something -- >> am i supposed to ask somebody are you a tipped position? should i pay you. >> i don't think a cashier is a tipped position. >> i'm not going to worry about it no tip just give me that receipt. >> and walk away in shame. >> thank you so much >> thanks for watching "power lunch," guys. >> "closing bell" starts right now. thanks so much welcome. i'm scott wapner at the new york stock exchange this make or break hour begins with the debt ceiling duel the president, the speaker, and other congressional leaders meeting at the white house in less than an hour. no resolution yet is in sight. stocks so far, taking the whole mess largely in stride here's your scorecard with 60 minutes in go in regulation. we seem to be waiting on tomorrow morning's cpi release before making the next move. there's your picture dow has been down five in the past six days. the fed, regional banks and earnings

s&p 500 up a couple of days in a row. back negative at this hour, as is nasdaq. interest rates and let's look at that complex movement moving a touch higher as well it moves us to the talk of the tape is the risk or reward for stocks getting worse? what, if anything, can get us out of this stoubborn trading range? let's ask courtney garcia. she's here with me good to see you again. >> hi. >> are we going to get out of this range >> that's what we're hoping for, right? what's happening with the debt ceiling is not an issue. the markets are barely reacting to that. i think everybody is expecting there's not going to be a -- they're not even calling this a negotiation which is probably a sign that nothing is going to get done right now. >> we can't even get to the point of where we're having a negotiation. that pretty much says it all about where we are. >> yeah, unfortunately i think this is going to be a problem for later this month it's going to go down to the wire i think right now what's more important is cpi which comes out tomorrow. >> mm-hmm. >> that's really been the big story all year, is is inflation coming down?

it does seem to be coming down which is great the fed is likely to be pausing with interest rates going forward. all these things are leading to really positives if you look forward, but yes we do need that catalyst moving forward, but i think you're going to need more data points and inflation, and labor is on good footing before we worry about these recession worries. >> you know the market has tunnel vision. right in front of it, that's the only thing it pays any attention to do you think there's some level of complacency around the debt ceiling fight? i mean, the fix is at 17.5 it's not in any way reacting except for, you know, a very small part of the yield curve. >> keep in mind, you know, i mean, a lot of people are looking back to 2011 where we did have a severe reaction to stock markets and they were down 17% close to that debt ceiling limit at that point in time, but realistically there have been about 45 increases to the debt ceiling in the last 40 years it happens often, and i think that's what a lot of people are realizing, but it is an election

year this is going to be thrown around like a political football i don't think anybody expects this is going to be done today, and that's why you're seeing that in the markets. >> how do you assess where we are after a pretty big week last week where, you know, the fed hiked again, they didn't explicitly say they're done, but the market assumes they are. >> yeah. >> not only that, the market assumes there are going to be cuts this year. >> which i'm not necessarily in the mindset there's going to be cuts this year i think we'll probably stay at this higher for a longer level, but the idea that there are going to be cuts later this year i think is also pricing in the idea that people are expecting inflation is going to continue to come down this year, which is ultimately going to be a good thing. i think realistically we've gotten to this place where even the fed is surprised at how they've raised interest rates by 5% over the last year, and we're still at a 3.5% inflation rate i'm sorry. unemployment rate. things are actually at a really good position, and now they're in a position that even if we go into a weakened economy, they're at a higher rate where they can

bring rates back down to boost things if they need to, and realistically what you are seeing with company's earnings is they're prepping for a recession that hasn't happened yet. even if that happens, it'll be muted at this point. >> you think people are by and large too negative in the market, right? for one reason you said, employment has remained pretty strong. >> correct >> the economy has been reasonably resilient as has the stock market itself. >> people have been calling for recession for almost a year now, and now you're seeing people push maybe it'll be in 2024 at this point, and yes, if you call for recession long enough, you're going to be right. it's a longer part of the cycle of the economy i'm not of the mindset it's impending right now, and i think you've continued to see people reach this year into your big tech companies, into your risk assets we are still in this higher rate environment. i don't know if that's going to last, but i see the general economy continuing to do well. >> what about looming credit issues and the issues that surround the banks how concerned are you about either of those two things >> i really don't see everything going on with the regional banks as being an issue for the overall banking sector i mean, especially when you look

