challenge conventional wisdom and take more conventionally think they publish their single most influential work at the age of 25. >> it says, 25. why do so many musical artists peek in their 20s, early 30s? you don't see a lot of creativity from the great artists. >> especially not emerging. >> all right. we will save the pickleball's for you for tomorrow. thanks for watching. >> "closing bell" starts right now. welcome to "closing bell." this full day of trading on the second half of the year, i'm mike sent holy at the new york stock exchange. this make or break our begins with investors struggling to sort of mixed messages from the minutes of the latest bed meeting. the major index is churning with modern declines, stock [ speaking non-english ] more sharply. later on the show, top ignition chris verrone charts out and what he thinks could be ahead for stocks. first, talk of the day, rising bond yields and further

rate hike inning, what does it mean for stock market leadership? here to discuss that, adam parker, founder and ceo of the cnbc contributors' -- thanks for being here, adam. >> thank you having me. >> let's start top-down here before get to what the market was up to in the first half. you have done some work on that. that minutes. give us the message we kind of got from powell in the press conference. we paused? majority, of course, unanimous, saying, we're not going to do a rate hike this time, but we're leaning in that direction. trying to be more patient about it. we have people saying, we think the economy is still vulnerable. you have these push the tempo dynamics within the fed. you have treasury yields, 10 year, you know, almost to the highs it was before svb, two year as well. is that a comfortable level for the equity market? >> you know, it's a very strong statistically significant militia between the price earnings for equities and the futures. so, you would think that if

it's a hawkish road of expectations, that would be bad for the market. lately, there's been this almost negative skew, where, again, a hawkish market doesn't go down, but then the market rips higher. that's usually a good sign the market wants to go higher. it's very hard, though, 44 or 49. hard to sketch out 10% upside to the market from here and say, okay, i can limit $5000 based on earnings and multiple. i think you need -- if they get bullish in the reality, it's because earnings in the economy are worse. we started the year bullish in the first half, and i'm kind of sticking with that call in the second half. i feel at the risk-reward is may be more up-10, down-10 than it was 60 months ago. >> yeah, bares in the second half, we feel like there's some payback. >> yeah. >> i know you look at this leadership, talking about stocks that have been relatively impervious to what's happening with yields.

the big mega cap names everyone's been fixated on have been having upside. what has the market been rewarding, specifically, when it's been adding tremendous amount of market cap in that area? >> you know, sometimes i think we all are guilty of this 20 variable problem we try to isolate to 1 to understand it. i made this turn, maybe this is the one. when cpi went up, when inflation went up, it hurt the margins of every company except the biggest 50, for the mega capital stocks. if you look back, the gross margins of those companies didn't really go down. right? the small caps, mid-caps, they got kind of killed. at the end of the day, you know, that relationship, we can see it. the blue line, they're the big companies that get their margins hurt. i think the case for the market may be be more bullish, okay, some of those headwinds to the small and mid-cap companies, the commodities are down, inflation starts abating. those are the input costs. maybe the market has been

bludgeoned by some of these guys participating with this case will get even 10% higher. but i wouldn't say, that's the base case. >> these guys, meaning everything but -- >> the 50 names. >> that have seen some margin hits taken. >> right. >> but in terms of those mega caps -- the market is rewarding the end durability of stats. >> for sure. >> forget about real yield and the cost of money or the fed. whatever. everything fits into it, but i also feel like it's interesting, because i look at a chart like apple, and if i do, i see this crazy 45 degree angle of a setback we have -- like today -- it shows you the margaret is migrating to this, not as a company with only seven variables, that it's sorting through on a day-to-day basis, but wants to on this category of asset. >> look, it's true in round numbers. look, we noticed in our work, only 20 companies in the u.s. are bigger than $300 billion.

