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tv   Closing Bell  CNBC  April 1, 2022 3:00pm-4:00pm EDT

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back in november, we did a workforce executive council summit you do a lot of these cnbc events professor blum was actually on the panel i did speaking about how hybrid work is here to stay. >> all right domchu, have a great weekend hit the links, man >> we'll be back here every day next week. thanks for watching "power lunch. >> "closing bell" right now. >> stocks have mostly turned higher here on this first day of the second quarter the most important hour of trading starts now welcome to "closing bell," everyone happy friday i'm sara eisen here's where we stand this hour. s&p 500 looks like it wants to go positive. most of the seconders are stronger in the s&p. real estate leads the charge along with materials, industrials, tech, and financials are lower, and so is the nasdaq the dow is up almost 100 points. about 85 points or so. we're still a little weaker on the week higher for the nasdaq. here are my top takeaways on some of the biggest stories. transports are hit hard, down 4% it's the latest group to signal
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economic weakness. names like jb hunt, norfolk southern, and united trains, planes, truck. they're coming off a great march, beating the market. that's an optimistic tell, but the sharp sell-off today could be a signal the mood is changing as signs mount about slowdown and even recession >> amazon workers, they vote to unionize the first successful union effort after a series of failed attempts we're talking about a warehouse in statd staten island will it continue well, watch the job opening data for a clue we just learned there's nearly a record 11.3 million job openings in this country. as long as that number is elevated, companies need workers and they have the upper hand >> ark innovation fund run by cathie wood, after a rough quarter, it fell 30%, morning star in a brutal takedown, ripping into wood for her, quote, perilous proomp in hopes of a repeat of 2020. the analysts point out she
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slashed the fund's number of stocks from 60 to 35 which has greater stock specific and liquidity risk and no risk management personnel let's get to our top story, closing out the first negative quarter since 2020, and the two-year/ten-year treasury yield inverted for the first time since 2018 that's typically a recession signal april a bullish month for stocks can we expect the same after a downbeat start to year let's bring in laurie and paul laurie, interesting call out of you today that you're downgrading energy, which of course, led the market in the early part of the year why are you doing that >> so look, sara, we have been overweight this sector since january of 2021. and we reiterated that call coming into 2022 look, we still think you have very strong earnings momentum. you have good valuations but we think there's a broader issue here, which is that we think this market is ready to start shifting back towards growth and away from value in
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terms of overall market leadership the reasons for that are pretty simple number one, value tends to work ahead of fed rate hikes but growth leadership tends to take back over after the fed lifts off. also, when you're trending towards a slower economy, we do typically see the market transition away from value leadership back to growth leadership value really only works in a hot economy. so we did a survey of our analysts and quite simply, you found while they're still in the constructive camp on energy, their enthusiasm has come down meanwhile, our financials analysts are still pretty constructive we wanted to take valuee exposure, and value was the place to do it >> the only thing is treasury yields tend to march higher. the curve is inverted and that's bearish, but does tech work in that environment haven't we learned that makes tech struggle? >> i think that tech had an issue from higher interest rates. had an interest fed liftoff, but we think a lot of the valuation
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froth from the tech sector has been pulled out. we see that on a few different studies. if you look at tech relative to the broader s&p 500, we're below the average in terms of the relative multiple, and we also looked at the most expensive stocks in the market relative to the cheapest stocks. most of the highly expensive stocks have been tech. but that multiple is back to pre-pandemic levels. a lot of the froth in tech is out. and also, when you look at the pe contraction that happened around the march lows, it totaled about 20%. that's pretty much in line with some of the worst fed tightening cycles and the contraction we have seen in the past, so we think the fed is probably in at the market level and we think that tech froth has been pulled out. >> do you agree, paul, with laurie's call that the market goes higher but the leadership basically reverses from energy to tech? >> yeah, i think laurie brings up a lot of great points there at this point, who doesn't -- hasn't heard that higher interest rates are bad for growth and tech?
