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tv   Closing Bell  CNBC  May 5, 2022 3:00pm-4:00pm EDT

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inflation will affect those gaming customers coming into play, kelly. >> absolutely. contessa, thank you very much. let's get a check on the markets now as we go it is the worst day for stocks of the year. rates continue to rise the 10-year back above 3%. >> i was hoping we could end on a positive note but i don't think it's happening today as we toss it over to our friends on "closing bell. thanks for watching "power lunch. world trade center. stocks are tanking giving back their post-powell gains and then some. nearly every name in the s&p 500 is in the red. the most important hour of trading starts now welcome to "closing bell." i'm sara eisen here's where we standing, another sharp sell-off on wall street we're down 1148 points lows of the low was down 1240 points, but it is ugly out there. every sector is sharply lower. consumer discretionary is getting hit the hardest, down 6% thanks to double-digit declines in names like etsy, ebay
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really poor earnings and just bad sentiment overall. check out the most actively traded names here at the new york stock exchange at this moment with the nasdaq down 5.3% nio is actively traded, down 15%. twitter, a rare bright spot in the action after elon musk gets more funding, $7 billion in capitol for his takeover bid uber and ford and itau the most actively traded names. we'll have some breakouts, including shannon, tony from pimco, kevin landis on tech, which is getting clobbered right now and david zervos plus we'll talk to the ceo of ni nikola let's get straight to the sell-off mike santoli with a closer look at the damage being done right now, mike, in the s&p 500. down almost 4%. >> one of the most violent recoils i can remember that
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anybody has seen based on two-day action up 3%, now down more than 3% shockingly, it leaves us still above where we traded at the lows on monday and essentially leaves the s&p flat for the week but very much a jarring situation. the fed indicated less tightening than feared but stocks are down, dollar up, yields up. treasury yield and german bond yields crossing a couple of trip wires, 3% and 1% respectively and that has people on the defense. so you see here, 4100 vaguely defined has still not been breached to the downside where's the top? 4300 last thursday three times tried to bounce and didn't get above it. there's friction above us even if you get a decent bounce in here it's a very indexy move, so some of the biggest, most crowded index names are leading the way lower. nasdaq down more than 5% it seems like liquidation type
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activity who knows if that's forced, but it seems like it at least. i wanted to point out 1994, this is the hopeful scenario people have been presenting, including jay powell and the fed for what a stock market does when a soft landing is being executed through aggressive fed hiking. so this was that year. what do you see here very early year peak january, just like we said here, decline. that's by the way early may of that year. and then you just chopped and really made no progress. in fact from early spring down toward the end of the year, nothing. don't want to make too much of it to say we're going to follow it exactly, but the idea of high volatility, capped on the upside by financial conditions, yet also supported by an underlying economy that seems okay, you could do worse than look toward that example. >> best day of the year yesterday following the fed and now the worst day since 2020 i spoke to head of a trading desk earlier just to get some color on what was going on going into yesterday, yes, there
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was a fear that the fed was going to be even more hawkish than it was. and then powell ruled out the 75 basis point hike and wasn't as hawkish and there was a relief rally on that. but i was told yesterday's rally looked unhealthy, a lot of short covering going into today, concerns the fed will be even more behind the curve. we got some economic data that was very stagflationary. weak productivity and very high input labor costs. which shows that no matter how the fed is postured, it's going to be a big fight for them to get inflation under control. maybe if they don't go bigger now, they'll have to go labigger later. >> a general sense there's no free lunch if you forego some front tightening, you have the fear of inflation. the burst off the lows always looks like that and also you did have people, i think, just running the same play as the
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last two fed meetings where you did bottom on fed day and had decent rallies to the upside so we'll see if today is a more violent shakeout along the way. >> here's the other potential why. and i know corporate america is generally in a good place. we got a lot of earnings out over the last 24 hours and they're really weak and they're in some of the internet darlings, the hot spots. etsy, ebay, wayfair, shopify, all down double digits on top of huge slides that they have already had. there seems to be a realization that the pandemic pull forward maybe was underestimated, even worse than people thought. even some of these companies that do have plans for growth or hybrid or secular growth plans just isn't happening there's a lot of give-back on those ideas and that is also pounding tech. >> and there's a sense there's a reckoning in the form of private companies layoffs. amazon talking about they overinvested and overhired so yes, i think that's a psychological overhang that's contributing to the idea that