at your, like, a large cap, like, take your jpmorgans. they will be big beneficiaries of this, and i want to make sure when you are investing in the banking space, yes, there's probably some really great buying opportunities here, but i don't know if the volatility is over picking and choosing names can be dangerous when you own the overall index, it's something you want to be invested in. >> and there are those who would say, you know, the biggest banks, the strongest banks are only going to get stronger as a result of deposit flight and what have you. so your point is well taken, but a credit crunch, and a contraction hurts everybody. so what do you think of the space in general would you put new money to work, for example in the banks in the financial sector now >> i would we have been adding to value all year your banks are one of the largest sectors there, and they have been continuing to really underperform this year so yes, there is definitely nervousness there, and i do think when you look at credit issues or the worries about that in the future, it is going to be

a concern, but i really don't think it's as large of a concern as is being priced in currently. >> let's bring in john mowry of nfj investment group been very bullish in our conversations over the last few months are you still today? >> good to see you, scott. yes. we remain positive on the market a couple of color comments the long bond has been signaling that inflation should come down for close to six months now, and what's really natsing is now the shorter end of the curve is also telling the fed they've gone too long in fact, if you look at the spread between the two-year bond and the fed funds rate, that's the widest it's been in close to is a 15 years so the bond market is telling the fed they've gone too far, and you're asking me, john, are they going to do cuts this year? i don't know i don't know, and i'm going to go to the doctor next. the fed never wants to cut rates. they were forced to cut rates in '07, and in '18, and they may

get forced to cut rates again. i think when you look at the opportunity set, there is a real interesting group particularly brewing, scott, in the small and mid cap group of the market. in fact, if you look at mid caps for example, mid cap value in particular, that group is trading at just 12 times earnings and has a 2.2% dividend yield. the russell 2,000 value is just ten times earnings, scott. ten times earnings, and you've got a p on the s&p of close to 17, so you've got a seven-turn discount stepping into 2,000 value today. so i think relatively to large caps i'm more bullish on small and bid at this stage of the cycle. >> aren't you asking a lot of people to buy what would be considered more economically sensitive areas of the market for the very obvious reasons that i don't need to tell you about? >> 100%, and the reason for that is you're getting that valuation discount so at ten times --

>> for reason though if it's for a reason, it's not a good enough reason >> well, i think that when you look at the underlying fundamentals, many of these have been beating, scott, and the reality is the banking system even though it's been more fragile of late, this is more of a liability crisis today than an asset crisis you still have a lot of strong balance sheets in the banking sector, and it's hard to see a stock market that's healthy that recovers without the bavnking sector participating i think you should be moving into these areas and i agree with many of courtney's excel comments inflation is coming down, and homeowners were scared when the mortgage hit 7% last summer. that was a great time to step in because you got those at five-tenths a book today you're getting the steepest discount since covid. >> there is this idea that we've already discussed, at least courtney and i have, and we'll expand it to you on the notion of whether the fed is done or not.

now, my colleague sara eisen was at new york club today talking to john williams who wasn't ready to concede that at least explicitly they've admitted anything let's listen to that >> we haven't said we're done raising rates. we made a decision in our may meeting to raise the federal funds target range as i said, and we didn't make a decision of what we're going to do in our future meetings, but it's definitely or what's, you know, how will the economy evolve, will obviously affect our decisions. i think we've made incredible progress over the past year or so bringing interest rates from close to 0 to a little over 5% i think that brings real interest rates from inflation adjustment rates to a stance that should help bring inflation down >> so john, is the market ahead of itself? is it -- is it hoping for something that may be still out of reach >> i don't think so. i think the market's patiently

