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tv   Closing Bell  CNBC  December 14, 2021 3:00pm-5:00pm EST

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thank you very much. >> exactly. >> big day tomorrow. we'll join you from washington you will be here yes will have it all on the fed. >> looking forward that. thank you for watching "power lunch." >> "closing bell" starts in a few seconds. welcome to "closing bell." i'm courtney reagan in for sara eisen. inflation headlines sending the averages lower today. >> i'm dominic chu wilfred frost will join us in a moment let's look at what's driving the action today ppi jumping 9.6% in september. fastest pace in record fanning the inflation concerns as the fed meeting gets under way today. the world health organization said the omicron variant is spreading at a rate not seen
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with a previous variant. pfizer said the covid pill is effective against the variant. the tech trade is lagging adding to sizable losses on the week. microsoft, tesla among the biggest decliners. we have about 59 minutes left to go in the regular trading session. >> it is a big show. coming up, another big exclusive interview you cannot afford to miss wilfred will have brian moynihan to talk about inflation and the consumer and much more. >> straight to the market action and a rough session for the tech shares josh lipton is at the nasdaq with a closer look. >> you mentioned tesla lower in today's trade after the ceo sold more stock on monday. tesla down nearly 20% this month. for the year up 30%. check out beyond meat enjoying a day in the green
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piper saying a nationwide u.s. launch in mcdonald's appears to come next year per industry contacts that stock about 70% off the january high b of a with a new note on apple upgrades to a buy saying it could be a game changer for the company and still edging down today but up 30% in 2021 sticking here with the tech giants morgan stanley says microsoft is a top idea for 2022 saying data management should be a key source of upside stock up nearly 50% this year. back to you all. >> thank you, josh financials the only sector in the green today. bank of america is participating in that rally. let's send it to wilfred frost who's joined by bank of america chairman brian moynihan in a "closing bell" exclusive. >> thank you i'm indeed in the top of bank of america tower no less in the
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middle of manhattan with chairman and ceo brian moynihan. >> it's chamber of commerce weather out there. enjoy the views. >> we are. you gave an interview and quoted yesterday saying the consumers are spending at the fastest pace you have ever seen quite the statement. talk us through what you're seeing is that a good way or a risk of overheating? >> it is good if consumers are active to drive the u.s. economy and why we are who we are as a society and the country. if you just to put a perspective you have to think about '18 to '19 to '20 to '21. it accelerated with 10% high than it was in '18 that's the pre-pandemic. growing 2% picked up from 6% growth at 10%
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growth across the spending not just credit cards. cash and checks and what people spend money on it. total 3.6 trillion this year a big number so as obviously fell in '20 and picked up and this time in '20 the same in '19 and now this year it is 20% plus over where it was in '20 and '19. and by the way december is going faster, too, than in november. consumer is out spending the money through the stimulus just spending the extra cash flow they have. >> you have that live data with early december omicron not slowed it down at all? >> it hasn't in november compared 2019 to 2021, spending at restaurants 40% up even when you think we have closed down an open in november's there and not seen
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the impact in december at all from the virus we'll see if -- it comes down to the societal remedy to curtail activities and knock on wood that the vaccines and the great science and everything's gone through and keep it under control. >> clearly there's inflation out there at the same time and consumer spending is one of the inputs creating that ppi this morning incredibly hot. to what extent do you think that the fed is at risk of being significantly behind the curve >> you just asked me a question about the new variant. that is the problem. the traditional view would be the recession and come out of it and then sort of predict life or try to now with the variant caused differences. they held on longer. we have the stimulus and the accommodation a ton of money went in the economy. they have november a first month that the balance and people have
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under $5,000 before the pandemic carry more it drifted down to 1% and growing since july every month and what the fed looks at is this a temporary thing what you see is this is hanging on so i think they know they have to do the job chair powell is clear about it two weeks ago in front of congress how they do it is a judgment based on what they know at the time and everything would support to normalize monetary policy and will start doing it probably tomorrow. >> if we do see hikes early next years, for example, are you relaxed about the effect that will have on the economy or is stagflation a genuine risk >> all of them are risks and a lot of different risks but the economy around high five gdp in the u.s. next year 4.2, 4.3 and then 2.2.
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think 6, 4, 2 to make it simple. that reflects the tightening to bring the economy back to trend growth and things like that and most predictions are assuming the fed raises rates next year and cool the thing down. could they overshoot the other way? they could with the economy predicted to grow half the rate with the same size and unemployment at 3.6 versus 4.2 had the fed fund rate at 2% and the flat yield curve and not a mystery. the question is when and how and what pace based on what they see and where everybody will get worked up is the end of the da comes quickly. >> credit quality is unbelievably calm and benign what areas do you watch daily for that changing that you're
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worried about? >> all of them we're paid to worry at the top of the large corporations and banks and have capital liquidity and worry about all of it. we have a balance book and it's growing well we grew at i think 8 or 9% we have seen that carry forward and seeing people borrow credit quality is strong especially on the consumer side. it should stay strong. do we look and worry yes. you're worried but don't see it having a big impact on credit in the near term just because we think the fed can yease back ino this and then employment being at 4.2 already is a pretty good bearing own people earning money and spend it and keep the economy going. >> when you look at the growth in buy now pay later is something that you feel like you missed the trick on at all >> not really.
