welcome back, everybody. dow is about 116, the low. >> tomorrow is the big fed day tune in tomorrow for our big cnbc special the exchange will be live from washington starting at 1:00 p.m. thanks for watching. >> "closing bell" starts right now. thanks so much i'm scott walker live from post nine here at the new york stock exchange this make orbreak hour begins with this big day, and the fed countdown decision less than 24 hours away so much riding on that outcome stocks already jittery, whether it's about banks waging on sentiment or data in a weakening u.s. economy here's your scorecard with 60 minutes to go in regulation. dow under some pretty heavy selling pressure as you know by now, so much for the s&p closing in on 4,200. it was just on the doorstep. it's back way off that round number now nasdaq giving back a good

amount today as well as technology slides, small caps under pressure russell down by 2% brings us to our top, the cornucopia of concerns, hitting the markets today, and what it might mean for where we go pr here let's bring in senior markets commentator mike santoli it's a launddn't have to go faro find things to worry about today. i think it starts with when the market, and the s&p 500, at the upper end of this range has been for awhile more things have to go right, and fewer things have to go wrong to keep it there the huge stocks do their job by insulating us from macro concerns much less expected earnings less week things kind of got burned up in the way of higher prices, and then you get mixed with regional banks unable to rally on what could have been that clearing event resolved i think that was yesterday their stock becomes a zero if you owned it, you probably own some other ones, and i think there was a little bit of a, you

know, as i said before, who's next it doesn't have to be somebody next, but you can try to play the game that being said, with the fed coming, australia hiking rates overnight, in the sense that we know there was always a risk that there was going to be one hike too many. we don't know if it's enough or it's too much, and i think that's just the natural jitters of where they get before a fed meeting when you have the stakes high and uncertainty there, that's the markets saying, let's make it the last one. >> secretary yellen moves up the timeline of debt ceiling sofi gets downgrade. stocks down a lot. >> sure. >> cheg talks about the implication of its business, down almost 50%. ibm layoffs. you go down the list >> sure. >> there are -- it seems to me, to be added risks by the hour almost today >> yes now look i think when the sellers show up, you can always look for catalysts in retro spect or at least coinciding with all of

that, but i agree with you that, you know, we wobbled around this range where, you know, at the upper end of the range, it's maybe the benign outcome is the one we're going to get, and let me also -- people hate when i do this we're at 4,100 and change right now. we closed to 150 one year ago. we closed at 470 two years ago we don't need extra reasons to be sitting at this level because under a whole lot of different conditions we have been here i do think right now though, it is really about a little buit o a batch of soft data i thought that the 25 basis points that we're not going to get tomorrow is going to be the straw that breaks any camel's back, but you don't know that. when the regional banks are saying, look we have kind of few escapes from the profit trap we're in right now, and our book values are not necessarily what they appear, you know, it maybe is just the market craving a little more clarity from the fed >> all right let's bring in cameron dawson now of new edge wealth, and eric

jonston. it's good to have you both with us as we watch this market over the final stretch here cam cameron, you first it's not necessarily that to mike's point, the 25 additional basis points is the straw that breaks the camel's back. it's the idea that bill ackman tweeted about. you want to push rates higher, then watch the outflow of funds from regional banks and into money market accounts and the like, and that just makes people nervous too. >> i think it does because it always exposes where there could be other risks on the balance sheet because the more that you have deposits outflow the banks have to look at their balance sheets and say, where could we have loan troubles one of the things that came out of the earnings season this quarter is that banks talked about the need to shrink their balance sheets or reposition their balance sheets all that points to is slower loan growth going forward which would likely coincide with much slower economic and thus earnings growth. >> i mean, look. let's be honest. you have been calling more recently for the sky is going to

call it's just a matter of when, right? your conviction has been extremely high that we were going to make a u-turn and go lower, and, in fact, we really haven't. now maybe this is the start of something today. maybe tomorrow will be it, but how do you see it now? >> yes, i think equities have been -- have been exfretremely resilient, and this is certainly taking longer than we kpexpecte but it doesn't change the fact as we look at things right now, we are seeing the economy start to really slow in very realtime as we speak. the job openings, they still remain very high, but this is the second largest decline over three months in job openings in the last 20 years. the only bigger time was around covid. we're seeing consumer credit, right? balances are surging probably tells you the consumer is weakening we're seeing tightening standards, etc even amazon, right to think that -- so it's not just a goods issue you look at amazon, aws.