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these were expensive, and crowded, and overfed stocks based on people's expectations for the future in terms of digital transformation. >> we'll have to see some sort of earnings clarity or stop missing estimates. stay close on a day like today with the dow down 1200 points. let's bring in shannon and keith. keith, i read your note yesterday after the fed. you thought the market was ripe for a rebound given some of the negative sentiment the opposite is happening today. what do you make of it >> yeah, i think lewis said don't put something in print that you can be wrong in 24 hours. yeah, today is surprising as far as how much we have come down. we did downgrade equities in april and part of that was concerns around a fed policy mistake. but as mike skdiscussed, i don't think it's appropriate to become more negative as prices have moved down at this point there is concern about the economy slowing down but with markets down 15%, you already price in about 50%
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chances of recession we think that's too high mike also discussed we're above the lows from earlier this week. so we have the employment report tomorrow, the cpi report next week as well, so i think that will be really important but again, i want to become more bearish as prices have gone lower here. >> we are making new lows for the day. we were as low as 1243 on the dow and we're now at 1240 or so. shannon, would you buy on a day like today or just step aside? >> i think when we think about the next probably three or four weeks, sara, we're really thinking about that chop that mike just talked about if you're a long-term investor and looking out the next three, four, five years there's absolutely no reason not to buy high-quality companies in this type of environment. with that said, if you're thinking about averaging in, if you have cash on the sideline, there certainly are going to be a number of opportunities over the next couple of weeks i think the most important thing we're thinking about is just
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that consumer aspect of the data that you mentioned and thinking about what does a lower growth consumer spending environment look like in the back half of this year and into next year and really thinking about where you want to be exposed there going back to the data, that's what the fed is doing and what we need to be doing as investors as well to make sure we're appropriately positioned and going into companies like in technology where you're focused on enterprise spending that is not going to slow substantially over the next five to ten years so for the long term, that's what you need to be thinking about. >> so you actually like some of the names in technology then, is that what you're saying? >> absolutely, sara. technology is still the largest weighting in our portfolios. although we've trimmed those positions several times over the last year and a half, if we look at what's going to drive growth in earnings, what companies can continue to grow their earnings over the next several years in a lower growth economic environment, you know, i think there's several quality tech names that can do that
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it's not just tech, it's health care, industrials. looking for companies that do not need a strong secular economic tailwind to necessarily drive earnings growth is what you need to be focused on the next couple of years. >> like what apple, microsoft, they're all getting thrown out today so how do you choose quality within tech? i want to press you on it because we're seeing a more than 5% decline for the nasdaq. >> yeah. our largest position, sara, are names like microsoft we like salesforce we like the digital transformation aspect of what's happening in the hybrid world. we have large positions in amazon certainly on the back of the aws and advertising part of the business, which is the higher margin, hire growth part of the business those are large names in our portfolio and will continue to be so. there may be opportunities to add to some of those positions, particularly like amazon over the next couple of weeks for the
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long term. >> down more than 8% right now keith, what do you think can i.t. spending hold up in a stagflationary and rooecessiona environment? it hasn't in the past. >> we downgraded tech a few months ago technology has been hit a lot this year but we have to remember they have been huge outperformers for the last decade even with this pullback, the s&p technology sector is trading at a 20% premium to the overall market so we've been increasing the quality of our portfolio a different way. we've been much more focused on staples and health care but also overweight energy over the last year still a very strong area as well as materials so we like that part of the market better and we also have been bringing our bets in because coming into this year even before the invasion, even before the fed became more aggressive, our point of view is that we were going to have deeper and more frequent corrections and we're seeing that today but even with today's move down, we still think we're in a big,