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it is a different way to pay it is enormous growth but make not a company with 80 billion in credit cards and 200 some billion in home equity loans and auto loans it's grown and it's a product that's designed. it is a deferred payment it's been around for i read 500 years but maybe since i've been around banking we have a product that is similar and will bring out products to meet that customer need and especially in the real prime space it is a product which is a little different as a company and will have it in the next several months and go to war in competition. >> it raises another question as to whether the consumer in general not necessarily bank of america clients but whether the consumer's overleveraged or whether we'll look back on this stimulus period and the new products enticed people to
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borrow me and reflect on that having to unpick excessive leverage. >> that always happens at the edges. the questions are incenting people to borrow beyond the means. think about how much money in people's accounts. so what stopped people from paying loans is when they aren't employed as a large credit company, looking at it for many years, people will get sick or unemployed, divorced they don't just stop paying so the reality is that they're borrowing more by the economic conditions around them and unemployment is low. >> when we sum that up, record closing in on friday and pulled back a little bit, in general are those levels justified on what you see this is still a pretty healthy environment? >> it is
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bank of america stock is always cheap. >> up today in a down market. >> there are valuation questions and strategists raise them too high a multiple to earnings. because they have to slow down with a recovery period and will play its out and remember the wealth effect by housing helps the consumer we don't see leverage near before no leverage in house. the home equity lines down and because people paid them off so the consumer's pretty well structured and pockets that you every always concerned about but generally the advice is follow the unemployment what do you think? that's where you have consumer credit problems. >> in terms of bank of america, the stock up on a down day
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the prospect of rising rates if it's not too sudden too fast must be something that you have been looking forward to for years and deliver leverage for you. >> leverage so that's what happened and then the pandemic and then went down and so unfortunately for more ceos i had a rate structure but the team did a great job and made a lot of money we have $2 trillion in deposits and a trillion in consumer largely checking when the rates go to zero and hit the floor and then takes away income. then the consumer team will make money and it's different rates on the book. depositive it space is where we get the leverage the estimate is low $7 billion a
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year with 100 basis point increase in rates and we captured a billion dollars in net income last year to the third quarter almost and so we can capture it in a flat rate environment, too. >> we expect announcements of vacancies on the fed if it changed the overall take on how banks should be regulated is that a mistake and unfair do you not get credit? >> fairness i'll let you describe what's fair we have an industry in this country which is the best in the world and best capitalized run the best by my colleagues and we do a great job. what it did through the crisis is did ppp, consumer -- not having consumer deferrals.
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$70 billion of commercial borrowing. it's powerful. the work done from the financial crisis through dodd-frank and the fed and the obama administration, all that's still there and protects and we should say the industry did a good job and then it's always here and there and debates about things but the reality is that this industry did a great job for america to support it through a difficult time. >> want to touch on the back to work rules and regs. some pure investment banks took a harder line on that over the summer do you feel vindicated given how much the virus prolonged >> we looked at it touch to manage an environment where everybody wasn't vaccinated. think of the trading floor if you had partially and vaccinated and somebody had to walk down the line saying, you have to wear a mask, you don't
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i would not tell them we're vaccinated we said stick to everybody on the trading floors get vaccinated and come to work. everybody else work from home. the back to work is around that. we have brought back 60% of the u.s. population back to work the branches which have done a tremendous job to support the american public in this time open every day we feel good about what we have done and getting the teammates vaccinated and back to work when they're ready and people have different strategies but focused on people coming to work to operate. going down the trading floor just the people trading and looks good and that's what we wanted we didn't want people to operate in a ham strung environment. that happens once in a while masks in the hallway. >> i'm glad we came up for this
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view today you made a number of leadership changes over the summer and a couple things came out of that you said you suggested you'd be in charge for most of the rest of this decade and took over in 2010 you really want to hit the 20-year mark >> we have a great team and fun to work with them. this company does great things, delivers profits the returns are tops in the industry and beat the s&p and that stuff and deliver for society. sustainable finance. we believe that we can do great things here and it is a fun company to lead and the team's great. we had some great teammates retiring in a couple weeks these people have worked at the company 70-plus years on a combined basis and made the company successful and developed a great team behind them and working on this for a couple years. and so i feel good about it. i always say to people that the
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happiest ceo i know is mr. buffett and he's 90. i'll see what i can do. >> the other thing is three of the eight business lines are led by women and another four direct reports who are women. we spoke about some of the changes recently at a panel. i wonder to what extent you set that target of wanting to be here for up to the rest of this decade to ensure your successor could be a woman or reading too much into it >> you are we have a deep succession planning process with the boefrd that alternates between the senior most people and the process and then i do a multiple levels down and always looking and i think as you look forward the board will pick somebody my job is to have many people prepared and see what they think about and watch the people in action and did the board offsite in arizona with 70 management
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members there with the board and need to know who's qualified we have a big activity to deliver into that process so they can see it but people always say that we have talented women and men and talented minority and that's the goal but that's many, many years of development through the cycle and trying to do. >> always a pleasure to catch up thank you. thanks for joins us. >> a pleasure. happy holidays. >> and to you. >> thank you we appreciate that and the big takeaways, credit quality is strong especially on the consumer side. coming up on the show, we'll talk with top rated analyst mike mayo about the takeaways from the moynihan interview and the sector overall pfizer with new data on the covid treatment pill and u.p.s. with a warning of vaccine
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not seen with a previous variant of the virus pfizer shared news about the covid pill meg tirrell has the details. meg, tell it to us is it this bad >> hey court, it is good news pfizer said that its covid anti-viral pill in the final results retained the same high levels of preventing hospitalizations and deaths in high risk patients 89% when given within 3 days of symptoms 88% within 5 days. we saw between merck's interim and final results a big change in efficacy and pfizer ceo said the fda wanted to see the final results to clear the drug. now the company also presented some data from a second trial that we are seeing for the first time in standard risk people unvaccinated this also included some vaccinated folks who had at least one risk factor like old age or an underlying health
