sauce? >> everything all the time. >> my kids put ketchup on everything. >> this comes full cycle to tyson foods. your chicken nuggets are cheaper, but the ketchup is more expe expensive. welcome to "closing bell." i'm scott wapner at the new york stock exchange we begin with stocks wanting to see more evidence that inflation is falling, more evidence the fed might be finished. a busy week of data and earnings just started with 60 minutes to go the dow down slightly for most of the day. that's still where it sits we have disney's numbers this week and the critical meeting on the debt ceiling there was a warning from treasury secretary janet yellen

of an economic catastrophe if that issue goes south. there she is a big interview with the secretary herself ahead. we're looking forward to that. the s&p is holding, along with the nasdaq we have an hour to go until the end. what should investors be doing with major issues unsettled? let's ask adam parker. he's with me welcome back. >> thanks. >> seems like you're getting more defensive you upgraded utilities to overweight, staples to equal weight and downgraded discretionary. >> i'm trying to position for the inevitable either you benefit from ai, you can't be destroyed by ai or i don't know, right? i'm starting to realize i know

i'll need utilities. i'll need staples. maybe they'll trade higher. >> wait a minute you're making market calls, broad market calls at this point? >> no. sector calls >> on ai >> yes >> who's going to win? who's going to disrupt who's going to lose? >> the market multiples are telling you who they think are going to win and things that are going to benefit, not benefit or get destroyed. what i realized the market's not up because people got dovish on the fed. it's because there's things changing and ai is starting to impact a lot that's part of the reason the market's up. part of the reason invidia's up. it's not speculative >> people say there's a bubble related to ai. you don't think it's too soon to

make sekctor calls >> it might be i've been too negative things i'm confident can't be disrupted by ai, maybe i should pay a higher multiple. we've been wrong and it hurt the portfolio. i'm trying to take it to market and say there's reasonable names i can hold that will remain at elevated multiples. >> what do you think broadly lies ahead got last week out of the way, a critical week with apple and fed. we have companies like disney. we have the debt ceiling which we're finally paying attention. >> i'm a seller on caring about the debt ceiling what's the alternative they're not going to pay government employees no they're going to raise it. when we raise it, the market will go up that day. that's been what happened the nice 97 times they did this.

i don't know if the next 10% move in the s&p is up or down. >> do you have a sense >> i think the rhetoric is negative, but i think people are worried it could go up and they'll miss it. earning season has been better numbers have been okay there's signs that things that inflation is rolling over. you're seeing consumer companies -- go to earnings. it's not a disaster and what people thought it would look like i'm mixed. we talked about this a million times. you always sound dumber when you're bullish if you're bearish, debt ceiling and most of that doesn't matter. what matters is earnings they're eroding, but not imploding. i want to own growth stocks. people are too negative on metals i find things that can outperform i'm not in the bear did he know.

the economy is slowing a little. >> you truly don't care about the debt ceiling issue even if it gets messy around the deadline and we have a big pullback you would be a big buyer >> yeah, i would be. i don't see what the alternative is to them raising it. what are they going to do? not pay government employees there will be washington stuff, but they'll raise it i'm doing this on the ipad oh, they raise it. okay i don't know what the craziness in the interim will be i don't believe they're going to implement massive hysteria and run it as a balance but yet. >> you're measured about the market overall >> yes >> what do you think of -- we're just coming off the berkshire meeting, buffet and company out there. what does it say that he's talking next to nothing about opportunities that they've taken on declines in the market, sitting on a mount everest side

pile of cash, not putting it to work in any meaningful way the guy is the greatest investor the world has ever known he's voting for not yet on great opportunities. what does that say >> they do big deals they have a lot of money they need to find something big. i don't think it's inconsistent with m&as. i don't think there's going to be a ton of deals there either they have a lot of capital they'll do bigger deals. that's pretty consistent if you listen to them, we all love listening to them they're not big believers in private equity they're more focussed on the public markets they have a concentrated amount of money and looking for good businesses that are reasonably priced i can see that logic. >> the other comment that raised eyebrows is central banker