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choppy range again, we're not becoming more bearish because prices are moving lower because we think we are discounting a decent amount of bad news at least sort term. >> so you'd be buying, keith, but in defensive areas, like staples, because they hold up better in slowdowns? >> that's part of it when we look back in late 2018, this is the playbook that we've seen, that defensives outperform and then also along with that, we still think the commodity side as well as the energy sector, materials, is a good offset to that also. we've seen that even today holding up better than some of those early cyclical growth names which are underperforming. >> the energy stocks are in good shape, thanks of course to unfortunate events in the world. it's only down 2%, the energy sector right now that's the best performing group as we speak with consumer discretionary the worst performing group it is down 6.5%. shannon and keith, thank you both for your recommendations
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today. i want to tell you the top search tickers near session lows right now, down near 1200 points it's almost all macro interest that is what is fueling all of this, worries about the fed and inflation. the 10-year yield getting the most interest. yields are rising firmly above that 3% level on the 10-year yield. hit 3.1 earlier today. selling intense today followed by the nasdaq. look at the nasdaq down 5.6% the nasdaq 100 down 5.7%, about 24% off the highs and 22% lower for the year there's the dow. the s&p is now down 4% the selling is picking up in this final hour. amazon also gets some search interest today, as i mentioned down 8%. it's all of the mega cap stocks which are not working, microsoft, amazon, tesla, in
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individualia, and the moves are much more sizeable tle let's zero in on the 10-year yield. joining us is tony from pimco. give us some color about what's happening today. >> hi, sara. well, obviously there's a lot of open-ended issues that the markets are having to deal with and readjusting to the idea of higher inflation, higher interest rates, just huge uncertainty surrounding the outcomes of these things, not to mention geopolitical issues. so there's lots of turbulence. what does a pilot do you seek out smoother air. how do you do that of course for an investor and we would say this at pimco, we take a long-term orientation. for the bond market that means getting back to bonds. this is what you've been waiting for. there were 18 trillion of negative yielding bonds last summer today there's hardly any
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this is exactly what you've been waiting for. the aggregation of all bonds in the u.s., including treasuries, corporates, mortgages, et cetera, the yield on that is probably around 3.60, 3.70 today with the move we've seen with a little alpha, et cetera, looking at a yield to maturity potentially at levels that are pretty good for a diversifier. that's the way to think about it long-term as a diversifier with low volatility in the long run, these yields are quite attractive. >> explain what's happening when it comes to, tony, the fed rethink. yesterday it made sense, right he took the 75 basis points off the table. he laid out his plan the market seemed to like that so why the sharp reversal today in your view >> well, is it really a rethink or just simply ongoing uncertainty surrounding the numerous issues we're thinking about? i think the fed is caught in what i would call and i'm
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thinking of seinfeld, the opposite episode the george costanza episode. the fed will do the opposite of what it did in 1994 when the 10-year yield shot up to over 8% back then greenspan was known for so-called gradualism started off with small moves, three 25 basis point moves, two 50 point moves and then wham a 75 point basis point you would think that would hurt the markets but instead ignited a big rally. and the market never looked back until recently here you see the fed acting aggressively it has an aggressive plan and has told us it will move expeditiously, and is highly attentive to inflation what it should be doing is listening to the adage don't fight the fed. today that means trusting in the institution to battle the inflation level down, which will