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condition. that missed the primary goal but it did show a sign of reducing hospitalizations by 70% and both studies showed a tenfold decrease in the load of the virus in five days so targets the virus strongly it expects to have 180,000 treatment courses by the end of the year and 80 million by the end of to -- 2022 and trying to ramp that up further and lab studies suggest it should hold up against the variant, as well. >> thank you for that. u.p.s. is out with a forecast about vaccine deliveries in 2022 frank holland is at a u.p.s. facility in louisville, kentucky, with that story. frank? >> reporter: dom, u.p.s. marking 1 million vaccines delivered
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globally and u.p.s. vaccine chief said there could be challenges of distribution and also storage plans also pediatric vaccines and changing to packaging could create new logistical problems. >> there will be potentially more vaccines that have to be returned or destroyed. if they're not used and kept in storage beyond the shelf life. >> reporter: year one 595 million vaccines shipped by u.p.s. and fedex and now moving with the holiday presents and not expected to impact deliver ri international effort is also a focus especially in africa where under 10% of the population is vaccinated u.p.s. is supporting drone delivery there and getting data about the commercial drone business from the vaccine deliveries >> thank you very much good news about that pfizer pill
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welcome back to the "closing bell." let's check individual stock market movers of the day we watch pest control company terminix soaring today rentokil initial will buy them at $7.6 billion. the shares up 19%. and a double dose of retail calls from goldman sachs the firm down downgrading ralph lauren saying it anticipates lackluster earnings. goldman sachs is upgrading cap ri holdings to a buy
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you can see ralph lauren shares down 2.5%. ca capri holding up. >> it is time for an update with rahel solomon. >> hi. cornell university closed most of the campus amid record number of covid cases all university sponsored events are canceled including the graduation ceremony. boris johnson handed a shocking defeat of his party 100 conservative members voted to require covid passes at large venues in england. johnson opposes the passes today is the ninth anniversary of the sandy hook elementary school that left 26 teachers and students led. president biden observed the occasion with a call to stop mass shootings. >> as a nation we owe all these families more than prayers
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we owe them action from the earliest months as president i have acting. and now up to date back to you. >> thank you very much. after the break, a bull warning from barry banister. including two predictions that could have a major impact on your portfolio here's a check on bonds. right now yields holding steady ahead of that big fed decision tomorrow the 10-year yield just a hair below 1.44%. we'll be right back. alright, here we go, miller in motion. wha — wait, wait, is that a... baby on the field??
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welcome back to the "closing bell." a bit of a comeback in the works. major averages lower today our next guest said the current approach to policy could lead to the third market bubble in 100 years. let's bring in barry bannister barry, this is big bubbles we talk about not lightly. but we have seen a pullback from highs that's only about 4 to 6% on a run of the mill basis is there a reason to think that deeper pullback is not happening any time soon? >> we have been in the correction camp and still expect one but after the correction if the fed folds like a lawn chair
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and get the fed put they risk the third bubble of the last 100 years. 1928 the first one the great crash. then the '99, 2000 tech bubble i'm hoping that chair powell grows a little bit of a spine and comes out swinging on the 15th because we calculate the fed's about four to five rate hikes behind where they should be based on the economic data. >> if that's the case, take us through what is the game plan for how you play for that kind of a scenario? what goes on the shopping list should you be raising cash now all those type of things to go into a strategy for this outcome that you predict. >> yeah. if you look at a 10% correction as we are in the next 1 to 4 months at the most and the
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catalyst, forget about the shocks like covid and russia and the middle east which nobody can really predict anyway, look at the three internal correction catalyst cyclical groups up sharply since the covid low in march of 2020 equity to bond ratio is very, very high and look extended so you could have a pullback. slowing global dollar liquidity. this is the $101 trillion of global m-2 up 25% since covid. that's slowing especially as the dollar increases and then third china already tightened quite a bit and beginning to ease but unfortunately they baked in the cake a pretty significant slowdown in the first half of '22 to spill over to the u.s. industries so i think there will be a correction and i would go with defensives like health care,
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utilities, telecoms in the interim and then see how the fed reacts to the correction and what happens to the economy after that that's the subject of the report. >> i know, barry, you talked act trying to put away the xonlg nis factors and then mentioned the fed with a careful hand on the economy and hearing from them tomorrow anything they should say or do to prevent this possible bubble from bursting? >> yeah. if you look back to 2018 and the fourth quarter, chair powell got us up to 2.4 rate. at the time we were critical it was excess and should move rates up sooner rather than later. i hope he talks about several rate increases in 2022 perhaps starting as early as march. they should move qe from june
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back to march and then some point we need to talk about not rolling over the balance sheet to keep the longer end yields up it would be helpful to not roll over the balance sheet so again now that he's been reappointed i think some of the power shifted back to the chair and i would hope that the board takes a tougher line on speculative excess indirectly by focusing on the inflation and the other risks we face right now from overheating. >> that's a lot to chew on thank you very much for joining us with an idea of how to play it if that comes true. after the break, the shine comes off solar stock just the tan is down today and lost of a third of the value since peaking at january th is coming up next
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solar stocks are falling hard today pippa stevens have a look. >> the solar stocks are slammed. all down double digit percents and solar edge lower the downturns is thanks to a new proposal from california to slash the incentives instruments to the industry's growth the decision reduces how much customers are credited for sending power back to the grid and adds a monthly charge for access to the grid this is only a proposed decision there will be a common period before the cpu votes on a final
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decision in january at the earliest evercore said it's friendly than anticipated. needham said it clouds prospects and if passed as is would have a detrimental effect on the california solar industry and morgan stanley believes it's damaging to near term growth and margins. dom, back to you. >> thank you. coming up, uber picks up ground musk sells more shares and why buy now pay later could be hitting a roadblock. those stories and much more when we take you inside the market zone, coming up.
