groups. china's factory groups are producing more, resulting in massive overcapacity. chinese brands coming to town. we all feel bad for irge. -- aaron rodgers. i had the same injury. lose the crutches, go with the scooter. >> and somehow they pulled off a win somehow in spite of everything. >> "closing bell" right now. welcome to "closing bell." i'm mike san tolly. scott wapner just finished up a conversation with jeffrey gunglach. he will bring us the highlights. we begin with stocks toiling in the face of two crucial catalysts, the s&p 500 sitting about halfway between its summertime high and low as bond yields and oil push the upper end of their ranges with the cpi

released first thing tomorrow morning. first, our "talk of the tape," market leadership being put to the test, apple shares in the red with the iphone 15 launch under way, and oracle's disappointing outlook dragging on the names. >> the headline is the analysts got it wrong for the pricing. it will remain the same, $799 for the regular iphone 15 up to $1,199 for the iphone pro max. the big changes on all the models includes a new plug at the bottom, replacing that lightning connector that we've been using for over a decade, now using usbc, and on the pro models, apple touting the features for videographers and filmmakers and professional photographs to connect to their maceasier, edit photos easier. that community has been asking for this for a while.

on the pro end, better cameras as we expect every year, a better zoom, 5x versus 3x optical zoom. and also following a pattern we saw last year, the best features and most advanced features in chips and so forth, those go into the pro models to be introduced into the lower-end models the following year. that's what we're seeing with the regular iphone 15s. they have the same processor that last year's i 14 pros had. then of course some watches, minor updates. the apple watch series 9 just some under-the-hood improvements, and a new feature, double tap, meaning you don't have to tap on the screen or use the dial on the apple watch. you just go like this, index finger and thumb together, to make selections. they're saying that's easier when you have your hands full and things like that. they're facing a really tough environment, smartphone demand is low right now, we know that, and we know apple has guided

this will be their fourth quarter of declining sales in a row. >> absolutely, steve. we don't want to make too much of the moment-to-moment changes in the stock price, but the losses in apple shares did deepen once the details came out. what's the read on the lack of a price increase? does it seem to suggest to investors perhaps that apple just didn't feel like they could push these through? we obviously have seen general inflation in the two years since we had the prior model and pricing setup. >> yeah. also, it doesn't mean price increases won't come later. we've seen apple do this before in certain markets, especially as we've seen the strong dollar of the last couple years, certain markets might get a price increase already. i haven't seen all the prices. also, carriers will be offering deals, apple excel offering up to a thousand bucks off, and each carrier will have their own off offers, trading in, et cetera.

>> we are also seeing session lows in the s&p and the nasdaq. still relatively modest losses but they have worsened in the last little bit. here to discuss, lauren goodwin of new york life investments and serrat of douglas c. lane and associates, also a cnbc contribute or the. let's first get to apple and how you're thinking about the new product release and the context of where the stock sets up right now. there's not really expected to be a whole lot of earnings growth in the fiscal year that just started. you hear anything today that's going to change that? >> no, not really. i think the pricing was surprising because we know volume growth has been coming down. so how are they going to increase revenue and more importantly margins and cash flow? i think you have a little disappointment there, but as steven mentioned before, you don't know what they're going to pull out later, maybe pricing cut, maybe see what the demand

is like. if demand is greater than supply, you will get pricing on it. everything we expected incrementally, no big news there. and you kind of have this slow drip in apple over the last week with the news from china and government selling. we'll see how it goes. but i think this will be an interesting test to see what type of demand the phones will have. >> so maybe apple just trading a little carefully on that front. i think more broadly, lauren, the question is what type of consumer do we have, what type of economic trajectory are we on. we'll know it again, the monthly bank of america fund manager survey says soft landing expectations are pretty well ingrained, the majority figures that's what we'll have. you seem not to think we'll get out of this quite so easily in terms of the economic cycle. so, if that's the case, how does it develop from here, what in the markets are mispriced in your scenario? >> the consumer is still incredibly strong right now. i think where we differ from the headline market perspective is how long it will stay that way in the sense that, look, we