start off the quarter with 11% growth that would have been unheard of one year ago, and there was a sharp deceleration this is not just a goods issue we're seeing this across the economy. service is very strong, right? service remains strong, but if you look at the totality of the data, we are slowing, and, you know, one of the things i would say arnound earnings is that, yu know, earnings have, you know -- >> they have been better than you thought? i can finish the sentence too. >> sure. >> better than you thought >> no. i'm not going to say that because, you know, they've -- estimates have fallen about 10% over the last nine months since we have been negative on earnings estimates growth this year -- excuse me, this quarter was negative. so yes, earnings estimates beat by 7%, which is the headline earnings growth this quarter was negative last quarter, it was negative, and that was with gdp positive and nominal gdp very positive, and we think that's going to decline and potentially gon

negative this year the head winds are also ahead of us. >> cameron, how would you respond to that? do you agree earnings, i think, it's kind of hard to deny they have been better than a lot of people feared >> yep >> that's for certain, and, like, a deceleration is one thing, which we've witnessed on revenue growth for the kinds of companies that eric was talking about. a cliff dive is another, and we haven't seen that. >> the first thing to point out is even though there have been a lot of boot eats, the market reaction has been kind of just a shrug, which tells you mostly for cyclical companies and cyclical companies beat and raise, and the stocks go down, that's usually a reflection that a lot of the good news is already priced in, but then the other challenge we have is that if you go into the back half of the year, you still have a big earnings ramp into the fourth quarter as well as into 2024 so there is optimism baked in, and that optimism shows both margin expansion and revenue staying strong, which means that there's no recession priced into

any of that at these levels. >> we may, in fact, have expectations that are too high for the back half of the year for earnings and into '24. the jury is still out on that. >> without a doubt now the 12-month forward has actually curled higher i think it's mostly because the better than expected numbers from the first quarter are kind of flowing through into current quarter estimates. so without a doubt, it's a prove it situation >> yeah. >> for the later part of this year i do think it has been frustrating for those on kind of both sides of the recession debate because, you know, everything eric said is correct. huge drop in job openings, and a huge surge in layoffs. yes, outstanding consumer credit is surging, but then you look at him on the longer term scale, and it's all kind of getting back to the normal range or it was just so overstated at one point or so much stronger than the norm, that it's coming back to the pack. so i think the fact that we have relatively high, nominal gdp growth because inflation is where it is, is sort of fouling the mechanism a little bit in terms of earnings themselves are

falling off. >> eric, what do you expect the fed to do and say tomorrow or at least imply? let's add that word into it? >> you know, so i think that inflation, you know, our view right now is that inflation is going to prove much stickier than i think maybe the market is really anticipating, and so i think ultimately tomorrow they're going to raise 25. i think they're going to leave the door wide open to go in either direction for the june meeting, but i do think the take will be slightly more hawkish than people are thinking, and the reason why i say that is you look where the pce and cpi, numbers they look at, still are, and you look at our deficit spending our deficit this year is going to be somewhere in the neighborhood of $2 trillion. that is very stimlative, and that is a major tail wind for inflation, and so i think it's going to prove very, very sticky, and the fed knows that, and is going to have to give a tone that will probably be more