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ultimately be good for investors. >> down 1300 points now on the dow. it's just getting worse, tony, down 6% on the nasdaq. what do these rising rates do to the economy? if we continue to see yields go up, we continue to see the fed have to move, we've already seen mortgage rates spike what is pimco's view on how much economic damage will be done as a result of what's happening in rates? >> we're sanguin about the yield next year. odds lower than 10% for recession in the next year looking 18 to 24 months out, that figure rises, call it 30% or so, because we are in fact in the midst of a fast-moving cycle with the jobless rate falling and likely continuing to fall. but the good news in terms of the slowing of the economy if it occurs, it correctly imbalances causing problems chair powell said the number of
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job openings 11.5 million. if there's a reduction in demand, that could be a good thing. final thing real quick, there's more burden sharing in the markets. it was all about the bond market weakening from 2 to 3% on the 10-year. now it's spreading around to other areas, which means the fed's handiwork can work and be successful in getting to that so-called elusive soft landing. >> so when does inflation peak in your view >> a tightening of financial conditions almost certainly will have some impact on the economy, and we think ultimately brings the economic growth closer to growth potential, which is around 2% next year. typically when that happens the inflation rate starts to moderate you've heard about resuring and even climate change and the geopolitical story that could keep it somewhat higher than the 2010s which is probably the wrong analog in
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terms of the 2020s, but there's deflation in financial assets now. it almost certainly has some impact on demand later there is a long lag and the fed is like walking a dog with a long leash when it conducts policy but it looks like it's moving in the right direction, it's just going to take a bit of time. but the peak should be around now, call it by the summer, the worst case. >> what does it all mean for the dollar, which is now up 8% year to date? it's making another big move higher, which also tightens financial conditions and hurts the economy through exports and through corporate earnings it didn't help overnight to have the bank of england come out and warn about the economy as they're raising interest rates that currency is getting slammed. but overall, strong dollar, where does that go and how do we feel it? >> well, the big story and it fits with this burden-sharing idea, the transition of monetary policy occurring through many channels that includes the dollar now
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it had not until a few weeks ago. the dollar seemed stronger but on a trade weighted basis, which is what matters in terms of affecting the economy, it had barely moved according to the fed's index, because of strength in the canadian dollar, which is our biggest trading partner in terms of destination of exports. now we see a few percent move in recent days. i should say in a couple of weeks in the dollar that could begin to eat away at economic growth and then, again, handle some of the imbalance. so that could be a good news story in this burden sharing, more stores on other camels' backs. >> we get a jobs report tomorrow what do you expect, especially coming off of a day like today >> jobless claims tend to be one of the best predictors of that and there is a recovery theme which we are strong believers in we're investors in the lodging and airlines industries. you know from your own personal
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experience, and we all do have these stories of having a change in conditions. the subways are not as crowded as they used to be restaurants, concerts, airplanes, they were full last week when i was on them. that should keep demand strong but we should look for moderation as the recovery theme plays out over the summer months. >> tony, thank you very much from pimco today. >> thank you, sara. we're down nearly 1300 points on the dow jones industrial average every dow stock is lower, even the safe haven more defensive stocks like coca-cola is lower but it's faring the best along with verizon the worst performers, the drags on the dow, home depot taking 122 points off the dow being hit by a double whammy of concerns about consumer, concerns about housing with moo mortgage rates
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spiking. consumer discretionary and technology the worst and the nasdaq is down 5.5%. those tech stocks under heavy pressure today the nasdaq sinking almost 6% as we speak let's drill down on some of the names getting hardest hit. steve has a look at the pain in microsoft and apple and frank holland is covering the clouds stocks steve, start it off for us. >> it's looking even worse for apple. it is down 6.5% and keeps falling. this is erasing the gains from yesterday on that rally. also off of news of last week saying the covid shutdown will cost them up to $8 billion as they deal with covid shutdowns in china, potentially impacting the iphone microsoft is down over 5%. again, the same story there, erasing their losses from yesterday, but also what we learned about in their earnings report last week was the