revert to this fund, cute narrative around economic dominos where as soon as the fed starts raising interest rates, dominos topple. right now they're stopped where they tend to stop, with the consumer. i expect we have a couple more months of ballast supporting the consumer in this environment. what's challenging is the sources of those ballasts coming off but important changes like those in student loan payments. we're seeing that have an impact quicker than we expected. does that impact the purchase of a new phone? i'm not sure. i think for next year it's something we're concerned about. >> does that imply that the 4%-ish wage growth we've been seeing on some level maybe the fed wants to see soften even more will come down? it seems like there are these offsets. if we have further of course deceleration, if it contributes to further disinflation, then we can get help on the fed side. at least that's the perfect choreography people might imagine. >> wouldn't that be fun to play

out? i think we'll have to see wage growth come down. it's one of the real challenges of the stronger than expected economic environment we've seen that that 4% risks that you have services, price inflation reaccelerate, move higher. we'll see over the next couple months how that plays out. the reality is the fed cannot let its foot off the gas in an environment like that. the risk to inflation, it's said, is more important than the risk of recession. i think the fact that the 500-plus basis points of hiking we've seen already contributing to recession has been a happy accident rather than a purposeful policy move. >> no count they didn't count on it going quite so well to this point. as you kind of look at companies that you're maybe going to invest the or already invested in, what are they suggesting to you in terms of resilience of their end markets, and what their phath of earnings are? we have seen the consensus start to turn higher, so a lot of it driven by some of those big tech

stocks. >> yeah. i think people are generally -- i mean, capital markets are starting to open up. you're seeing some ipos. but, you know, to lauren's point, oil prices are now going higher and higher, wages are going higher. you have these discussions with the autos and the union, higher wages for pilots, u.p.s. i think we have this embedded inflation in our system, and the market is pricing in a soft landing. so it will really be companies that have true cash flow growth and earnings, and i think those that don't are going to get punished. you saw what happened, you disappoint slightly in the stock. i think the earnings season coming is going to be one of the most important ones, you know, with consumer demand slowing, costs increasing, and you look at capital structure for the companies trying to raise debt as well. a lot i think has to be perfect for the soft landing to happen.

>> that does seem true, although i guess a couple of things, lauren, that maybe folks would argue as counterpoints, one of them is the initial conditions in terms of just how strong the consumer was, how much fiscal stimulus there was, consumer balance sheet, corporate balance sheets being in good shape, that the weakening we've seen is so far kind of a normal saization opposed to falling off a cliff. the microcycle idea, housing had the worst of its pain, manufacturing has been bumping along for a while without a lot of overall help to the economy. this idea that not everything is going wrong at once. >> yeah. both arguments are effectively a function of time, and timing is pretty important in investing, so i'll grant the objections there. but as the strong consumer has weakened over time, every recession looks like a soft landing at first. we were talking about the same thing in 2000 and 2007. i anticipate this will look very

similar. what is absolutely different this time is the fiscal support that the consumer has been seeing, not only what's allowed the economy to continue on the path that it has over the past year, but likely what's going to contribute to this difficult decision the fed will have to be making and i expect more hiking in the future. all of that together, though, has created one of those most interesting investment opportunities in the last decade, which is a little bit of yield. certainly not all bad. there is an environment we're staying fully invested. what we've seen time and time again in those 2007 experiences, is the market doesn't react to recession until it's already here. we don't need to preempt it quite that way. >> i guess if that's the case, if you are fully invested and the majority seems to be wanting to position for a better economic outcome, where are the opportunities you feel being neglected in that? >> i think the soft landing position is a little optimistic,

different from expecting a recession but staying bullish. what i mean is if you're worried you might see a bit of an inflation refirming, which we do expect that will happen, not talking about a double peak, but a little bit of refirming over the next couple mos, you expect economic growth will continue to slow, you might be adapting your stocks, from gains to high yield, even looking at some of the real assets that tend to do well if you see an upside infl inflation surprise like real estate and commodities. they're slightly different commodity choices in an upswing or cyclical recovery. those are the opportunities we see having positive returns. >> and high-yield bonds, you always get that question, if the economy is wobbling, why does that make sense? >> we'll see spread widening if not meaningful as the resession risk rises.