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welcome back here's a look at when's coming up in the second hour of "closing bell. wealth manager tells us about the bubble warning for tech. the rearksz to the interview with bank of america ceo why bitcoin's pullback could be a good thing for the taxes we'll look ahead to tomorrow's fed decision and the impact to have on the market but first, with just about 12 minutes left to go in the trading day we are in the "closing bell" market zone today we have chief market strategist joe ter nova and jeff branch stocks of course as you have seen all day under pressure. the nasdaq underperforming as
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tech sells off today joe, is this all in reaction to anticipation from what we're going to hear from the fed tomorrow financials are the only sector that are higher right now and technology is the weakest of the bunch. >> great to see you. as the year moves to a close you see elevated volatility. markets are ab sent the comfort blanket. that's corporate earnings. we won't get them until january so you're in a little bit of a vacuum on the calendar markets are trying to understand a very hawkish communication from the federal reserve degree co -- being countered by a flattening something has to give in either
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direction. i think that leads to the volatility markets are still in a good place. s&p 500 is sitting 50 handles above the 50-day moving average. >> so it's interesting that we mentioned about the breakdowns greg, i would like you to work into the conversation. a place to see a pronounced breakdown is in software and cloud computing stocks many of them down big and some big etfs that track them down big. what does that tell you that they're taking it on the chin more so than the other parts of the market even in technology? >> it tells me that we have a psychological reaction and the tech names en masse are down and that again is the psychological reaction because the threat of a tightening cycle is traditionally a strong headwind
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for growth but we need to distinguish what's growth and category killing growth and speculative growth in the case of the latter i would agree with this type of movement in the former this is an opportunity. looking at structural companies like microsoft that delivered 27% operating margin growth and 46% operating margin looking at adobe with 22% revenue growth go google 1500 basis points of growth i want to dig in to a sell-off like this and distinguish one from the other. >> tesla staging a rebound today and still lower on the session as musk continues to sell shares robert frank has those details robert >> dom, elon musk selling $900
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million of tesla shares yesterday. he has another $5 billion or so to go to get to that target in the twitter poll and to pay the taxes and could end the year selling $18 billion in shares in total. of that amount about 12 billion would go to pay taxes to the irs and the state of california for that huge options package. now the other $6 billion or so for his pocket and likely come out with a higher stake in tesla and still the world's richest man with $250 billion. guys >> lost track of the zeros joe, to you, tesla has been in a near term momentum trend is this a stock to buy on the dip? >> it is a stock that i own in the joe t etf. i'm there and invested in it the actions of musk indicateive
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of an investor with a higher income threshold that would be exposed to a tax consequence in 2022 far more significant than in 2021 so i think where i'm going with this is a lot of the selling that you are seeing is in the hyper growth stocks where the stocks are down significantly year to date so you have got this tax loss harvesting before the end of the year because we still don't know what the tax structure's going to look like incomes above $5 million is there an added tax for capital gains? is there going to be another 3 to 8%? that's still up in the air and sell now when you have the constant of what the tax structure is in 2021 and then reassess and re-establish positioning at a higher cost basis. >> interesting stuff the tax plan going into the decisions. uber jut performing today on
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bullish comments seema? >> hey the ceo says uber just had the quote best week ever in terms of overall gross bookings and said overall mobility business is closer to pre-pandemic levels. the comments are made at an investor conference today sending both uber and lyft shares higher. it comes amid increased concerns on omicron and the latest quarter reported 1.6 billion trips up 39% year over year and with today's move higher uber down 26% so far in 2021. court and dom? >> absolutely good point greg, what do you make of uber and lyft has this sort of a peak performance or the peak
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ridership passed and past this moment now that incentives have warn off and more worried about sort of shared services with everything going on with covid or an opportunity, greg? >> yeah. that's right we have to see between what's temporary and the long term trajectory i don't know if we can say that there isn't a steep rising positive trajectory. want to keep an eye on the engagement the rides per user, the ability to deliver pricing but the mobility margins are close to 2019 levels. some incentives for drivers tapering off and using the profit to invest and expand into the suburbs and move into convenience. i look at uber and lyft that's
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structural and transitioned for a consumer to order food and rides and something of a secular tailwind there in my mind there's risks in london. belgium and california keep an eye on those but i don't have anything that's scary here in tells of the long term trajectory of the story. >> talk about that changing trend for the consumer explosion of buy now and pay later may be hitting the road. there's a price cut for paypal and square including a rising number of delinquencies. they found that 50% of the users in key income cohorts have missed at least one payment. the firm says the risks are not yet understood by vef just brian
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moynihan joined "closing bell" this hour and weighed in on the competition. >> it is a product that's a deferred payment not a new product. been around for i read one article 500 years but take it since i've been around banking and we have a product that is similar and will bring out products to meet that customer need and playing in the real prime space it is a product that's different for us as a company and will have it and go to war on competition. >> joe, i'll turn to you a place that's red hot is buy now pay later space. you have names like block and paypal that are just trending lower. where exactly is the trade in fintech in general >> i think first of all a lot of
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the names with a specific concentration towards that strategy they're going to face significant competition challenges moving forward from the likes of a brian moynihan and others in traditional banking. i would look away from those names. i do think that a name like paypal as we clear the deck of 2021 eand get passed the tax los selling we experience. on the other side i think the visibility of strong fundamentals to come back into play for paypal and would wait paypal is a name to target let's hear the strategy on the quarterly earnings and see the revenue and guidance looks like going forward and might have a moment where there's a paradigm shift in the strategy to step back in and purchase the stock. >> all right let's take a look. we have a minute into the closing bell for regular
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trading. we have lower on the day overall. off the worst levels of the session now. the dow down one half of 1%. 143 to the downside. s&p 500 you can see there's some moves to the downside to the tune of just about .8% for the s&p 500. the nasdaq composite still off session lows and pacing the declines for the day so far. you are talking about rye now 185 points to the downside for the nasdaq composite roughly 1.25% to the downside. these are well off session lows for the day indicating at least some buying interest as these indices moved to the lows of the afternoon. courtney said financials only sector in the green so far that's holding true right now with 30 seconds into the close the financial sector and s&p
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up .5% consumer staples just about flat on the day two worst performing sectors is technology and real estate down 1.25%. you can see there closing bell happening at the new york stock exchange and the nasdaq. finishing down but off the session lows why this is "closing bell. let's send it to the folks at new york stock exchange. ♪ dom chu, thank you welcome to "closing bell." i'm wilfred frost along with courtney reagan in for sara eisen today. coming up more reaction to the interview with brian moynihan and we're joined by mike mayo who's bullish on that particular stock. joe and greg are both still with us i'll come to you, joe.