waiting for the fed to realize that it's pushed rates very quickly and to a very high level. inflation has come down every single month since june when it peaked at 9% now we may get a sticky number here and there, but the trajectory is down, and again, i would argue that when you see that widespread between the two-year bond yield and the fed's fund rate, the shorter end of the curve, scott, is telling the fed they've gone too far, and they're going to need to back off the gas a little bit. so i empathize with their position they want to keep the hawkish tone because they want inflation to come down, and i think they're probably keeping their fingers crossed behind their back that we don't have much more of a banking fallout in the meantime, but the reality is that inflation has come down significantly and you should still see that come down lower, and i think that's a floor for equities and has been a floor for equities. >> courtney, do you agree with this premise they've always made this argument thad fed follows the two-year he's saying something that the fed isn't. you heard what john williams had to say

how do you assess it >> the fed will continue with their narrative they're not sure what they're going to do they're going to follow the data, and we need to see more of that coming out. cpi is tomorrow, and ppi is later this week. if we see this trend come down, they'll have to follow that. what they have been saying is they want the labor market to soften in order for them to start to pause on interest rates, increases which hasn't happened yet, but you're starting to see them change their tone on that which i think is pretty binteresting. i think they're realizing how re resilient unemployment is. >> the other thing i think we need to discuss, quote, i do not see in my baseline forecast any reason to cut interest rates this year. now we're having this discussion that, well, the bond market doesn't want to hear that. we need to keep a restrictive policy in place for quite sometime to make sure we bring inflation down do you believe the market is

truly understanding of the risks of the higher for longer that, you know, okay so they may be done, but that doesn't mean that they're going to cut, and they're intent on making sure they don't have to come back and do this job all over again powell has made that clear, and he has frequently mentioned the period of the '70s when policymakers were forced to do just that. >> well, it's a very fair point, scott. i mean, what i would say is there are definitely weaker companies that are very much being impacted by the higher rates for longer there's no question about that if you look at some of the to smaller office reads, and you look at some of the reads that did poor bridge financing when rates were at zero, and now they have to roll that debt, they're in big trouble, and i do think that you can see some of the smaller players get washed out, and when that equity goes to zero, some of the larger players will gobble it up. this will be a market that's more darwinian than the last environment. that's good. you need a high-rate environment to shuffle out many of the

inefficiencies of the economy. recession, or looming recession or the possibility of one can help shuffle out those weaker hands. this is ultimately a favorable environment for companies that have better balance sheets, better income statements, better cash flow statements i would argue it is a market that you want to be involved in. i think that active management stands to benefit because not all the companies are going to do well that have done well in the past so i'm bullish on the equity markets. i think that you should definitely be choosing your spots. i don't think you should be adding the equities broadly because there are some pockets that are too risky or alternatively, scott, have gotten too expensive. >> i hear you. let me ask tyou this when you bring up things like survival of the fittest and darwinian and what have you, i'm, like, okay. if i have a select amount of money that i'm willing to put at risk at the current time, thinking risk/reward may not be all that great, but mowrey said i shouldn't go broad, so i should focus on the companies that are survival of the fittest.

i'm, like, why would i put money in those cyclical areas you saids said, and why wouldn't i ride the gravy trains those are the fittest. >> i will push back a little bit. if you look at the cap space in particular, this is an area that's grown faster than the large cap space and has done so with lower variability of the return than the mid cap space. the mid is the sweet spot for equity markets it's an area that typically gets overlooked investors focus on the small or large. they don't look at the mid cap space, and, in fact, scott f you look at the mid cap which is the bottom 800, okay, of the top 1,000 stocks, that's 800 kp company, but they make up 25% of the market scapitalization, and they grow faster than the top 100. many healthy companies are sit t sitting there. >> we'll get back to this conversation in just a moment. i want to get to our kelly evans

who has breaking news. a verdict has been reached in the case of president trump. kelly? >> hi, scott hi, everybody. the just jury has reached a verdict in the rape and defamation trial by e. jean carroll against trump, and here are their fiendings, that donal trump did not rape e. jean carroll. they found that trump sexually abused carroll, and there are financial rewards. they reward her with $2 million and $20,000 in punitive damages for that battery claim they also find that trump defamed carroll in october, 2022 when he called her allegations a con job, and that are they award carroll $2.7 million in compensatory damages for the defamation the u.s. jury in this case finding donald trump did not rape e. jean carroll, but that he did sexually abuse her. $2 million in damages for that,

