To strengthen names like amanda. It is a big day for earnings. Take a look at some of the biggest earnings winners. Vantec names like paypal, robin hood, sophia, surging double digits. Cvs is jumping, too, taking the drug source higher. There is moderna up up 70 leading the s p 500. Ahead, carlisle groups the David Rubenstein will join us with his thoughts on the market rally, the state of public equity, antiInflation Reduction Act. Lets get to this route it was talks surging even as a number of officials came out with a hawkish tone. Here is jim bullard, st. Louis president. We still have some ways to go to get to a restrictive monetary policy. I have argued that with the hotter Inflation Numbers in the spring, we should get to 3. 75 to 4 this year. San francisco fed president mary daly told reuters that if inflation keep soaring, a 75 point basis hike in september may be appropriate. 50 would be reasonable. She said this week that rate cuts in 2023 are not her modal outlook. Joining us now, chief Market Strategist tony flyer. Did the market not believe these fed officials that are coming out and trying to walk back . There is a little momentum that we have and people are remote more focused on that and maybe they became a little overly defensive around the low. Now we are up over 14 and they are ignoring issues out there. It is interesting that jim bullard said we are not restrictive. We are at 225. He wants to go to 3. 75 to 4 . I cant see how that is a great thing. There is that and the fact that we are starting to get a mismatch between when the market is pressing the fed and where the fed is saying. Is at a risky thing for he market . You will in the middle of the initial the initial fear is that what is the fed going to do and how they impact the economy . That was the first move lower. Now we are in okay its not as bad as the economy because it works with a live. Our call for the fall, once we look through the summer rally which i think we are pretty close, you actually get the fear of what is happening. Interest rates work with a lag. This is a pretty funny range. It takes three months to 18 months. Tires the spread of what economists think. Lets take the shortest, three months. We are discounting the first 25 basis point hikes. It looks more like the economy slowed down because of the fiscal cliff, the ending of extra Unemployment Benefits and other pandemic related fiscal stimulants. As we go to the end of the year, we will have to have the impact of those higher rates. Again, the whole premise here where i screwed up in 2020 was after the initial surge, we did a good job of identifying that. Where i made a mistake was i didnt get bullish right away. I thought the market would test the low. I ignored the fed had started easing. That is what is different. Not only is the fed not started easing, they have not announced they are buying corporate debt like they did to gain a changing decision on april ninth, they are telling you they are in a double rate from here. Your calling into the summer rally. I think we are really close. Tony, we are 14 off billows. That is where we should be after the oversold conditions where we were going into june. We hit the median plus a little bit of what upside you should expect. The short answer is yes. Again, the conditions they were not just the oversold conditions, it was that the economy was in recession. I disagree with that. It takes time for that to take place was 7 nominal growth, topper is still above 300. There are things that you look at and say they are down from peak but nowhere near recession levels. I think that is what we have to look out for at the end of the year is as you get that weaker data if those indicators come in close to a recession level of what is going to mean to the idea that we will have a soft landing. Why do you think and this point the market has not priced in a session or deeper economic slowdown . We know it happens in history when the fed hikes like this. 100 . Down over 30 for the nasdaq, yeah. It was pricing and some semblance of a recession but we are not there anymore. Because of how far down it would at how much he discounted it even if it was too early, but that now thats not the case. We are up 14 . I cant come on tv and say to you and the viewers we are discounting a recession because we are 14 higher. We will test that low in some way. It will be historically unique in my data. Because the fed hasnt started easy. That is the difference between now and 2020. I want to look to take definitive weakness versus changing this kind of strain. Where would you be . Would you go back to the defensive groups that worked well when the market was more worried about recession . Utilities in staples . Those types of places . Aggressive traits that people put on an anticipation of a summer rally or whatever you want to call it. I dont think you want to get super bearish, you want to neutralize. It is a do no harm in the situation. A month and a half ago were so long the expected rally just like right now it works so long. Its all wrapped around the fed. I guess we will see what happens we talked about the fed being in a box. Statistically it will be too hard to get to the level they want before the next meeting. The owners equivalent makes up such a high level of defeat. The thing that blows me away, its my entire career, the fed looks in the camera and says it is more representative of real inflation, not the cpi because of the significant overweight of owners equivalent rent. Somehow the fed let the narrative go to the cpi. With us said again, you cant statistically drop it to where they stated they want to be by the next fed meeting. In our view, to really turn the tape here, you need to fed not to say we will do 50 instead of 75, that generated a summer rally. You need them to say we will not raise rates anymore and if the data gets worse we will ease. That is what kick starts