hawkish than the market is currently expecting. >> i understand that, but maybe in the same respects they'll be tone deaf to the issues that have been around the banks you just had the third bank failure since march. you're unmoved by that rich giving -- the former fed vice chair giving an interview i would be in the camp of signaling a pause, he said, a short time ago you wonder how many others are in that camp >> so i don't think they're going to want to put themselves in that box because if they come out somewhat, they won't come out explicitly, but somewhat explicitly indicating a pause, and ask the prices work to rally, they'll be in the same predicament that they were before where they led the market in the wrong direction and they have to pivot back and i don't think they're going to do that if you look at rent prices, the real world rents prices, they're ticking up again so a lot of the indicators beyond sort of the cpi are also

suggesting that things are starting to be -- kind of move higher again from the inflation front, and i do think that's going to concern them, and so i think your best case scenario is where they just play two sides, leave it open, and they'll see where the market takes them over the course of the next month >> going to be hard for the fed to surprise us, right? >> i think it would be hard to have a machjor surprise it's going to be about the shadings of the message, probably, but i would take the other side of this idea that they feel like they have to be hawkish. they're never going to declare victory if you have inflation twice at their target, but so much different than last august, when inflation was still pushing 10, and the markets were ripping. here we have, you know, there's some elegance to getting the fed funds rate to 5% and saying, let's wait and see that's above core pce. that's restrictive, and the fact the economy has slowed down to a fair degree is also getting to their goal of below trend growth for some period of time. there's a rationale they can easily trot tout say, enough for

now. we're kind of in the zone of where we need to be. meanwhile, debt ceiling and regional bank stress, another reason for a risk management mindset to come through to some degree in the message. >> do the tea leaves and clarida tell you anything about tomorrow >> that means it's going to be far more split, and we could see defectors and pushback we won't know until after this meeting because we don't get an update to the plot, but i think it's also important to remember that this hike gets us to the median dot that they raised to in march, which means that they're finally restoring credibility in their terms so this kind of gets us to the success of saying and doing what they said that they would do, and now from there, i think that they have a little bit more wiggle room to be able to stand back and see how things play out, but we'll see that really battle out between the hawks and the dofves and the fed speak following this evening. >> i want you to challenge the other side of this need and, you know, necessary thing to be

hawkish tomorrow by the fed. just -- i would say, okay. well, maybe you would be right if we didn't have three banks implode since march, but maybe the playing field is littered with some land mines now that the fed just doesn't want to take a risk on walking down. >> yeah. i mean, their commentary has kind of gone back and forth on banks, whether it's some of their responsibility or not. i do think, you know, bottom line is it does scare them a little bit and they don't want to be held responsible for that type of, you know, action, but i think what their path has been to talk hawkishly as we know, and what they would be concerned about is the going back and forth and changing the message before the, quote, unquote, job done if you look at the data it's very difficult to find a reason for why they would pause. >> because it's all lagging data come on. you can't expect the whole story to fall apart. you know as well as anybody that

we're just beginning to see the effect of what will be, what ten or so 500 basis points worth of rate hikes? >> i agree there's a lag effect for sure we have been talking about that a lot, and i think that exists, but the fed to be has been very focused on a lot of the data that as we know, is lagged so whether it's pce, cpi, the current unemployment rate, right? all of this data that they talk about, and even job openings which have come down a lot, but they're still at an elevated level. wage growth, the eci came out. it's analyzing over 4% wage growth, and so all these indicators that they look at, and don't forget they're trying to get the 2% average inflation. average inflation. so you, you know, getting in a one-touch on 2% is not getting their job done so they're well above where they are trying to get to, and i'm not sure they're going to want to make a bet right, if they're going to err on the side of

