at the impact of rising prices on retail hit hard today, housing and energy how you can protect your portfolio and the stocks to own in an inflationary environment like the one we're in right now. first, over to kelly and a check on the markets. >> thank you, tyler. hi, everybody. we are right near session lows the dow was briefly down below 1100 points and just off that level. the dow's gains in the past three sessions are now gone. it's 31,580. the s&p is below 4,000 in trading today. the nasdaq is down four -- almost 4.5% below 11,500 let's get right down to bob pisani who has more on what's driving these losses today, bob? >> it's essentially straight down for the s&p 500 slow, but steady descent straight down. i think what's most surprising to everyone is the reaction of the defensive names. consumer staples considered defensive stocks and everybody has to buy consumer staples, right? they'll be fine. walmart is considered a consumer staple and shocking some people to see campbell's soup among the biggest losers in the s&p 500. kraft heinz, all what you consider defensive and safe plays even as the economy slows down and apparently not so much and here's where it gets confusing is dollar tree is a consumer staple store or discretionary store. for our purposes, target and walmart are impacting everyone best buy, which is clearly a discretionary and autozone you have to fix your car, but you'd have to consider that a discretionary, too >> remember something about the housing business that was the first industry to downturn in the beginning of january. these stocks are down 25%, 28% including carrier global which is the air-conditioning company and we're seeing another leg down here today. what's the gainers this is curious to me because the gainerses have one thing in common, verizon, con ed, american electric and philip morris are all high dividend payers dividend and rg they all play yields, 3%, 4%, 4.5% and there might be interest in buying high-dividend yields and as where we are in the s&p 500. remember the closing low last thursday it was 39.30, we were essentially sitting on the closing low and that was the 52-week low last week. that was an immediate reference point. i think, guys what we're seeing here the consumer staples are weak because walmart and target are telling us essentially that there is very big risk to earnings here from the consumer reacting to these high are prices and maybe adjusting their spending that's what we heard from the target ceo today, and i anticipate now they'll take out some of the estimates for some of these names today guys, back to you. >> thank you very much let's drill down further our next guest says we're seeing a perfect storm in the markets and p-e multiple compression and worries about a slowing revenue growth for more, let's bring in the always-cheery peter bookmar. that is a trifecta of trouble for equities multiple compression and revenues, perhaps, slowing and profit margins getting squeezed. >> hi, tyler >> well, those are the three drivers of equity prices at the end of the day and what the multiples will end up being and where earnings go and we know through rate hikes and quantitative tightening we see the compression that really started last year with the most expensive parts of the market we heard profit margin compression and we heard that this week and keep in mind that profit margin compression is coming off record highs and there is a lot more room, potentially on the down side on the revenue side now we're obviously worrying about the economic downturn and slowing rate of growth as we progress through the year particularly in certain parts of the economy. so that's what gets to this perfect storm of compressed multiple and have earnings at risk. >> i don't want to linger on it and make this the point of the conversation, but wouldn't one rather have profit margin compression when who fit margins were high than when they were low. in other words, i'm trying turn the argument inside out a little bit. >> well, the one challenge with that is you're trading at 17 times earnings right now even with this pullback in the market and that 17 times earnings estimate is embedded with record high profit margins. >> right >> so if you see a reduction in earnings estimates and earnings that are eventually realized at the same time you see this p-e multiple compression that's the toxic combination. >> peter, jeremy grant last hour when we spoke said he would recommend resource names and he recommended climate change plays and basically thinks that will be one area that does see huge top line growth in the decades, you can call it ahead. commodities can be very fickle over time and i know you've been a fan of this trade, as well >> can you give people some specific ideas are these names looking too crowded or pioneer said they think oil will be over $100 a barrel for a couple of years >> energy stocks, i still think have room to go. particularly the european stocks that are above the pre-covid levels and the group as a whole of the s&p 500, and that's twis as much as where it bottomed out and the ratio will go higher and i remain very bullish being and i think it is a safer place to be this environment. where you can buy it as pop posed to speculating on the actual price which i think it will go high irare what would you say about the broader -- there were 17 times on near record profit margins is a risk the multiple continues to compress, probably 15 or less with quantitative tightening and interest rates going up at the same time that earnings estimate, i expect to fall as the year progresses. >> in other words, the multiple has a couple of handles to drop and the earnings, and the denominator has fallen, as well? >> yes unfortunately. prices go down, earnings go down what sell-off does this sell-off remind you of? does it remind you of 2020 does it remind you of 2008-09? does it remind you like me a little more of 2000 where it began with a cascade in the internet names here you can say it was partly the meme name, partly the fashionable pandemic stay at home plays and what, and what can we learn, if anything? >> i agree with you 100% if you think about that time period, tech topped out in march 2000 >> correct. >> similar to the meme stocks topping out in february 2021 in 2000, the s&p 500 actually made a fresh high in september of 2000 even after the tech stocks started to implode similar to the s&p 500 hitting a record high just in january well after the frothy part of the market started to sell off so this reminds me very much of that timeframe >> so what does that imply for the