in relative terms to the s&p now we're seeing a slowing down in the move up in yields, which is important everybody now is uber hawkish on powell saying he's as hawkish as he's ever been rates are are not going higher look at the 10 and 30-year, they're down ten basis points from recent highs.

my work shows that rates are close to peaking out with the dollar and should both start to turn down pretty sharply over the next couple of months. >> two-year at 5% didn't mean anything significant to you? >> yeah, certainly i'm not a -- i'm not a economist. there are a lot of armchair economists out there now my feeling is it is best to concentrate on price action and the move on the ten-year and 30-year is key to how i look at the market and look at seasonality for march. pre-election years are down if not flat for the first half of march. they bottom near the tenth trading day of the month, next week i think any further drawdown is not going to last more than three to four days and we'll bol out and turn higher. that could coincide with next week's economic reports. i expect to see inflation start to roll off. in general, stocks are still in excellent shape. momentum is good we have nearly 60% of all stocks above their 200 day moving average.

that's impressive. this isn't something we run to the hills because of one down day. s&p was up -- went from 3925 to 4080 in three days and didn't talk about that. but we're down one day and everybody thinks they have the fed figured out. so, you know, i think we have to be patient a little bit. >> i think, excuse me, the market is reacting to what the chair himself said this idea of higher, faster and for longer, it seemed like fed funds had been moving in that direction. and the bond market had been moving in that direction since the last jobs report it is the very stock market you speak of as showing some much resiliency that some suggest was delusional or not paying atte attention. >> well, trends are still very much in tact if anybody is delusional, it is those that are calling this real bearish and we have to have a big sell-off if anything the trend is back with what i'm saying, sentiment, look at aii reached the highest

bearish level this year. people are paying attention and concerned for the right reasons. that doesn't necessarily mean the economy has to go into a recession right away with such a strong labor market. my own real estate cycling look at the cycle for real estate, it shows a bottom near 2028, 2029, not that we have to go down right away rates start to really start to sell off and pull back pretty dramatically i think we're going to weather this i'm very much in the no landing camp for this year i think we push it off a couple of years the market resilience, there never has been a time where first five days in january is up 1.5% following a down year the average return is about 22% and so, look, in general momentum and breadth support the idea so does seasonality. that march and april should be quite bullish. so i'm a buyer on pullbacks. i don't this i wthink we get unr

last week's lows. >> mike santoli, i'm going to paraphrase, this is much ado about nothing today. >> i wouldn't say nothing, but it is definitely within the realm of kind of the normal sloshing around. when you talk about how resilient the stock market was in as yields repriced higher, the s&p did go down 5% or 6%. the most aggressive parts of the market corrected more. you had the overheated speculative stuff come off the boil in february it isn't like it just stood still. there was things happening and an acknowledgement of what was going on they said i don't understand it, two-year note went up so much that the nasdaq should be down 5% to 10% on this. it went down 7%. peak to trough in february as the yields went up i don't think there is necessarily as much dissonance

as much as might be suggested. >> mark, thank you we'll see you soon mike, thank you. see you at 6:00 p.m. we're going to have a cnbc special tonight "taking stock. tune into that there you go right there george c. has made his way, annandale capital. nice to see you in person. what do you make of what we're witnessing is this -- we're making too much of one day your area of the market has been tech you came over here with a smile on today your sector has been doing well this year so far. >> it has been thanks for nothing, chairman powell appreciate the financial kick in the teeth today. not fun. a bit painful. we'll see where we go from here. i would love to see the fed get it over with and raise 75 basis points and shut it down and say we're done they're not going to do that. >> stocks would be shut down if they did that. >> for a short time. the market would rally considerably once they know the fed is done. we need all clear air raid siren from the fed we won't get any -- a slow drip of attrition.

