tv Closing Bell CNBC January 26, 2022 3:00pm-5:00pm EST
record-long expansion, we saw labor force participation rise we saw wages persistently higher for people at the lower end, and there really was no obvious imbalance in the economy that threatened that expansion. it could have gone on for years were it not hit by the pandemic. so we looked to try a find a way to get back to that and tra requires fed tinting interest rate policy and do our part getting inflation back down to our 2% goal. i mentioned two-sided risks. you know, a couple things. one covid is not over. and covid can continue to evolve, and it's just, we have to accept that it's not over and the risks to it can slow down growth and that would be, that's sort of a down-side risk from a growth standpoint. i would point to, you know, another risk is -- just further,
further problems in the supply chains which could slow down activity, and, you see the situationina. there's a situation there where that's -- their no covid policy may cause more lockdowns it's likely to, and that may play into "may" play into more problems in supply chains. in addition there's what's going on in eastern europe and things like that. there's plenty of risk out there and we, know, we can't, we can't forget there are risks on both sides. that's there that's what i would say. i know you've been all over this issue with my colleagues, craig, on the issue of information. we don't have that information at the board, and, you know, i asked the inspector general to do an investigation, and that is out of my hands. i am playing no role in it and
seek to play no role in it and i can't help you here today on this issue, and i'm sorry i can't. >> okay. >> thank you we'll going to gina now. >> thanks for taking my questions, chair powell and sorry for my tech issue. i wonder if you can tell us where your thinking on inflation stands today the last time we saw an nft in september you say thinking inflation would be back down close to target by end of the year do you think that projection from december is it reasonable and thinking it's changed at all, i wonder how you're thinking about that and whether you can talk about the best way to getting to acceleration how do we get from 7% to where you expect it to be end of the year >> i would say, you know, since the december meeting i would say that the inflation situation is
about the same, but probably slightly worse i'd be inclined to raise my own estimate of 2022 core pe inflation. just go with that, by a few tenths today but we're not writing down at this meeting hasn't gotten bet just a bit worse and that's been the pattern. that's been the pattern. so i think if you look at the, the participants definitely, there's a range there. and that range has been moving to the right for a year now. and, by the way, if you look at other forecasters essentially all other macro forecasters who do this for a living, you're seeing the same pattern. so what do we think about that well, i think we you know, we wrote down rate increases in the december meetings. each of us individually. and i think to the extent the situation deteriorates further, our policy will have to address
that i mean, if it deteriorates meaning either in the time dimension or size of the inflation dimension. so that's how we're thinking about it as i mentioned, though, i think it's, part of this will be that us, the fed, moving away from a very highly accommodative policy to substantially less accommodative policy and over time to a policy that's not accommodative. in time. i don't know when that will be those are the things we're thinking about that's part of it. another part of it is the fiscal policy provided an impulse to growth over the last two years that impulse will be less. in fact, negative this year. that's another thing the other one is we will eventually get relief on the supply side. and, you know, the ports will be cleared up, and there will be semiconductors and things like that now, what we're learning is it's just taking much longer. so i think longer than expected, and that, i think, does raise, raise the risk that high
inflation will be more persistent i do think we'll come off of the highs that we saw in the early part of the episode, in the spring last year, but really what the question's going to be what is inflation running at and so we'll be watching that, and we, our objective is to get inflation back down to 2%. it's also to provide enough support to keep the labor market healthy. the labor market is very, very strong right now and i think that that strength will continue. there's really a shortage of workers. we see it particularly among production and non-supervisory workers and people in the lowest -- you see very large wage increases i mentioned other indicators so i think that's what we're looking at, and also, know, we realize, i think as everyone does, that this outlook is quite uncertain, and that we're going to have to adapt and we're going to communicate as clearly as we can, but we're going to have to
be adaptable, and, you know, move as appropriate. >> okay. thank you. let's go to colby smith. >> thank you chair powell, when you talk about these humble and nimble about the path forward for monetary policy does that also include possibility of raising interest rates by larger increments instead of doing 50 basis points hike at some point if inflation does not moderate sufficiently and should we interpret this approach as a deper cher from t departure from the last cycle? >> we have not made these decisions. we really haven't. what i can tell you now, though, is that we fully appreciate that this is a different situation. if you look back to where we were in 2015, '16, '17, '18,
inflation close to 2%, even below 2% unemployment not as natural rate and growth was in the 2% to 3% range. right now we have inflation running substantially above 2% and more persistently than we would like, we have growth even in forecasts even in the somewhat reduced forecasts for 2022, we still see growth higher than substantially higher than what we estimate to be the potential growth rate, and we see a labor market where by so many measures it is historically tight. i think, you know, in a way the least tight aspect of it looking at unemployment rate, still below our median -- if you look at things like quits and job openings as mentioned earlier and wages and just the ratio of job openings to unemployed, you're seeing a very, very tight labor market now, we also know that labor
force participation is significantly lower. a percentage point and a half lower than in february of 2020 maybe a percentage point of that is retirements some part of those retirements are, are, you know, related to covid rather than just regular retirement in respect is a pool of people out there who could come back into the labor force but it's not happening very quickly, and may not, it may continue to not happen very quickly as long as the pandemic is on. so that's a, that's how we think about that we haven't made, to your specific question, we really have not addressed those questions, and we'll begin to address them as we move into the march meeting and meetings after that. >> let's go to rachel. >> thank you, and thank you chair powell for taking our questions.
i'm wondering if you can talk to us about any metrics used to assess our inflation affects different groups of americans? especially lower income earners, and are you worried the fed underestimates or can't effectively measure the impact of inflation on some of the most vulnerable >> it's more a matter of, i think the problem that we're talking about here is really that people are on fixed incomes, who are living paycheck to paycheck. they're spending most or all of their, of what they're earning on food, gasoline, rent, heating their, heating, things like that basic necessities. and so inflation right away, right away, forces people like that to make very difficult decisions. so that's really the point i don't -- i'm not aware of, you know, inflation literally falling more on different
socioeconomic groups that's not the point the point is some are just really in -- frprone to suffer more people economically well off, inflation isn't good it's bad high inflation is bad. but they're going to be able to continue to eat and keep their homes, and drive their cars and thi things like that that's more of how i think of it and, you know, we, to control inflation for the benefit of all americans, but part of it is just that it's particularly hard on people with fixed incomes and low incomes who spend most of their, of their income on necessities, which are experiencing high inflation now. >> thank you let's go to edward lawrence. >> thanks. thank you, mr. chairman for taking my question here. year over year, 40-year high,
interest costs producer price index for all of 2021 highest on roshd. some investors fear the fed might be moving too late that you said decisions were made on the path of rate hikes, but was a rate hike more than 25 basis points discussed today and as a follow-up to that, problems with the mute button. as a follow-up to that, you testified that the supply chain issues could be worked out by end of year. talk about that today. ceo of ford, though, told fox business today that the chip shortage will last into 2023 today you said inflation will start to ease this year. i want to drill down and get a timeline that you see as to when we can see that release? thank you. >> so i would not say that i would expect the supply chain issues to be completely worked out by end of this year. i do not expect them and i have no expected them what i would say and have been saying is that i expect progress to be made in the second half of this year mainly progress because we're not making much progress if you look at a ton of metrics
you can find some that suggest delivery times are shorter, inventory in some industries are moving up. overall, we're not making progress things like the semiconductor issue will be quite a long time. i think more than through 2023 in terms of, so in terms of being too late, i would just say this -- our policy needs to be positioned to address the full range of plausible outcomes as i said, and particularly the possibility that inflation will continue to run higher, more persistently than expected we think we are positioned to make the changes in our policy to do that, and we're committed to doing that, and that's really where we are. in terms of your, your question about the signs of rate increases, we haven't faced those decisions. we haven't made them it is impossible to sit down today and tell you with any confidence what the precise path will be, but in, as we work our