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it's been well documented and well discussed that's not a good backdrop two things first of all, everybody -- what everybody is talking about, it tends to be priced in. secondly, if you look back historically over the last 20 years, just look at the long term treasury etf, when you see 10% decline in that etf, the forward returns, tech doesn't typically underperform when you have treasuries falling and long term interest rates rising so the history hasn't necessarily played that out. and going forward, tech has tended to do, you know, better once you have gotten that initial shock and decline in long term treasury i think laurie brings up a very good point there that tech is, has been sold off sharply here, and that usually when that happens, it tends to get a rebound when everybody is leaning against something and in such a strong fashion. >> so laurie, if tech works and
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financials work, which are your two best picks, is this a call that we're going to see slower growth but not an outright recession despite what the bond market is doing? >> that's the camp we're in. our economist recently revised his gdp forecast for 2022 from about 3.5% down to 2.5%. that's right in line with the long term trend. he would tell you recession risks have risen pretty markedly, but he's still not in the recession camp at this point in time. i think that's where we are as well we're monitoring it very closely, but in uncertain times, what you want is higher quality. and what financials and tech both have in common is that they are higher quality relative to their peers. so when we do quantitative stats on quality metrics, tech is higher than every other sector and financials, while it's not the highest, it is the highest on the value side and kind of cyclical side of the trade we think this nervousness about the economy pushes people into quality. it can keep you in financials for a bit longer but it really pushes people back to the secular growers and tech stocks
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in particular. >> paul, break apart the tech trade for us who's gotten the most hurt and where do you see the most value? >> so, first of all, one other thing with respect to the tech sector it tends to be growth oriented it also tends to have one of the lowest debt loads of the other sectors. so they aren't necessarily impacted as far as borrowing costs from higher rates. that's something to keep in mind so to the point of quality semi-conductors are an area of the tech sector we tend to focus a lot on while you were just talking about the transports leading into the intro of the show, semis are a leadership sector, and we have seen that sector actually underperform in this most recent leg higher that's something we're watching here closely as far as the overall yield curve discussion we have been talking about here, the twos/tens did invert this week, but historically, you need to see multiple points of the yield
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curve inverted, and at this point, less than half of the points of the-yea yield, not ev close to half of the points are inverted, so you would want to see that happen. the parts of the yield curve like the three-month and ten-year, which have been the most reliable of forecasting a recession in the past, are among some of the steepest points of the yield curve still. so that's something to keep in mind here as we go forward so as far as tech overall, though, the companies that have some earnings here that aren't priced at multiples of sales and have little or no debt, those are the kind of tech stocks i think you would want to focus on here >> semis are down another 2%, about 11.5% lower for the year laurie, paul, thank you both for joining me have a great weekend >> after the break, we will talk to the council of economic advisers chair, cecilia rouse, first on cnbc interview about today's jobs report, the inflation outlook, and the administration's plan to combat high gas prices. you're watching "closing bell.
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we're up 113 on the dow. we'll be right back. ok, let's talk about those changes to your financial plan. bill, mary? hey... it's our former broker carl. carl, say hi to nina, our schwab financial consultant. hm... i know how difficult these calls can be. not with schwab. nina made it easier to set up our financial plan. we can check in on it anytime. it changes when our goals change. planning can't be that easy. actually, it can be, carl. look forward to planning with schwab. schwab! ♪♪
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welcome back you're under the radar stock mover today, tellurian, outperform, citing strong demand for american lng in light of the russian sanks. it's up more than 19%. near session highs for the hour and has more than doubled already year to date >> another strong jobs report today. the average monthly job growth since the start of the year now stands at 562,000. the unemployment rate falling to
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3.6% just one percentage point higher than where we were in february 2020 joining us now in a first on cnbc interview, cecilia rouse, she chairs the council of economic advisers for president biden. welcome back nice city you. >> i'm happy to be here. >> so obviously, a strong jobs report better better wages how do we square a jobs market like thas that is on fire with some of the signals we're getting like a yield curve inversion? which typically signifies recession? >> the report that we got today on the labor market really suggests that the u.s. labor market in particular continues to make robust gains which we know has been so important since the labor market suffered so tremendously at the beginning of the pandemic we have 93% of our emp ployment back we have seen an increase in labor market participation because workers have been hesitant to come back due to the
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virus, but workers are coming back they're seeing an increase in nominal wages. unemployment is down to all worker whose want a job can find one. we always hear tracking the risk to the economy going forward, but our economy is in a very good place household balance sheets remain strong, even accounting for inflation, and this tremendous growth gives us a cushion to weather additional variants as we saw this economy reflects omicron. and any maneuvers that the federal reserve might make, and importantly, even the russian invasion of ukraine. so we believe theeconomy is in fairly good shape. as we weather these shocks going forward, but we'll be tracking, and the president is acutely concerned about it and he's doing all that he can to address the prices and to keep our eye on what is happening in the economy writ large. >> one symptom of this tighter and stronger job market is we're seeing increasing number of wins for labor movement in this country, including just today,