the fundamentals in high-yield bonds are different in this cycle mostly because of the government programs during the pandemic era. so there is a stability of the maturity walls and of the quality of issuance that we think gives the asset class more resilience. maybe you don't see spreads widen out as far as they tend to when recession hits. the other important benefit is the yield we're seeing from high yields, wasn't the case in the last economic cycle, and allows an investor, if they're looking to take equity-like risk, because that's what high yield tends to perform in that scenario, you can click the coupon and not seeing the same yield out of an equity portfolio. >> for sure. sarat, we have the cpi tomorrow, you can pan out and say the ingredients of hour the market got where it is this year is disinflation has been pretty much consistent all year, the fed, maybe it's not done, but it's certainly close to it, and corporate earnings had a downturn and maybe are coming out of that, at least in

aggregate. do you expect anything tomorrow from the cpi that will complicate that story, or do you feel as if that's already too well price tds d in the market? >> it's already priced in, but we have to be careful with inflation showing up in commodities, showing up in energy, so i don't think the fed is done. i think they'll wait, but if the economy slows down faster than we expect and we get inflation, i think that's where it will be difficult for the market. but in the perfect scenario, we get inflation kind of coming up just a little bit and the economy slowing. i think that's exactly what the fed wants. so tomorrow's number i don't think will be too surprising, but i think the data for the next four to six weeks will be very interesting to watch. >> we had this "wall street journal" report over the weekend that the fed is now thinking that, you know, it can be more patient, i guess, or the risks are more balanced in this view. even on paper, they don't expect inflation to get to the target for quite a long time. arguably, they're giving the economy a little bit of a longer

leash right here. does that not change the dynamic to you? >> i agree that the fed is unlikely to hike in september. that's my expectation. bup i but i think that represents a reset ochg their pace for hiking rather than a signal that they'll pause. it has everything to do with the inflation risk pointed out. the fed says if things are going as welles wealth as they going in 12 months, we still won't be at the target. that's an environment that presents interesting investment opportunities. but it's one that also has very different leadership from just a traditional cyclical thing. >> sarat, dealing with your clients, we've talked about the novelty factor of 5% safe yields in cash-like instruments, a lot of folks -- it's been a long time since that was the case. are you having to talk people out of cash, into cash, does

cash serve a different purpose right now in a portfolio? >> that's a really good question. so, cash is more equivalent to either getting your 5% yield in money markets or treasurtreasur. a lot of clients are saying if we're going to do corporates, you have to give me a really good yield to compensate for the extra risk. but you are seeing that especially in balanced account where is, you know, in the last ten years you're pretty much on the higher end because you weren't getting any yield. now it's, hey, i can be on my lower end and i have equity-type returns in the high yield or bond-type instruments. i think that's taking away from some of the equities. then on the equity side, it's also, you know, valuation is really important. do you really want to buy companies who are 20, 25 times p/es with interest rates at 6%? you have to look hard and say the growth rate has to matter. you want to look at other areas where they are value stocks, but make sure you're not in a value trap, areas like health care, some cyclicals, any type of, you know, rebound, that's the areas

you want to be. >> all right. sarat, lauren, thanks so much. >> thank you. >> talk to you again soon. our "question of the day," how would you bet the market will react to tomorrow's cpi report? rally, sell off, red or black? vote on that. we'll share the results later this hour. let's get a check on top stocks to watch as we head into the close with s&p down about 0.6%. seema mody. smurfit and westrock combining. the combined company shares will trade in both london and new york. smurfit falling about 10% in london on concerns over valuation, while restrock is up around 3% at this hour. gains on a number of banks including zions bancorp., after

dimond said he would not be a big buyer of bank stocks. he was cautious on the outlook for this economy. >> he was. even though he wouldn't have been a one-day, you know, flipper of those stocks, he could have had a good one. thanks very much. we're just getting started. up next, we're headed out west where scott wapner caught up with jeff gunglach. highlights from that conversation and instant expert reaction after this break. s&p and the nasdaq are trading at session lows.

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welcome back to "closing bell." i'm scott wapner live from the future proof wealth conference in huntington beach, california. just finished speaking with doubleline ceo jeffrey gunglach. obviously we spoke a lot about the economy, the current state of that, what he thinks the fed is going to do. we are just about a week out, of course, from the next decision. as you know, if you followed our conversations over the last many months, he's been arguing to me and to you, viewers, that the fed should have been done already. i asked him, are they done now? here's what he said. >> i think they're done. i think that we have enough economic weakness. the one thing they need to change, to be done, is they need the core pce to drop below 4. it's been a 4 to a 4.5 for about