way through this meeting by meeting, we are aware this is a very different, different expansion, as i said a couple times, with higher inflation, higher growth, a much stronger economy. and i think those differences are likely to be reflected in, in the policy that we implement. >> thank you let's go to mike mcgee. >> thank you, mr. chairman i'd like to sort of weave some of the strands of your answers together and ask you as you start to reverse policy, what your goal is are you going to be raising interest rates until you get inflation to 2%? do want to go below 2% so that on average you get a 2% inflation rate and because you said we have to protect the employment part of your mandate, is there some sort of circuit breaker that would stop you from raising interest rates on the employment side
>> so, no. there's no, nothing in our framework about having inflation run below 2% so, that we would do that, try to achieve that outcome. the answer to that is, no. what we're trying to do is get inflation, keep inflation expectations well anchored at 2% that's always the, the ultimate goal and we do that in the service of having inflation -- we get to that goal by having inflation average 2% over time and if inflation doesn't average 2% over time and it's not clear why inflation expectations would be anchored at 2% that's the way we think about that. you know, what was the last part of your, of your question? >> i was asking if you're protecting the employment side of the mandate, whether there's some sort of circuit breaker there? >> nothing like that i mean, i would say, you have a tremendously strong labor
market, and you have growth this year and forecast to be well above, well above potential. i mean, people are forecasting growth potential growth is around -- most forecasters significantly for that 2022 and even with policy becoming substantially less accommodative the labor market will be strong for some time. ideally we're trying to achieve is inflation back down to 2% and do it in a process that accomplishes, you know that will also leave the labor market in a very strong position, and no one really know what's that will take again, i would say that it isn't just monetary policy that's helping inflation get down will be supply side improvements and less fiscal impulse. you know, in all likelihood. but monetary policy will do our job. it is inflation to get inflation
down to 2% and the situation where the two goals can be intention, is a difficult one. but i don't really think they are here, though, because i think a really significant threat to further strengthening the labor market in the form of higher participation over time is high inflation. also high inflation is taking away the benefits of some of these large wage increases we're seeing now so we do hope to achieve and our plan is to achieve both of those goals. >> if i could follow-up. does the danger of tightening too much as policy works its way into the economy with a leg mean you should go back to being more forecast dependent in making decision rather than the state dependency using as a framework the last year and a half or so >> dependency was around, the thought that if we, if we saw a very strong labor market, we
would wait to see actual inflation. actual inflation before we tightened. so that was a very state-dependent thought, because for the long time we'd been tightening on the expectation of high inflation, which never appeared that was the case for a number of years so in this particular situation, we will be clearly monitoring incoming data as well at the evolving outlook. >> let's go to michael duffy. >> thank you for taking my question i want to ask you, with benefit of hindsight, and i realize that it is what it is, but do you feel that monetary and fiscal policy maybe did too much to react to the crisis, and that part of the inflation problem we're having right now is because the government response collectively was more than what the economy ended up needing
>> so i think it's too soon to write that history, really, but what i would say is this -- the, if you remember what it felt like beginning of the pandemic, literally the global economy shutting down in large part including our own economy and people going to their homes for weeks on end in masks and no vaccines, and it could be a really long time to get them you know, and then, you know, you have economic activity drops by a shocking amount so there was a real risk of lasting damage, and i think congress responded remarkably with the c.a.r.e.s. act. incredibly timely. very powerful. people, there are always be flaws in these things but in realtime, it was a remarkabl achievement, and we responded and what we were able to do stave off a collapse of the financial system at the beginning, and make time for
what really needed to happen, which was the income replacement and then the recovery, that congress enabled with the c.a.r.e.s. act now, that was a lot -- that was a lot. what we did was a lot. and you know, now -- so what we have now is, we have the strongest recovery of any country, and we have a recovery that looks completely unlike other recoveries that we've had, because we've put so much support behind the recovery. and we're managing the relatively high-class problems that come with that, which are high inflation and a labor shortage these are serious problems very serious problems that we, you know, we're working as hard as we can on was it too much? again, i'm going to leave that to historians, look, in 25 years we'll look back at this incident, which will be a two, three, four, five-year period and we'll say, have a much better basis to make a judgment about the actions that people took. but it was all founded, though
in a very strong reaction to a -- you know, to a unique historical event and i guess i'll have to leave it at that. i hope i'll be around to see how it looks in 25 years. >> thank you >> thank you let's go to jean young. >> thanks, michelle. chair powell, some investors are expecting the yield curve could flatten or eve be revert would that worry you and how important for the fed in adjusts policy >> so -- we -- we do monitor the slope of the yield curve but we don't control the slope of the yield curve. many factors influence longer-term interest rates but it is something we watch, and you will know that from, when we had this issue a few years ago. and we take it into account along with many other financial
conditions as we try to assess the implications of all of those conditions for the economic outlook. so that's -- that's one thing i would say. another is, currently you've got a -- think about twos to tens. two-year treasury, 75 basis point well with range of a normal yield curve slope so it's something we're monitoring we don't think of it as, i don't think of it as some kind of an iron law, but we do look at it and try to understand the implications and what it's telling us and it's one of em things we monitor. many things that we monitor. >> can i follow-up quick and ask if it did invert, would you tie it to u.s. fundamentals or would it be driven by a much broader set of factors >> that's a good question, and in realtime. obviously, u.s. long-term sovereign debt is an important
global asset, and the fact that our rates are so much higher than other risk-free sovereign rates around the world may put something of a ceiling on our rates. i don't know but it would depend on the facts and circumstances at that time. >> thank you let's go to brian cheung for the last question. >> chairman powell, brian cheung, yahoo! finance broad effort normalizing rates what would you do as a gradual hiking and secondly with the hiking cycles often talking point for financial stabilities wanting to make sure asset bubbles don't merge. is that fct also factored into the conversation as you start thinking about raising rates >> i would describe what we're doing along these lines. this is going to be a year in which we move steadily away from the very highly accommodative
monetary policy we've put in place to deal with the economic effects of the pandemic. involving a number of things it's going to involve and does involve finishing asset pushes, involves lifting off and it's grog to involve additional rate increases as appropriate and we have, we're going to write down in march our next assessment what that might be. it's going to continue to evolve as the days evolve we need tos quite adaptable, i think, in our understanding of this last thing we're going to do is we're going to have a couple more meetings, i think, to talk about allowing the balance sheet to begin to run off. and do some predictable manner and something we will also be doing as appropriate and i wouldn't -- i don't think it's possible to say exactly how this is going to go, and we're going to need to be, as i've mentioned, nimble about this
and -- the economy's quite different this time. i've said this several times now. ed economy is quite different. it's stronger. inflation higher labor market much stronger than it was and growth is above trend even this year, let alone last year so all of those things will go into our thinking as we make monetary policy. >> you asked about financials having concerns. in connection with our policy? is that your question? >> yeah. within the context of other cycles seems worries about asset bubbles emerging as a result of ev rates is part of that i didn't know if that was part of the discussion today. i would just say this -- we, of course, have a financial stability framework. what it shows is a number of positive aspects of financial stability. you mentioned really asset prices one of the four asset prices are somewhat elevated and reflect high-risk appetite that sort of thing.
i don't really think asset prices themselves represent a significant threat to financial stability, because households are in good shape financially than they have been. businesses are in good shape financially. defaults on business loans are low and that kind of thing the banks are highly capitalized with high liquidity and quite resilient. and strong. there are some concerns in the non-bank financial sector, still around money market funds, although the s.e.c. made very positive proposals there, and we also saw things in theduring tho the crisis which we're looking at ways to address overall, vulnerabilities are manageable, i would say. >> thank you very much. >> thank you.