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where amazon warehouse workers in staten island voted to unionize first time for amazon. are you supportive of that move, and would you like to see it spread >> i think what we know about the u.s. labor market is that over the last few decades, that the median worker has had rather anemic wage growth and that we have seen an increasing separation between labor productivity and wages, and so i think it is appropriate to see a tilting back towards seeing workers see higher earnings obviously, we want that to be driven by productivity gains so it's sustainable growth, but i do think it's important that workers are getting their fair share of their productivity gains. >> but isn't that happening without organized labor, without unions it's happening organically, we're seeing wage growth shoot up to levels we haven't seen in years and the market for hiring is strong. >> absolutely, and that's part of workers having a voice, having some say, having more power in the labor market. one of the facts we know about
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our labor market is it's become increasingly concentrated so we know there are not enough workers hired. their wages tend to be lower, and this is a phenomenon that labor economists are starting to increasingly understand. so we think it's important that there be more competition in the labor market so workers are paid according to their productivity and are paid a fair wage and have good working conditions >> i know that you and the tea are also very focused on the higher gas prices. we saw the move by the administration to release the sdr, strategic -- spr, excuse me, strategic petroleum reserve. how is that not just a band-aid solution it doesn't change the fundamentals of supply, which are driving oil prices higher, especially with russia increasingly shut out for who knows how long >> absolutely. the release of the strategic petroleum reserve, the president has done a historic release of a million barrels a day for the next six months and he's gotten
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the cooperation of about 30 countries around the world that will also be releasing millions of barrels from their own reserves this is the short run solution as we bridge to oil companies stepping up production from their existing wells and as we also make a transition to greater energy independence. so the release from the strategic petroleum reserve is meant to be the short term way to address this and address the increased gas prices due to russia's invasion of ukraine, but fundamentally, we know it's important we increase supply of oil around the world because fundamentally, the price of oil is a global price, and we need to insure there's an adequate supply >> so it is a short term solution what about food prices they're also spiking, and it's also causing a lot of concern of global shortages, of famine, of crisis and potentially a big impact on u.s. consumers is there any effort by the administration to do something there? >> you know, food prices are
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another concern because ukraine and russia are the bread basket for many parts of the world. here in the u.s., we're less reliant on their wheat and grains we're a net exporter, so i don't -- we do not anticipate shortages and famine here in the united states. in contrast, what we expect is our farmers will be responding to the price signals and will be doing what they can to plant corn and soil and other grains and so going forward, we will have adequate supply obviously, this is a big concern. and erand we're working with our international aid agencies because we're concerned and particularly in the middle east and parts of africa, and the far east, that we're concerned about famine and shortages in those parts of the world >> chair rouse, thank you for joining me today good to have you >> you're welcome. >> show you what's happening with the markets dow still higher we're up about 58 points or so the s&p 500 unchanged. we lost a little bit of gains we
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got coming into the hour nasdaq underperforming today technology is basically doing that the best performing groups in the market are real estate, materials, staples, and utilities. kind of defensive lean there small caps having a strong day up about .75%. thanks in part to the strength ninergy and materials. chinese internet is also getting a pop today on positive regulatory headlines we'll talk to the cio of crane shares, the company behind the kweb e auttfbo today's action and some of the wild moves lately "closing bell" back in a moment. you're a one-man stitchwork master. but your staffing plan needs to go up a size. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit
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. lose aglittle ground here, s&p down about .1% in the final hour yields continue to move higher, at least on the shorter end of the curve. also the ten-year is up 2.38 right now. let's get back to mike santoli taking a look at the updated gender gap in the labor force on the back of today's jobs number. wall street was paying a lot of attention to the labor force participation. what did we see? >> well, the real story, sara, as of today's number is the gap
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has closed it had been pretty stark in prior months as we have highlighted, and in the latest march numbers, it seems as if the female prime age labor force participation, that's people between 25 and 54 years old, has now basically met parity with male participation this had been a lagging indicator, we know about why child care issues, omicron, all these things that seem to keep women out of the work force more than men, and it's probably good news obviously, all around, for more participation for women's access back into the workforce, but also for the fed anything that brings people back to work, maybe moderates wage gains. maybe frees up some of the labor tightness is probably good just for the length of this expansion out there. this number that we're showing you is kind of indexed to the immediate pre-pandemic level february of 2020 so pretty much all the way back at this point. >> it was also the first good month for black women entering the labor force and seeing their unemployment rate fall
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we did not see that last month mike, thank you. >> up next, investment bank cowen, the latest to jump into the crypto gain. we'll talk to jeff solomon about the move this week to trade spot crypto for institutional investors and the reaction he's getting so far from customers.