$20,000 in punitive damages and they found he defamed carroll. about $5 million altogether, scott. huge significance as we gear up for the political cycle. back to you. >> appreciate that that's kelly evans with the update there. back to our conversation, where we were on the market. this idea, court, that, you know, you also said you like some cyclical areas. if i want to invest right now in the best balance sheets, let's say i have to be -- i'm running money, and i have to be invested in the market. why wouldn't i go toward the best balance sheets in the market which are,i don't know, even if there's an argument, megacap tech >> but on the flip side, i mean, actually some of the good balance sheets are your energy companies, right which yeah, have been underperforming recently, but they have just as strong of cash flow when you look moving forward, and that supply/demand issue will be there. the valuations are significantly cheaper because that's the problem with your mega cap techs right now. especially the top eight are significantly at a premium

compared to the markets, and when you strip those out, the rest of the markets -- the rest of your large caps are still overconcentrated and to his point here earlier, your small caps are about 40% cheaper than your large caps, specifically those top eight right now which are extremely overvalued and in a higher rate environment which you're saying people aren't pricing in right now and i agree with that, that i don't think can be justified and i think that's what you have to look at. >> you have to be focused on the amount of risk you're being to take yes, they are cheaper by any metric you want to say i completely get that point of view, but as i said before, they might be cheap for a reason, and you have to wait a little bit longer as well to get the reward for the risk you're willing to take >> well, that's true, but i think if you look for dislocations in valuations but try to avoid the dislocation of the fenl funundamentals, then y paid for that risk one name i mentioned, alexander realty, it's an office read. everyone loves to hate those,

but this is life science, pharmaceutical companies that can't move quickly they've raised their ffo guidance, and they have no dislocation in their fundamentals and they're the steepest discount since covid and even in some cases back to '08, and even to the peer group. you have a tremendous value and it's an area that no one wants to even touch or look at and i totally agree with courtney. you're getting substantial dislocations in these companies that have a lot of upside, and i mean, scott, let's not forget it wasn't that long ago that nobody wanted facebook. nobody wanted amazon nobody wanted the big cap tech names and when i think about the laundry list of places people wanted to avoid, you know, at first it was energy. then it was tech then it was china. now it's banks and now it's cyclicals. there's a long list, and i think you do get paid to step into these areas, but to your point, scott, they're not all created equal, and investors should be concerned about a dislocation in the fundamentals, and as an active manager when that does occur, we need to be proactive and can't sit on our hands.

>> you want to mess with that right now? >> i think those are definitely still going to have some issues moving forward here, especially as you start to see some of the mortgages that are getting reset right now which hasn't happened yet. that will be the lagging effect of rising interest rates we do have exposure, and we're not consistently adding to them right now and i think, yes most of this is probably already priced in, but probably going to see some pressure moving forward here. >> guys, good stuff. john, thank you so much. courtney, appreciate you being here let's get to our twitter question of the day. we asked, is the market too complacent around the debt ceiling? yes or no? head to @cnbcclosingbell on twitter. we'll bring you the highlights after this break. plus, rising recession worries why mark okada is making this case we'll explain it all