that was the end of the press conference there with fed chair jay powell what a roller coaster ride once again with the markets the statement was interpreted it's a the press conference hawkish. stocks like the former not the latter gone from session highs pretty much plus 500 on the dow to session lows currently down almost 400 welcome to the "closing bell," everyone crazy intraday moves once again. but sadly, today, in the wrong direction. >> another 800 point swing in the dow. really what we've seen in the last few days. the interpretation of what fed chair jay powell said, as you mentioned, hawkish he did not rule out a 50 basis point or a double interest rate hike he did not rule out hiking at every single meeting he said they hadn't made though decisions yet but didn't rule them out and did talk about the fact we're in a very different
place than we have been pap higher, stronger growth economy. faster inflation than what was expected, and a lot of accommodation out there. also talked a lot about the balance sheet, of course, the market was very interested in. said they're not there yet in terms of a decision. it's going to lap in terms of shrinking the balance sheet after raising interest rates and could take a few more meetings to talk about, also a huge focus for investors. i'm watching the dollar spiking along with especially short-term treasury two-year yield at multiyear highs. a lot to talk about, stocks going in the red and looking at session lows as we speak a great show is coming your way. we are going to talk with a number of market experts thought leaders, from charles schwab, and galaxy digital, about these wild market notes coming off the fed decision, plus two big names reporting earnings after the bell. results from expert analysis of tesla and intel soon as those numbers cross.
joining us first of you all to weigh in on the press conference specifically, chief market strategist at jefferies and manager at asset hill management and very good afternoon to everyone. and come to you first of all, because what an extraordinary intraday turnaround in terms of market reaction. was your interpretation as confused, let's say, as the markets were if you compare and contrast the interpretation of the statement versus the press conference? >> no, i don't think it's confusing at all i look at the press conference very much as a valedictorian by chair powell they achieved their mission. they have super accommodating policy andhave a strategic pla and a tactical path to pull back from that. and so i thought he did a really fine job as he put it of saying
we're going to be humble but nimble and maximize optionality. a great job. i think the marketplace is in a very skittish place and going into a consolidation period here now. i think we've stopped the carnage, but are in a bear market for risk appetite >> david, what are your comments on the interpretation of the market out of all of this? we came in with hopes he'd be more dovish than in december what was your net takeaway >> i do think the market was hoping for some, some recognition that things had been very choppy and he was going to be a bit more of a backstop, but certainly didn't do that, and certainly wasn't our expectation that he was going to do that at jefferies. the thing that really seems to be getting the market hot and bothered is how they're going to move this balance sheet what they're going to do.
he keeps referring to it as much laerger than it needs to be and left the window open to do more than just reduce it through runoff they said primarily through runoff that word "primarily" a big key word in the statement that they released on principle for balance sheet. it was there five years ago as well in principle and didn't sell assets, but i think the market's very skittish they might move a little faster whether it's a 50, in every meeting or decide to step up the pace of balance sheet reduction through the combination of runoff and sales, got the market very nervous about how this is going to take place, and i think they need to start giving us some information how they will react if this inflation doesn't come down quickly through the first half even the second half of the year. >> coming a little off low of the session. dow's down about 200 points. nasdaq positive again. nasdaq 100 also positive a little buying there in
technology session low down more than 300 down 240 on the dow. get to seen jer economic reporter steve liesman part of that news conference, and asked a technical news worthy question, about the balance sheet? >> yeah. the way he laid it out, i was just checking to make sure it could happen by the summer get to that in a second. what fed powell did largely delivered on market expectations today. firmly signaling a rate hike is on the way used language we thought they'd use. soon appropriate the fed is preparing to reduce the balance sheet. if it was anything maybe a bit more hawkish not a lot, just a bit. surprise release of balance sheet principles suggesting processes may be further along than previously thought. here's what he said about balance sheet reduction. >> the balance sheet is substantially larger than it needs to be. we've identified the end state as, you know, amounts needed to implement monetary policy efficiently, effectively in the ample reserve regime
there's a substantial amount of shrankage in the balance sheet to be done that's going to take some time we want that process to be orderly, and predictable. >> hey, sarah, just got to tell you. pay attention to the cnbc fed survey ours suggested july was likely time for starting the balance sheet reduction. we have an average consensus of 380 billion dollars this year. nothing said today really changed my view. a lot of people kind of hoping he would be dovish i think kind of maybe talking more portfolio, but i have no expectation he would be anymore dovish, come in, in line with expectations i think is what he did, i think >> steve liesman thank you very much, steve of course, that survey comes out every pre-fed meeting. jenny, does any of this change your investing philosophy right now or what you're doing in terms of managing money gentleman what we heard from the fed? >> no.
no, not at all but that's in no small part because of the k50ind of managei am i invest in cash flow oriented company with a very longtime horizon and everything we buy is with the anticipation that the company itself will weather any kind of economic storm, interest rate storm, market pullback. so, no this changes nothing my only source of confusion today was why the market was up so much ahead of the announcement, because i thought to myself. who thinks he's actually going to pivot his line, to be that dovish we don't everything we heard today very much in line with expectations's no changes in advance of this to the portfolio and certainly no changes after the conference. >> one comment stood out to me he said inflation persisted longer than we thought what level of confidence should we have that he'll get his restrictions of inflation right going forward? i guess you could say a lot of people got it wrong over the course of the last year, but is
that a risk that suddenly they're going to have to hike a lot of time the year goes on and should have already hiked, say, today or last year >> i think they've got a lot of hiking to do over the next couple of years, but i don't think it's a critical issue from the standpoint of them being behind the curve and needing to do something precipitous i think independent of the precise level that it falls to, inflation's coming down. he laid out things that will reinforce that downward direction. it's less penalty, fiscal policy, a big move away from accommodation on monetary policy and then the supply side correcting itself. i think that hat trick that he articulated is a wonderful prophylactic against higher inflation, but how quickly and how far it comes down is the ultimate question, and that's where he'll need to be nimble.
>> mike, watching reaction to the markets. looks like tech is catching a little bid nasdaq wants to go positive. what stood out to you watching the news conference? any big surprises that would hurt the market? >> i think there were incremental surprises relative to how people were postured right before him i think the real reason, a little gap going into the meeting between what the bond market priced in as a near center in terms of number of hikes and the last statement of the outlook from the fed right? talking three, maybe four. fed was like, we're at four. so there was this opportunity for powell to say, you know, we are where we were. explicitly say the market might have rushed to the hawkish side. he ratified where the market was. said had it right. gotten our message that one two, took every opportunity to emphasize upside risk to inflation as opposed to de-emphasize it. talking what the fed always want
to do kind of maintain its optionality as paul was saying throughout the year. right now that means remaining reacting to higher inflation not soften economic growth kept talking how tight the labor market is. asked about effect of the solvent economy on margin the workers and took it as an opportunity to talk how people with fixed incomes, low incomes are hurt by inflation. all of those things took some of the edge off the kind of bullishness of market. 200 s&p points in the bank as a cushion from monday's low to where we started the press conference used up less than half still in a one-week range. could be part of this choppy bottoming process. that explains the boom and then the kind of deflation of the rally this morning and this afternoon. >> david, on that point, do you think there was anything from today that significantly altered your view as to whether that fed put that's been in place so many years is meaningfully disappearing >> we don't call it
disappearing we wrote back in december we just think a strike on that put if significantly lower than in the past 10% to 15% down where it might have come in in previous periods when we did have a ppi and job creation a 7% ppi, this is a fed that doesn't need to back up the market down 10 to 15 probably not until down 20 25s25 o where it was a year ago. almost a 3700 level. that's something the market's not, didn't come into this year thinking about clearly, and something we tried to warn clients against. that just made a spew for up side versus down side much different this year than pretty much any year in the past. largely because ofinflation. remember, we started last year with cpi at 1.1% and 10 million missing jobs in 2020 now at 7% and we have 3.5
million missing jobs and many of those could be explained through early retirement and a few other factors related to demographics. unemp unemployment, % inflation. has ever reason in the world to sort of move that put strike lower and go after 7%. does not want to go down as the fed chair kind of messed up 40 years of inflation credibility getting too cute on the labor market i think that's what we saw today with jay he's very concerned that this inflation needs to come down worried about it thinks it will happen but not going to take chances. >> so jenny, final question to you. what is the investment strategy right now? you have a long-term view, but message heard loud and clear a fed that will hike rates probably in march and is concerned about inflation and feels good about where the labor market is, and going to start talking about ways to reduce the balance sheet, which the market is concerned about what do you do >> so i think you actually
follow what jay powell said to do looking for my exact notes, he said something like, we the fed must be adaptable and adapt to the changing economy we as investors, he's talking macro. we as investors need to do the exact same thing at the micro level in our portfolios. if you own snowflake and lemonade last year probably can't this year. same way you did last year and make money maybe need it adapt as an investor own the boring old ones like dow, intel, cisco be nimble, thoughtful and you need to be very careful in not using broad generalization you can't anymore say things like, oh, i want to own cap tech no, no parse through see which companies make sense to own in this environment a different game one theme i've talked about the last maybe nine months or so you have to work hard. that's what's ahead, if you want to make good money in the next year, be ready for hard work as an investor.