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. we know crypto is gaining ground among institutional investors and banks are following suit investment bank cowen announcing it's starting a digital asset trading in currencies. future plans could include nfts and de-fis you're the first investment bank to offer spot crypto trading for institutional investors. >> that's correct. >> why has nobody else -- is it because you're less regulated? >> there's a huge barriers to entry. the lack of federal oversight means each state has their own rules. we spent the better part of the last year going state by state to execute trades. institutions themselves have been reluctant to participate in a meaningful way in crypto trading because honestly the custody issue has been a big problem for them we did a partnership, invested in a company that has a custodian called standard, and standard bank, and so for our
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standpoint, we partnered them so we can offer full end to end solutions from custody all the way through. >> you have been planning for this for a while do you expect all of the wall street banks to follow suit eventually >> i think eventually, as the federal regulatory landscape lays out over time, i think there will be more participants. but right now, we're doing things in a very -- it's all compliant. all fully regulated, but it's mostly regulated by state regulators >> does this mean you do not see bitcoin as a speculative bubble? >> i think bitcoin trades as a store of value in its own right. this is interesting about bitcoin, what it's really about is the proliferation of different ways for people to finance their businesses or actually to participate in the creation of new businesses and new business models. and you know, there are literally thousands and thousands of coins and tokens already. the vast majority of the trading occurs in a relatively small
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percentage of them it's really a lot like equities in that regard we want to be in a position where we can offer our clients institutionally the ability to trade without worrying about how do i account for it? >> is there a lot of demand? >> yeah, we have seen a significant amount we have been hosting events and talking to our clients for well over a year. we see that demand, and the answer is how can we develop a solution for those institutional clients, and that's really what we have done together with standard custody >> i want today ask about other parts of your business as well the stock has underperformed this year. capital markets concerns, m&a is down, ipos are down. is that what's plaguing investors, and how does that look for the rest of the year? >> yeah, so listen, i think we had two amazing years in which we had tremendous amount of financing activity and a lot of m&a activity post the pandemic i think the markets are always overstretching and overreacting. our business is built to be a
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business that lasts regardless of market environments we're continuing to see tremendous demand for m&a activity a lot of our clients - >> demand for m&a activity >> i still think a lot has to get done one of the things that's happening in the market, in my opinion, is there's a lot of uncertainty around different fundamentals that have underpinned our market for maybe decades. peace in europe is a good example. we don't have that so commodity - >> low interest rates. >> inflation the market is digesting that when the market is not aware those things are happening and then it becomes aware, there's a huge amount of volatility. now you're seeing the vix come in, people are beginning to process the unknown unknowns they're becoming known unknowns. we know there's inflation. >> a better environment? >> it becomes the market processes that, and as we end up in a situation where it's a
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little less volatile, companies need to get financing done and m&a done >> what about biotech in particular you have distinguished yourself, now you're crypto, but as a health care and biotech place for capital markets. that's been a weak part of the market really since february of last year totally collapsed. >> we tend to spend time in places that are ahead of the curve. that is the moniker for cowen. it's really about looking over the horizon to see what are the trends and how can we help those companies place themselves if it's disruptive growth, we tay attention to it because that's what we do best crypto and biotech fall into that category. not well known requires a firm like cowen to explain it to a lot of folks for biotech, it's been a bear market for a year. a lot of people i have been talking to in biotech, a lot of investors are simply waiting for that moment where we can see a floor under the macro environment and where we can begin to understand that there's a lot of companies, probably like 40% of the publicly traded companies are gauche to run out of cash in 18 months that means they're all going to