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35 minutes left in the trading day. let's get a check on the top stocks to watch. kristina is here with that >> let's talk about novavac. they shared promising new vaccine data their combination vaccine that targets covid and the flu produced a strong immune response against the viruses and was well tolerated in a phase 2 trial. they're also unveiling a cost-cutting push to reduce 25%

of its work force. that's probably what's driving the stock 27% higher under armour shares are slipping they missed expectations on gross margin as it leaned more into promotions to drive sales and warned that demand issues could persist. stock down almost 5.5% scott? >> appreciate that hedge fund investor stanley is speaking. leslie picker is here with some of highlights and whenever he talks, there are highlights. >> there are many highlights the challenge is narrowing down which ones legendary investor, saying he's not one to buy into fads, but he does see a lot of opportunity in ai >> it is very, very real, and could be every bit as impactful as the internet, literally going forward, and it could be a

beautiful opportunity and a hard landing just like '01 or '02 when the tech bubble burst for companies who would benefit from the internet ai could be there. >> his family office duchesne i not limiting this. speaking of that, he said he wouldn't be surprised to find the current second quarter is actually the start of one. he said he's not predicting something worse than 2008, but believes it's naive to not be open-minded to some possibility to that effect >> when you have free money, people do stupid things. when you have free money for 11 years, people do really stupid things so there's stuff under the hood that's starting to emerge. obviously the regional banks

recently, we had bed, bath & beyond, but i would assume there are a lot more bodies coming >> he said they own gold and silver right now although historically they haven't done well in hard landings. he said he may change his mind on those metals and urged the audience not to go out and buy gold he said normally in this type of environment, he would be buying treasuries, but that asset class is off the table with the tenure yielding, and the fed funds rate at 5 they're not exactly, a quote, fat pitch, scott >> it's always interesting to hear from him. i'm thinking of a couple of things as you were telling me, you know, where their positioning is, right? it's microsoft and nvidia is how they're expressing ai, but not alphabet >> yeah. >> which has hl really been the topic of conversation among larger investors of whether they'll be one of the companies at the forefront or if they'll take a step back. >> it's interesting, scott, because in terms of his perspective on ai, he's not

actually very much exposed to equities at all. he says that equities in general, he doesn't expect them to go higher over the course of the next decade. he said people should in the be prepared for 9% annual returns over the next decade like we've seen in, you know, the prior de decade that said, ai is one area where he does see potential for big productivity gains the way he's expressing those as you mentioned, you know, largely through nvidia, which he believes could be kind of recession-proof which is kind of interesting given the backdrop of his other kind of macro-concerns he mentioned during the conversation. >> soon we'll be talking about the a lot more bodies coming, quote, unquote, in terms of what might be under the hood so to speak. leslie, thank you. up next, a big recession risk sycamore tree capital partners mark okada is raising the red flag on one key catalyst he thinks could send the economy into dangerous territory he'll explain just after this break. and throughout the month of may, cnbc celebrating asian

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regional banks trying to find their footing today my next guest says the likelihood of a recession is much stronger across the board

because of the banks joining me now, mark okada of sycamore tree partners, good to see you. i apologize to you off camera for mispronouncing your name i apologize to you on. >> thank you >> i looked at the notes and i was, like, man, this guy is negative he's really bearish. the likelihood is much stronger. we're going to have a credit crunch i'll save the doozy for after we talk about those two things, but you're pretty negative on the market >> it's hard not to be there's -- there's certainly a lot of things going on, but i think if you focus on what the fed's doing, the way i see the fed is most of their mandate is a main street mandate where they're talking about full employment, stable prices. those are main street things, and from that standpoint, i think they've screwed up on the first one as far as the price stability, and they're making up for that issue on the secondary one of unemployment, i think they're

doing pretty well. i mean, honestly if you're a consumer today, you've got a job. you've got a raise you're making money in the bank, you know, the numbers there are incredible the lakers beat the dubs it's all good. >> really, really good. >> but if you think about wall street, on the other side, we have been in a recession since last year. '22 was an awful year. >> a rolling recession, right? >> absolutely, and i don't think that that the -- where the rubber meets the road really is where this whole regional bank crisis where we're facing right now, and they don't have a lot of easy answers. you either have a liquidity or equity problem you have a problem because you have to pay more for your deposits and you've loaned it out in long-term mortgages there's no easy fix. >> don't invest in the regional banks. there are other areas, no? policymakers continue to say, and i think john williams himself with my colleague sara