no easy returns. manage emotions. one of the things i wrote in a recent note to my clients was, don't pin your success or failure at that high point that you recently reached in your portfolio and also don't overly lament the lows. need to remember investors, it is a long, hard slog there's ups and downs along the way but it trends up just stay rational, stay reasonable if you don't see -- be the investment version of jay powell keep marching along, eyes up and forward. >> i think he added humble in there as well. paul macaulay, david, jenny, thank you all for joining us. >> yes. s&p 5 hadn't down about half a percent financials going positive. check in on individual market movers right now shares of draftkings a strong day on heels of an upgrade morgan stanley likely very large
with a handful of winners and sees drafls draftkings as a winr kimberly-clark dropping today. company beat on top and bottom lines but issued weaker guidance especially revenue guidabance expecting supply chain issues to persist. hurts when making paper towels and toilet paper stock down 3.4%. a finally, big win for mattel the toy company announcing a multiyear global licensing agreement for the disney princess "frozen" franchises all sort of disney princesses. winning the license back from ha hasbro making the dolls since 2016. that stock up 4% because of lots of kids like disney princesses >> and down 5% in light of it as well. intel and tesla gearing up to report earnings top of the hour look at what to watch next in
the market te joining us to give his take on the fed and the market reaction we'll be right back. ♪ ♪ you can't buy love. or peace. you can't buy security. you can't buy happiness. you can't buy confidence. but you can invest in it. we believe that your investments should work harder for the future you imagine. and that's where our strategic investing approach can help.
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crypto by the way hanging in there. bitcoin high perp first, just about 15 minutes to go here in the trading day and we are now in the closing bell market zone. cnbc's commentator mike santoli here to break down crucial moments of the trading day and today josh brown with us welcome, josh. kick it off with the broader market stocks. volatile again another day of wild swings after the federal reserve chair jay powell's press conference. the dow currently in down about 254 points or so hit the high right after the fed's statement came out at 2:00 then went down to low of the day as fed chair powell was speaking josh, any big takeaways for the fed as relates to your next move and what you're telling your clients to do? >> so i listened to, like 20shgs min minutes of it. the most important point, he is aware of his affect on market expectations of course he is, but that's
important, because one of the things i've been saying, i think this is the third week now, is that the fed is going to use its mouth well in advantage of it actually using its tools always does. in this instance, no different, and the market is moving both bonds and stocks towards where the fed ultimately needs them to go, if we're going to get inflation moderating, i say hon its own. it's not really on its own, but you have to believe that a $38 trillion stock market is now extremely important to the wealth effect that drives a lot of what's going on with inflation. not all, because of supply stuff, but on the demand side. stocks and home prices are the two big things home prices are moderating fourth month in a row. that market is cooling off now the stock market started the year with the worst january, pretty much ever so these two things get the fed closer to where it wants to be
ultimately without the fed even having moved the chess piece yet. so i'm constructive. like hearing powell point out he is aware of that impact and i think markets are being rational in light of the fact that we've probably been stimulating for six months longer than we should have been. >> mike, interested in your take on what this extraordinary intraday volatility means. clearly earlier in the week from lows to highs, the opposite today. but another sort of 900-point intraday move on the dow >> yeah. >> is that sort of the sign that the bull market's going to continue, or is it also joining and drawing conclusions? >> no way to declare in way is of interpreting that type of day-to-day intraday volatility and say all of a sudden it's a different regime not that at all. we have broken the steady broken uptrend from last year, going on
the last few weeks wild asthe move seemed today, 100% within the range of the last five trading days once you break through and widen out the scales of what these daily moves are, all of a sudden there's kinds of freedom to move within it, because we just saw prices a few days ago. right? suddenly doesn't seem as dramatic, but also fundamentally telling you there's a fairly widespread of possible paths both in terms of macro direction and policy reaction that the market now has to consider as we decelerate in the short term, think reaccelerate and fed reaction more attuned to upside risk on inflation and, therefore, might have a lot of play in what, in fact, the monetary side of things looks like for a while i think the message that powell gave today, as jarring as it sounded, because he really was intentionally seems wanting to put the market on notice they're serious about countering inflation, however they might'sit's what the market's been contending with three week.
explains what the market's been doing three weeks as opposed to all of a sudden, 2:30 p.m., blindsided us here why the market's trying to struggle its way a little above the recent lows from monday. >> agree i don't think any big surprises there. josh, close at levels on the s&p 10% off the high technically a correction nasdaq now about 16% or so off its highs. you've been looking at the history of drawdowns what are you concluding about what we're going into here >> well, i'm glad you aregivin me an opportunity to talk about this, because this is what we are actually talking about with clients right now. and for the most part, it's us reaching out not clients reaching out to us i don't think it's been quite as volatile as it would take for people to really get nervous, but i think it's important to point out, this year is not the aberration last year was. last year the s&p did 30%, and
the max drawdown was 5.7%. that's bizarre a lot of that is because how it active the fed is in the markets stimulating. going on now is entirely within the range of historical probabilities. average drawdown over the last 94 years is 16.56% intrayear meaning half were worse. if you look at the typical drawdowns, in 59 of those cases down in excess of 10%. in 24 of them, down more than 20%. so this could go, get worse, and still be normal. and i don't think people have a grasp on this concept either which is that just because you have a 16% drawdown, average or worse drawdown, three of five instances market ends up closing higher including, byes way, 1987 we have to understand stocks are not meant to only go down 5% in
any given year the problem we have is that 25 million new investors joined the stock market in the last 18 months, and they just haven't seen, other than march of 2020, normal volatility. so i think people just need to reorient themselves around the idea that bears will make money too every once in a while and not every day's a sunny day. starting to get that message, it appears, and obviously, tougher for some areas of the stock market than others, but broadly speaking, this is what stocks should do last year is the strange year >> but, of course, history doesn't always repeat in some factors. they may suggest that, like the fact 25 million new retail investors in the market or like the fact a 50-year bull market in bonds and now have inflation and perhaps that's going on. a lot of factors on that and we'll discuss it all going forward. we want to dive into micro
huge hour of earnings ahead including results from chipmaker intel. jon fortt has a preview, the street is looking for 91 cent eps on revenue 18.32 billion considering the challenges intel is facing, gross margins in capex most important metric because the general attitude of intel road to product and technology leadership takes more than a couple quarters intel gross margin quarter reporting here 53.5% down from 60 a year ago. high sir better, of course as we look at the report long as it comes with a revenue beat warning here there could be a lot of stock moving based on the color intel gives on product launches, timing of those. questions about possible delays and spending on chip manufacturing, guys. >> jon fortt, thanks for that. and the question less legitimacy after the move we saw during that press conference what we've learned from this
week, earnings more important than what the fed says or does, even the trigger of selling start of the year was great. microsoft for example, yesterday showed the effect earnings can have for a massive stock >> for sure. well, after today once we get through tomorrow, sometimes you get sort of the rethinking delayed reaction to what the fed said, yes, mostly about the give and take of what earnings reports tell us, and when you've taken 10% off top of the market, all of a sudden the e and the pe ratio matters more what we're doing right now comes to something like intel, retooling process. company under way strategically and increment's progress mostly what we'll want. not priced for a lot of long term growth. path of the goals ramping production in the right areas in capital allocation. >> microsoft biggest contributor to nasdaq 100 gains and right behind it, tesla winning today other set to report earnings