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in terms of this intraday action, buying off the lows but slippage there into the close. week to date down 2.5% on the nasdaq. >> yeah. little bit of a turn around tuesday feel to it, wilf you still have an s&p 500 that's residing well above the 50-day moving average i attribute to the tax loss selling and the hyper growth stock names and the conditions in place with a very strong consumer, record corporate profits will come back to the forefront on the other side of the calendar we have a battle to understand the communications of a hawkish federal reserve with a yield curve that continues to invert and volatility is elevated riding out the calendar for 2021. >> greg, how much do you think the inflation fears playing into
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the sentiment with the market action and the november ppi stronger than consensus? we know inflation exists and we believe it is much more than transitory but is it worrying market investors >> i think so. i think when you saw the action today it is responding to the fears of a tightening cycle being closer than consensus is right now. so we saw financials rise on the back of possibly a more positive net interest margin environment and saw tech broadly sell-off and can make the argument that rising interest rates have a much more disproportionately negative impact on growth than some of the names traded down in sympathy i think as i look for inflation to move 200 to 300 basis points high higher in a month or two this is
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typical. >> tech the worst performing sector today finishing down 1.6%. joining us is helena what do you think is happening in tech has to do with fears about global growth or about the fed's tightening cycle and how much is valuations are just as hot as they can get right now? >> yeah, exactly thank you for having me why what we have seen and the management shows is that -- the moves we have seen is more focused on deleveraging on the tech sector and the nonprofitable side right? most people talk about the tech sector as a homogeneous sector but it's software, cloud,
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equipment. so when you want to analyze and deep dive you realize there's deleveraging and some of the sectors within tech are definitely overvalued. the head of equities here believes that one is semiconductors >> to what extent do you think that rates will rise significantly next year? do you think we are just going to get a hike or two and the shape of the yield curve won't change too much? >> no, yeah. thank you. so we have been as you guys know out of consensus and calling for inflation not to be transitory for now 18 months and expect definitely rates to move accordingly now that the market has woken up to inflation now being transitory if we even look at breaking even moved 20 basis points in the
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year it is still in the low 2s. expect it to come hot at least into the highs 2s. overall rates to follow and definitely expect -- the market expects three hikes next year and another three the year after. but the tone that powell and the fed set tomorrow on the comments and the dots we expect them to move higher and increase the pace of the tapering unsure to mention rates at this point with the pressure you have on the uncertainty that omicron and the developments on it are bringing to the market and earnings going forward and expect rates higher. >> joe, what are the expectations for the dollar? stronger here today. >> i think it's continuing the trend of moving higher about 7% high er on the year
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i would be somewhat cautious in assigning the belief that the inflation is going to impact the economy. i just -- we have this technologically deflation element impacting the economy. not going away the impact of an apple or an amazon or a microsoft, that is empowering the consumer. that's delivering pricing power and transparency to the consumer i'm not sure about the permanent nature of inflation and be careful concentrating in that direction. i wouldn't concentrate solely on that direction this is a digital economy. >> how, joe, do you manage the etf at the moment with volatility and moved side wairs for months
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does it make it harder to pick mu momentum names >> it elevating the identification of where outsized risk presents itself people come on the network and talk about the best trades of year the purchases. i look at a lot of trades that maybe you got out of and avoided the downside at the end of october in the quality momentum index and the etf joe t that tracks it peloton, zell low and zoom video liquidated use whatever term you want dodged the bullet. very happily those are three names i'm glad are not in the etf. i think that's the exercise moving forward in 2022 >> greg, speaking of potential outside risk i suppose how do
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you feel about bitcoin is it something that investors need to pay attention to if they haven't already as part of a balanced portfolio or is the risk still too high because the moves are not always associated with fundamental analysis? >> i think it's a case of the latter i don't know if i would relegate this to a necessary parent of a pochl until we see less volatility in the way that the understood lying currencies and things like coin move in sympathy i think that it's more speculation than fundamental analysis and while it remains there i would caution individual investors particularly those without the stomach for the volatility that it should be a part of their portfolio and probably shy away from that. >> we want to get a couple of zone in best trade ideas quickly. let's get the first pick.
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>> for us it is regional banks in the portfolio we believe the structural factors keeping inflation low for three decades are moving the other direction. rising inflation now starting con fligts increasing demographics central banks. having to tolerate more inflation. so we believe regional banks are key to have in portfolios now in the move or ahead of the move on higher rates. >> joe, what's your best idea? >> health care as we move forward in 2022 health care, diversified exposure of it, that's the way xlv is the exposure and if you look right now at the sector overall trading at the deepest discount relative to the s&p 500
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in the last 30 years there's a positive correlation between health care and rising real rates and if you go back and study the last 50 years, you will find that when inflation does begin to modestly rise health care overall outperforms and the biggest aspect is the policy uncertainty is removed from the policy makers in washington, d.c. they recognize they need companies right now and instead of demonizing. i don't think you will see regulation and price concerns that we previously had expected as we move over in 2022 so xlv diversified health care exposure. >> thank you all for joining us. >> thank you. we are just getting started on the second hour of "closing bell." bank of america ceo said earlier
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that credit quality is strong especially on the consumer side. up next, reaction from mike mayo bank of america could rally 30% from the country price and why a loophole could make it profitable to sell bitcoin before the end of the year despite the sell-off much more to come on "closing bell."