eisen said it again today. that at least in their view the most acute phase of that issue is done. it's passed. similar to what jamie dimon had to say a couple of weeks ago do you disagree with that? >> i think that early on in any cycle, you take out the weak parts of the market. so i mean, we've seen the players that had mismanaged their books getting taken off pretty rapidly, and the fed stepping in to make sure this mechanism works. the banks are the transition mechanism for monetary policy, and we get back to this policy and it's where the rubber meets the road between the two and that's where mom and pops is banking. you have to treat them well. they're it no going to pass up 5% in a money market because they like your tie i mean, it's not going to happen so i think that definitely has to keep working. i think the reason why they're saying that, that the banks are

sound and, and i'm tall and shor handsome, the reason they're saying that is because they need to it needs to work, and so they're going to make sure it works, scott. i think the -- if i were in charge of the fed, i would give the regional banks a break on fdic insurance i just figure out a way to get that higher. >> it sounds slike you're saying the whether the fed is done or not is irrelevant. they've done a lot >> yeah. >> it's just starting to take its toll it's like the druckenmiller thing we just said, and he said we're just get a look under the hood first, it was the regional banks, and in his words, quote, a lot more bodies coming. >> i guess i'm honored to be mentioned in the same comment with druckenmiller, but yeah it is early. it's early in the whole process of a slowing economy, and

there's nothing that you can look at that would say that the economy is actually strengthening anywhere except for the labor market, right? >> that's one of the most, if not, the most important part right? we're a consumption-based economy. two-thirds >> i get that, but if we get back to what wall street has to restructure to, it's higher rates across the board a higher cost of capital everyone is, i think, impatient about this cycle because they're used to this v bottom that we've seen after lehman, and that's not the reality anymore. i'm old. st i started in the snl cries. that's what we're going into >> and as stanley said, you find great opportunities like you did in 2001 after the tech bubble burst. >> yeah. >> you're just sitting on a pile of cash? >> no. we're feasting off the front end of the curve i mean, there's a lot of

high-quality credit where we're getting 6%, 7%, 8%, 9% i feel great about it. recession or not a recession we're making great money if i can play defense, make money while i'm waiting and when the party gets started and we get the real recession, a lot of workout, and that will be pretty interesting too, but we're finding ways to make good money while we're waiting. >> you know, i said i was going to save the doozy of your views for a moment i want to bring it up now. you also said you don't see stocks going anywhere for the next three to five years >> right. >> is that right >> i do. you've got to get through this long workout, you know at the top, we talked about this asian american pacific islander heritage month. >> right >> one of the things that i think comes along with the culture is some form of humility i mean, and as i look at the world and i see all the things that we're facing, and we don't have a fed put, it's going to

take time. so how can the riskiest bottom part of the cap structure get out of this until we work through the cap table? we got to reprice all of this risk that's been doing -- $3 trillion of high yield credit out there. it's going to take time, and it's just getting started. >> you think the fed put is really dead? >> i do. i don't think that makes sense in this environment. let it work through. let it work through. let's reprice credit let's reprice risk to a higher interest rate, which is what just is getting started. >> you know the minute that the you know what hits the fan, the fed's going to be there. they're not going to let the whole, you know, system have a repeat of what we witnessed a decade ago. >> which is what we said a little bit earlier, the transmission mechanism has to work, scott. you can't have a full-blown crisis that's why they stepped in and did what they did with silicon valley bank, et cetera, et

cetera they made sure that liquidity is there. i think at some point, they need to do something with the fdic insurance to make that transmission mechanism much more workable, and not have this full-blown sort of crisis. >> before we end, you mentioned aapi month which we have been highlighting all throughout this early part of the month. >> thank you >> you say enough with the speeches show me the reaches. >> yeah. yep. >> tell me more. >> a lot of times when you talk about topics like this, people want to get up and make speeches to talk about awareness. they say, oh you know, you're a certain percentage of the population, but you only get this much in aum. that's fine. everyone understands that, but show me -- put your money where your mouth is. i mean, put -- the research shows that aapi managed funds beat the market. they beat their peers. they do better so it's -- put your money where your mouth is. that's a great opportunity to actually outperforming here.