after the bell phil lebeau leer with key numbers to watch. >> sara, keir number not a profit will be a sizable profit from tesla. the expectation on the street. automotive gross margin. coming in at 28.3% the street expects. we'll see if that number hits the mark there also what do they say about the giga factory production in austin and berlin. austin close to coming online. berlin might be pushed back. what's the guidance? elon's product road map. expectation is elon musk will be on the conference call when it starts at 5:30 this afternoon. what does he say about where the company is in terms of developing future products do they give clarity some specifics one last thing to keep in mind shares of tesla. expectation earn $2.36 a share we're on the call this afternoon more importantly numbers for you coming up shortly. back to you. >> all right phil, keep us posted
phil lebeau. josh, what do you make of tesla the recent action and performance amid the nasdaq swoon and high-growth sell-off and valuation reset on higher interest rates down about 25% off the high. definitely gotten hit. technically in a bear market, but not at bad as other growth year names >> i never thought i would speak of tesla in the context of, it being the "stacy trade," in any universe that existing, but look at tesla versus rivian, versus lucid. tell me when you feel more comfortable in right now interesting about tesla, it has a reputation of being way more volatile than it actually is especially after earnings. last time it reported two, three numbers for 2021, ended up that that next day plus 4% and change time before that, minus 1.5% and quarter before that, minus 3.8% it really has not had an
outsized reaction to earnings historically at least not in recent memory. and i think that's probably part of what it means to mature as a company, and maybe to get even a little deader at playing the game with analysts, better, as elon musk keeps doing that i don't know this is necessarily fireworks. stock only up 8% over the arrest has year given up a lot of the fourth quarter gain, but i think the faithful are probably not deterred by that, and hanging in to every word that will be said later today. >> mike, would tesla investors be in anyway worried about what happened to netflix this quarter? or in different kind of camps, those two stocks >> different in terms of stage of maturity. netflix, big reaction was, wow, this company may have ventured a much more mature phase than priced for tesla, always about kind of spin me another dream for tomorrow.
because we're still early in the process of this revolution that's going to probably happen. yeah it's not volatile in response to earnings because it goes from 1,200 to 900 for no reason what the overall market is doing. earn $10 a share this year roughly. 100 times earnings 100 times earnings, 90 doesn't matter show me you're moving in the right direction of the big dream you've placed 0 ut in front of us. >> two minutes to go in the trading day. s&p 500 up a little more than 2% just after the fed statement given it all up. now down about .02 of 1% what do you see of market internals into the close >> pronounced turn for the negative side in terms of the volume split in the new york stock exchange it was pretty much 3-1 positive before now closer to 2-1 to the negative side. a cyclical sector hit on the
perceived hawkishness out of jay powell traditional playbook, by the way. cyclicals the one getting mhurt in a tighti ening cycle. look at gold excited about it in the last week short-term uptrend people thought maybe break out here again, no not happening now. real rates a lot less negative now. we'll see how the chart fares. swatted down to break out above 1875 volatility index all over the place. down three points from yesterday's close and now in the 30 range so still up there. kind of agitated but nothing crazy on a day-to-day basis. we'll see if that can bleed well as we clear the fed, will? >> just 40 seconds left. basically flat now in the s&p 500. having been higher by 96 points, lower by 52 points do you bein about 100 points or so on the
dow. and nasdaq essentially -- you see there from intraday chart well off theslightly off the lows a key point to make, sounds like the -- so often this week, yet we are -- and that's the action. two sectors end in the green real estate materials and communications services at bottom of the pile yields moving quite significantly higher the fed meeting as well. >> nasdaq managing to eke out a little bit of a gain less than three points at the close. welcome back to "closing bell. coming up this hour, much more on this volatile market joined by mohamed el-erian and galaxy digital ceo. plus, investors waiting for a
huge hour of earn beings from tesla, intel, las vegas fans and levi strauss all the numbers plus instant analysis straight up first up on the close, josh brown with us, liz ann from charles schwab joins the conversation what's the fed take away for you as relates to the market and the fact we lost a rally yields and dollar really spike up after fed chair jay powell spoke? >> you know, the statement did not bring a lot of surprises and couldn't be deaned it more or less hawkish than expected but at the press conference went on i think the tape was he sounded a bit more hawkish i think one of the most important subliminal messages which he didn't address directly today, but he has in the past is, this is really important for those fed watchers or market watchers that still very much believe in a fed put or a powell put is you have to differentiate
between financial market volatility and financial systems stability. in the case of 2018, did the pivot, back tracked, caused stabilization in the market, we had a very, very different backdrop at that time. also because of the view that the financial market volatility was bringing with it potential for financial system instability. financial market volatility in and of itself is not going to be a trigger for the fed to back down, and i think that's an important overarching message we need to heed >> just want to jump in and do some headline numbers on intel a couple of percent, and quarter just passed, with a beat non-gap 19.5 billion, forecasted for 18.3 eps, 109 per share forecast, 91 cents the guide, though, for the quarter had a little disappointing. 18 billion, $18.3 billion. forecast with $17.6 billion.
eps a little soft, non-gap eps guide. 80 cents per share expectation was for 86 per share. i need to find the full-year guide as well, but just sliding a bit there and that guide is disappointing even though the quarter itself was a nice little beat there. >> and looks like we're give up the year to date gains for intel. small. down 3.3% after hours, mike. intel outperformer on this idea it's a value play, and has maybe some catch-up to do. didn't surge as much at the other semiconductors last year what do the numbers tell you >> basically within sectors there has ban skew towards value and less crowded stocks. intel certainly would qualify within semis as that exiting 2021 obviously moderating first quarter explains the initial reaction as i said it's not a stock that's really
traced for much growth right? talking about a low teens forward pe multiple and 2.5% dividend yield the company has been trying to make the case it's going to have huge multiyear investments in domestic chip capability to become a national champion and use political winds to its favor and all about i guess progress in that direction without losing much in the way of market share along the way. >> let's get to jon fortt for more on the numbers. shopping around a lot? >> i expect perhaps even more here said to pay attention to this gross margin number, and in the guide it's 52%, which is, i mean, again, we were last quarter at 53-ish percent. pat gelsinger said last margin stay comfortably above 52. some might of hoped for more than that. we still don't have the color here on product launches like
the sapphire rapid searver hip what happens with the graphic chip and more color around capex in particular. if you're an investor you want to see the turnaround plan is on schedule to some degree. like to see the products aren't slipping further explanation for these gross margin numbers, still within the range of what intel projected. so we'll see what we get on the call, but perhaps as with microsoft last night, learning don't take the first move as necessarily the only move. >> and jon, thanks so much for that josh brown, what's your take on the broader estimated chip space at the moment and the pullback we see i mean, less of a pullback, of course in a cheaper stock like intel and some of the other names but what's your take >> i think within 70 is the place to be still, in the capital equipment side like, even on a day like today
where most of the nasdaq gave up its gains, look what's in the top 50 of s&p 500 performers today? paradigms in there you've got kla in there. like, to me, that space makes the most sense because i think we're starting to ponder a semi cycle not really a cycle anymore. just a reality of let's say 4% of an automobile ten years ago used to be chips, and now 20% of cost is going to chips, and we're just in this secular moment so the chip equipment space will be in demand almost no matter what that's the way i prefer to play it the other thing is, different strokes for different folks. people that look at intel, say, okay 2.6% yield a little valuation low. not a lot of faith these guys can do anything right. that's my type of stock. makes sense to me. it's not what i'd do, nvidia in a 30% bydown
how can you buy intel? that's what i do >> josh, i got to get to tesla numbers. they are out stock down 5% after hours. phil lebeau has the numbers. >> a beat on the top and bottom line for tech. key numbers here first of all, eps, 254 for the quarter and fourth quarter, expecting 236. revenue much better than expected 17.72 billion dollars expecting 16.57 billion dollars. just starting to dive into the numbers within the numbers but the one that's going to get a lot of attention, automotive gross margins, ex government credits 29.2%'s number we're seeing now tesla numbers. beat on the top and bottom line, but real fireworks, guys, comes during the conference all at 5:30 if elon musk is on what does he say about the company's product road map what we're focused on.