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xfinity rewards are our way of thanking you whose resumes on indeed match your job criteria. just for being with us. enjoy rewards like sing family fun nights! rent sing for $1, then belt out all your favorite tunes from the movie with sing karaoke. plus, see sing 2 in theaters with buy-one-get-one free fandango tickets. join over a million members by signing up for free on the xfinity app. our thanks. your rewards. shares of bank of america higher and otherwise down day for the market last hour i spoke with bank of america chairman and ceo brian moynihan here's what he had to say about the pace of consumer spending. >> it's always good if consumers are active to drive the u.s. economy and part of why we are who we are as a society and a country but if you really to put
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a perspective think about the turn to 2018 to 2019 and '20 to '21. it got higher and the baseline pre-pandemic economy growing 2% picked up from 6% growth to 10%. across all kinds of spending cash and checks and what people spend money on and total 3.6 trillion this year a big number so obviously fell in the early part of '20 and this time in '20 the same as '19 and now this year 20% plus over where it was in '20 and in '19. so twice the growth rate reflecting the economy growth and by the way the fist part of december going faster than in november so that means consumer's out spending the money through the stimulus just spending the extra cash flow they have and unemployment is down and good for the economy. >> you have that very live data
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with early december. omicron didn't slow it down? >> it didn't millennials and spending at restaurants up 40% even when you think we closed down an open in november there is not seen an impact in december at all from the virus we'll see if -- it comes down to what the societal remedy has to be to curtail activities and knock on wood and the vaccines and the work done and the great science has gone through to keep it under control. >> credit quality unbelievely calm and benign. what areas do you watch daily for that changing? >> all of them we're paid to worry at the top of these large comp comp rations and kworry about all of it.
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we grew in the third quarter and see people borrow. credit quality is strong and especially on the consumer side and it should stay strong. >> in terms of bank of america, the stock is up on a down day. the prospect of rising rates provided it's not too sudden too fast must be something that you have been looking forward to for years and going to i guess deliver operational leverage for you. >> that's what happened and then the pandemic and then went down and so unfortunately closing in 12 years i have had rate structure basically zero and learned how to operate the company. made a lot of money. we have $2 trillion in deposits and largely checking and when the rates go to zero you hit a zero floor and that then takes away income. going back up the excuse me team makes more money
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it has different impacts on the commercial book. consumer deposit space where we get the leverage because we're deposit insensitive. the estimate is low $7 billion a year with 100 basis point increase in rates and we captured a billion dollars last year to the third quarter almost and can capture it in a flat rate environment too. >> brian moynihan there last hour let's bring in mike mayo on the cnbc news line a $60 price target for bank of america which closed at 44 bucks. great to have you join us. overall he's as relaxed as you could expect given the current concerns about the outlook of bank of america and the economy. what was your take
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>> that was my take. that we're in the middle of a bull market banking. he talked about the economy, spending, recent activity. what i found remarkable in the clip you just played brian moynihan is carrying around an umbrella on a sunny day. we are in the middle of a bull market for banks and when asked he said, quote, all of them are risks. we have quote paid to worry at the top. he said, quote we worry about all of it ji love the worries when times are so good because that leads to more responsible growth and it helps prevent the huge failures of the industry with the bubble or the early '90s commercial real estate.
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the other two-word phrase that i found really fascinating was the quote depositiv insensitive he mentioned $2 trillion of deposits bank of america's deposits of four to six quarters grown equal to the sixth largest bank and front loaded the cost to gather the deposit but the benefits are back ended and won't be seen until the interest rates increase he didn't really take your bait. it helps them to save and bank of america more than any other large bank. >> the price target you have, will that be achieved if the s&p 500 is down? we got a glimpse of it today in
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that environment where bank of america and the banks outperformed in a down day but do you need a relatively constructive backdrop for the markets to get that $60 price target >> our firm still assumes some increase in the stock market but nothing like we had this year. our target's based on relative to the stock market as a whole we think it can be pretty close. from my three decades of covering banks, bank of america always traded at a money center discount until over the most recent period bank of america is paired with the average bank we think that the banks reach parody where they have been historically still a discount to the market and bank of america holding on
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to the average bank and the potential for bank of america to trade at a premium to the average bank because the mote around bank of america businesses are deeper than ever before and seeing that with the digital banking and technology and potential to be higher and not factoring that in. >> may have been carrying an umbrella and seemed quite positive coming to comments about the consumer, whether credit or spending not slowing down in the face of omicron. how does that play into your models when you consider the deposits for bank of america and what that means for the company now and the near future? >> as goes spending so goes loan growth to the extent that loans increase and interest rates increase we have that in the exists model that their traditional banking revenues to improve. they have $2 trillion of
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deposits $1 trillion of loans that's an opportunity for bank of america to invest if the economy is indeed as strong as brian moynihan said in the interview. >> mike, thank you for joining us. >> thank you. or hear you. not so much see you. >> we know what you meant. nice photo bitcoin has gone bust down 30% and up next explaining why the sell-off could be a boon for the taxes if you act quickly and the ceo of hawaiian holdings whether they'rimct be paedy the virnt. a lot of "closing bell" still to come
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i have dreamt at performing in redshore city since i was a little kid. here she is the star of our show. [ gasps ] there's nothing rosita can't do.
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i can't do this. she's afraid. can i try? no, no, no, porsha wait! ♪ this girl is on fire ♪ this is probably for the best. but i wrote this part for you. time to show the world what you're really made of. ♪ she's walking on fire ♪ bitcoin's sell-off is allowing investors to take advantage of a big tax loophole and time is running out to do so robert frank has the details for us. >> starting january 1 that loophole to make it easier for crypto investors to use tax losses may be ending current law allows them to apply the loss and buy the same crypto right back and that's because they are exempt from the so-called wash sale rule
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markets losing $700 billion in recent weeks those losses could be lucrative but the build back better plan has a rule to eliminate the wash sale xerpgs for crypto tax advisers say investors should sell the tranches with the highest prices before january 1st. under the infrastructure bill that's the one already passed crypto exchanges will also be required to report customer holdings to the irs. so starting next year it's going to be a little harder to avoid the taxes as a crypto investor guys >> where are we on how easy it is for the irs to track this sort of activity i presume for the likes of coin base, listed and public as they are that they won't let clients keep things secretive.