if apple goes up by 10%, which almost in june, and adds a home depot-sized company. >> vent third-biggest company. >> it's massive. if you're trying to index your portfolio against the s&p 500, you just have to kind of manage your risk around the biggest six or seven names. i don't think you can really know something about apple that's not in the price that you're going to do research and understand something. it's the most covered security in the world. who knows, maybe 1 chilean of the 3 chilean value is there data, and some potential intelligence they can get.how do you value that? >> outside of that group of stocks, you have made the case, essentially, they form a core of the market knows what there is to do about these things. they seem to be much more resilient against economic shocks and others. but below those, what are the things that are emerging right now, in terms of when earnings are interest look bad? where do you feel like there's the opportunity to pick a more smart and distinct way? >> in a six-month view, i think there's a chance that the bull

market tightens a little bit. you know, we've been wrong recommending that this year, after two discrete years of recommending it, we've been wrong with more supply coming from russia, venezuela, a little bit of a weak demand, but i look at the estimates, 29% lower for energy. i think the butter estimates were bright enough to come down a little. i think there's a chance we can have estimates come up in six months for energy when the socks are cheap.i stick with that call. i think the risk-reward on the energy looks good, and the metals are good but we have no clue with nickel, copper, et cetera. i still like the top earners. i think everybody likes healthcare, because they think it's cheap, and probably has relatively more cheap investment. bottom investment are 9% lord then 2020 for the healthcare sector than 2022, where the broader market, upper-1/2 percent. i think those of the bigger risk-reward sectors. the worst are retail, with

quick deterioration. i think that's kind of how we're positioning the market. >> yeah. we are part of that cycle for consumers to get excited. >> yeah. >> let's bring in jon mauer of mfj investments into this discussion. good to have you, jon. this really tees you up ready well. you've been pretty excited about a lot of the big index type stocks coming into, perhaps, this time of year. now, you feel like there's a little bit of a different risk reward equation elsewhere in the market? >> i do. thanks for having me on this afternoon. a couple of things. i would say, three down quarters in a row last year, first quarter was negative, second quarter was negative, and the third quarter was negative. now, we've had three up quarters in a row. unfortunately, the way that the geometric compounding is, we are not back to flat, but i will say, we have had significant rallies, particularly the tech names.

i agree with adam eye comment. the profit margins are more resilient, allowing those to recoup those losses faster, plus the fact that nasdaq trailed the s&p by 1000 basis points, over last year. that sets the window for a massive tech rally, and the ai cherry on top with the conflation there. when i look at technology stocks that are particularly semi conductors, now trading at the highest in a decade. if you look at that relative to others, for example, that one the worst years on examples for utility space trailing the market significantly, the worse here in 35 years built into the nasdaq, with its best year to start the year on record. but i would argue that even though the fed says, they're getting cheaper, investors should be looking at small and mid-caps. the small and mid-cap space has not participated in this rally whatsoever. again, to echo a

comet adam made, which i thought was very astute on the cpi, the small and mid-caps were not able to pass through some of the inflationary pressures in the same degree. that being said, now you have the dislocation in valuations, and you have a situation where you could see earnings start to recover in the small and mid space. i would argue, investors should look to those areas, as well as utilities and banks. i think these have been massively dislocated. you have not seen a charge-off spike in the banks like many might have expected, and then the margins are still holding steady, and if you look at rates, for example, there's another area that's overly discounted. you may be wondering what if the fee from the feds is raised 25 more? i say, they raise a 25 more and you cannot refinance your debt at the proper level, you got way bigger problems. >> yeah. certainly, that would be the case. you have bigger problems. the best question would be, how much have they been discounted? victoria, how are you urveying things right now? i suppose the market, as a whole, has been able to say, maybe the fed has more to do.