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do financing at some point in the next 18 months that's facts >> good for your business. >> going to be great >> there's a lot of regulatory concerns still, isn't there? manchin is talking about prescription drugs again in a new build back better. there's questions about the fda since the biogen alzheimer's issue. >> that stuff always hangs around investors that are in the know, the folks i talk to in the biotech space, and we spend a lot of time with them, have all raised significant amounts of money. new fund launches have actually happened they're sitting on dry powder, and they have their shopping lists. so these stocks have become incredibly cheap on a relative basis and some cases on an absolute basis many are trading at discounts to cash >> we'll see deals >> i think we'll see deals, financing, and investors over the course of the next year reemerge because there's value there. for the first time in a really long time, and that's what we heard from a lot of investors. >> happy birthday. >> thanks so much. >> jeff solomon. and happy birthday to jeff
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sonnenfeld as well two guys who share a birthday. >> we celebrated together eyesterday >> here where we stand in the market we lost a little steam dow has gone negative right now. we started the hour up 100 points we're down three right now s&p 500 down .2% technology is leading us a little lower today nasdaq down .4%. the final four tips off tomorrow, but wall street is buzzing about the companies that are racing to cash in right now on college ales.thte that story next when "closing bell" comes right back and interactive charts to give you an edge, 24/7 support when you need it the most. plus, zero-dollar commissions for online u.s. listed stocks. [ding] get e*trade and start trading today. never settle with power e*trade. it has powerful, easy-to-use tools to help you find opportunities, 24/7 support when you need answers, plus some of the lowest options in futures contracts prices around. [ding] get e*trade and start trading today.
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and have historically low risk. call today to request your free bond guide. 1-800-376-4376. that's 1-800-376-4376 what is wall street buzzing about? the final four and the new money and big brands rushing in this year to college sports for example, cheg, the higher
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education homework help company announcing its first athlete sponsorship with uconn basketball star paige beckers. they'll raise awareness for student hunger by opening a pop-up market this weekend she's an incredible athlete who shares the company's core values but it's also about brand promotion on the big stage, and chegg is not alone let's bring in contessa brewer this is the first march madness where we can see big companies sponsor student athletes because of the supreme court decision. what are they getting out of it? >> it's interesting because the games themselves are a game changer for the companies, for instance, after the cinderella run that st. peter's had, buffalo wild wings went in, swooped up a deal with star player doug ettert paige becker also has deals with gatorade, cash app, stock-x, the sneaker reseller
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we know adidas has said any student athlete at the schools it sponsors are eligible for what they call nil deals meaning name, image, and likeness and then you have a company that i follow, penn national gaming, its barstool sports has launched barstool athletes at the beginning, at least, there was no money changing hands, but any student athlete nationwide who wanted to be a barstool athlete, they can raise their hand and get swag in exchange for promoting it on social media the companies get a lot of exposure to a very young audience base. and by the way, open door estimates the first year, $600 million worth of deals >> wow it is a growing industry contessa brewer, thank you up next, new reports of netflix tightening its belt, moving the stock, and auto stocks hitting the brakes. those stories and more when we take you inside the market zone. dow is posite aibyne point. o we'll be back. you need to hire. i need indeed. indeed you do.