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stagnant cloud growth and this pandemic story that we keep hearing from digital services and cloud companies also getting whacked today. really tough comps versus the peak pandemic times, sara. >> speaking of cloud, the wisdom tree etf getting wrecked today down 9%. frank holland tracking the biggest movers there. >> you look at stocks like salesforce, snowflake, palentir, datadog. extremely sensitive to pressure. let's take one more look 10-year after the fed announcement, it falls from the 3% yield the etf rises immediately. 10-year rises again, especially overnight, you see cloud stocks crash. now on pace for a seventh month of declines. despite the need for cybersecurity, especially with the war in ukraine, expected to
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lead in cyber threats. we're talking about zscaler, sent nell, all of them down 10%. palo alto networks down 5.5% talking to analysts, it's not about demand or financials, simply that weight pressure making these stocks less attractive. let's bring back in mike santoli. a lot of people looked at some of these, especially microsoft and apple as defensive, if we are going into a slowdown and not as rate sensitive. but on days like today, they really get dragged in hard. >> their businesses are more stable, they're more predictable, they should be defensive. fundin fundamentally they probably are. today who owns them in size and what happens to the indexes and portfolios they're in. if you look at apple, microsoft, alphabet, all down 5 or 6% their intraday charts look the same not a lot of differentiation that's what happens on a lot of
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these liquidation, high volatility days. rate pressure, no doubt about it that's part of the story because it does create more valuation pressure on all equities and the more expensive ones have been hurt the most. it's been the story the entire year it's just happening in a big bite today, i would say. >> i'm also looking at the move in corporate bonds the jfk etf, big sell-off in corporate bonds. then they're starting to come to levels that would indicate there's some fear out there. >> there's some shakiness in that market for sure you have to be careful in just looking at the price of the etf because they're going to move on overall treasury yield action. if you look at the spreads, corporate risk bonds, high risk bonds to treasuries, they have wavered a little bit and you're starting to see anecdotal signs of individual companies having a hard time rolling their debt but it's not to me the center of the
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action it's a little more reacting to equities than it is causing what's going on there. it doesn't mean you can't go lower in stocks, but it does suggest this is not systemic unless you consider people who have balanced portfoliois runnin for the exits at once and selling their treasuries and stocks at the same time because you do have these strategies that are so deep underwater. >> what's the center of the action, the nasdaq down 6%, 10-year yield above 3% >> those two things. they're operating different ends of the seesaw. they have moved in sync for a while and really it's just the recoil and the idea that we still kind of keep darting around the same territory we've been at the last four days or so remarkable, huge moves but not making any net progress in either direction and it just grinds people down. >> we're only down 0.4 of a percent for a week we were up most of the day for the week unbelievable one bright spot in the market sell-off is nikola, jumping after reporting earnings this
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morning and beating analysts' estimates. the company bringing in $1.9 million in revenue, much higher than analysts were looking for joining us now is the nikola ceo, mark russell. i guess it's really not about the numbers for you, it's about the updates. so bring us up to speed. you've started production on the truck. how many have been delivered and how many more do you expect for the year >> sara, we started production last quarter and this quarter we're shipping to customers. we've shipped 11 saleable trucks to dealering for customers and are ramping up production. that's the reason for the favorable reception. >> what's the reception from the 11 trucks, i know it's a small sample, that you've delivered and what type of customers >> well, we actually had a fleet of 40 preseries trucks that were out with customers before, starting in december
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we started delivering those preseries trucks to fleets to testing. the reception so far has been awesome. we started our earnings call with a video where they're interviewing customers, fleet kp executives and customers, and they're thrilled with the trucks the trucks run like champs. >> what's happening on the production side of things, are you able to ramp that up or is it tougher in this environment with some of these supply chain issues, of key battery inputs that we see other ev majors struggling to get? >> sara, that's the key issue. right now this is the toughest supply chain environment i've ever seen in my career it's really, really tough. so we're going to be supply chain limited, not production capacity limited but we think we've lined up, thanks to the efforts of a world class supply chain team, we have parts to build up to 500 trucks this year. so we're really excited about that and think it's an incredible achievement in this supply chain situation we're