that's okay if the economy hold together, and you also have those dynamics of, strong first half of the year, maybe the trend will be friendly for the second half. i know you have been defensive. are you rethinking it? >> i wouldn't say, we're rethinking it, mike, but i think we are looking at some of the signs that say, you know, is it really different this time? historically, when you had some red flags we've had so far this year, the leading economic indicators down to 13 months in a row, the yields, a consumer that may start to weaken with the student loan issues coming up, cracks in the labor market, these are things that typically tell us, the market should be pulling back a little bit. yet, we're just not seeing it. you do need to take a step back. our investment committee last week said, only being too stubborn in our view? and as we look at all the factors, we go, yes, there is some strength in the economy, but there's still a lot of stuff waiting on the

sidelines that we think is gonna work its way through.so, we're not saying, come out of the market. we're not saying, 100% marriage, but we're saying, you need to be cautious. you need to have some exposure to some of these names that you guys are talking about, some of the tech names, some of the more cyclical names. have those in your portfolio, but i also think you need to have some exposure to some more stable names or some more value names, in case you see the market pullback a little bit. healthcare. even talking about healthcare. i think that's a great place to have it. even elemental is in him we have added recently, but i think you can find some tech not as offensive as those big seven you had out there for us, you can look at something like oracle or adobe, where pes almost lower. we are looking at the obvious things, this is the third quarter in a row when the majority of the gains in the s&p have been from pe expansion. at some four, we think you are going to have to pay the piper. that's got to come back. we're worried about that.

>> adam, it's interesting, kind of framing differences between saying, you know, the market hasn't pulled back the way you normally expect, given the overhang and potential indicators of recession. on the other hand, it's been such an unbalanced market, that a recession, so to speak, has perhaps rolled through part of this. >> yeah. at one thing i worry about that we're maybe forming an agreement on the makes me worried, i don't really know if valuation is going to be a great signal, because if, ultimately, what the market's discounting for semi conductors is the answer to every ai at the end is you need more to compute, or whatever. my point is, i don't want to be long businesses that are disrupted by ai, short those that benefit, and the markets taking valuations up and down respectively. i'm just try to find where i think the businesses have better ability with margins, and i do think that maybe the upside skew to the market is just that more companies are going to see margin expansion more so than the current bear

rhetoric. >> yeah. >> i think there's more you can on, but it is just not as good as it was in january, you know, before everything retired. >> sure. and, jon, you mentioned before, you felt as if there's companies you are leaning towards that are smaller, that are maybe more neglected that, i guess, you would help could withstand a little more from the fed right ere. do you expect the economy, as a whole, is going to be able to keep chugging, even if the fed says, we have to force inflation down from 4% 22%? >> it's interesting if you analyze last cpi months, it is 2 to 3%. we have been down the cpi numbers every single month since june. it's almost there. this is a big month we have rolling off. june was the peak of the cpi, 9%. roll off this month, it will continue to move lower. don't forget, 1/3 of the cpi is shelter, and to this ast 3 is on her rent, which is not when the call people on the front and see when they can rent their houses. it's a little bit strange in

the world of ai that we are still doing that. but i digress, i will say, if you look at the medium and small-sized companies, you do have a situation where you've got multiples that drop levels, and in many cases, which gets me so excited, you have not had a deterioration in the earnings. some have come under a little bit of pressure, but others have not. life signs and tools is an example of an area that has been really fast down in evaluation. the technologies trading at 20 times earnings from 7 times earnings, a company that is trading below the covid march multiple. you see him getting excited. that's an extreme discomfort has been no deterioration in the earning results, and they just have teamed up with a group to expand the ai machine learning in the tools business. i think healthcare is an area that can benefit from the ai frenzy, but i don't want to pay stressed multiples. i want to see better stress

locations, and we have seen that in slow-cap space. >> victoria, i think you had a word on the fixed income side of things here, because credit holding together fairly well, to this point, has been one element of the bolsterli for equities as well. >> you're right. there have been a few stories, where people were saying, this is going to do the tightening of the financial conditions for the fed. it's going to be doing the work for them. this was one those areas, along with banking and housing. we have seen all of these turnaround a little bit. look at credit spreads right now. last week, credit spreads moved in the short-term to the long- term maturities, and across all of the value levels from aaa, all the way down to double-b, spreads tightened. it actually is working guess what the fed wants, and is telling us, right now, the credit market seems pretty stable. in high yield, we have seen leverage ratios go up a little bit. they're still below their historical ones, so it's not flashing a symbol right now, but there's a concern. i think we will see some widening as margins get compressed a little bit. i think we can talk about the earnings.