the next real sustainable the data, the sustainable bull market. Our inflation could be, wti is at the lowest level since february. We have to leave it there. Thank you very much. Have a great day. We have a news alert on the Inflation Reduction Act. Elon with the story. The Congressional Budget Office estimates the democrats the reconciliation package would reduce the deficit by 102 billion over the next decade. That number does not count the impact of enhanced irs tax enforcement, and 80 billion in that bill that would go toward collecting additional taxes. The cbo says that would generate another 204 billion in revenue over the decade. You add those together and you get 305 million in deficit reduction matching democrats estimates for the impact this bill would have on the deficit. Really keypoint for senator joe manchin as you know. The cbo saying 102 billion for deficit reduction, add in the tax enforcement piece, you get another 204 billion. They are looking at the death of deficit. They dont have estimates on what it would do for inflation. Democrats are saying the deficit reduction is one of the key reasons why inflation would go down over the longterm. There are differing estimates on that. Democrats are porting to that reduction as one of the reasons why inflation would come down, to. It doesnt start until year five. It doesnt help inflation right now as we have been talking about. Thank you. After the break, kkr out with a new warning saying a slowdown for high income spenders could be on the horizon. We will talk to the author about the market implications. We have an exclusive interview with David Rubenstein. Stocks surging at 450 points on the dial. Every sector is positive except for energy. You are watching closing bell on cnbc. Nurse mariyam sabo knows a moment this pure demands a lotion this pure. Gold bond pure moisture lotion 24hour hydration no parabens, dyes, or fragrances gold bond champion your skin in order for Small Businesses to thrive, they need to be smart. Efficient. Agile. And thats never been more important than it is right now. So for a limited time, comcast business is introducing Small Business savings. Call now to get powerful internet for just 39 dollars a month. With no contract. And a money back guarantee. All on the largest, fastest reliable network. From the company that powers more businesses than anyone else. Call and start saving today. Comcast business. Powering possibilities. While we are sensitive to the impact inflation and economic surges are having on consumers, it is critically important to understand we are not currently seeing any measurable reduction in customer spending or any evidence of customers treating down. That was Ceo Howard Schultz on last nights Earnings Call. Kkr is out with a new report raising red flags and spending writing, quote, we expect a material slowdown and personal consumption is the high income consumer slow spending over the next 12 months. Joining us is kkr head of Global Consumer and real estate macro. Welcome, paula. What are you saying that Howard Schultz is nothing . We are seeing a ton of different data sources that high income Consumer Spending is the last leg of the stool that is supporting u. S. Economic growth were we are noticing and why we expect the slowdown over the next 12 months is high and income Consumer Sentiment is below that of other consumer income cohorts. Is a really important flight that we track. Other thing we are looking at is personal disposable income is negative, down 4 yearover year. If you put those together, what we expect is over the next 12 months with equity market relatively that that Consumer Spending will slow. Response to Howard Schultz is, what is important is what we expect is tradeoffs between Consumer Spending categories. It is not that all sectors will fair the same. Given that we see high Interest Rates and low and real disposable income it is those durable goods categories where we expect to see material slowdown and spending. That is why it has been confusing to track what is going on with the consumer, even if you look at profit earnings from walmart or target. It is not like they are talking of demand falling off a cliff. They are talking shifts in prioritization and getting inventories wrong because of the sudden nature of the move. It is hard to tell what the underlying trend is. This is a complicated environment for investors. Not only do you have fight inflation and slowing growth when you you have impacts of covid which really shifted the way Consumers Behavior what about service . Where we have seen the biggest pockets of strength and earnings is travel hotels, casinos. No evidence of slowdown and we are not hearing it from those ceos. That is where we would expect to see continued strength. Services rebound on the back of covid is where pentup demand for travel and leisure is coming through in high income spending. We expect that to persist through the fall but then start the slowdown thereafter with continued equity market. Next year this all catches up or what . We continue to slow down until the recession subsides. Services will hold up. It will do better than goods. Next year we start to see some slowdown in services. What does that mean for investors when it comes to Retail Stocks . It has been winners and losers given the categories and the income groups at Different Companies have focused on. We are longterm investors. We are less focused on individual stocks today. The big things we are interested behind our personal care, vehicle maintenance, nesting related stocks or names and those are names that will benefit from the covid theme. Were more individual stay home longer. Furnishings or offices for the remote work or food at home. Those things continue to persist. It is an economy driven by Consumer Spending . Not recession yet what do you think . We expect the recession over the next 12 months. A mild recession at this point. What prevents us from thinking this is a gmc type severe recession is there is actually a lot to be excited about in terms of Balance Sheets that are still strong. The labor market is still very strong. Even though i am talking about a material slowdown, it is not that i expect a gmc type contraption. We dont have those levels. We dont at all. We are seeing debt to income ratios are back to precovid levels. What the signals is just a widening of the credit is consumers settling in to ramping up spending back to those levels. You are getting consumers dipping into savings and dipping into borrowing. It is changing. , for joining us with those inside. Paula Campbell Roberts from kkr to show you where we are on the market. Still holding onto nice gains. 