2 1/2 years. and that's the one inflation indicator that is just sideways. all the rest of them are clearly very substantially have come off their highs, not the core pce. and that's because of services and to a certain extent wages are part of that services component. that has to come down. i think once that goes below 4, and i think it's 4.1 today, i think that will make them definitively stop. >> the bottom line is he doesn't think the economy is as strong as people would like to believe. that's why they're done raising rates. doesn't believe the soft landing scenario. here's what he said about a recession and the idea of rate cuts. >> absolutely. i look for one next year. i think the indicators are getting really convincing in that regard. and so, this debt coming due would be just devastating. the fed can't have interest

rates at 5%, 6%, and hold them there for the next few years without bankrupting everything about this country. and i think they realize that. i think they want the economy to slow quickly and rates to go back down, because if that happens on their watch, it's going to go down, you know, as -- in infamy, really. so i think that the economy is definitely weakening. i think it will be the first half of next year. i think it will be when the economy really weakens. >> "it" being the first federate cut. we talked about the topic yesterday that came up unexpectedly, bill gross formerly of pimco, took a shot at jeffrey gunglach and his moniker of being the bond king. i want to play you some sound here of what jeffrey gunglach said to the words of bill gross yesterday, where he said, "first

of all, to be a bond king or queen you need a kingdom. pimco had 2 trillion, okay? doubleline has 55 billion. that's no kingdom. that's like latvia or estonia." i should prefs iface it saying t 50 billion, not 100 million. here's his response. >> i don't care. i just don't care. >> it doesn't bother you one bit? >> it's sad for somebody who's been out of the business ten years and is still trying to, i don't know, i guess exorcise is demons, i guess. it's sad. but i hope he's doing fine. >> does the world really need two battling billionaire bond kings? >> i never wanted that title. i never embraced it. i really don't know what it

means. we're doing great. our numbers are great. things are good. we manage a lot more than $55 billion, so i don't know. >> the last i checked -- >> four pinocchios. >> the last i checked, at the end of 2021, it was three times that. i don't know what it is today. >> about $100 billion. i don't know. it's a strange thing. i actually don't want to manage more money than i do. i stopped marketing my largest fund 12 years ago. >> all right. so that's jeffrey gunglach on the record. you heard his thoughts on the economy, his prediction for next week's fed eeting, which, i should remind you, he spends every fed day with us on "closing bell," and we'll do that again next week. you heard what he thinks will happen, and you'll find out what did happen. when i see you later on, we have more sound from him on investment ideas about bonds, stocks, and some other areas of the market he watches closely. in the meantime, join megato discuss all of this is nancy

davis, chief investment officer. good to see you here in luntington beach. >> thank you. >> to the point about the economy not being as strong as some would like to believe, he doesn't believe as you heard in a soft landing scenario, recession next year, rate cuts to follow. what do you think? >> well, the treasury does have to refinance, almost a third of our debt is coming due in the next year. the data in the u.s. has been pretty strong so far, but the treasury has so much debt to refinance. like, what are they going to do? that's going to explode the interest carry costs. i think expecting some sort of rate cuts are reasonable, and i do think, you know -- obviously we'll get the cpi tomorrow and we'll see whether core actually comes down, but the headline is expected at 3.6%, so fingers crossed. but, again, cpi is just a number, just an index. it's like the dow jones or the s&p. it's the consumer price index. it's not the only way to measure

or think about inflation. >> you would admit yourself the trend has been going in the right direction, which leads the fed to, you would want to believe, think they could be patient from here forward. don't you think? >> i definitely think so. i think they've hiked too much already. they should have been using the balance sheet more. i feel like they keep hitting the same nail with the hammer over and over again. they have monetary policy, not one policy, but policies, including quantitative tightening. they've been pansies about it. they haven't gotten bold with reducing the balance sheet by having these caps in place, and then silicon valley bank created more liquidity and increased their balance sheet again to save the banking system. so i think they could really ease off the rate hike, use more quantitative tightening with their balance sheet, and stop being -- stop doing the same thing over and over again. >> so, just because you believe they've done too much doesn't necessarily mean that they won't