we're going to see margins get compressed with pricing power climbing, but we will have to see how that affects corporations, also lending standards. we are seeing lending standards tighten. we will see if that flows due to revenues and margins. if so, we should see some widening in credit. for now, it says, we're doing okay. >> yeah. that's a big part of the story. a lot of leading indicator say, be careful. things to keep an eye on for a moment. adam, jon, victoria, thank you very much. appreciate it. let's get to our twitter question of the day. we want to know, what's the big catalyst for stocks? is it fridays job reports, cpi next week, earnings, or sending us? head to @cnbcclosing bell on twitter. watching top stocks to watch, christina neville is here with those but high, christina. >> hi, mike. earnings is, more mrna drugs to

be developed in china with research-develop and manufacture medicines exclusively for china, despite the rising tensions between both countries. you can see moderna, almost 2% bitcoin base, though, following after the stock was going to end downgraded to a neutral rating. the revenue forecast, piper seneca, adding, it expect is to report its lowest trading volumes in over two years. shares are down .5%. mike, back to you. >> christina, thanks so much. we are just getting started. up next, charting the second half. top technicians are plugging one part of the market that could determine the road ahead for stocks. the case for that after this break. later, a big thread thread. looks like meta is taking on twitter with his newest app.how the launch could impact the company end bottom line. we are live from the new york stock exchange. you are watching "closing bell" on cnbc.

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that's hundreds in savings a year when you wave bye to the other guys. no wonder xfinity mobile is one of the fastest growing mobile services. you really shouldn't walk out the front door without it. switch today at xfinitymobile.com. yield on the 10-year trend, hitting the highest level in months today. stocks, of their best first half in years. our next guest believes the road ahead for rates could determine the market's direction in the second half. that's bring in christopher rowan, head of text mg at city just. chris, thanks for joining me. >> thanks for having me. >> you have been on yield for a while. they bumped up against the stealing of the ceiling, maybe gone through it. what are the implications? >> i think this is a big deal. we've been shopping at yields since the bottom out of october with 390 on the high side to

350 on the low side. we ran out of real estate on the chart. now, i think, we have decisively pushed through some big levels. in terms of determining what this may mean for stocks, the back-half of the year, i wouldn't sleep on it. i think there's an irony happening, when no one is at the desk. always, big stuff happens. >> yes. >> we pick from the past, and years to come to minor '95, '98, even '87. >> yup. >> looking at the second half of the year, rates continued to fall in '95 and '98, went the other way in '87. looking at that as some kind of a roadmap, i think when you start pushing forward 20 or 30 yard yields, the high from october, you will wonder if that will put pressure on stocks. >> to spell it out, '95 was the melting of stocks, '87, we know what happened when rates got too high. we had a crash.

if real yield is also going higher, a lot of things feel like they might be pinching around the edges, but in terms of the types of stocks that have worked and not worked, does it change the equation? >> you know it's interesting? today's the first day in a few weeks when you have yields up and defensive showing signs of life. yields up doesn't particularly worry me when groups are leading, which has been the case of the last couple of months, the first they will hit a change. i always want to be on guard when you have rates that should be stronger in a kind of economy that should be defensive with utilities, healthcare, which is not the best mix. it's one day, but i think it bears watching going forward. it reminded me a little bit of the summer fall 2018, when rates were running away, and leadership started to skew more defensive. that's a message that, maybe the market's a little bit couple with rates here. really wants that. it's been one day. i think the leadership for the market is still led by industrials or discretionary,

but we need to put that in the watch. >> in terms of outside those areas of leadership, in terms of the broader thing, seemed like it was under-believed, and under 6 months ago, but now, after piling on almost market value, where does that leave us? >> i would say, number-one, mentioned real deals. there's been a pretty good relationship between real yields and growth value. it broke down a little bit the last several months. i wonder about this break out in real yields, 165, does the growth value relationship start to fall? it has, quietly, the last few weeks. look at microsoft really having participated the last few weeks. google hasn't participated the last few weeks. i think that there's some watching moving forward. the trends are still up. >> sure. >> they have taken the 50-day voting average. i would make that the starting point ski. do any of these names violate the 50-day? that is the litmus test going forward. >> s&p 500, looking how that is set up, what sort of hole -- as