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w what percentage is captured? >> the irs chief thinks it's a small percentage because exchanges like coinbase are not required to report the flows to the irs. even though it is part of the infrastructure bill it won't take effect until january 1st, 2023 so at least for the next tax year and next calendar year there is not mandatory reporting by the exchanges and without that there's very little effort by the irs, ability, to track what customers are going and another year before we s.t.start to see how much we are missing. >> thank you so much speaking of crypto dogecoin with a big day. find out what's sparking that rally. and the ceo of hawaiian holdings on whether they could end benefits for employees not vablgted by its january dead
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line we are back in a couple. hm... i know how difficult these calls can be. not with schwab. nina made it easier to set up our financial plan. we can check in on it anytime. it changes when our goals change. planning can't be that easy. actually, it can be, carl. look forward to planning with schwab. schwab! ♪♪
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welcome back time for a cnbc news update with contessa brewer. hi. >> hi there. here's the cnbc news update. the senate is voting to raise the federal debt limit by $2.5 trillion and avoid a default by the federal government the bill needs a simple majority it is expected to pass before going to the house. the parents of the oxford school shooting suspect appeared in a michigan courtroom today. james and jennifer crumbley each face four counts of involuntarily man slaughter. the three men found guilty of murdering ahmaud arbery will be sentenced january 7th facing a minimum of life in prison. the judge will decide whether they receive the possibility of parole. o.j. simpson was discharged
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from parole. before that he had served nine years in prison on armed robbery charges. remember that sports memorabilia case >> i remember. hard to forget thank you. hawaiian holdings shares on the decline today. shares have been under pressure since the world health organization named omicron a variant of concern joining us is peter ingram, hawaiian holdings president and ceo. thank you for being here with us you held an investor update and revised the guidance and still some concerns out there with the omicron variant and changes continuing to vaccine policy what's -- what were the headlines for the investor update >> yeah. look i think what we shared with
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investors is that we're pleased with the pace of the recovery this year. next year to get back to the full scale of the oeperations we need a recovery on the international side and there's policy responses internationally since the omicron variant became part of our world a couple weeks ago have added some uncertainty to that but we are expecting a strong recovery next year and optimistic about what 2022 looks like. >> the requirements to travel to and from hawaii are more stringent. do you think they're appropriate? how hard is that on your business coming to international travelers that you are looking
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for recovery in? >> it's the same for hawaii as it is for anywhere in the united states international resident would need a vaccination and a test prior to travel. the difference we have is on domestic travel. despite the fact of a requirement to have a vaccination or a toest to avoid quarantine and not a big impediment for us. >> can you understand that governments more outside of the u.s. have added any travel restriction or do you think everyone is overreacting too much almost two years into this virus? >> i do think we are going to have to manage with the virus. it is -- appears to be something that will be with us for a period of time
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people want to get back to something that resembles an old normal when people have the ability to access leisure travel they take advantage with a vengeance and hopefully moving binto the new year we can see that we have the vaccine and effective there therapeutics with the opportunity to get on with living our lives and enjoy things with managing a pandemic that is ongoing. >> speaking of still managing a pandemic ongoing you require your employees to be vabted by january 4th. looks like 90% of them are already. do you anticipate it being an issue for the remaining 10%? >> i think we are a little bit over 90% we are -- we got a january 4th deadline we will have some employees who
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will be granted reasonable accommodations for medical or religious reasons and i hope the remainder take advantage to get a vaccine and i think we'll see a very small percentage that doesn't. >> just wanted to go back to the effects of omicron in the last couple of weeks has it affected people's willingness to book in markets that haven't seen extra restrictions? do you think like the consumer is stronger in the u.s. than the international markets showing a willingness to spend to a greater degree >> domestically we haven't seen any change in booking behave i think in some of the international geographies it is a little more of a concern because there was a policy response it's added some uncertainty. people don't want to travel if
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they are concerned they won't be able to get back without a quarantine on -- as they return to their homes and so that's created some uncertainty on the international side as we were in the early stages and still are in recovery there. >> so we have talked a lot about revenues and what it means of course for passengers coming back on your airline and the other side is the business are costs to run the business. what are you facing with inflationary sort of costs weighing on the profit right now? >> quewe talked with investors i week we expect the cost per seat mile in 2022 up 2 to 6% compared to where it was in 2019. and if you think of that on a three-year analyzed growth rate that's less than a percent and a
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half analyzed so we think that's pretty good when you factor in that some wage increases that have been included in the contracts. we have higher armt costs that we all deal with we are working hard to make sure that we are building back from these last two years as productively as we can and get back to scale we should be in a good shape from a cost structure standpoint. >> thank you very much for joining us here today. beyond meat a big winner on wall street today. find out why investors were loving it. and the expected reading on inflation could impact the fed decision tomorrow. we'll be right back.