future and imply for how investors can both protect t themselves and shuffle into sectors of the market where they can eke out a little gain. >> the cheaper, so-called value stocks i still think will be a much better place to be. while not necessarily will it immunize you from losses, there are low expectations and there are still a lot of p-e multiple handles to come off the high-flying stocks, the tech stocks, the areas of the market that everyone has loved over the past five-plus years and i'm more attractive to thinks that people care about and it's the same thing that happened in 2000 to 2002 where a lot of the value stuff actually stopped going dun. at the same time the tech stocks stopped going up >> peter, what do you think is the catalyst for the sudden return to the kind of capitulation moves we saw last week was it the comments from powell yesterday that seemed to indicate he would stick with their plans for tighteningand saw no reason yet to back off? >> i think so. i wouldn't be surprised if we do bounce to 4200-ish in the s&p, but what has really -- it's only beginning to get priced in is the economic impact of this inflation and higher interest rate world that we're in up until this point, it has been mostly on the p-e side that has seen this adjustment and it has barely been on the e-side which i think as i said earlier is to come >> all right, thanks peter, always good to see you, my friend. >> peter boockvar. >> our next guest says those moves can result in inflation that's too high or a contraction in the economy that's beyond what's desired and he's still finding opportunities. let's bring in dave smith, the chief investment officer with rockland trufst good to see you again. let's start with what you're telling investors right now. >> we're telling investors as we do, as uncomfortable as this period is, you always think long term i don't know if it will last another month, another six months, another year, but for our clients when we think five, ten years out this is an interesting entry point and i don't know if at then of the day mach a big deal as to whether or not you wait a week or a month before you start to invest and you need to remain invested. it's time in the market not timing the market that results in success, ultimate leet. >> what gives you the confidence that this won't be a period of chronic underperformance for stocks >> well, i guess at the end of the day we have some degree of confidence that the federal reserve will be able to manage their way to an okay outcome i think the fed has chaired what's not optimal and something dramatically bad >> if you think of underlying the quantitative easing and the quantitative tightening and we've only done this before, so it's calibrate, and to nail down the perfect resmooth landing for our system to prevail. sat at the same time we have companies that have the ability to manage through the environments and have some consistency and we can manage the cost side and ultimately grow their earnings streams at a reasonable clip. >> i wonder what you think of how consumer behavior is going play out over the next, say, six months we will hear from mastercard survey, and it will tell us that consumers are spending a lot and spending on experiences and their airline bookings are above 2019, pre-pandemic levels and other areas of expenditure are higher, as well. i wonder what is going to happen when consumers have that ultimate reckoning that they have on the one hand, declining wealth a lot of wealth has been destroyed here or transferred and increasing prices. that is the anti-wealth effect that is going to -- i can't imagine that it isn't going to catch up with and dampen consumer behavior as we move into the summer and fall >> tyler, you're spot on, and it is murky about what will happen here and a lot of data is looking and clearly, was there pent-up demand and we're seeing that in the statistics on travel on mastercard with transaction activity and so forth. what we peered through in some of the earnings we've seen this week, from some of the retailers and it seems to be the lower end consumers and the one who is most challenged here even in t.j. maxxs. >> as always. >> they're in the lower end demographics it's more challenging than their hiring demographics so there's a tale of two stories here and it's important to keep into context that yes, this has been a challenging start to the year, but we're coming off very strong years and the wealth effect is certainly a mental and psychological thing, but people, if they think back to where they were two or three years ago they're very much ahead of the game and are above long tomorrow averages and most people are still feeling good so long as this doesn't continue and persist. >> let's talk about two names that you would be recommending here. >> yeah. we're looking to try to pick from the rubble. meta, formerly known as facebook folks know it was hit pretty hard the first quarter was challenging for them in the way they were able to track their ad spend. they seem to be making some progresses on that and the stock in the meantime has come off what was sort of above market multiples down to levels below the market which is remarkable with a company like the growth rate was trading at higher multiples than the market and sometimes as high as 2x the market and we're interested in taking a closer look at investing and own our facebook meta platforms another one we're focused in are chubb, and they've been up for two or three weeks and high interest rates are generally speaking and particularly to banks and insurance companies, the difference between a bank and insurance company is if you get the economy wrong and there are challenge e ths, the banks have issues with the history that doesn't ensure chubb. you get the benefit of the interest rate rise without the risk of a substantial impact from the slower economic environment particularly through chubb who ends up their insured skew wealthier so less impacted by that >> your final one, we have to move along is t. rowe price. you like their conservative management, you like their cash flow and you like their dividend. >> yeah, and the multiple is incredible at 13.3%. maybe the earnings multiple will come down a bit and great long term holding so we're very bullish on t.rowe. >> thank you >> thank for having me. >> what may be causing much of the entire inflation story and oil and gasoline all taking a toll and they're averaging $4 a gallon in every state for the first time ever even in texas, brian. what's going on? >> even in texas their 4.54, and they're watching us