getting, quote, vibes of a credit crunch beginning. what do you make of that comment? also in the context of the loan officer survey, a lot of people were paying attention to tighter credit and weaker business loan demand you have a tightening of credit. >> every time i come on i say i don't like the regional banks. i don't know how somebody is surprised about that now it's been obvious. talk to anybody about trying to get a loan from the regional bank, zero regional banks, of course, that's slowing it's hard to be bullish. whatever your view was before the banking issue, it has to be lower now. financial conditions are tight i think there's relaxing of financial conditions we need more loans. >> is the fed being done at bull case >> yeah. they didn't say that clearly.

>> if you have austin talking about a credit crunch, the data of credit and loan demand would suggest, are they going to keep raising rates in the face of a deepening credit crunch? >> i don't know what they'll do. i think most people have been wrong predicting what they'll do it feels like more of the raising is behind us i think on the margin they'll be a shade more hawkish we'll see. because they tend to look the most at full employment and stable pricing that data -- the main issue is the employment cycle will be way different. you're gutting the middle end worker we talked about this a couple weeks ago. the wm, waste management ceo saying i can't find somebody to drive a trash truck for 90 grand a year in houston, but if you have an mba, i can pay you 60

grand. it's a meaningful comment about where we are in the economy. that middle end might not be in as good of shape there could be dislocations on discretionary which is why i'm sanguine on some of the things that dominate the retail sector. >> do you think there needs to be a reckoning about what the -- it's like jm morgan said, quote, dissidents remains from the bond market, equity market interpretation of those cuts and the fed's rhetoric not seeing anymore rate cuts. what markets refuse to acknowledge is if rate cuts happen it's because of a significant crisis in financial markets. talked about breadth being the

weakest ever, narrow leadership. >> look, these are all smart people. >> there's offsides between the market and fed and somebody is wrong. there's going to be a reckoning some way, sometime >> the market's never wrong. the market being robust is telling you earnings will be better six months from now that's the bet i would make. that's why i'm not as negative as some of the other people. >> you said the market is never wrong. >> i think the market is usually right. usually. not never. i'll take that bet the market is telling you that earnings have been more resilient than we thought six months ago in terms of the bank stuff, everyone knows -- what we don't know is the private credit it feels obvious that that's asymmetric between the negative and the positive it's why the regional bank index

has got annihilated. what's the economic contagion from lower loan growth and tighter conditions that feels worse to me technology is impacting the way businesses are running and performing the stock market reacts to expansion. if the commodities are down, if the dollar weakens, that's positive for earnings. we had high gdp. i'm saying, generally, maybe the earnings, the bear case for earnings is less severe than it was six months ago. >> okay. let's bring in nicole webb do you agree with that >> you don't have to >> it's better if you don't. >> it's preferred. >> i would love to go back to the conversation earlier, which is what breaks us out of the range we've been in. to some degree i do agree.

we need to see margin expansion. what's the implications of it, the expansion of ai. i would go to buffet and sitting on enough cash, so much it's the economy of germany what does that indicate? he thinks rates today are higher than they're going to be he can capitalize on the short term, capture the upside there and make mindful investments when he sees the effect of tightening credit. a lot of growth we saw was in q1 bringing the convergence of all this together and to your exact point which is the market is pricing in cuts, is the market going to be wrong? it's a political game of chicken. how can you go into 2024 pushing rates on a trajectory where you're forcing the unemployment numbers to go up >> you're talking about the election year, 2024? >> absolutely.