>> i appreciate you being here >> thank you >> apparently a laker fan hiding out in dallas. is that what i gleaned from that >> go, lakers. >> mark okada, we'll talk to you soon. >> thanks. we're tracking the biggest movers as we head into the close, and do not miss ibm's ceo on "overtime" at 4:00 eastern time "closing bell", right back ♪ old school wisdom, with a passion for what's possible. that's what you get from the morgan stanley client experience. you get listening more than talking,

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all in north carolina. ranked america's top state for business. 15 minutes or so to go before the closing bell. let's get to kristina. >> let's talk about shares of mobile i they announced a new collaboration with bw and porsche on animated driving sof software they're calling it level 4 autonomous driving it's mobilized stake, but still owns 40% of the firm shares are 2.2% higher. >> this company could be looking at bankruptcy. pe wheels up having isn't a good day today. down almost 23%, the private jet company once promised to become the airbnb of private jets with a valuation that was once at $2 billion, now it's close to $100 million quite the fall >> yeah. tough day. kristina, thank you.

last chance to weigh in on our twitter question is the market too complacent around the debt ceiling duel you can head to @cnbcclosingbell on twitter the results right after this break. ♪ imagine, a car that goes as far as it does fast. as sleek as it is spacious. as smart as it is beautiful. introducing lucid air. experience the best. ♪ ♪

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let's get the results of our twitter question we asked is the market too complacent around the debt ceiling duel majority of you saying yes, it is near 55% up next, wynn resorts reporting in just a few minutes. we have the metrics of what you need to watch. and we are moements away fro president biden's meeting at the

white house. we're on the lookout for arrivals debt ceiling, that's the topic in the market zone

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finally we can eat. ♪ you know you make me wanna...♪ and then we looked around and said, wait a minute, this isn't even our stroller! (laughing) you live with your parents, but you own a house in the metaverse? mhm. cool...i don't get it. here's to getting financially ready for anything! and here's to being single and ready to mingle. who's ready to cha-cha?! ♪ yeah, yeah ♪ all right. here we go we're in the market zone now cnbc senior markets commentator, mike santoli here to break down the crucial moments of the trading day. plus, grant brandt shares his look at the market, and contessa brewer with what's at stake when wynn resorts reports

i'll begin with you, mike, on this debt ceiling duel we're waiting for the arrivals the president and the speaker and other congressional leaders. top of the hour, they'll begin this meeting our voters in the poll, they said, market's too complacent. >> i like that everybody else says they're not worried enough you get this low-level anxiety that can spill into panic. the test will be, are expectations low enough for what really should be a kind of a meeting where not a lot comes out of it? so i think yesterday was interesting. we tested the tape with the ceo loan officer survey. it went down for a minute and a half, and bowed back up. this range is stubborn in both directions we'll see, you know, if there's any reason whywe should get released to the downside if we somehow get the nothing out of the this meeting that we're all expecting. >> and then it's the tape test that comes tomorrow morning with inflation. the cpi. >> which is interesting. it's hard to know if that packs as much of a punch as it used to the estimates have been relatively close to where the

numbers have come in in the last several months it hasn't been as big a jolt to the market, and also arguably the bar is high for the fed to be moving again in june with a hike so maybe one cpi report isn't going to swing we'll see if it takes as an opportunity as a catalyst or not. >> greg branch, you're still from my notes calling for an october-style demise those are your words >> i am. i am, and we're going to get that one of two ways, scott. i believe that this debt ceiling, whatever we want to call it, debacle, will be resolved in one or two extraordinary ways it's far too little and far too late at this point we're about three weeks away from the x date or biding date, and typically the market doesn't react until that time. we'll probably see nothing either way tomorrow because in 2011 which is likely or best case scenario, we saw 20% market loss in the 2 1/2 weeks proceeding the x date, and we're not quite there yet. this will resolve in one of two extraordinary ways

either we will default, and we're all saying we won't because we never have, which is not necessarily a solid base to build an argument on, but if we don't default, i think the president will have to oversee or supersede congress. either one is bad. either one likely results in a debt downgrade which then triggers likely or at least exacerbates a boiling problem in cre at the regional bank level i think we'll see more sfds. we'll see more first republics we'll see the credit markets likely freeze, and therefore the recession been inevitable as unemployment shoots to around 5%, and growth comes to a halt >> that's a bit dire, no i mean, even if it goes over the cliff so to speak, you paint a picture in which it would stay over that cliff for an extended period of time for all of those cascading effects to take place. that sounds a little overly negative to me