and laughing at us and i saw th $6.50 in parts of l.a. prices very high and creeping up $5 bucks a gallon in the northeast. tyler, you know this you've been doing this a long time and this is the ultimate regressive tax and we all pay the same for a gallon of gasoline no matter hugh much we make or what car we drive, we'll pay about the same when we look at prices going up like this, the average driver easily about 50 gallons of gasoline on average. do the average and multiply that by two cars, a household, kids, et cetera and soccer practice gets more expensive. for those who can afford electric cars which are still incredibly expensive by most beings they're just driving right on by, but if you are going to the station, it is inflation nation. >> it is also inflation nation when you look at diesel prices whether you have a diesel car which typically get better per-mile, per-gallon mileage and the diesel costs are way off the roof and that affects the transportation sector dramatically >> 1981 our family briefly owned a peugeot diesel wagon and it lasted about six months. it's cleaner now if you're a trucker, tyler this is tough it's not the united states and the new york area. they were showing price of diesel around the new york area. in brewster, new york, long island city, i understand it's not representative of the country and it's a logistical challenge, but the price of diesel was $7.50 per gallon. if you back that out, just 42 gallons of fuel in a barrel of oil that would be the equivalent of $315 per-barrel oil it's not one to one. the price of gasoline is only half a price of a barrel of oil with marketing transport i'm just trying to make a point of how expensive it is and there were concerns about shortages and no doubt they have pricing power right now. oh, and by the way, tyler, you guys were talking about retail and margin compression everything in that walmart or target is probably trucked in. it probably came on a ship and it probably gotta a train at some point and that's why energy inflation is the macro story in many ways. >> brian, we're also seeing a lot of pressure across the transports today at last check they were down 7%. this hits them hard as a bellwether and just a supply chain story it's about the most frustrating thing that could be happening right now. >> it's brutal i mean -- and the trucking companies, i've got a good buddy of mine who runs a small trucking brokerage and he does the small loads and not hit quite as much and they'll find ways to charge it back the trucker and the trucking company will not hold the whole thing. it goes down the whole line. natural gas is not getting the attention it deserves. we were in london in november of last year trying to tell their inflation story. everything focuses on gasoline i get it because i see it every day. do not lose sight, please, of utility costs. natural gas over $8 and the utility bills, it will reset much higher and to make stuff. you need a lot of power to manufacture cars, solar panels and everything so the fossil fuel inflation story is going to hit a lot of other parts of even the esg story, guys and this may be the story and utility costs heading into the summer and with that in mind, s&p global dropped tesla from their esg index today and tesla's elon musk tweeting out, insane esg is an outrageous scam. musk back on the record this time going after esg good luck, america. >> thanks very much, brian sullivan our next guest says gas and diesel prices are headed even higher you're not surprised to hear that from what you just heard from brian he expects gas will approach $5 a gallon and diesel will average $6 a gallon. let's bring in bob mcanally. good to see you. did you hear anything in brian's report that you disagree with? >> no, not at all, and i feel the pain you know, these gasoline and diesel prices are enforcing the iron rule of economics that you can't consume what you are unable to produce or draw from inventory and import and the supply side is really stretched both in the crude oil market and the refining sectors and so i wish i had better news. i really did it's not a happy forecast, but these prices have to go higher because there is no sign yet of real demand capitulation, real demand declines and they will go higher as that happens, unfortunately. >> has there been any effect from the release of gasoline or supplies from the strategic petroleum reserves >> not really. one could say that the release of crude oil from the reserves made prices lower than they would have been otherwise, crowd, but the problem isn't so much crude anymore crude at $110, $113, the problem is shifting to the refining sector and the margin between the product price, diesel and gasoline and crude is $50 or $60 a barrel, what normally it is and it is that refining bottleneck which is now something that the xpr can't address well so no, it hasn't had a big effect and had it not been used and it's not the big deal, that's refining right now. >> bob, do we need a recession in order to balance the energy markets? >> i hate the word need, but you know what? not every recession began with an oil price spike, but every -- and i mean every oil price spike led to a recession they just are there at the scene of the crime and it continues to rise until it crushes consumption. you can get from '03 to '07 and '08 you can have rising energy prices with the economy and with the central banks drawing liquidity and geopolitical risk and i'm afraid it will not end well and possibly, let's hope a mild recession >> as brian pointed out there, not only does virtually everything that you buy out of a target or a walmart or a best buy or a train that uses diesel and an awful lot of the trucks themselves have petroleum in them is there any way that you see consumer product inflation declining in the near term >> it can't. not without a recession. >> diesel, we talk about gasoline and it's what we see and what we pump, but diesel is the economic fuel and the lifeblood of the economy and transportation and power in some cases and so forth so it really is embedded in economic activity and it filters through so many goods and services, so no. i'm afraid we'll have to march higher here. it will affect broader consumer price inflation. energy is the tail wagging the dog here >> bob mcnally, always good to see you, bob. >> thank you shares of target the results one reason the market is selling off deeply today they warn of unusually high costs that are eating into profits. courtney reagan is here. court? >> target and walmart results are key examples of the challenges that inflation infl