how is there not pressure on the fed? that's where i think you're seeing this push/pull effect. >> do you think the stock market is pricing in in any way or ignoring policy risk from the fed? is the stock market ignoring that >> absolutely, investors and the market are ignoring how fiscal policy will affect markets if you take out the excess being built in in terms of liquidity excess that comes into the market in the back half of the year, our valuations which are trading near highs, is it sustainable into the new year? >> what about adam's point you were expecting an implosion and you're not getting it that much? maybe valuations should be

higher than we thought. >> i think there's a strong case for your point there exactly you also saw -- there was a lot of tailwind in q1. if you think about what reprices, it's a lot of what we saw priced in in q4. breaking through it, that didn't happen to be a recession we dodged a recession on on a global scale when we reach the high end, you start to see the capitalization, people pulling off when we reach the midrange, you see the buys how do we break through that is where one has to push on the bull case. is it just a reinfusion of cash into the market? are we stretching multiples too far? >> i thought apollo ceo had a good line, a nonrecession,

recession. >> rolling recession >> i don't know if that's got to manifest itself in s&p earnings the same way it did in the past. i don't think it's going to. we have so many different businesses with higher margins the market getting killed q2 last year was the earnings dec decline that happen. again, i'm not saying, hey, the train's left the station jump on board. i think there's things i can own and things i don't want to there's bigger things at force. >> let me ask you both, what makes better sense, sounds more realistic, 4400 or 3,800, s&p? can we get to 4400 >> we might hit both this year i think both are possible, maybe

even this summer i think 38 is possible if the solvency of the u.s. dollar gets called into question, which it never should, yes, we can -- >> planet earth will end if the dollar's not good. >> if we see political pressure for the fed to adjust course, i think we hit 4400 before the end of the year. >> i'm trying to do the math on 44, 38 i don't think you gave me the same percent up or down. i'll take 44 or 38. >> it's to your point though it's easy to be negative and you can give all the lists and say, well, you can easily see us going back to 3,800. doesn't it seem like it's a harder case to make to get to 44 >> everyone wants the recession to happen so they can get bullish and buy stuff. is it cheap on 25 or 26? >> be careful what you wish for. >> right

when you're an equity investor, you want to see what number you can evaluate current valuation i don't know i think earnings are up in '24 and i'm on a cycle, the fed stops hurting me here and maybe we let inflation come down margins can go down and the bull case is you're in a five-year cycle and trying to value it on 24 earnings. >> last quick word, nicole what lies ahead here over the next month >> in the ultra short term, incredible pressure on the market to the downside as we have the looming debt ceiling. janet yellen, it was a call to action over the weekend. we're not paying attention to the fact that we'll see loan growth decline probably substantially over the summer. below the surface of the market, there's still opportunities for

investors to get invested because not all companies are trading equally right now. i think that would be my parting words to investors pay attention and look for opportunities where ai can impact future growth potential >> all right >> i don't like the breadth thing. i don't like that. when i look at your screen, tons of stocks up 20 and 10%. people look at the breadth because when you go up 10% -- there's plenty of 10 billion stocks up 50%. i have to myth buster that. >> we'll look for that nicole webb, adam parker, thanks. which of these sectors have the most upside? it's our twitter question of the day. go vote. we have the results coming up later on we're just getting starting on "closing bell.

signs of life in the ipo market rashawn williams is breaking down if he sees a thankw in tha space. we are live from the new york stock exchange here on "closing bell" on cnbc.

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welcome back let's get a check on top stocks to watch pippa stevens is here with that. >> shares of catalent tanking

today after the company said it will delay their third quarter earnings report. from one loser to another, tyson foods getting crushed. the meat supplier posted an unexpected loss of 4 cents a share while analysts expected a gain of 80 cents those shares hitting a three-year low today shares of zscaler growing. the company raised its outlook for 2023 >> pippa stevens, thank you. k kenvue slightly higher it was the largest ipo since 2021 it's been a minute is this a sign the ipo market is

thawing out? let's ask rashawn williams good to see you. welcome. >> good to see you >> i was here and i was watching that all go down on the floor. it was excitement the likes of which we hadn't seen in a while. is it the start of something >> it's not. thanks for having me back. i remember i was talking about the mobile ipo i'll reiterate the same talking points we saw johnson & johnson doing a technical ipo. that doesn't apply to all businesses you can restrict the supply, oversubscribe the book, they still own vast majority of the company. spinoffs are easy to do because they have control over supply, where they price it and they're just waiting for the multiples to expand for that to trade up the vast majority of companies where you have bcs, looking for