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♪ “baby one more time” by britney spears ♪ good to have you back, old friend. yeah, eyes on the road, benny. welcome to a new chapter in investing. [ding] e*trade now from morgan stanley. seven minutes in the trading day. we're now in the "closing bell" market zone. mike santoli here as always to break down the crucial moments of the trading day plus, crane shares brendan ahearn on the rally in chinese tech stocks, and victoria fernandez on her second quarter stock picks. we'll kick it off with the broader market because stocks have lost steam into the close major averages dipping back and forth into the red the dow pretty much unchanged. so is the s&p. has to be one eye on the bond market we have seen yields rise in reaction to a better than
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expected jobs report with good internals which continues to signal green light for the fed to raise interest rates, right is that a problem for stocks >> yeah, well, it's exactly what's going on. the bond market is not allowing the stock market to fully relax into this new month. and i do think it's for all those reasons. the new high in the two-year treasury yield, it just tells you that the data is giving more force to these expectations of a front loaded fed tightening cycle. that doesn't mean game over for stocks it doesn't mean that the market usually immediately falters, but what it does say is there's a sort of a narrower window for performance. the other piece of it is, the stock market is operating without its usual weapons to some degree. if you look at the leadership profile, you mentioned it was pretty defensive transports down today, technology not helping out commodity related stuff is quite strong health care is good but it's taken a day off. you look over the last two years, commodity index is now basically slightly outperformed
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the s&p tech sector. and the commodity index is not fully really reflective in the s&p 500 itself in other words, it's just a blunt instrument for allowing the broad stock market to perform. i think all those things are coming together. >> wait, commodities and technology, mike, are equal returns in the last two years at this point >> two years, absolutely now, that sort of gets you just past the low of the market in march of 2020. now, the other thing is, if we go to any other time period, longer than that, technology is just absolutely obliterating the commodities. b of a showed today the ten-year trailing return on commodities has been negative for years. just barely went positive now, so it does show you there's a lot of ground to be made up. >> absolutely. materials and energy both higher in the market today. take a look at the chinese internet stocks. they have been all over the place. kweb up sharply, more than 5%. this coming on the news that
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chinese authorities are considering giving u.s. auditors full access to the audit reports of some chinese companies. with us is crane shares cio brendan ahearn has anything really changed with the regulatory story today >> it has, certainly, that we saw from the china side, that there appear to be willing to allow full access to the pcob on audit reviews. we don't know if they're going to differentiate between private companies that have nothing to hide versus a smaller number of state-owned enterprises as well as had a great scoop, stating that the chinese regulators are also reaching out to the chinese accounting arms of the big four u.s. accounting firms to let them know they should prepare for this audit review so two very strong signs there >> what happens,though, if it doesn't work andsome of those stocks get delisted? that's been hanging over the market and the names what would happen to your etf?
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>> well, certainly, it's been a significant overhang, and certainly a lot of investors are going to wait for definitive agreement or at least a sign from the u.s. that there is such an agreement coming. but certainly for ourselves at crane shares within kweb, we have started migrating our exposure out of the u.s. adrs into their hong kaong equiv lnlts, and as stewards of our investors' capital, we have tried to protect that capital by migrating to hong kong >> so amid all the extreme volatility, what have jyou seen in terms of flows. >> flows to continue to be strong this is partly due to many u.s. investors might not be allowed to do adr conversions such as we can do for kweb. they might work for broker dealers or custodians that don't allow it or maybe they don't want to hold a hong kong name, so our inflows are more reflective of investors hiring us to make this conversion for them >> right, exposure there straight to hong kong. thank you for joining us
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i want to point out gamestop having a volatile day after the company said it plans to issue a stock split. it rose initially on the news and then gave up all their gains. seeking approval from shareholders to increase the number of authorized shares to 1 billion from 300 million with gamestop shares now in the red, did the plan backfire what were they after here? >> if the plan was to boost the stock price with this stock split, it was a fail shares down 2% since that announcement was made. certainly, a roller coaster ride you're looking at the chart, a lot of money made, a lot of money lost in the end, stock still down investment interest, especially on wall street bets, that worked like a charm if you go on wall street bets today, a lot of chattering about it people posting their moves at least from yesterday not a lot of people posting their result from today. today, the volume was three times the 30-day average short interest is also up year to date, something to watch. and really, a lot of questions
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about whether the plan here has even been revealed i talked to acouple analysts they flagged this, an a krk k filing listed as the reasons for this stock split, so we may to wait and see, even though gamestop's chair isn't known for have agplan a lot of talk about converting the company into an online retailer and nft marketplace, but very slim on the details so far. >> it's good perspective, mike i can only imagine your reaction to this news they don't have short term financial targets. they don't have long term financial targets. they don't take investor questions or analyst questions on the conference call, don't talk to us or anything like that, but continue to make these moves to cater to retail investors and traders. how much longer can they keep doing that >> well, i mean, this can go on for quite a long time. this company is now got financing to live for a very long time. it's not as if it's in the dark days when we were kind of wondering if a chain retailer like this could make it.