caution, but if the lag effect is going to work out >> the other key event which we haven't discussed at all today is apple and the earnings on thursday, and what kind of an event that's going to be eric is negative on apple or at least thinks it's going to be a negative event what do you expect, cameron? >> the bar is really high after you saw the big rally not just in the recent days, but from the beginning of the year. it's now trading at 27 times earnings, and what's interesting is that if you look at apple, it's had flat profits for the past couple of years you have seen the earnings grow because you've seen them buy back a ton of stock, but the question is should you be paying an increasingly high multiple for apple given the fact that earnings aren't growing rapidly? so what we'll see with technicas that $180, that's the 2022 high, that's formidable resistance you could move up to that. you're seeing better relative performance, but i note that momentum in apple, even though the stock has been trading up, has been kind of flatlined for

the past two months. so that would tell you all that this is a really important quarter with a very high bar >> write the mega caps off at your peril we learn about that as we go through earning season as we did last week where they were pretty good. >> they mostly were. i wouldn't write them off, but you have to keep them in perspective. sowhen they rally and the rest of the market doesn't, it doesn't mean that the s&p is at an illegitimate price or somehow it's a house of cards. it means it's an unbalanced market, and the rest of the market is resetting, and so i do think it's clearly mathematically important tomorrow it's definitely always a test of the willingness of investors to pay up for the stability and the perceived predictability of a, you know, $2.5 trillion company that buys back a few percent of its stock every year. >> guys, good stuff. eric, thank you as always. cameron as well. santoli is back in the market zone we look forward to that. let's get to our twitter question

what should the fed do tomorrow, right? what should they do? should they hike 25 basis points or should they pause you can head to @cnbcclosingbell on twitter to vote later in the hour we'll reveal that, and don't miss our all-star lineup. we'll hear from the double line ceo. we're getting his first take, and charles schwab's liz anne saunders she's reacting to the stock move on "closing bell,". now we have more news regarding the famed activist investor just putting out a statement in response to the short seller report from hindenberg research which is targeting enterprise he's saying iep has significantly inflated the value of its assets, that it trades at an unreasonable premium, and also went after the dividend

yield saying mr. icahn has been taking from investors to pay out dividends to old investors icahn now saying that the company believes the hindenbeur report was solely a self-serving short seller report. we stand by our public disclosures and we believe that iep's performance will speak for itself over the long term as it always has a tough day for iep shares currently down by more than 20%. as we head out, another check on the dow. it was down more than 600. half those losses down 382.5 got about 40 minutes or so to go. up next, the regionals getting slammed today. we'll break down those moves today. and after, amd on deck

we'll break down what we're watching in that report. you're watching "closing bell" right here on cnbc

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let's get a check now on some top stocks to watch kristina is here with that >> we're watching weakness in energy today as oil prices hit their lowest level since march diamondback is following its

earnings miss. here are other that include marathon oil, a parks corporation, and halliburton down 37% right now the company says ai tools like chatgpt are having an impact on new customer growth rates. chegg is down 50%, and those are weighing on other educational players like duolynningo, and others back to you. >> look part lookin looking forward to hearing from daniel les lessless leer-- leslie picker i here >> steep drops in banking today once again as the market digests the fallout of first republic failure and the sale to jpmorgan the kre regional bank etf down

more than 6% western alliance, and key corp leading its level of uninsured deposits, and did thesis stems from the fact the bondholders and stockholders were wiped out in yesterday's seize to jpmorgan, and they're re-evaluating the decision that they see the same fate the power of the big bank balance sheet preferred by the fdic in this case to acquire the famed bank out of receivership in a world of potential industry consolidation. this calls into question regional's ability to compete, scott. >> leslie, thank you we'll follow it. some stunning losses again today. for more now, let's bring in david. he covers the regionals. i'm really glad to have you today because you're in the heart of this proverbial storm in terms of your coverage list

it's all over this space how are you thinking about it today? >> yeah, it is surprising to see this level of selloff following the first republic saeizure yesterday because this was front and center for the past month and a half you didn't have the same sort of shock and awe that occurred right after svb went down, right after signature bank went down people were prepared for first republic to go down. so it is surprising that, you know, this sort of reaction today, if anything, should have happened yesterday so the delay is a concern, but what i'm thinking is that people are looking ahead, looking to the funding issue for banks because rates are continuing to head higher deposit costs are continuing to head higher, and then credit quality. i think that what the market is telling us is that credit quality is going to be an issue and commercial real estate is getting the headlines here with