liquidity and you have employees, they're looking at ipos to see if they can get fair multiples today. i think for all the corporations they can do deals like this often. >> you have a lot of tech companies in the hopper waiting for the right moment when is that moment going to come if this isn't it? >> a few fundamental things need to happen. first, the market needs to be rising and consumer and investor sentiment needs to be positive everyone looks at the performance of ipos and no one wants to grab a falling knife. the economy needs to be better the market needs to have a sustained rally. people need to feel more positive and you need to see a few more ipos do well. you have all the companies that we love waiting to go public and can tap the market at normalized

markets. no vc wants their company to go public at a fraction of the multiples. >> you say secondaries are the new ipo, right >> yes, and we love it our firm, we buy most of our shares in the secondary market seven years ago the secondary market was looked upon like the evil stepchild of the primary market when i was working at goldman sachs in the early 2000s we knew the secondary market was higher than the primary market. now the secondary market is not only maturing, but doing very well vc funds are staying private longer now that the capital markets are close, they need liquidity and employees are risking using stock options. you have all these buyers out

there, institutional buyers set up for this, but sovereign wealth funds, individuals. you have individuals buying secondaries on websites where they couldn't get a piece of the primary round and they can buy smaller chunks and build their position over time that's the way that some people have been accomplished gains in this market where you were otherwise locked out >> how many times a week are you getting a look at ai-related deals? what do you think about that whole space? it feels like we've gone from 0 to 100 miles an hour overnight i had a gentleman rethinking his sector allocations because of ai, winners, disrupters, losers. how do you think about it? >> between ai and cyber security those are the two industries poised for huge growth that we haven't even tapped into the

adjustable market. i would give a third to climate tech and maybe a fourth to quantum computing. ai is one of those things where you feel like you have to be in it because vcs are looking around the curve saying what's going to be popular five or ten years from now, not today. it's scary to see how quickly it's gone. i don't think we as investors have done a good enough job explaining the upside. to your point about it coming up quickly, it's been around us for a decade already we use ai on a daily basis with siri and all this different technologies, with alexa my phone can do a lot of things i used to manually do using ai as we get deeper, it's becoming more complicated and scary.

>> we're deciding winners and losers today based on technologies yet to be developed. we don't know who the true winners and losers -- in the most obvious cases we know who the winners are going to be, but we don't know who stands to gain, you know, the most, who stands to lose the most. we're making investment decisions today. >> it's similar to biotech when i left wall street, they said how can you invest in businesses that aren't profitable i pointed out that at least one third to 40% of all ipos were from unprofitable companies. you're betting the ones that make it through fda approval are billion dollar corporations curing cancer. you can go into ai and technology and you're trying to get real estate on the most

expensive beach in malibu. there's water in the ocean and all the boats are going to rise. i want to hold on to the ones the market deems are public ready. i want to add those to my portfolio. that's why people are investing. that's common in the venture space. it's very uncommon in the public markets. >> for sure. rashawn, i appreciate it. >> thanks for having me. cnbc's analyst of fast-growing innovative startups is back. it's the 2023 cnbc disrupter 50 list it will be revealed tomorrow on air and online. one top market strategist is breaking out her playbook for the rest of 2023 and how she's navigating the big headwinds we're back right after this. with its customizable options chain, easy-to-use tools and paper

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reads on inflation and the con s consumer let's bring in jp asset manager. welcome back you're looking for rate cuts that's one of the great conversations in the market right now. you're going with the market >> i think there's two more reasons the fed might have to cut by the end of the year the first is potential recession. if we see the inflation closer to 3% even 3.5% and economic growth is negative, it's going to be hard for the fed to keep rates above 5% banking issues are leading to credit growth. we saw that this afternoon in addition, not only will it tend to slow down economic growth from that perspective, it's also putting a lot of pressure, higher rates, on the

banking system in general. when we think about the solution to relieve that pressure from small and medium banks, that has to do with rates there's a number of band aides we could apply, but the big one is bringing rates down to a reasonable level >> jp morrigan said be careful what you wish for with rate cuts because that means the economic has got to the point where they have to cut rates. do you share those views >> i share those views the fed said long since the cycle began they wants to a resn hold if they cut, it's because they're forced to based on economic data. it wouldn't necessarily be a positive then for risk assets.