back to you. >> phil, thank you. stock down 4% after hours, mike seems like a miss on the margin point. what else stands out >> yeah. i mean, i suppose so i'm not sure that this stock was priced in such tight tolerances to the market expectations if that's what's really going on here feels it wasn't a blowout. we already no the volume and unit sales from tesla before we got the report it's all about the little numbers within i really think this is one you want to wait and the hear what they have to say, ifs really sort of wows the crowd because, again, it's mostly about the much more distant future and exactly how tesla's going to propose to be a part of that as opposed to what happened, you know, september and into december. >> and liz ann, interested if you sense your client changing sentiment changing significantly over the course of the year so far and back end of last year? >> really depends on what
version or what cohort of clients. much like many other firms and platforms, we've soon a significant influx in newer investors, younger investors a bit more trading oriented, and the extent you can sort of collectively gauge the psyche there, that's where i think the pressure feels a bit more acute, and what we have found in the recent period of time, and in general, find during periods of heightened volatility or weakness in the stock market our clients who take a very disciplined process. they have a long-term plan strategic asset allocation in advised approach with rebalancing and diversifications a core component of those disciplines. they can do, be a bit more resilient and don't tend to get as rattled through periods like this, and so i think we're seeing a bit of that in the past month or so. >> what's your advice to them,
liz ann, on navigating all the volatility and changing dynamic at the fed, which we started with >> yeah. i actually -- let me lead into that the answer to that question, actually, i want to tie back into something josh talked about in your lead-in to the close, which rightly so was the relatively benign drawdown that was associated with an index like the s&p last year and he's right. had you a max drawdown at the index level of 5.2% concentrated in that september period of time, but that masked what was actually going on under the surface last year. 94% of the s&p at some point last year had a full 10% drawdown in fact, the average maximum drawdown across all 500 stocks last year was 19%. i don't need to remind people that's bear market territory by the way, for the nasdaq, average maximum drawndown, 43%
seeing more index level this year you've had rotational stealth bear market and i think that's likely to continue that suggests investors should, number one, be diversified said focus on factors mon that are sectors or style indexes, with an umbrella of quality. i think we're way past the low quality phase we saw in the beginning part of last year, and if you can, maybe consider moving from calendar-based rebalances to volatility or port follow yore-based rebalancing. give yourself more opportunity to add into weakness and trim into strength. and trying two disciplines with nuances. >> liz ann and josh, thanks for joining us today appreciate it. >> good to see you we're just getting started here on the second hour of "closing bell. tesla shares under pressure, we just showed you, despite earnings beat down about 4.5%. up next, reaction from an analyst with a buy rating on the
stock and find out what he wants to hear on the conference call, and mohamed el-erian, whether he thinks the worst is now behind wall street. we're back in two. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description.
tesla just out with fourth quarter results. shares lower bring in a buy rating on the tesla stock. $1,040 price target and cnbc tech reporter all over the tesla story. your first impression on the stock here doesn't look too problematic in headline numbers but stock down 4% after hours does it say more what we're getting from tesla or is it the broader market >> i wouldn't read much into that look at tesla, outperformed a lot of other ev stocks part of that higher volume numbers. kind of got what we were expecting coming in. you got a bead on the auto gm x
credits, but not a huge beat i think the more important thing is going to be, what they say and talk about with respect to texas and berlin, and how that's going to factor in so i continue to remain positive on this name, and i think that, you know, it willprobably be volatile. >> tesla saying in the release, laura, factories running below capacity for several quarters and supply chain becomes main limiting factor likely to continue through 2022. what else stands out to you and what do you want to know from the call >> issues, just acknowledgement those remain challenging in 2022 might be a slight damper on trading now. also blurry with guidance. you know, follow model in texas and not specific yet maybe get more on the call a lot of excitement about cyber
trucks and experimental metal pick-ups, and one thing that stood out to me maybe not at sexy as veebl tech and cyber and all that is just what kind of, you know, how are stores and service centers keeping pace with demand? we see vehicles and deliveries, pretty high. very high, but then store and service centers are only increasing 25% year over year. super truckers, too. especially if they plan to move ahead with ambitions with elon musk brought up in the past open up super-chargers, other electric vehicles around the world. the super-charging network increased 36% year over year, and shareholders expect, and wonder how that impacts customers longer term? they want to all maintain exclusive charging access and want to have white glove service, but seems too good than in recent years.
>> jed what did you make to the reaction to netflix's quarter and the risk that tesla could lose its halo as relates to avoiding gravity when it comes to earnings multiple maybe not this quarter but at some point in the next few quarters >> definitely see a risk-off trade. look at it numbers are probably low and have to come up across the board with respect to volumes, because you're going to have texas, berlin and those have to be factored in, and not all of the consensus numbers have that in there. we think that energy's probably low and will have to come up but you're going to see the risk off, which means some analysts will, you know, probably take cover from a lower multiple on higher numbers so i think you're going to continue to see, know, volatility in this name, and a
lot of different opinions. i still come back to the fact that we believe that what's setting up here is left on the auto side, less, and how they use auto in the capacity from the 4680, which you'll see in texas to get into the energy storage market and to ramp that. which, you know, is basically non-existed in most estimates but i think that's where you're going to see the narrative start to shift to talk about more of an energy story in '22, and less of the comps in auto companies. >> jed, laura, thanks for joining us good to see you. >> thank you and session lows, now only down 2%. dow and s&p closing in the red nasdaq barely positive this on the back of fed chair powell hinting interest rate hikes could come soon at march
fir increase since december 2018 and joining me, mohamed el-erian great to see you before we get to what jay powell said or didn't say, did this week's market performance make you think that that dip sentiment is still very much alive and well and today did the reverse, your view on that as well. >> told me two things. one is positivity is here and will stay. three reasons for that in growing importance, one is a more fluid economic outlook. two is geopolitical tension, but most importantly, the markets recognize that the liquidity regime is changing, but they're not clear on how it's changing so that's going to lead to a lot of volatility. two, the second thing he told us is, yes, it is still there, but not overwhelming like it used to be so we're getting bigger swings,
and lasting for longer i suspect that's what we're going to see for a while. >> in terms of the market reaction to jay powell today, i guess you got a clear, a clear glimpse they would like him to be more dovish, if possible, but he's not probably going to deliver that in the couple of meetings ahead >> it was fascinating. so, you know, as you know, there was hardly any reaction to the announcement the announcement was as expected and we were holding on for the gains, and yields were very well behaved. in the press conference that was the problem. two things played out in the press conference one is, his references to inflation. i kept writing them down inflation is well above our goals. problems have been larger and longer lasting than anticipated. price increases now spread to border range so his capitalization of
inflation massively different than the transitory, something the market noted, and then secondly, what you saw many of the curves do in fixed income. the market started pricing in more rate increases than before. and you ended up with yields up 13 to 40 basis points. it's really interesting, the press conference now, does that mean the market wants him to be more dovish or the market wants to create a clarity as to what's coming? i suspect it's the latter and i suspect the fed missed a golden opportunity to catch up with realities on the ground. instead only further behind. >> still feels like, mohamed, a market that want the fed to be dovish, too, and that this market is so sensitive to every headline as relates to the balance sheet or just any kind of stimulus coming down, or
rates going up what does that say about the market space in the recovery and the economy to stand on its own feet without the $9 trillion dollar-plus fed balance sheet and all the stimulus out there >> it's not about the economy. i don't think many people think that the $9 trillion balance fee has fundamentally helped the economy. fiscal policy has. monetary policy has helped financial assets. no doubt as someone elser erarlr on your show, i think david, the fed hook now, the strike is much further away than the marketplace had earlier. i think this is about the fed put. this is about a change in the liquidity paradigm and all that relates to inflation. that's what has changed in a major way, sara, and what the market has got to adjust to. that inflation will no longer allow the fed to be our best friend forever. >> mohamed, talking just that
the u.s. equity market, are there pockets, area of it, that are very attractive after this recent ullback, or is it a cas of everything's going to kind of continue to move together and really what we're talking about here is overall rich sentiment and where it settles down? >> so i think things will continue to move together to a large degree look at monday's numbers record volumes etfs were 40 percent of volumes. when you is something that's 40% of the volume that are baskets of stocks, not individual stacks, you get high correlation. that high correlation actually creates significant opportunities. because the stocks that are felt in the etf are not all that similar. yes, they're going to be a lot of opportunities that arise, but we need to get through this adjustment to the new liquidity paradigm and you will, and the economy is strong enough to navigate it. and there will be lots of opportunities.