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shares of beyond meat surging after scoring an upgrade. kate rogers here with that story for us >> hey there, wilf upgrading beyond meat to neutral and moving the price target. piper said the industry contacts are saying a nationwide mcplant
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launch could come in late 2022 earlier than expected. the note says in an early read the product is very well received and leaving mcdonald's to move quickly to expand the offer. could be $75 million and raising the 2022 sales estimates from 565 million to $600 million why beyond also remember did just hire two tyson executives ahead of partnerships that are set to expand in 2022 with yum, pepsi and mcdonald's the mcplant in eight locations beyond did close higher by about 9% mcdonald's fractionally lower today. >> who's winning particularly in terms of big restaurant partnerships like that who's winning between impossible and beyond >> they're both doing well and in quite a few locations
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i think when you ask who's winning people have said mcdonald's has kind of been late to the game and not offers a plant based option in a big way and investor and consumer anticipation what time it comes in will remain to be seen and it's in the eight locations and test is reportedly doing well and mcdonald's didn't have a big plant based offering like burger king has >> the mcplant is pretty catchy. i don't know if you tell your kids you want an mcplant in the happy meal maybe it will work. we'll explain why dogecoin is higher and fed decision and the highly anticipated press conference the key themes to look out for and impacting the money ahead. "closing bell" will be right back
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dogecoin skyrocketing after musk said tesla would accept it as payments for some merchandise. kate rooney is here with more. >> dogecoin the meme inspired cryptocurrency is back in the headlines up more than 20% today after elon musk tweeted about it according to him tesla will make some merchandise buyable with dogecoin and see how it goes as he says. hardly the first time tesla ceo talked up the cryptocurrency musk called dogecoin the favorite digital currency and rallied and it went from being worth a fraction of a penny at the start of year bo 74 crepts in may and down 70% from the
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all-time high. robinhood is beefing up its crypto team and buying cove markets, a crypto platform to make it easier to manage multiple accounts. no number in the robinhood release and the start-up valued around $8 million with 8 employees and smaller side of the m&a spectrum and the cove co-founder will join robinhood's crypto team and the crypto side of robinhood's business becomes increasingly important to revenue for the company. down more than 75% from the all-time high back in august guys >> kate, obviously this sounds like they wanted to beef up and offer more when it comes to the crypto offering. that is robd remind us how important it is to the typical traders. dogecoin is very popular as a
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meme stock is it popular with the robinhood crowd in general dogecoin specifically. >> second quarter dogecoin made up a bigger portion of the revenue but it's been sort of cyclical first quarter goldmaamestop. and then most recent quarter the cfo said we didn't see much volatility and reliability on the volatility and whatever the flavor of the week or month is coming to cryptocurrencies or stocks but increasingly important and competitive pressure with single or finteches with cryptocurrencies and does seem that they're focused on building out that side of the business to differentiate away from stocks in general and be a one stop shop for finance which is the pitch that paypal and square
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have made and competition there. >> kate, thank you so much. up next, the decision on deck of the fed tomorrow why what to expect and the key things to listen for in the press conference when we return. as an independent financial advisor, i stand by these promises: i promise to be a careful steward of the things that matter to you most. i promise to bring you advice that fits your values. i promise our relationship will be one of trust and transparency. as a fiduciary, i promise to put your interests first, always. charles schwab is proud to support the independent financial advisors who are passionately dedicated to helping people achieve their financial goals. visit findyourindependentadvisor.com your record label is taking off. but so is your sound engineer.
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how we finished the day at wall street. the dow only down by 100 points or so. nasdaq was down 1.2% we were well off the lows by the close. a little bit of selling into the close, but the afternoon was better than the morning. worries about rising inflation and the slowing of the feds program brings fears let's bring in shri. do you think we get a hawkish surprise tomorrow or has powell
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already laid the groundwork with his testimony a few weeks ago. >> i believe that chairman foul -- powell is not one given to bucket statements. last time he did that, he had to eat back his words what we have learned so far is inflation. on the other hand, support of equity markets so if the markets would correct over the next several days, you would expect him to make statements that could help investors rather than fight inflation. >> so that's what you expect him
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to do, sri what should he be doing? if you were in that chair, what would you be doing given the data we have >> i think the chairman of the fed should have stopped the process a few months ago i did not do that. right now i am going to do that. immediately an interest rate that would shock the market, and it would be much better economy. >> sri, is there a risk that inflation runs too hard beyond what the fed can control or rein in >> that is a risk. i have written about and talked
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about comparison with what we are doing today with what happened in the mid 1970s, and there are lots of similarities we found at that time as well, that once we let inflation get beyond control, and with inflation as a strength to control inflation, they say inflation will come down by itself inflation does not respond to those words. so i think there is a distinct danger >> sri, i think we are going to have to leave it there thank you for joining us i hope your carpet is spotless after the vacuuming that may
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have been taking place breaking news out of washington on the debt limit >> the senate has a vote that needs to pass a bill that would raise the debt ceiling by $2.5 trillion, enough to make it through the mid terms and into 2023 under a deal cut with republicans earlier this month, democrats only need a simple majority to advance this bill through the chamber. 50 democrats have voted in favor of it. only 49 republicans are voting this is expected to be a party line vote. once this vote has been gaveled, the bill will head to the house and then could head to the president's desk for his signature to avert that catastrophic default that was
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warned could happen. it would increase the debt ceiling by $2.5 trillion >> catastrophe averted which is great in the short-term, but what about long-term how far down the road does this kick the can >> democrats believe this should get them through mid terms into 2023, even if they do pass the build back better plan republicans are already looking to 2023 saying they will not help democrats pass this again but the power of both chambers of congress could change hands so we will see how they decide to define the debt ceiling
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>> what other holiday business needs to get done before the holiday break begins >> democrats are saying they want to pass the social spending plan in the senate they are working with the senate parliamentarian to see if it meets the rules of the senate table. it is unclear if they will be able to meet that deadline because joe manchin is still concerned about higher prices and inflation. the senate leadership is applying pressure as well. we will see. >> thank you for that break pg news tomorrow don't miss our exclusive interview with dave ricks, the eli lilly ceo the big event is the fed meeting which we look forward to live coverage as the press conference wraps up in our show
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it could be really interesting as we just discussed with sri, he already set a hawkish tone. amazingly strong inflation data this morning no doubt he will be pressed on that during the press conference we are out of time as "closing bell. "fast money" starts now. >> this is "fast money." i'm melissa lee. tonight's lineup -- tonight the apes go bananas. trading volume off the charts. blockbuster turn around with one of the biggest voices in the trade. plus a big warning for the new year why chris harvey sees losses mounting in 2022 an

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