>> where are you on your view of where you think we're going from here the market has been resilient. we're right on the doorstep of 4,200. then it looked like we were going to break down. here we are back as of the end of last week moving back higher. how does it look >> it's possible we stay range bound for the near term as the market and economy continues to absorb rates at over 5%. if we see further deterioration from where we are today, that could result in a more downward trends you were having having a discussion about 4400 and 3,800. i think 38 is more realistic i don't think there's a catalyst to catapult earnings higher. when we think about profits, valuations and weakening growth, we could see the markets slide

we have a lot of headwinds ahead that could cause more gyrations. >> you like international over u.s., correct? >> we've had an unwavering to internationals this year the dollar has moved lower from a european perspective looks like they avoid recession for longer than the u.s. china is picking up. the ceiling was 5% on growth, now it's looking like the floor. that could lead to potential earnings upgrades. add valuations into the mix, there's a lot of reasons to like international. >> you put china high on your list i feel like there's questions today as to what is actually happening with the china recovery relative to where ex expectations were. expectations went here real

fast i wonder if we need to dial that back >> we need to be realistic about ex expec expectations the bigger challenge for china is confidence. if the property market is still undergoing challenges, that's going to weigh on consumers. from a business perspective do you want to invest when you think there's going to be more political uncertainty. confidence is what we're looking at and earnings upgrades we're seeing luxury stocks in europe, emerging markets which have been stable outside china >> that's ons i was thinking of it in terms of not working out. estee lauder, perfect example. thinking there's going to be this luxury travel from china that's not materializing yet

just that idea, beneficial, no brainer to places like that until it isn't. >> we've seen a huge runup in chinese stocks in particular, a lot of stocks linked to the recovery we don't want to see stocks take off to the moon. we want to see them backed up by earnings and numbers we're willing to be patient. i don't think we can expect a three, six-month turnaround. it's going to take many months, potentially years. >> thank you very much. up next, we're tracking the biggest movers as we head into the close. we're back in two minutes.

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15 minutes to go before the closing bell let's get back to pippa stevens for key stocks to watch. >> some big earnings report on deck, including devon energy down 16% for a year. still, we've heard that cash flows remain healthy investors will be listening for commentary on the company's capital return plan. shares of palantir ahead

they reported profitability, but growth across government and commercial businesses has slowed scott, back to you >> pippa, thank you. paypal, the key metric to watch. we'll tell you what it is. the last chance to weigh in on our twitter question. which of these has the most upside potential vote on twitter. we'll bring you the results after the break. ♪ ♪

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which of these sectors has the most upside potential? tech in the lead, 43% of the vote guess you think it still which. up next, regional banks remain volatile after an ugly week we have the latest and what's ahead. treasury secretary janet yellen on "over time." you can't miss that. "closing bell" right back.

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who's ready to cha-cha?! ♪ yeah, yeah ♪ ♪ we're in the "closing bell" market zone. mike santoli is here to break down the crucial moments of the trading day. plus, leslie picker following the money in the regional banks. kristina partsinevelos with a look at what investors should be watching for when paypal reports in "overtime." we have cpi, ppi, some disney earnings the debt ceiling, as we inch quarter to the purported deadline of june 1st, i suppose we'll be more than worried about it. >> sometimes it's not worried at