the banks. that's what's concerning us, and we have been cautious on the banks over the past year or so we continue to be cautious looking parted, and really curious to see how this plays out. >> one of the things just said, you know, about deposit costs, it doesn't matter if deposits are leaving, right that's the kind of thing that bill ackman was tweeting about today. fed's going to likely raise rates tomorrow you continue to push rates higher, you've got competition from money market funds like you haven't had in what feels like a generation at this point, and you're going to see more flight as a result. >> right so you've got the fed's balance sheet that's coming down it's not even the banks competing one anothers as you noted. they're competing with market funds. this funding pressure will squeeze in net interest margin you've got the cost pressure on the deposit side, and then when the credit quality costs end up going up, you're going to be left with far less earnings than

what people were expecting earlier this year, and certainly late last year so multiples are coming down, and i think investors are beginning to shift towards tangible book value as kind of a baseline to support valuations >> can you -- can you feel confident putting a bye rating on any of the stocks in your coverage list? as we have this conversation today, i'm talking about pacwest, and i don't have your rating ratings in front of me i just have your coverage list citizens, western alliance i mean, some of these are in the heart of this today. do you have a buy rating on any of those if you do, how >> yes so the only one out of the five you mentioned, they have a outperform rating on is western li alliance, and we put it in the category of higher risk, higher return we just upgraded it right after they reported earnings when it was training at $32 a share, and they really -- what surprised me and what was a good surprise is

that of the 6 billion of deposits that left in the first quarter, they got 2 billion of it back, quarter to date through april. so we're seeing some stability there. we're expecting $8 of earnings per share from them. so it's trading at, call it, you know, four times earnings, even less than that we put it in that higher ricsk, higher return category >> like pacwest, for example forgive me for interrupting you. what do you have on that >> we've got a neutral rating on that one, and they do screen poorly from a -- when you look at tangible book value on a fair value basis they screen poorly in that regard, and they've improved their insured kdeposit rate they were down 45%, and they've increased that to 73%. so that should add some stability to them, but i think what investors are focusing on for them is also capital capital has been an issue for

pacwest. they're trying to increase their cet 1 ratio. they're attempting to do a capital raise, and svb going down they pulled that off the table, and now looking to send their lender business to $2.7 million portfolio to lower the balance sheet to indirectly improve their capital ratio. pacwest has wood to chop, and they have a poor number of metrics and i think that's the reason why it's coming under such pressure. >> it's getting chopped all right, and today it's getting chopped by another 25% i appreciate your time very much >> thank you up next, forecasting the fed. the countdown is on. tomorrow's crucial decision and our next guest is raising the red flag at what he says could be theigst r bgeisk for commentary tomorrow. he'll explain after the break. we're back with "closing bell. dow is down 350.

welcome back stocks wavering ahead of a critical fed decision tomorrow our next guest says the big risk

is more hawkish commentary than our investors expect we have the senior market strategist at wells fargo institute. welcome back why is it going to be more hawkish than we think? >> well, for one thing in our opinion, anyway, i think the bond market has this mispriced we think the fed is going to hike tomorrow, of course, but probably another 25 basis points in june, and i think more importantly, a hold rate steady over the balance of the year, and clearly that's not what the bond market has priced in. so i think the risk is we have been up here toward this big resistance level at 4,200 as you mentioned. you know, there's a lot of reasons to be concerned here, and if the fed talks hawkishly just from a trading perspective alone, you would think there would be some downside in the market. >> i'm trying to think of what the probabilities this could happen if could mean a lot of things. economy is slowing, inflation is coming down. banks are fragile and some are wobbly doesn't that factor into hour