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but it is very instructive that first of all, the idea of trying to get an authorization for this huge increase in shares possibility. you already had way less than the authorized number of shares being utilized right now the staugock was only at $166, o what's the big deal about a high stock price to try to split it to make it more accessible it seems like a much more overt gesture toward the retail investor base to get them excited, keep them excited in the absence of anything else that has materially changed with the business itself. >> right ryan cohen buys more shares. that gets people excited fundamentally, the stock sells off on earnings. frank holland, thank you >> take a look at shareoffs netflix,taking a leg lower in the last few minutes on a report from the information saying the streaming giant is asking employees to be more mindful about spending and hiring. the comments were reportedly made at an employee town hall. netflix has been grappling with a slowdown in subscription growth let's bring in julia boorstin
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for more perspective what are you hearing in light of the stock's terrible perforpance in the first quarter, down more than 30% >> the stock's terrible performance and also the fact the company has guided to the addition of about 2.5 million subscribers in the first quarter. that's down from 4 million subscribers in the year ago quarter. that 2.5 million does not even take into account the loss of the subscribers they're going to have in russia suns they stopped operating the service there. two things here. netflix giving me a no comment, but this is in keeping with the way the ceo reed hastings runs the company. they are known to communicate a lot with their employees i do understand that those meetings where these things were reportedly said were regularly scheduled meetings they were having an off side they do have these regular town halls and they had one on monday this is a company that does tend to fill their employees in on subscriber trends even ahead of those quarterly results. so it would make sense for two
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co-ceos like that to give their employees this kind of heads-up ahead of earnings which are coming up on i believe the 19th, a week from tuesday. >> but is there any other signal, julia, that the company is shifting strategy or shifting discipline when it comes to spending when we know it spends a lot of money on its content >> they do spend a lot of money on their content there have been a lot of reports recently that they aren't extending shows, tv series, if they don't have full confidence that they're actually helping the service hold on to or add subscribers. there are two things they have been doing that do indicatetha they are concerned about the slowing growth one is the price hikes and that is something that they have been rolling out. and second is cracking down on password sharing this is a key thing for them there's this awareness that the password sharing is not only rampant but could really be impacting their ability to hold on to subscribers.
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those two things indicate they are concerned about the slowing growth, and the fact they have been investing in new categories such as gaming which could potentially help them hold on to subscribers or add more subscribers considering so much competition out there. >> one thing they have got going for them, the second season of "bridgerton" is amazing. i won't say anything else. >> julia boorstin, thank you >> auto stocks underperforming the market take a look at gm, reporting a 20% plunge in the first quarter sales in the u.s. because of supply chain issues. the stock down more than 2% right now. both gm and ford announcing new production halts at plants in michigan due to those parts shortages. separately, ford issuing a pair of recalls involving 700,000 vehicles because of oil leaks and braking problems phil lebeau joining us on all of it any sign that the chip shortage is improving at all when it comes to auto production and sales? >> well, it's gradually improving. but that gradual increase is not enough to offset the fact that
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there's still a shortage so you will see things like production brought down at particular plants, next week, ford is bringing down production at one plant. gm at two other plants as it gradually increases, they have to replenish the supply, the inventory of vehicles. that's going to take some time what's the end result? higher prices. they remain high and here's one indication of just how high, sarah according to edmonds, the average monthly payment for a new vehicle in the first quarter hit a record high of $648. you know where it was a year ago? $575 don't be surprised, by the way, if that continues to edge higher over the next couple quarters. >> so is this the sort of thing where normally auto stocks would get hit when there are worries about consumer discretionary spending in a weaker economy, but they're just immune this time because there are such strong shortages and they're getting such good pricing and people are still buying cars and they want them and they're on wait lists >> absolutely. the pricing is certainly the key for helping the automakers right now.