most people would probably anticipate -- would seem deemed and will be more cause for concern? >> i think routine is to the 50 here. call at 4200. >> okay. >> 50 has been good, basically, since march, even during the depth s of the march angking with the 50-day herald. i think it would be the starting point. under that, i would start to wonder, is this something more serious. but this market's not really about levels for me. it's about character. it's larger been pro-cyclically driven producer to see a change in that, i think it then begins to beg the question whether the character of the table is changing. look at the uk. the uk is an area where 10-your yields are back to the high is where they were last september, october. that's a market that's legitimately starting to weaken here.let's use that as a little bit of a guide to understand how higher rates may impact the character of this day. >> chris, good to chat with you. >> thank you, mike. up next, weighing recession risks. cic walks malcolm after days off.

he sees some downside ahead that is not all bad news. we will breakdown is forecast for the rest of 2023. later, chip stocks, sinking adg was e close. we'll tell you what's behind that. don't go anywhere. "closing bell" will be right back.

welcome back to tran04" stocks are lower across the board today, although the s&p, showing most officials expect more rate hikes ahead, and my next guest believes the fed will continue to hike until the 2% inflation target is within reach. let's bring in malcolm deatherage, cnbc conservator. malcolm, the dcu. i guess the question would be how much more would you expect the fed might have to do to get that 2% inflation target within sight, and to what effect on the economy? >> hey, mike. yeah. i think the fed chair, chair powell, has made it clear that he is absolutely committed to seeing this 2% pocket reached

as far as the cpi number is concerned. so, i think pretty much means that it is a win, not an if as far as hikes are concerned later this year. i think a party telegraph, too, the number they already have on the table, and participating gets them to that target, even though they've also told us, don't expect it to necessarily mean that we shop with 2% cpi targets, say, in september, all of a sudden, after the second rake height in the same month, they expect it to play out, because that's where they think the rate hike should be. we should look at two hikes this year, probably in the 3rd quarter of this year, and then we'll see how long it takes to get back to 2% from there. but the 2 is a big deal, i think. >> is fascinating we will at this moment, where there is, on one site, plenty of folks who have great confidence that the gravitational pull on inflation is strong, and you can look at the leading indicator. seems like we have a beeline in the coming months, at least towards 2%. others are saying,

the economy is too hot here. if wage growth is still strong, stock market is up, sticky around the 40% level, where do you come down on that? do you think it's going to be a struggle from here or relatively clear path to get inflation lower? >> i think we end up seeing is it takes a lot more time to get that number down from something with a handle down into the 2s. anybody trying to lose signal can wait, the first 20 pounds are probably the easiest, and the last 5 is what billy persists and takes the most work to get rid of. i think, also, powell has shown his hand and said, it's gonna take about two more hikes before they finally see the numbers they want to see. i think it's really just a matter of how long the rates stay as high as they do at that terminal rate before they finally pilla back and say, enough work has been done and we can kind of just wait and see from here. i think he has also tipped his hand in saying, their plan was

to tighten until something broke. i think, no matter which side you fall on, it also agrees that not enough has meaningfully broken to this point that was signal that they're going to back off of the gas pedal and allow us to coast from here. we should all be seeing that, at least two more hikes of was going to come. it's just a matter of how long do they hold on at that terminal rate at that point before they decide to start initiating cuts. >> powell does seem prepared to try to let time do some of the work at some four here. what does it mean for you, in terms of the playbook? is it just sort of, okay, now just position as if there's a slowdown coming? be defensive? are there other things to do? >> yeah. i think it obviously depends on where you are, as far as your investment time horizon, but i also think this market that we've had so far, through this year, the 1st1/2 of the year, has really been a gift to those who really need to take a gut check here and see if they should be positioned as aggressively as they currently are. i read a