thi -- how you're thinking about all of this? >> it does, and for us, did we think inflation was going to fall in a straight line? no has it come down a decent amount yes. when you look at core pce, and cpi, we're hung up at levels that are above what the federal reserve would like to see over the long term. it's going to take longer to get down there, and in our opinion, trs going to take a recession to push downs to the levels the fed would find acceptable, which we think will happen in the second half of this year. we're looking for sub 3% cpi by the end of the year, and a lot of that has to do with the recession that we think is probably going to start, you know, negative gdp, third, fourth, probably the first quarter of next year so that's what it's going to take to get there. unfortunately we're going to have market volatility that's going to come along with that. >> they don't necessarily have to keep hiking to put us into a recession. we're starting to feel the effects and implications of what they've already done >> that's right.

>> maybe they're content on just tomorrow and pausing and holding and seeing >> they could be, and, you know, i think, you know, they're going to -- they're going to hike tomorrow for sure. after that, you're splitting hairs whether it's another quarter or they pause or whatever, but i think the important thing is how long are they going to leave it at the terminal rate? the market's pricing in better than 50% chance of a cut in september, and then i think north of about 80% in every meeting through the end of the year they're going to want to see this inflation come off because of course, the last thing that the federal reserve wants to do is take a pause, have inflation hang up at levels that are too high, and then have to start hiking again >> how vulnerable again are stocks do you think? >> well, you know, for us, we think that the topside is as i said, 4,200, you know, the bottom of the range as you said, as we see it is around 3,700 let's call it 10% to 12%, so really for us, when you see all

the risks that are out there, m2s crashing credits tightening, and the fed will leave rates high, unemployment's going to go up. we think we're going to have some downside here, and very well could get toward the bottom end of that range, which at that point, we would be pretty optimistic and we do some positioning, nondefensive positioning looking out well into 2024, that we think is going to be a lot better. >> scott, appreciate it very much up next, you know by now, we are weighing the big risks at hand, trying to navigate how investors can best position themselves amid this volatile ti - vola volatility don't go anywhere. "closing bell" will be right back

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we got 20 to go before the closing bell let's get back to kristina for a look at the key stocks to watch. >> let's start with molson gaining almost a percent right now. its highest level in almost four years after its earnings easily beat quarter one estimates even though they have been hiking prices on its beers and sel seltzers, the company is shifting to cheaper ones like coors. the opposite direction of tap, almost down 7%, even though

dupon dupont beat estimates. industrial businesses forcing them to trim their outlook they agreed to buy spectrum plastics group for 1.75 billion shares or almost 7% lower. scott? >> kristina, thank you very much last chance to weigh in on our twitter question we asked, what should the fed do tomorrow hike by 25 basis points or do nothing and pause? head to @cnbcclosingbell on twitter. the results are right after this break.

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the majority of you said, nothing. that they should pause 51% said it was close we'll see. hope y'all join me i don't know we're 24 hours away, less. there's the dow today. 358, 359 to the downside it's been an ugly day. our next guest is forecasting even more rough waters ahead i'll explain why, and how to navigate it in the mart nekezo

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the crucial moments of the trading day. scott krohner on why he still sees nearly 10% downside for stocks by the middle of this year and stacey raskon is back with a setup for amd. earnings after the bell. looking forward to talking with all of you i'm beginning with santoli and looking at pacwest why? it's down 27.5%, and as long as you have issues around the banks or perceived issues or worries about potential issues, this is the kind of day you're going to have >> you can't be comfortable. it doesn't mean that we know something specific is blown loose in the system. we know that there are enough people not wanting to stick around to see. i do think there's a decent chance it's very hazardous to say this. you got a really good flush in the overall regional banks today. they're a little bit up off their loads. it seemed pretty indiscriminate, and not really pinned to anything except we have a fed meeting tomorrow, and it comes with the obvious risk that it's one hike too many if we get that