>> if you voted in our twitter poll on the show today, and we said is there going to be a 50 basis point hike in the next couple of meetings, you would have voted yes >> yes 50%. >> you think the stock market would take a hit only momentarily? in that? >> i think it depends how the fed does this and they're dripping it out. we're getting one today. probably more before they're done. >> what about the areas of the market that you're specifically invested in, you got a lot of megacap growth. >> i do. >> you've been somewhat surprised as much as anybody else in the way that those stocks have reacted to start this year. >> well, a lot of short covering and we were layering in all the end of last year too, so you have a barbell with our commodity plays too. we have quite a few commodity stocks we got a barbell. >> you got a texas flag on your tie. i'm sure energy is part of your book too >> we're subtle people >> 300 texas flags on your tie

seriously, though, do you think that -- it sounds like you're not a believer in your own stocks at least to start this year, maybe caught off guard, many have, by the move we have seen. >> i'm a secular bull on energy long-term. i think we'll have a real bump in the road this year as the fed keeps tightening and as the economy slows down you look out three to five years, energy is going to clean up i'm a true believer long-term. >> i was talking about tech. i'm sure you're a believer in energy joe, you're a believer in energy too. >> who is not a secular bull on energy >> got to be >> you got to be but tell that to the energy stocks, i wish they would listen to your message. so far year to date, i'm listening to george speak, thinking about crowd strike, which is going to report here after the close. >> we didn't touch on that >> let me touch on that for you. implied volatility, a move around 12 to $13, i'm hoping that crowd strike gives me something good i can transition out might have

of my qqq position and buy crowd strike the opportunities i'm looking for in the market reside in -- it is in the trillos, crowd strike, trying to rebuild a little bit of positioning in the growth areas of the market. >> i thought it was interesting, george, you know, joe was not positioned to start the year thinking that growth was going to do well, right? he buys twilio if the last few days, and goes long the qs, not suggesting that he thinks he's going to stay there. but you're also looking to add to areas that you do have. alphabet, amazon, but you think now it is too early? >> i do. i have half the position i want. we'll layer in we think it will go lower with chairman powell rattling the saber every month. >> you think rates will go demonstrably higher from here and that will weigh on technology stocks even further >> i would love to see them stop 75 basis points up that's the right amount, to sit and watch for a while.

i'm worried they'll go higher than that. it is a real concern. >> what about a recession? do you think we'll have one or not? >> i'm betting on soft landing right now. i'm not betting on no landing or hard landing >> how can you bet on soft landing if you think not only they're going to go far, further than people think, but 75 righta withstand that >> i would like to do 75 now and get it over with that will result in a soft landing. i could be wrong, but we'll see. >> why do you think the economy is strong enough to handle all that and the stock market? >> you look at the labor numbers, the unemployment numbers and how much full employment we still got and how resilient all the various indicators have been for the whole of last year, everybody is calling a recession for a year and a hf a half now and it hasn happened. >> it feels like the runway has been prolonged a bit you have brian moynihan, ceo of bank of america, suggesting we'll get a technical recession

in the third quarter that's what we really need to think longer and harder about is just the fact that things have been pushed off. they haven't necessarily been pushed away. second half of the year, i guess. consensus is wrong on everything this year. what is the payment account for earnings i said to you in the last several weeks, i believe earnings really will dictate where the market is going to go. we don't get the answer on earnings until april but earnings are really going to be critical to see if we can grow the bounce that we since october to something a little bit more until then the jury is still out, you have to be suspicious of it. >> we had the two-minute warning, heard the sound effect. i'm watching the clock count down 39.93-ish on the s&p 500 got a little bit of work to do if we think we can get back to closing above 4,000 after the kind of day we had dow jones industrial average is off the lows too still down by some 570

this all sets up this was just day one of the most important 12 trading day stretch arguably of the year how do you get powell out of the way? >> technically from the perspective of momentum and technically and the nondiscretionary funds tomorrow morning is going to be very critical tomorrow morning, if the market makes a run towards unchanged on the month, if the market makes a run towards the lows from last thursday, we're going to be able to see is there enough support there to hold it in balance? if you breakthrough, right back to the february downtrend. >> i thought it was pretty stark too to hear mark newton suggest, the trend is still your friend it doesn't feel like we're in a positive trend market. you suggest they are don't make too much of a one-day move here, he pointed -- all the

reasons why you should take today with a grain of salt. >> and a strong trend in the area of the market that is lead agent 2023, the nasdaq >> here we go. near 600 points. we pick up the story in "overtime" with morgan winners stay late and got to stay late to win today welcome to "closing bell: overtime." i'm jon fortt with morgan brennan. tom lee will join us with his thoughts on today's sell-off and where he sees the market heading from here. >> plus, we'll discuss fed chair powell's message to congress today, and the market reaction with morgan stanley global chief economist seth carpenter, whose name has been mentioned in reports as a possible fed vice chair candidate as well. >> let's get straight to the