>> finally, mohamed, 23 mentions of the balance sheet in the news conference today one of the words i was watching out for. can you just explain why the market's so sensitive to this and what we should be watching in the coming meetings powell said no decision made on this front but what shrink ap looks like and what's going to matter most for investors? >> make it very simple, sara you are buying something want someone to buy after you. why? they validate your purchase, put the price up of the asset and liquidity in case you change your mind. if i tell you the person behind you is no longer buying but selling, want to know what that person is going to sell. otherwise, you start having a bigger risk attached when you value what you buy it is significant and not surprising that the market really is focusing on this
balance sheet issue, because they want to know how the balance sheet's going to contract >> so if you have cash right now, where's the best place to put it >> so i have cash right now i'd wait a little. i think this continues and then go in, buy stocks with pricing power. because i do not this that inflation is going to go away that rapidly still talking inflation in six months's of time and the market hasn't fully comprehended drivers of inflation and importantly it really matters how inflans comeflation comes d the year. >> and mohamed, great to have you here on a fed day. appreciate t. thank you. appreciate t. thank you. still ahead, galaxy digita they're banking, with bank of america. his girlfriend just caught the bouquet, so he's checking in on that ring fund. ceo mikenovagratz and whether ceo mikenovagratz and whether bitcoin hit a bottom.
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guidance for the company, q1 revenue guidance falls in line with what the estimate were, and the same thing talking about the full year versus q1. full year guidance $1.1 billion to $1.2 billion. yet the stock is down 17% right now. though only thing we could see now at the moment parsing through the information is q1 net income guidance came in range of 25 and 30 million dollars based wa we see on recitative, $30 million. a discrepancy talking q1 net guidance same thing with full year net guidance 130 million to 150 million, that's the discrepancy there q1 net income guidance as well as full year net incomes guidance back to you guys. >> thanks so much. time now for a cnbc update
news update. >> news and weather from the news what's happening wicked nor'easter churning along. early forecasts, get this. new york city could get a couple of inches to say 20 inches of snow friday night into saturday. we expect to have a better idea tomorrow this one's on the move supreme court justice stephen breyer is retiring nbc news pete williams brokes the news he's planning to stick around until the senate kerms a replacement. 83, justice breyer oldest on the cold president biden wouldn't comment. on the campaign trail promised to name the first black woman to the court if a spot opened up. the united states formally responded now to russia's demands as it amasses more than 100,000 troops on the border with ukraine russia's ambassador personally delivered written responses to
moscow today secretary of state tony blinken said the u.s. laid out a serious diplomatic path forward but that nato remains an open-door policy for countries to join the alliance tonight, we are on the border between russia and ukraine as tensions skyrocket. plus a former clerk for justice breyer weighs in on possible replacements on the news right after jim cramer 7:00 eastern cnbc. sara, back to you. >> all right, thanks, shep smith. and a rough start to the year, bitcoin. lowest level hit since july. joining us to talk where the crypto market can go galaxy ceo mike novogratz looked like a strong day then lost gains during the fed chair's news conference. jay powell not so much a friend to bitcoin lately. what your takeaway about how it's been acting
>> listen, the big picture is for the last few years we've had both the fed and treasury providing a lot of support for all asset prices and managed to, call them a global asset bubble, and now you've got a very hawkish debt powell could not have been more direct today we've got no real hope that biden's going to show up with anymore silver bullets right? that gun is empty. now you have headwinds to asset prices we're going through a big re-rating. you see it in lots of growth equity stocks. seen it in crypto. good news if there's a silver lining, crypto already down 50% to 70% from the highs depending on the coin. a lot of the beatdown has happened and seeing bitcoin trading better down here in the 33 to 37 zone. i think it's going to about tough year for assets. right? listen, the stock market could have been a lot worse today. nasdaq finished roughly flat
s&p down small with, you know, interest rates, front end down 18 basis points. there's been a lot of fear in the first three year weeks of the year a lot of selling bear markets are hard to trade big squeezes and they sell off again. i think we'll have a lot of indejegs for the next three, four months in both equity markets and a lot in crypto markets. >> in crypto, the difference, how do you know whether we're end of a beatdown or what the price of bitcoin should be in this environment at least in stocks you can look at valuations and cash flows, and earnings, see when it's gotting really cheap >> that's why i think you've seen the bigger falls in things like growth equity multiples are so high. the guessing only valuation. tesla, right tesla $900 billion company maybe. they make great cars
multiples are insanethinking about it in classic terms. takes a while. buyers coming in down in florida for the super bowl of allocators, right? so many conferences down here. it's shocking how many people have interest in crypto. how many meetings our team is having most of the institutional allocators are just starting in their journey. i feel pretty strong bids both in the bitcoin complex and web 3 complex, money into venture funds and that money flowing into the market. >> mike, interesting the way you compared the moves to higher priced equities. interesting chart over the last few years showing the correlation between the arc etf and bitcoin. another one showing similar correlations with the nasdaq 100, although a little less pronounced understandable why those correlation wos exist over the last couple of years if we were to predict the future over the next decade, do you think those correlations would separate, or not >> yeah.