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dealing with right now. >> you know, we're down, it's a brutal day in the market, down 1300 points on the dow i know you've got your story that you're focused on, ramping up production, but, mark, do you worry about the economy here because that's certainly going to impact demand for trucks and companies upgrading their fleets >> well, the economy affects us all, of course, but we're focused on the long term here. we're trying to ramp up production of our battery truck, start production of the fuel cell truck next year and make sure that we have charging infrastructure for the battery trucks and hydrogen infrastructure for the fuel cell trucks that's our singular focus. >> does the fact that we've seen diesel prices skyrocket, does that help you? that's what powers most of the trucks right now. >> yeah, it doesn't hurt it doesn't hurt our prospects, it hurts the economy overall because that raises costs for just about everything. it certainly does tend to accelerate the impetus for
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switching over you know, the higher costs for the diesel fuel and the more -- the more mandates against it that are spreading, the more likely people are to consider switching. >> just one more on the stock market and just on your stock in particular, mark, which has been pretty volatile. i think you're winning back some credibility on wall street after a rough start and some concerns about whether it was a real company, but the whole sell-off and concerns about higher interest rates has impacted any kinds of speculative play on wall street where you're a prerevenue company obviously you'll get dragged into the selling how are those conversations with investors going? how do you view the stock price? >> well, i think the exciting thing today is we are now a revenue company. it wasn't much, a couple million dollars, but we're in the mode of shipping vehicles and generating revenue we're looking forward to growing that quarter by quarter as we go forward from here. it's an exciting watershed for us to become a revenue company. >> up about 4% today on a tough day. mark russell, thank you very much, ceo of nikola.
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major averages are having their worst day right now since back in 2020 the height of the pandemic here's a live look right now at the s&p 500 heat map it shows you that this is a broad-based sell-off every sector is lower right now. the worst hit at the bottom there, consumer discretionary down almost 7% and that's thanks in part to names like etsy and ebay those two falling 18 and 12% disappointing earnings technology also getting hit particularly hard. every stock in the s&p tech sector is lower. communication services right down there with it it's why the nasdaq is down so much with the nasdaq 100 down 6% as we speak. even the safer haven plays like utilities, which are holding up better, down almost 2% consumer staples down 2.5% bob pisani here to break down the carnage at the nyse. kristina partsinevelos looking at the big nasdaq losers and there are a lot of them. bob, what are you watching >> i know it doesn't look like there's any place to hide but i
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want to put those sectors back up there is a differentiation and what matters here is the cyclical sectors, like consumer discretionary. i know that you mentioned some of the issues with etsy and ebay, but tesla is down big as well there tech is down if you look at the more defensive sectors, consumer staples, for example, health care, they're only down about 2% so yes, everything is down but it's down 2 and almost 7%. i want to show you the nasdaq, the closing low there of course we're going to violate that. kristina will give you a little more on that information but the important thing right now, if you want to look at the inflation story and that's what's motivating things today, there's only one sector on the new high list, it's all oil stocks and energy stocks so some of the refiners like phillips 66, exxon, devon, marathon oil all at new highs. the market is starting to price in a somewhat slower economy, so all of a sudden recently we've seen cyclicals that are a big
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global cyclicals like newcore and honeywell lower and consumer cyclicals also down. defensive groups holding up a little better but as you can see, even the consumer staples names fairly flat right now. back to you. >> kellogg doing well off a good quarter but a lot of pain there. crude oil interestingly higher on the day up 108. the nasdaq composite down 6% kristina partsinevelos is at the nasdaq which names are you watching, kristina >> i have a whole list but i wanted to pinpoint something you said at the start of the show. you were talking about yesterday's upswing which you can say maybe it's short covering and how quickly it was followed by a massive 5% drop, which you're seeing right now. it's rare that the nasdaq jumps and then falls 4% at least on consecutive days since 1980 it's only happened 12 times. we're heading for lucky 13 today. to go up and down like that in the span of one week, and you did talk about that, sara.