all, and then worried right bebeforehand pretty much everyone nose on an enduring basis this is not the may-or-break thing, but it's hard to resist the moment tear stresses it could create you've seen gold trying to break out. t-bills getting all distorted, because of where they mature when it comes to the stock market, the idea of a fed pause, still pretty defensive positioning, or at least a lot of hedging, based on how the big money has positioned is it enough to keep in the market the very confidence assertions the only reason is this perfect scenario mike on the investment committee side, they say the only reason the market has resilient is

because the thought that inflation has been tamed and we're going to get 200 basis points of fed easing within 12 to 18 months who says i've always been a thought a pause is enough to explain >> leslie picker e. regional banks are going to remain a story. who knows where we go with these stocks >> a bit of a reprieve, but definitely down from where they were at the open this morning. the biggest laggards of the month are in the green today pac west, western alliance, but zion definitely down from the start of the session the slight bounce confess after

last week. according to goldman, hedge funds net sold global financials at fastest pace in the past year piper sandler describing it meme stock frenzy in reverse. in other words, the fundamentals remay -- for both big and regional banks there's been a big increase, but still, fthe sloos showed banking had pulled back on lending with concerns over the economy, furnisheding costs and deposit outflows, so all of this has a cyclical impact. >> leslie, thank you very much one of your learnings, i they we call it, from out in omaha, it doesn't seem like buffett is

taken in any way by the upset in the regional banks he certainly found some things to criticize, but not really willing to put a lot of money to work here. >> the ones that are in the cross-hairs, low market cap, purely regional, not necessarily that would rise to the level of that's a definite bump on the other hand, he both didn't see them as really cheap and a huge green flashing light, but he also seems to feel as if it's not confide a systemic thing. if you look at the numbers, you're not seeing the same level of deposit flight. of the top 100 bank, if you just run unrecognized losses, they always have positive tan able net book value that tells you, it is mostly a trading phenomenon, in a sense

that these are in a fundamental trap, even thought not necessarily, it's not an insolvency crisis at the moment. >> kristina partsinevelos, we have some earnings to look forward to after the bell, and an important one at that at one time a stock that had a bigger market cap than one of the big bank. >> oh, how far we have come. one will be e-commerce growth and recent trends could signal stability. why i say that, these are sales, with no card present, digital, they were up 9% in q1. while amazon e-commerce sales came in flat that still means stability paypal's ceo recently indicated that e-commerce was comes in better than expected in q4 paypal said out of the largest 100 internet retailers, 75% of them already accepted

paypal 33% used some advanced version of the checkout, some means there's more room to grow, as long as apple pay doesn't grab competition. lastly, the major overhuang is a lack of a succession plan. dan shoulder man has not announced a succession plan. i'll be sure to ask about it. thank you. we're at the two-minute warning here on wall street. i want your opinion about what adam parker said about the myth busting, if you will, with these top heavy stocks doing all the work well, you have the biggest

market cap companies of course if they go up, the market will go up. >> there's a hazard to saying what percentage of a net change is attributable to a handful of stocks, right? if you think about that, every stock that didn't go to zero contributed to the fact that the s&p is up 8% today if you look at stocks that are within 5 per to 10% of their highs, it's a longer list. a lot of these of staple, better franchising with consumer discretionary, so it's not as if it's just a few stocks that are up, but i do have to grant, fewer than half of all stocks are above the 200-day ample. it's not been an exclusive widely distributed strength, but sometimes you don't get that it also doesn't tell you how it gets resolved. i do think there's always the possibility that appear 8 today is taking a breather it's right at resistance in august if it goes down a lot, sure it

will be a drag on the indexes, but that doesn't mean it couldn't get on the day -- >> all right we are janet yellen coming up in a matter of moments. please don't go anywhere on that note, we'll send it over to jon fortt [ bell ringing ] welcome to "closing bell" overtime morgan is off today. we have a can't-miss interview coming your way in just a moment we'll talk to treasure secretary janet yellen about the looming debt ceiling deadline. we begin with breaking news off fed and the reloose of the financial stability report leslie picker has the results. >> inflation and bank stress top