i do i do do a degree. i would separate bitcoin from the rest of crypto bitcoin really being a great hedge, you know, versus the demacement of money. maybe chairman powell and janet yellen can take the economy, slow it down, not too much have inflation come down, not too much and have the deficit rollover most likely we'll have to inflate our way out of this debt 135% debt to gdp in america. that's really hard to get out of over time i think bitcoin really, you know, shows its mettle it's supposed to sell off when the fed gets much more hawkish and it did right? fed got hawkish in december. it accelerated sell of crypto. people said, okay. maybe act like real central bankers. it's a complicated set of, of problems right now if they raise too much, they
shut the economy a huge debt service all of a sudden so how they're going to manage this, interesting to see right? first move was this kind of excessive speculation that we had in all assets. right? from watches to baseball cards, to, know, gamestopto tesla to, and to crypto. a lot of that kind of gambling comes off out of the market. and now you're starting to see kind of relonger-term investors looking where they think they want to take their shot. >> so my question to you is, what you're doing, mike? are you adding you have an enormous bitcoin position and crypto position, or are you shorting bonds because i know you've also wanted to do that for a while >> we have been shorting fixed income, shorting equities. i think this is the year you sell the rally, don't buy the dip. we trimmed some crypto positions. listen, we're a crypto company we have crypto assets all over our firm
we hedged the best we can. i think rates were a great hedge. saying that the last nine months for a while sounded like chicken little and finally came home to roost and had a major sell-off i think rates can continue to fall right? ten years look like it could go to 2.5% at one toint to me this we're. what are they? 185 or something now more room there. stocks -- stocks might squeeze into the beginning of the next month. right? got big month-end flows that come big monday, tuesday, could be positive days in the stock market but, know, three, four, five percent up a going to hit a wall of selling again that's our strategy in lots of way. bet on the good cryptos, trade some around and continue to hedge dynamically. >> just quickly, mike. last week tweeting, for example, ethereum, 2500, 2600
briefly broke below that this week obviously found some stability. did we find a shirt-term bottom in the bigger market cap crypto currencies or will they come back if the equity market comes back >> listen, if the nasdaq goes down 20% in the next month, crypto's going to find some challenges, but if the nasdaq goethe douse slowly or holds itself, those are pretty good bottoms for the short run. could be bottoms, you never really know. right? bitcoin had a 50% sell-off almost to the penny and has, you know, run into good buying down there. so we'll see hard to tell in this kind of volatility one thing i stress is we're going through a paradigm change. the last two years buy the dip in everything. now this is going to be a seller rally world. most traders aren't used to that most portfolio managers aren't used to that
it means you can have big short squeezes that just run out of gas. >> uh-huh. mike, greatto see you. thanks for joining us. >> thank you mike santoli takes a closer look at home belder stock valuations after a big decline to start the year. as he wed to break another check or tesla and intel both down a couple of percent. off after-hour lows. we'll be right back.
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get a great deal for your business with the ready. set. save. sale today. comcast business. powering possibilities. and on levi strauss. courtney reagan has it. >> hi there, will. levis reporting fourth quarter november 28th, not including month of december. putting up earnings in line with analyst estimates. street looking for 40 cents adjusted revenue 1.685 billion. street looking for 1.687 billion. shares high perp company giving a full year guidance for the full year to come here again, pretty much in line with what the street had been looking for for both earnings and revenue with the range they are providing. levi says direct to consumer
revenues grew 25%. the store divided into segments grew 28% net revenues for the ecommerce up 22% global ho wholesale grew 20% this does not include month of december levis says net revenue benefited from black friday and acquisition of beyond yoga offset supply chain restraint. hear more about it on the call later. shares higher by 3%. and when jean styles changed, courtney. people having to switch them out. levi 3% run-up after hours. up next, much more reaction to intel's earnings. and talk to an analyst what he wants to hear during the
call the stock came ban after-hour session. counting down to apple's earnings released tomorrow after the bill key numbers to watch out for and a look at heotr big names on deck when "closing bell" comes back. trading isn't just a hobby. it's your future. so you don't lose sight of the big picture, even when you're focused on what's happening right now. and thinkorswim® is right there with you.
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welcome back intel shares falling after reported earnings, although coming back a little after the initial drop down now less than 1% after beating top and bottom line in the quarter just past. joining us, from bernstein research great to see you initial take on numbers? >> you bet it wasn't bad, but it wasn't great either and probably explained some activity we're seeing in the aftermarket. the quarter itself quite good. 18.3, a buck 9 in earning. 90 cents a nice solid beat on the quarter. revenue outlook okay guiding 18.3 500 million above the street 80 cents, 6 cents below. gross margin outlook quite weak. 52%. a point below the street implied opex guide quite a bit higher they are spending money.
also pushed the annual guide usually given an annual guide. pushing out to analyst day a lot of uncertainty about that analyst day and what it might tell us for the long-term model increasing uncertainty and importance of that day in a few weeks and that explains what's going on not awful look give inwhat we've seen in the last several quarters frankly pt no a super report either. >> what's the most important -- m >> so what's it going to take? go ahead >> sorry what was the question? >> sorry we crossed wire there's. what are you listening for on the analyst call >> yeah. love to know a little more in terms what's driving the gross margin guidance. is that, like, peak of the trough for the year? i don't know how much they'll give us. might have to wait for analyst day. and also on the segments, data
center and client pcs reasonably strong love to know how that's carrying through in q1. most important, margins, investments, capex intel as an investment is not about any given quarter. the company's embarking on a multiyear transition that is going to require tremendous amounts of investments and frankly taking on a lot of risk. so investors want to get some idea what the transition economics look like and probably won't find that out until the analyst meeting. any preparation to that, would be good. >> i was go to ask what's it going to take? a new ceo making moves, promises, trying to turn it around amid a strong time for the industry right? chip sales boom. what would it take to convince you? i think you're still under perform on the stock >> we -- you have to remember, like, the issues that intel is
having, didn't just develop in a quarter. bidding building for ten years the ceo to his credit recognizes that and if you listen to -- getting rid of the blow up the model to try to save it. massive amounts of capex. of fr capex, it's not something to fix rapidly. it's going to take a multi-year process to fix it. we're just embarking on the beginnings of that it is no guarantee it will work. a lot of wood to chop for anyone to have conviction one way or another >> thank you for your first take on those numbers, we appreciate it >> you bet. >> the home builders have been off to a rocky start in 2022 up next mike heads to the feilhaber deep dive what is driving it lower. and -- check out shares of tesla
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mike for a closer look after that group. certainly an area of the economy that's going to feel higher rates. >> exactly and the group was down 3%. pretty classic they go down when rates go up. you obviously have some tightening here. amazing run, five-years, even through covid. look at the big players, len are, dr horton, toll brothers, forward price earnings multiples right now down six, from above ten in the last year or so obviously market is saying looks profit and affordability looks good but no confidence that this can to continue. take a look how it played out before and after the housing bubble in the mid-2000s. you actually got these same stocks to the same lennvel
five or six times earnings in 2005-06 at the peak and valuations shot up because the stocks crashed faster than earnings went away so trippically cyclical stocks are treacherous but say the demand continues and maybe because affordability is better the cycle could go longer. that's where we are right now. >> the stock -- the earnings crashed faster >> no the stocks crashed faster and therefore valuations went up. >> that was 2007 -- >> you're right the earnings went away and stocks crashed alongside it. >> there we go >> good catch. >> thank you very much we are counting down to apple's big earningsept, u rorp next, what will we be watching when the numbers hit the tape and other key names on the docket of my workplace benefits.
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will continue to test the fed and this new-found hawkishness from fed chair jay powell it was quite a swing during the press conference and the fed chair took a lot of opportunities to talk about how inflation is rising faster and they're worried about it and they have to be vigilant when it comes to finding it see what the bond market does. >> yeah vigilant and flexible and humble, he kept saying, in other words, we have seven meetings in the next 49 weeks, that's ahead of us, so we'll keep the market with its guard up to some degree. on the other hand, the fed has been testing the market implicitly and have gathered to 9% level, today was lowest close since october even though
intra-day monday were lower. it still has a look of a bottom level. we'll see after earnings tomorrow. >> it hasn't pulled back like microsoft but also not the top line growth. >> very low growth, more about safety and predictablity, one quarter earnings shouldn't matter as much, we'll see if it does. >> that does it for "closing bell", we're out of time "fast money" starts now. live from the nasdaq market center over looking new york city's time square this is "fast money" i'm melissa lee tonight's trader lineup tim seymour and pete and -- tonight we're on a busy night of earnings, tesla, intel, las vegas fans on the move reactions coming your way. plus power pull back stocks giving up early gains and we break down the fall out. later retail revolution big bet on gains