1. 6 higher. We are not higher for the week. The nasdaq zooming because the three bestperforming groups are Consumer Discretionary informationtechnology communication services. The nasdaq is up 2. 6 . Citigroups u. S. Equity strategist scott kroner on todays rally and what to do with technology after the master expect rebound over the last month or so. The naaqsd 100 now up over the last month, 14 1 2 . We will be right back. Treasury yields have turned lower. Todays markets down poured focused on seasonality and the s p. How the s p 500 this year is tracking against a composite of cycles that show the tendencies of what the market might have been expected to do in 2022. Is is called the Ned Davis Research cycle composite i said at the beginning of the year is a broad sense of what not only the seasonal factors that the fouryear election cycle as well as the tenure decade cycle your heading into. Does that matter . History says this is of the year should look like. In blue, the year is tracking relatively well. I want to emphasize the magnitudes are very different. Actually got down to a 20 decline. Obviously the average of and down is much more muted than that on all of the cycle composite years. It does show you a june low would not be unusual in this scenario, as well as weakness in general and the first half of the year. A lot of electionyear stuff has to wait until after you at the election itself and the Fourth Quarter tends to be strong. It does show you a general tendency of what history says might be the way the winds are blowing. Especially if you think we have gone up the gym. That would mean a new high. There is a lot to assume that i wouldnt want to make those leaps. This is where that is out in front of us. Up next, cofounder David Rubenstein weighing in on the stick market rally and the outlook for a dealmaking in this environment. Dow is up more than 460. We will be right back. Oooh were firing up the chewy app. What do we want delivered every month. Hmm. Clumping litter . Resounding yes. Salmon pate, love that for me. And some of those catnip toys. Just choose the frequency. And ship it. We did it. I feel so accomplished. Now you can pet me. Ok thats enough youre literally so annoying. Just kidding love you. Great prices on everything pets want. Chewy. Do you have a Life Insurance policy you no longer need . Now you can sell your policy even a term policy for an immediate cash payment. We thought we had planned carefully for our retirement. But we quickly realized we needed a way to supplement our income. If you have 100,000 or more of Life Insurance, you may qualify to sell your policy. Dont cancel or let your policy lapse without finding out what its worth. Visit coventrydirect. Com to find out if your policy qualifies. Or call the number on your screen. Coventry direct, redefining insurance. Stocks in rally mode today on track to snapping a today losing streak. Our next guest says markets may be bumping for a while. Joining us is Carlyle Group cofounder David Rubenstein. Welcome to the show. Nice to see you. My pleasure to be here. You get a view across streams and sectors. Do you think we are in a recession . I dont see it yet. I dont think there is likely to be a recession in the immediate future. The fed has done a reasonably good job of catching up to the problem they have is not anticipating inflation being as high as it turned out to be. The markets are anticipating that the fed has got it under control as much as you reasonably can. Markets reflect the fact that the economy is not heading into a recession anytime soon. The bears would say that means there is still downside ahead because the market has to price in a recession at some point if we do get one. Do you agree . The markets are reflecting the fact that the fed has increased Interest Rates by enough to make people feel we are not likely to go into a recession because people are recognizing the feds actions are working and inflation is probably coming down and people are not going to take actions that reflect the recession as imminent. What do you think is ahead . Now there is a debate about whether we are closer to the end, which is what the market suggests. All the fed speakers at the last 48 hours or so seeing quite the opposite. My guess would be that the federal increased Interest Rates you see by 50 basis points and probably in the two subsequent meetings this year 25 basis points apiece. It is unlikely that he will see increases next year. The market is telling us they dont expect to see increases early next year. The fed strategy seems to be working reasonably well. Admits that they missed the ball a bit on inflation early on when it was not transitory. It was more significant than they thought. To use the inflation coming down quickly based on what you see from your companies . Inflation doesnt come down very quickly. Inflation gets embedded into a system. It takes a while to get it down. Will work for the government if you chairman of the fed that when you get inflation into a system it takes longer to get it into the system, get it out of the system and getting it into the system. Right now