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you highlighted how rare that is the last time was during the peak of covid in march 2020. november the 2008, the heart of the financial crisis the companies responsible for this massive swing downward because of their weight on the nasdaq is the usual, big tech. apple, microsoft, tesla, al alp alphabet, the biggest sea of red. pinduoduo is down 12%, ebay down 12% on weaker guide anxious and semi conductors trending lower nvidia followed by amd, marvell technology with all of this talk about inflation and the pinch consumer, of course online retail taking a huge hit etsy, 18% lower today. yesterday the cfo mentioned how the consumer has less disposable income and more places to spend it so that stock taking a major hit. paypal down over 8% and
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6%, sara >> no shortage of losers today kristina, thank you. we'll stick with tech with the nasdaq now down 25%. joining us is kevin landis from firsthand funds. kevin, selling getting extreme to you in some of these tech names or more to come? >> this feels like full-fledged horse selling. you can probably name a handful of days in your whole career where the market is down more than 5% like this and you've got stocks in your portfolio that are down 10 or 12% in a day. that's -- that's pretty extreme. >> what does it indicate what should you be doing about it >> well, it depends on whether you fancy yourself a trader or just a long-term investor. i think if you're a long-term investor you just have to sit here and get punched in the face if you're a trader, you might be able to make it even worse by thinking that you can get out of
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the way now and being wrong on your timing. so i guess, you know, you're mad when you're having to sell something that's cheap and you're terrified when you have to buy something amidst a falling market so pick your poison. >> but what about opportunities for long-term investors? amazon is now 8%, about 40% off the highs. is that an opportunity to get amazon at a good price or is that just a total rethink given this inflationary, high rates environment? >> it's probably a decent opportunity. this may not be the perfect day to get back into it. i've taken a look at what we call the pandemic stocks it's a little over two years but you could take a look at a two-year chart and say, okay, companies bike docusign and zoom, they're almost complete round trips, but they're clearly better companies and different companies in a better place than they were. on the other hand, take a look at peloton and this is probably
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not the time to get back into peloton. but for your favorite great quality companies, this is probably a great time. more importantly, though, we're going into a recession and the stocks i think that you want to own as you go through a recession are the ones that can grow through the recession those are the high-growth names that are just getting just pummeled even more so today. >> like what what do you like in a recession? >> well, you know, i've talked before about wolf speed. wolf speed makes silicon carbide power electronics. why does that matter that goes into evs, and the ev trending is really just now taking off they will do great it doesn't really matter what the fed does or what putin does, wolfspeed will do great. i think it's down something like 10% today. >> 15. >> yeah, okay. 10, 15, right, exactly so you can also take a look at, believe it or not, roku, right
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some days it feels like kathy and i are the only ones that own that stock. >> cathie wood. >> yeah. but streaming is not turning around, it's not going away and roku wants to be everybody's partner and they're uniquely positioned roku will grow through any recession, so -- >> by the way -- well, i want to come back to roku, i have a question on it, but you mentioned cathie wood. the ark innovation etf is down 10%, underperforming even the market and now 64% from its highs. my question on roku, kevin, and i think it gets at a lot of these names that you've been mentioning, it does feel like besides the higher rates, which is a problem for valuation, there has been some surprise at just how much give-back there has been from the pandemic that even some of these companies where you thought there was a secular tailwind for growth, like a roku, maybe like a netflix perhaps, it's just
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being turned on its head because netflix is now losing subscribers and the pandemic behaviors are changing so much that these companies are missing earnings, which also takes a key bullish reason to buy them out of the -- last year it was all fine because they were going up and up and up but they were beating expectations this year is the opposite. >> well, and the other thing that goes on here is when you're under stress and sensing greater risk around you, you try to go to what feels like the safer names. those are the names you know well amazon, apple, google, they just feel better. and that's why in a situation like this, a high-growth story but it's a small cap and it's not quite so expensive and people haven't quite figured out what the heck it is they do for a living those are harder to step up and make yourself buy them that's why they don't get the support the others do. >> kevin landis, thank you for joining us as we look at the dow down 1279