do more. do you think, like jeffrey does, that they're done? i think we'll probably get one more hike. i'll take the over on that and say through the end of the year i think we'll probably get one more. but i do think the market, if you look at fed fund futures, is expecting rate cuts next year. i think that will be the real surprise for markets, right, if the fed hikes and holds longer than what we're expecting, because pretty much all bond managers, whether you're a king, queen, or something else, everybody is coming out and saying where are the cuts, right? everybody is looking for rate cuts. it's kind of a deja vu a little bit. if you think about, you know, back in 2021, nobody was expecting the fed to hike 5%, 5% interest rates in about a 12-month span. so i think it's very difficult. you don't want to be stuck with consensus thinking. and i think we'll have to see what the data shows. but it's also the labor statistic, and revisions happen all the time. >> bond market volatility is something that you obviously

follow and invest on where you see that going. would you be willing to say that the volatility in the bond market has been pretty modest almost throughout this whole stretch of rate hikes except for a few periods where things got a little crazy? how would you describe what you've witnessed, in your expertise, in our area of the market, through a little more than a year of rate hikes? >> yeah. definitely it's needed. a lot of people focus on equity volatility, but what's lurking in all of your viewers, you have fixed-income volatility if you're short if you own a mortgage. any place you own a mortgage, a u.s. homeowner can prepay whenever they want. they own an option. if you own the mortgage, your short options to them, and whenever you're short options, you're short vol. vol has not gone higher, but if

we see an increase in fixed income volatility, that will mean price going down in mortgages, so it's important to understand the ag index, a third of that is mortgages. the fed's balance sheet is still about $8 trillion. the balance sheet with silicon valley bank, a third of that is mortgages. >> jeffrey likes mortgages, and he's -- >> maybe the mortgage king. maybe we can agree on that. >> he made the point, you know, people are sitting in 3% fixed mortgages or perhaps, you know, some maybe a little under, some a little over, who's moving? who's going for the 7.5% mortgage now? so, there's been such a degree of stability in that area of the market. has that surprised you? >> it's all about modeling prepayment risk, so it's about interpreting what home owners are going to do, how they'll respond, when they're going to prepay, and it's very rational for homeowners to prepay when interest rates go down.

but when they go higher, people don't want to move. that's created more of a wealth gap in property prices because it's so expensive to buy a home now. if you're not already in real estate, what is a regular person going to do? i think that's also another problem going back to the fed using their bleetd more. a third of their bleetd is mortgages. they can help normalize things, because markets are distorted in fixed incomes. the yield curve is more inverted now than it was in the late '80s. one-month t-bill and get 5.25 or lend the treasury for ten years and get a percent lower. it doesn't make sense. normally you take more risk, you get higher reward. in this case, you take more risk and get less return. the markets are definitely screaming that the rates market, the bond markets, with this inverted yield curve, that a recession is coming. >> all right. great to catch up with you here and especially having you react

in real time what you heard from gunglach. thank you. >> thank you, scott. >> "market zone," i have more sound from gunglach on whether bonds are still as attractive as they once were. and the fed's change of thought perhaps about what they can do from here on out as people have been talking about the last couple days after that "wall street journal" article. up next, apple, you know, unveiling the new iphone today. the company's stock moving low owner the back of its highly anticipated event. it's been moving lower into the highly anticipated event, which is a story in and of itself. we have an expert panel stand big to break down the headlines. and don't forget, register for seeb's deliverin ing alpha conference. i'll be there with bill ackman on september 28th, new york city. scan the qr to get your tickets. s everywhere are asking: is it possible? with comcast business... it is. is it possible to use predictive monitoring

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shares of apple down over 2% following the event in cupertino, california, announcing the new iphone 15 and apple watch series 9 set to be released next friday, september 22nd. dan ives covers the company and cic wealth's malcolm etd rherid a cnbc contributor. dan, your first reaction to what we learned today from apple. the stock has been selling off into the event and selling off on the backside too. >> no doubt. knee-jerk reaction. i think we've seen especially with the china worries. but if you look, it's a flex the muscles moment. the iphone is a pro on time, september 22nd. the price increase in terms of the pro they did not do, and this is important. that's something that showed more and more pricing power from a chip perspective. it comes down to i believe this is another share game, and what

i view as a mini superpsych that will will play out despite many of the bears' skepticism building. >> you say many of the bears. i want to come back to you, because are there many bears on apple and the concerns that exist are legit. i could read you the statistics. three straight quarters of year over year revenue declines, year over year iphone has declined. those are real numbers. >> in my opinion, this is a transition to the next stage of the growth story in cupertino. services are starting to uptick to double-digit growth. i think the most important thing, 25% of the install base did not upgrade in four-plus years. when we look at it, we sit here six, nine months from now and looked a more and more share gains in china, not the opposite. that's our call. >> so you thought there was going to be an increase of a hundred bucks. you didn't get that other than