hike the bold case, if there was a premise out there it was peak inflation, fed pause and a predictable fed thereafter, earnings dipping, but flattening out, and therefore evaluations are not too extreme. sentiment and positioning remain defensive, and how much do we use that up to get into the upper range, really is where the debate lies. i do city think we get the pause. everyone who says they're still way above the inflation target, they're correct, but they got back to 2%. >> right >> you got to remember all the ways that powell rationalized aggressive hikes last year he was reaching for gasoline prices, for university of michigan inflation expectations, for job openings, for everything he could to say -- >> i thought you were going to say tuition implications. >> he might as well have the point being, when you get to the point where they think they're going to need to make -- they're going to find a rationale for it, and it's going to be persuasive as long as they stick to it. >> the tough thing is if you get

a sell on the news, even if you get an implied pause, because what do you have >> you certainly could >> what do you have? >> they're going to try both directions we know the market always does that just to see where the conviction lies after a pause i think it's going to be about whether financial conditions relax at all after we get a pause over the next couple of days, or if they continue to seize up credit conditions are not really at the stress levels right now, but they're inching in the direction of, hey. you want to pay attention. >> we still have to watch the contested cabana indicator we'll get to that later. scott, you think that stocks have 10% downside from here? >> you know, we went into this year thinking 3,700 was a pretty good, you know, first half target that was predicated on ongoing fed hawkishness which is, you know, has been on and off this year we also thought for earnings expectations would have a downside bias, and that would continue some of the negativity. at this point, as we get closer

to the mid-year point -- >> i think we've lost the microphone we'll try to get scott back in a moment, but look there are some who think we're going to back to the october lows there are some who would say, well, yes, we're going lower, but we're not going that far back lower because we're not in that dire of straights. >> that's right. you have to remember the inflation level at that point, and how much more the fed had to do, and the fact that it seemed as if it was a stagflationary panic. 3,700 is not that much above 3,500 which is roughly where we bought it last year. i do think that there's a plausible reason to be skeptical about the way the market has come off that low. it has not behaved the way a traditional bull market would have in terms of how broad it is, the aggressive sectors leading and all the rest of it on the other hand, i've said from the beginning when we got through those october lows, if

that was it, if that was all the pain this market had to take -- >> yes, you did. >> we considered ourselves lucky. >> you did >> what does it mean when you get a relatively unpunishing level? it means the returns are probably not as good as if we got a real devastating kind of a crash to a low that was much more extreme as we did in early 2020. >> scott, we're back with you than thankfully what does take us lower if, in fact, you're right >> well, guys, i think from here it's going to be the perception in that second half earnings begin to falter. it'll be higher for longer fed funds, and that's our house economic view against the 550 to 575 funds rate if you look at end of the year expectations, the market is expecting that you get a pivot and you're down to 4 1/2 that 100 basis-point spread is the battleground in the market right now, and essentially it underscores that there's a big division between the valuation

driver that's taken the market higher so far this year, and where fundamentals may ultimately lead us >> scott, i appreciate it. sorry about the technical issues that we have we'll have you back. stacy, amd, and somehow all roads lead back to intel with you because intel's on your mind as we're thinking about amd. >> well, i mean,to be clear, you could argue from a market standpoint, intel's results may be somewhat supported. the results were not good. they were objectively horrible, but better than expected on both pce and data center. they thought the channel which has undergone the inventory flush, ought to be normalized and those things were somewhat supportive of the markets. that being said, i do think intel's print made the setup just a little bit tougher and particular data center because intel's results while they were bad, again, were better than expected