piece in "the journal," highlighting the fact that far more borrowers are allocated 100% to stock source in the close to it than they probably should be at this point. i think, for anybody who's been looking for the exit ramp, not sure if you want to leave the party yet, i think the market being up significantly the way it has on this tech rally has really presented you with a second chance to get out of the market, not necessarily all the way, but at least get some of your portfolio toward lesser risky assets, maybe cds, for example. i've been seeing clients buying way more citys the last six months an hour from then i have been any other point in my career doesn't hurt that the 12- month, this summer north of 5% particular risk-free rate of 5% plus, versus them out 15 percent for the year, do i really want to keep on chancing it? i think this is a really good time for anybody who knows deep down in their heart they should not be allocating as aggressively as they have been the sort of start to take

profits here and get out of the way. >> so, you are not in the position of trying to talk people away from that 5% plus mission at this point even without more options? you think it's a good option to rebound? >> like i said, it's going to depend on where you are on your horizon. if i'm a retiree orson to be, a couple years out from retirement, is there really that much of the benefit having my portfolio 100 present allocated to stocks, which means that if the market does, in fact, go in the direction that i think it is, and we're going to see a recession before this year is out -- if the market does, in fact, going that direction -- that means i'm going to have to start selling things at a loss the moment i step into retirement. or i can look back at a june or july of 2023 and say, there was an opportunity to take on the risk a little bit, diversify my portfolio better, and take that burden and hand that 5% cd that pays me a wait and see. >> makes sense there.if you are at that stage to try to squeeze

out a little bit more. thanks very much. appreciate the time for talk you soon, malcolm permits him to you, mike. up next, we're tracking the biggest number into the close. christina is standing by. hi, christina. >> hi. contract negotiation between u.p.s. and the union lives have collapsed. we discuss if a strike is on the horizon. we learn more right after this

coming on 21 minutes until tran04" major index, almost $1000 down. s&p, below the foul line along with the nasdaq. let's get back to christina for a look at the key stocks to watch. christina? >> yeah. i'm watching most features that are rallying double-digits with the company signing a 10-year deal for japanese semi conductor deal with a deal reported to be about $2 billion, which the company tell me, silicon carbon chips will be produced at the facility building in north carolina. you can see shares of 12%. meanwhile, shares of u.p.s. are falling, as negotiation between the delivery company and the teamsters union are appearing to hit an impasse. the current u.p.s. teachers contract expires in july, which is very soon, and the group of over 340,000 workers already overwhelmingly voted to authorize a strike if a contract is not reached.

shares are down 2%. mike? >> kristina, next again. we are also keeping an eye on meta shares. social media giant, taking aim at twitter with its newest app. jalin moore instead, here with the details. i, julia. >> meta shares, at 852-week high to be on optimism about a new app the social giant is going to rollout called threads. it was set to be viewed tomorrow, but the countdown clock on threads.net says, it's launching in three and half hours. we'll be watching. investors have seen the potential to leverage instagram eye which the 2 billion users to attract some of them to a twitter alternative that could be a new growth driver for meta. threads is described as a text based conversation app that it appears to look a lot like twitter on. it's designed to leverage instagram eye popularity by enabling those users to quickly follow the same profiles they follow on instagram, and to use their instagram handles. now, for twitter, that is

threads coming at a time when the company is particularly honorable on the heels of elon musk setting limits to the number of tweets users can read. thus, there are questions about how many of twitter's users will opt into paying the company's twitter blue subjection service and threads appears to be free. mike? >> yeah, certainly an opportunistic play here, julia. i wonder if we have any read on what meta is going to consider a success with this roll out you detailed the advantage they have, in terms of on-ramping instagram members, but in terms of revenue, twitter had like $5 billion or so in revenue when it was a public company. meta's got $125 billion. i just wonder what you think they're seeking in terms of success? >> i would say, meta has a long track record of rolling out products first and looking to monetize them later. the first thing you need to do is build an audience, make sure you have a place to put ads,