for the pro max. are you surprised? because you said, ooze the rumors were swirling is that in might happen, it would be good for apple. but they didn't do it. >> on the pro max, i think you'll see more and more, especially in china and the u.s., heavier going towards pro max because of the camera technology, not raising pro max on a hundred dollars is a bit of a surprise, but it's a rebalancing act for cupertino, especially given the macro. this is something from a unit perspective that could be a bob positive. i think it shows more and more confidence in terms of what they're doing and ultimately controlling it. >> does it reverse those trends that have been trending in the wrong direction in terms of iphone revenues of late? i know the importance of the next quarter, december quarter is really the bread and butter. >> sure. >> this one they'll do some numbers because the phones and stuff is rolling out. is it enough to reverse? >> i think it is.

share gains in china, quality two generations be hind apple, 300 bits a share we've seen apple in the last year and a half. i believe from a unit perspective, single-digit-type unit growth, plus asp is lifting, that's the perfect combination, which is why we believe year from now it's 3.5 trillion. >> is he too optimistic? you don't find people more bullish than dan ives. >> i like him, and i hate to say it, he's my guy, but i think he's hate l too optimistic on the iphone cycle. a lot of shareholders feel like i do we are hoping/expecting to get something better than a new iphone and veganlet owner the apple watch. that isn't going to move the needle. services and revenue is where the growth margins live. can we get a confirmation of the partnership of american express

leaving goldman sachs? that will move us to apple finance moving the needle as far as services? can we get the iphone no longer 52% of the revenue mix? that's what i as a long-term shareholder care about. going from the 14 to the 15 and the 15 to the 16 won't move the meidl. it's no longer a purchase you make because you want to. it's necessity. they won that bat. >> do they have to do anything beyond that? you mentioned partnerships with another financial institution is really going to be anything more than an incremental move forward, right. so services business, as you said, is, like, you know, a fortune 50 company all by itself. >> sure. >> this is an iphone company, first, second, third, and twen twentieth. >> they've proven $10 billion in deposits with the goldman sachs partnership, the apple savings accounts in three or four month, that show where is the demand

really is. all apple has to do is add its marketing wizardry, its secret sauce as far as branding is concerned to a banking product. there's not a large list, and apple doesn't have to compete on margin like a regular bank. there's tons of opportunity to take share from traditional banks. i think that's where they should be leaning long term because it's one of the markets they can disrupt as the size they are, $2.8 trillion or whatever. >> you want to just address that before we go? good points from a shareholder. >> great points as always from malcolm. the monetization of cupertino has just begun. when you look at services, a knicks 2025, this is just the middle stages of the next growth story that they'll see. >> enjoy the rest of the conference. see you soon. see you back at post 9. up next, we're tracking all the biggest movers as we head towards the close today. later, oracle shares got slammed

today. we'll break down that and check in on the rest of the key software names as well. "closing bell" is back after in.

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seema mody is looking at stocks. >> casey's general stores delivering a strong beat on first-quarter earnings as it remains on track to acquire 25 stores. whole pizza pies is one of the reasons sales came in higher than expected. rbc raising its price target on the stock from $2.75. excontinue is moving higher as morgan stanley reiterates its overweight rating saying the company is a top pick in this category. the gains fueled by rising oil prices with wti hitting its highest level since november,ing the energy sector a continued boost. scott? >> see ma, thank you. seema mody. last chance to weigh in on our "question of the day." how will the market react to tomorrow's cpi report? will it rally or sell off? we'll bring you the results after the break.

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the results of our "question of the day." we asked, how will the market react to tomorrow's cpi report? the majority of you said sell off. it was close, but the majority wins. we'll see what happens obviously after tomorrow's report. up next, much more from my interview with jeffrey gunglach. what he says actbout investing bonds rather than stocks. ♪♪ it's time to bring balance to business travel. and discover the equilibrium that works for you. at national, you're in control. skip the counter, choose any car in the aisle...