they actually beat fairly handily, the reporter, and so amd does not show a kind of similar data center, and they got the data center down pretty significantly. if they don't show a similar amount of gain, you can start to pull a little bit into the share gain i think the setup is slightly harder, but the market commentary may be supportive >> when are you ready to declare that pcs have bottomed >> well, they may have, right? again, it's not just -- for these guys, it's not just the pcs. they sell the chips that pcs use, and for much of the last year and much of the year before, the industry was overshipping cpus versus pcs they were overshipping by 30%. they are now undershipping by a very wide margin intel suspected it was by 20%, and maybe even worse than that because of that, eventually you

can't undership forever, and even if pcs themselves are weak, you move from undershipping to shipping to demand, and it actually gives you a lift, and we upgraded intel awhile ago, and that was a big piece of the upgrade. it seems likely to happen. >> you cover nxpi? >> sure. >> i mean, i guess i ask you that in the context of stocks up 3.5%, and -- >> sure. >> -- as we're ready to declare that, you know, those kinds of companies are going to falter. it has a heavy exposure to autos, what's really going on there. there do remain some upside surprises. -- right >> they're having a strong quarter. they've beaten raise, and what happened their core market, the auto and core industrials are resilient, and they have had a decent week in some of the consumer areas in china, and they were less bad than they expected and they're seeing some recovery they've got mobile recovery into the back half and some other things, and those actually look

pretty good. the margins were okay. i think the big question sustainability i know investors are worried a lot about auto because it's the last market that's holding in, and they've shown signs of holding and it can't last forever. you go back to the same kind of analysis, the market, and auto shipments, and they massively diverged over the past couple of years and i think we're shipping -- i don't know what it is 50% or 60% above the trend line in terms of concontent, and peoe point to lots of things in driving that doncontent up, but it's now for sustainability, and it looks like it's going >> as always, thank you. don't miss amd's ceo, "squawk on the street" tomorrow we look forward to that as we always do. starbucks which is in overtime in just a few moments. kate >> scott, analysts are looking for eps of 65 cents on revenues of $8.4 billion for q2

same is expected to increase 7.1% overall, and 8.5% in the u.s., and .6% overseas this is due to covid challenges which is projected cocontinue into this quarter. we'll hear from the ceo on the call for the first time. the former ceo howard schultz remember stepped down on the 20th, but this was after he left the company a year ago the union battle with starbucks which schultz testified about before congress last month investors don't seem bothered. the stock is up 14% plus year to date. >> we'll see what happens. kate rogers, we'll see you in just a bit all right. mike santoli's back with us. we have had the two- minute warning. >> it's a bit sloppy we're up off the lows and the indexes, but you have an 80% downside volume day in the new york stock exchange. you have the russell 2,000

struggling trading beat for beat with the financials for the most part down another 2%, really not that far off of where it was, you know, back before the pan pandemic so i think it's still a delicate situation. we go into the fed trying to stay somewhat neutral in the middle of the range right here i do think it's worth remembering we get the adp jobs report tomorrow. never really a market mover, but it's a reminder that it is a jobs week. so we're going to get loaded with a lot of here's where the economy stands right now, and then tomorrow, obviously it's going to be hashing through the message from the fed where, you know, you have had the market in regional banks essentially, you know, proactively throwing a tantrum, suggesting that maybe the pain threshold isn't much hire than this right now. >> i would give you one more reminder, liz ann sonders joining us on friday we're excited about those interviews there's the vicks. i did want to mention that that's what nervousness looks like for a day. >> and yet it ticked toward --

above 20 at one point. it shows you it has a hard time getting ahead of steam, but it is on alert right now, a couple of points off the low from last year. >> all right so the dow was down by more than 600. recovered a bit. let's talk about that. down 357, but it all grows, leading the fed here up here in overtime tomorrow, overtime does begin now with morgan and john we got your scorecard on wall street. welcome to "closing bell overtime." get ready for a big hour of earnings with reads on the consumer, the chip space, commercial real estate and more. our reporters are standing by to bring you results from ford, starbucks, amd, and silent property group. >> and the ceo of chegg, the company that got wrecked today as it worries about the effects of artificial intelligence let's get straight too today's wild