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one reason you're seeing a number of the automakers, not tesla, but a number of them under pressure, they got a bounce last year out of their ev plans they have announced. well, now we're in that gap between the announcement of the ev plans and when we actually start to see the evs rolling out. in the middle, people are looking around saying, what have i got from the main automakers i'm waiting for this supply of evs to kick in, so that's why you see these stocks under pressure right now >> phil lebeau, thank you. do want to point out the broader market, the dow is now up more than 110 points. joining us is victoria fernandez, chief market strategist how are you thinking about the second quarter we have come off a very rocky period with some extreme moves best quarter for commodities in decades. worst for bonds in decades what do you do next? >> yeah, i think a lot of this is going to ride on what happens in the next couple weeks when we have actually have earnings kick in everyone is going to listen to what's happening with profit
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margins on companies they're really going to be listening to the inflation component for these companies. i think that's going to really drive sentiment. for us, though, we think even though there will probably be a little bit of a slowdown, we don't see recession being imminent i know a lot of people are concerned about it, but you look at the short term part of the curve, that three-month to two-year, and it's actually steepening we're 200 basis points there, so we're not concerned with a recession. with that in mind, we still like financials and we like adding a little bit of some of the value or some cyclical names because we do think there is still some runway for this market to do well before we start to see things turn around. >> want to get into specific stock picks with you i think you have walgreens on your list, which i am noting because it's had a pretty rough week and down 16% year to date. and there are concerns now after the quarter yesterday about the bump they knot from covid and what's going to happen next with testing and vaccines down.
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>> yeah, so that's actually one of the reasons we like the name right here we try to be opportunistic we try to look at names that have been revalued their earnings were strong, actually they had decent numbers come out. they're talking about the revamping that they're going to do of their stores so they'll actually be a stronger competitor to cvs than what they have been in the past. we think with the stock down where it is, it gives you a little bit of opportunity to go ahead, go in at some of these levels, yes, it might be a little strained going forward with some of the issues you mentioned, but we think longer term this is a name that's going to continue to do well and you have a good buying opportunity there. >> give us a namewithin the financials i note it because there was a note today from wolf research about how the brokers actually do better on rising rates than the financials, especially if we're worried about the inversion of the yield curve and that the banks have already seen the move on higher rates >> yeah, it's interesting, sara. bank of america is actually the name we probably like the best
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right here and i think people have to shift their thinking a little bit. they have always thought about the net interest margins for these banks, between the short term and the longer term of the curve. but look, in 2010, about 60% of the loan balances for these banks were real estate related now that's down to like the mid-30%. most of their loans are either cmi loans or credit card loans, which are tied to a much shorter part of the curve, so as the fed hikes, net interest margins should go higher so i think with that, with their balance sheets being in good shape, with the dividends probably doing well, and the revaluation we have seen, so they're cheaper versus historical levels, this is a good place to be and bank of america is our favorite. >> got it. victoria, thank you from cross mark with a few picks for us financials underperforming, but i will say with two minutes to go, we have seen a little bit of a recovery a nice one in fact the dow up 150 points. mike, i know you're monitoring the internals. any catalyst for the spike in the last minute or so?
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>> the calendar. first of the month, strongest month of the year. we were down 1.5% yesterday in the s&p. i do think it's probably all those things working together. internally, the market has actually had a bit of traction all day. a lot more volume on the new york stock exchange to the upside than the downside that's been a little bit of a positive point also, did want to take a look at semis and transports typically, some bellwether groups they're struggling here. semis down a couple percent. transports, mostly the trucking and rail stocks, pretty weak ism indicator. downgrades of the freight industry right now weighing on them, and then the volatility index is still in this kind of mostly okay benign state we had a spike in the chart down below 20 going into the weekend. probably sets that up as being fine for next week in the overall market >> nasdaq is up now .3%. we have recovered nicely as we go into the close. take a look at the dow jones industrial average we're higher by about 146 points
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right now. so things are looking a lot better than when we started the hour we have strength in names like facebook, microsoft, google, tesla, helping the nasdaq recover. energy and materials, real estate and utilities at the top of the s&p industrials, technology, and financials still weak, but it looks like we're getting a close at the highs of the session. and just the last few minutes, a little spurt of buying that's going to do it for me on "closing bell. have a good evening and a good weekend. scott wapner into "overtime. >> all right, sara, thank you. welcome to "overtime." you just heard the bells we are just getting started right here in just a few minutes, we'll get a brand-new stock pick from star value investor scott black he's a member of the barrens round table. and a newand scathing report about cathie wood and ark innovation i have got it right here the strategist who wrote it will join us live if you invest in those stocks, you need to see this interview >> let's begin with our talk of


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