then you add as to the product. meta has had various situations where it has tried to create new apple products, and they have failed to take off. one was bulletin, a sort of alternative with other ones. so, sometimes, these attempts to copy other popular features on other platforms just don't work, but i think in this situation, the confluence of various factors, including the fact that twitter is struggling, and the fact that they're not building this as a standalone app, but rather using the popularity of instagram to try to get some of those instagram users to try this new platform, they may be better positioned this time around, but i think, at first, what they're going to be looking for is users and engagement on the platform, and then they'll monetize later. >> yeah. i guess this would be another instance where a lot of people said, well, they really could have a shot here. seems to, perhaps, gather steam >> that definitely did work. >> absolutely. all right, julia, thank you so much. last chance now to weigh in on our twitter question. we ask, what's the next big

catalyst for stocks? jobs reports, cpi, earnings, or some thing else entirely? head to @cnbcclosing bell on twitter. we'll bring you the results after this break.

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today. welcome, all. scott, love to have your take as we embark on this 2nd1/2 of the year. is an interesting kind of nuanced combination of observations we have here. on the one hand, looking for the potential of a recession maybe the later part of the year, and looking squeezed. yet, you're preferring some cyclical areas of the market vs. defensive's. how does that square? >> as we redefine growth, cyclicals and offensives, they are a real cluster, which is an indicator of growth for the component committee will come up about 30%. cyclical is up only 2%. there down 2% predicable discussion points here. one, how can we be exposed? looking for paul-backed up to be more aggressive. for new money, we're more comfortable putting it in the cyclicals over defensive's, either on the premise that the recession timing will continue to be pushed down and or into a fed pivot, potentially further into the your. both of which, we think, could

help the cyclical component of the market. >> yeah. it's a was as if there's a chance that you sort of run out the clock on the bears on the economy to some degree here. and i want to get to the work you have done on general earnings resiliency, because you have seen earnings forecast kind of flat now, maybe bumped down the last couple of weeks, but why do you think earnings don't have to go down as much, as we've got knust in prior cycles? >> well, given prior cycles, we usually look at a recessionary effect is more of a shock situation to investors, and we have been talking about this recession for at least a year now, and we think, between investor expectations and management expectations, both are better-prepared this time, going into potential downturn, then they had been in the past,

and you think the tools with which they're managing, the supply chain could have lack of mentors going into this and so forth, which is all setting up for a much lesser earnings downside risk than most would expect. so, our earnings resilience would essentially be just that, that companies are able to manage this downturn more effectively than previous, ultimately, investors responded with a premium paid for companies on the side of this. >> gotcha. circle back to you in just a second, scott. phil, though, want to get you on this mood we have seen in live in today. >> we'll talk about rivian and all the auto stocks that started monday. what we have seen is with regard to q-2 deliveries engine salesperson with general motors, q-2 deliveries, much better than people expected second quarter, 18.8%.look at the average transaction price actually increased in the second quarter vs. the first quarter by more than

$1500. incentives and inventory flattened that speaks to the demand out there. take a look at shares for general motors. q-2 history sales according to gm, they believe that they got $60 million for a sales pace. it's been a couple of years since we have seen more these sales rates of $60 million. also, look at toyota. june sales, up 14.9%, including trucks over 70% increase relative to a year ago. finally, as you mentioned, mike, rivian was up monday, short trading day, and also up today. not as much as it was earlier in the session, but still up on the day. why? because monday, they said, they are still planning to produce at least 50,000 vehicles this year. that reiteration of the prior guidance, that's enough for the people who believe that rivian is getting the traction it needs to grow. >> interesting. obviously, rivian is an early- stage player, but the numbers from gm, as you mentioned, from

toyota and tesla, even, it suggests they're getting bigger than people thought it would at this stage, almost as if, you know, autos are no longer sensitive to interest rates and other things we got sed.for so long. >> and i think that's the surprise in this. the auto loan industry environment -- we have talked about this -- these briefs are anywhere between 60% and 10 percent depending where your credit ratings are. they are much higher than a year ago. that's not slowing down demand. even when we see a little bit of erosion on the lower end of the market, there's still some growth there. it's interesting to see how long this will continue. by now, i think people.these interest rates would slow down demand. we are not seeing that yet. >> for sure. starting to crash the economy at this point. thank you, phil. kristina, explain what you can about this move in chips today . >> once again, semiconductors, caught in the middle of tense relations between the united states and china. the chinese government announced export resurgence on two metals used for semiconductors and solar panels but as of august