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live in the "closing bell market zone." we're digging into the sell-off in software stocks. and advanced auto parts trading at lows not seen in more than a decade. michael, stocks lower as you know, s&p heading for its first down day in three. i spoke with doubleline ceo jeffrey gunglach earlier, told me the big issue for markets what he's watching into the end of the year and what he thinks about bonds versus stocks right now. listen. >> right now the competition that bonds give stocks is one of the highest in any of our

lifetimes in terms of the risk premium on bonds versus stock, the yield on bonds versus stocks. that i think is going to be an issue for 2024. bonds are less attractive today than they were a year ago. >> of course we're in a different environment relative to where we were a year ago and the attractiveness that some saw to bonds at that particular time. what do you think about what gunglach said? >> the math backs it up, at least from the sense that the earnings yield on stock, the inverse of the price-earnings ratio, relative to the 10-year treasury, has not been this low since you go back to, like, the pre-goebel hf pre-global financial crisis heres. since then, stocks have given you a bigger valuation cushion relative to bonds with rates low. i would argue if you look further back in the '80s and '90s, the current levels of equity risk premium are unremarkable, and the market was

mostly going up during those periods of time. to me the key differences are risk-free yields above 3% or below 3%, and, you know, inflation or deflation, which is the main risk? we're back in that world where rates are higher and inflation is the risk. so, yeah, we can say stocks are less attractive on a relative basis, but i don't know if that's a clinching argument because we've been here before. >> i wanted your reaction to -- i heard you talking about it earlier in the program as i was getting situated to come on about this. this idea that the fed has made this change in their own minds, you know, rather than the risks being on overdoing it, rather than doing too little, that that's now changed to not doing too much and unnecessarily harming an economy that they've managed to manage fairly well. >> yeah. i think essentially it goes back to the message that they've been conveying, which is one of patience, one where they think

they're generally from the zone of where rates have to be, and they're willing to let time do some work, in other words the amount of time with rates elevated around 5%-plus. i think that's consistent and a relatively comfortable spot in general for markets if the economy holds up. it mean theys ear no longer chasing inflation, assuming it will come down, but over a multi-month basis, it has to continue to come down. it can't be the dped gist allows the numbers to be where they are without action. it was a better spot than last year when the fed ruz running headlong to get rates anywhere in the vicinity to the right spot compared to where inflation was. >> gunglach made the point, too, i hope they're not changing. those were his words, because he thought that, you know, they've been really -- powell has been really consistent on his messaging so that they weren't going to do what some of the reports of the last couple days had suggested. let's talk oracle quickly, mike. it's heading for its worst day

in more than 22 years. that's after earnings, and what that might mean for software. >> this was a stock that had run nicely since the prior earnings report, going back to the june quarter. the stock has done a roundtrip to that. it got into the ai slipstream and it benefitted from that, and then the rest of the business that's not really a cloud beneficiary of a sixth causing problems. so we have that, still a reasonably priced stock. the rest of software has take an hit, but the software sector as a whole was up more than 10% in three weeks. i don't necessarily see it as true game changing, just a bit of a gut check. >> back to you in a second. phil lebeau, give me 30 seconds on aap. what's going on with advanced auto parts today? >> stock is at an 11-year low. october of '11 is the last time you saw it. s&p downgrades the current

rating to junk status saying its competitive standing in the industry has weakened. that's why the stock is getting whacked today. take a look at the big three automakers. all of those stocks moving a little higher. the deadline for reaching a deal with the uaw, 11:59 tomorrow or thursday evening. back to you. >> all right, phil. we'll follow that and come back to you as need willed. phil lebeau, mike santoli, back to you. apple, the idea of the stock selling into and now out of the event and the idea that they need to -- the stock needs to stabilize before the market can really find some footing. >> probably. i mean, it's a relatively measured response, but there was nothing in the release today that's going to really spur a round of earnings increases over the next couple weeks. that's what the stock has been lacking. it's not that much of a bottom line growth story at the moment, but it is weighting on the

market. regional banks up today. cpi will probably determine where they go next. >> good stuff. i appreciate your help today. thank you very much. mike santoli. we go out in the red as we see across the board. see you back on "closing bell" tomorrow as well. to "overtime" now. stocks weaker today with tech the biggest underperformer and the nasdaq down 1%. that is the scorecard on wall street. the action is just getting started. welcome to "closing bell overtime." i'm morgan brennan with jon fortt. apple is part of the reason. it's unveiling its iphone 15 lineup along with several other new devices. we'll bring you all of the highlights and what the next catalyst could be for those shares. plus, we'll get the read on retail and the state o