>> it could be, and i didn't address duration actually, and you're exactly right how deep and long a recession could be would depend on the duration in which we're in default. if we quickly resolve this shortly thereafter, i think we're still subject to a downgrade which does increase borrowing costs across the board, and the fed will wait because they want to see how much of their work will be done for them the consumer is fighting the fed, and thus we've seen not only a strong supporter, but we've seen the rate of disinflation slow considerably something needs to be done in terms of getting inflation where the fed wants it the fed doesn't know if it has to do it or if congress will do it for them. >> do you think the fed's done are they done raising rates? yes or no. >> they are not, if we reach a debt deal. they may be if we do not and we default. >> maybe they already know that there are credit issues to deal with that's an interesting perspective. i appreciate that, greg.

thank you. we'll talk to you again soon contessa brewer, watching wynn what are you watching for? >> all the eyes are on the count, and we have a preview because las vegas fans are reporting at mgm we know what the gaining revenues are, and the street is anticipating when still walt turner profit sees an impending loss per share las vegas has been outperforming and subsidizing in the pandemic. let's see if they can turn a profit i expect a call about wynn's new project in the united arab emirates it's the first new project to be conceived without the founder, steve wynn at the helm, and he thinks this could be an important new driver of growth for the company. >> is there any worry at all that the great reopening of china, that some companies have suggested may not be as robust as they thought has an impact into macau as well

>> what we've seen is the pentup demand, the kind of pentup demand we saw in vegas, we saw in singapore and coming back expotentially in macau it's blowing through expectations and a lot of times the visitors you get going there, they're the upper echelon, right even the mass, even vip mass, even if you're not going in as a high roller vip player, it's attracting a better heeled crowd. >> we'll see and look to you for those results. thank you so much. make santoli, the sound effects went off the two- minute warning has passed greg branch, pretty negative on these cascading effects that are going to happen as a result of this duel which may end badlyba. >> you can never foreclose that it doesn't touch on something disorderly and ugly. it could be why we're churning on low volume and very noncommittal it seems like there's a lot of

ways things can break. on the other hand, we have been in the zone for a while right your, and for me what's interesting is it's all coming as we're kind of bracing for a little more of a real economy impact of the credit crunch, of a lot of the things we have been seeing it's not really being reflected in the first quarter numbers or the corporate guidance it kind of has us pinned in that zone, even on the recession watch side it's almost everything that concerns people is on the rate of change side, and not on the level of ctivity that applies to senior loan officer survey, and the ism, the pmis, the m2 number that is everybody talks about. it's about the rate of change, and the level of the monetary basis. i think that's why it's a little bit of a sticky and puzzling moment, and, you know, people are probably justifiably cautious, but it's good when people are cautious as opposed to overconfident and looking for things to bet on by the way, the equal way to russell 1,000 doesn't look good.

it's kind of a tired, sloppy-looking chart i'm not saying that the market is really shrugging off the challenges. >> we'll see what comes out of the white house, if anything there's the bell we've got some earnings coming up that we need to pay attention to in overtime, and for that, i'll give it to jon. we got our scorecard on wall street, but winners stay late. i'm jon fortt. morgan brennan is off today. breaking news this hour. president biden is hosting a crucial meeting with congressional leaders, including house speaker kevin mccarthy on the debt ceiling that meeting slated to kick off right now. we'll bring you any updates throughout the show as get them. plus, we've got after hours action coming your way with earnings results from affirm, airbnb, rivian, wynn, and more