1st, they will have to apply for permits with chinese if they want to work with china, and chinese state media, saying, these controls are a way of telling the united states and its allies that it will not be squeezed out of the global chips supply chain. shares of rare earth producer, np materials, a rare earth producer come up 5% since it is based in the united states. they could set to that if tensions continue. chips, also playing a role. part of the supply with smart phone supply chain. you're seeing several names, down about 2% to 5% lower just because of the rising tensions in the measures coming with the biden administration reportedly prepared to expand its own restrictions, not only on the sale of advanced semiconductors to china, which would impact we have talked about with names like nvidia, but economic cloud computing services that use ai chips, companies like amazon, croissant, would need to seek u.s. government permission to do business with china. that means a tense environment

just ahead of treasury secretary janet yellen's trip to beijing. mike? >> yeah, kristina. it seems as if the chips have benefited from big holocene measures in one side, you know, with the chips act, and we had this construction boom in chips, and then there are kind of political football to get kicked across the pacific every once in a while. where does that leave the players? >> i guess micron would be the fruit that china just went after him banning certain chips that got hit genetically. the biggest cfo, last week in a webinar with piper sanderson, roughly 20% to 25% of the data center revenue comes from chin .she claims, there would be an immediate impact. however, 20% to 25% is substantial. should the united states go ahead -- which it seems like it likely will, perhaps this summer or in october, with putting further restrictions. that is going to have an effect, given china contributes roughly 20% or 25% of local chip command. if you are cutting out that local country, that will have a

substantial impact. by now, though, it seems like the argument is that ai revenue is enough to offset any kind of weakness that may come from the loss of china. >> yeah. of course, that's where we're showing the sector up 40% year to-date >> exactly. >> even with a pullback here, kristina. thank you so much. >> thank you. >> scott, which a current snapshot on how investors are sort of positioned, and what sentiment might mean for the next, let's say, few months in this market? >> we think the surge of this mega cap has caught many types of investors offsides. we think the move is probably going to catch up in various ways, shapes, and forms even on the et-upside, flows were very subdued from last november through maybe when we began to see a pickup in june. we're sensing here, there's still an element of, okay, how do i position around this market? ais sort of the elephant in the room. here, we want to keep an exposure to those areas, in

terms of more direct revenue and earnings component. so, we tend to prefer the communication services slash software names within that cohort, and less constructive on temporary hardware at this point, particularly on semis, as just discussed. i think the issue here is, okay, great, how long can this mega cap extend, and coming back to your survey about the bill, i think that huge earnings will be critical here. essentially, the higher you run the stocks, the more implicit the expectations are that should be coming out as fully earned reports. that is going to be the next significant market for these earnings. >> scott cronin, appreciate the time today. thank you so much. coming into the "close," for five seconds left. the s&p 500, modest losses at about 17 1/100 of a percent. the russell 2000, down 1 to 2%.also, the snp is about 4/10,

and a big downside for leaders in the snp, apple, up about /10 of a percent, and meta, up to date. big day across the entire s&p 500. losses are the theme. that does it for us, guys. let's send it in with morgan brown now. >> mike, we'll see you in a moment. middling markets on this first full trading day of the second half, with all the major averages finishing lower, fractionally. that is the story on wall street. actions, just getting started. welcome to "closing bell overtime." coming up this hour, we're going to talk about news today surrounding field contract negotiations between u.p.s. and the teamsters union and the major impact that can have on the economy with fedex. plus, the ceo of