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points we're going to go straight into the "closing bell" market zone mike santoli of course here to break down these crucial moments of the trading day plus needham's bernie, and kate rooney on crypto stocks taking a stumble. stocks are getting slammed here into the close major averages having their worst day since back in 2020 i just want to give you a market check because kevin is right we don't often see days like today where the nasdaq is down 6% there's the dow down 1287 points mike, intense selling really from the outset and we're continuing to make new lows as treasury yields rise, the dollar strengthens. add it all up. what is driving the intense selling today? >> all of it it's kind of like what are you rebelling against? well, what have you got? that's an old movie line 3% treasury yields has been a little bit of a psychological line
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dollar racing higher and really just keeping the market off balance after a day when they thought they got investors kind of read the fed as maybe giving an incremental dovish surprise. it's the largest stocks that are having the greatest weight so the biggest nasdaq stocks are causing the most damage today. look at all 1,000 stocks in the russell 1000 are down less than the s&p. that's because of the apples and microsofts it's a very index-concentrated selling storm happening right now. one thing people are watching and have been waiting for, for some time, is to just see a very comprehensive flush lower in terms of breadth volumes being all to the downside. you have some of that. you can check off the box that says more than 90% of the new york stock exchange volume is declining stocks that's not sufficient to say some kind of traction is being founding right here. also we talked about depressed investor sentiment you can make the argument that it's one of the supportive
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elements of this market because people are pretty negative at the moment but not sufficient as a catalyst right now so to me it's all the macro stress coming from multiple directions we mentioned credit markets. they're still not misbehaving that badly but in general the number of failed rallies that we have had at the similar levels i think just has traders less willing to make a bet right here. with it all, putting all that in the middle of the table, you can still say for better or worse, it's remained this range-bound trade with a definite risk of a delicate floor that we're now testing out. >> how do you protect yourself in an environment like this? because the traditional 60/40 definitely not working -- >> no. >> -- when bonds and stocks are sharply lower and vulnerable should you have more exposure to commodities as we see new highs with natural gas and some of these other commodity plays? >> the case can be made that maude tees will be net
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beneficiaries. if your portfolio was built not to handle down 15% in equities, you probably had too much risk in the first place but at the very moment that everyone decides diversification is broken, the model doesn't work anymore, you have to find some kind of separate solution i just wonder if that's a lagging sentiment. if the market has gotten you to this place -- 60/40 has never had this bad of a start to a year ever. do you think it's going to get worse? just how high do you think yields will go from here is the question if we're simultaneously worried about some growth scares. >> so i guess my question also, mike, is what are the catalysts from here to know whether this is the washout that we're expecting? we just got a lot of clarity from the fed chair and that doesn't seem to be helping out much today we're going to get a jobs report tomorrow we're still in earnings season where it's kind of mixed, wouldn't you say are we going to need to see more
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downgrades and more lowered forks from companies >> that would help in terms of saying the pendulum has swung far enough bigger picture what needs to happen probably is the idea of peak inflation probably needs to have some credence and be supported by the evidence in the next weeks and months. that to me is the big call at this point so either the fed is tradpped o the fed is not trapped and does not have to really get the economy into a bad place before we can say inflation is moving to the right spot. >> it's hard to know with the war still raging in ukraine, oil prices still rising. nat gas up 21% this week i want to hit the e-commerce names. amazon sinking to its lowest level since 2020 there's wayfair, ebay, etsy, shopify. ebay and etsy among the worst performers on the s&p after both companies gave
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weaker-than-expected guidance. again, these stocks have been weak all year long shopify is now down 70%, mike, taking away a lot of the pandemic gains i guess the question from here is what settles these stocks if the fundamentals are turning weaker than expected >> well, i think in every case the question is -- and it's going to be different. what is built into shopify's valuation near the highs about the perpetual, very fast growth that was going to be there at these levels, i say who owns them, who needs to get liquidity. when are they going to be so low they are kind of ignored the other question as i mentioned earlier is what's going to happen in the real tech economy or what is happening there in terms of people choked on a ton of hot money that went into these businesses, private and public you built your business for continued, very fast growth. now you find yourself in a rough place. amazon the biggest example of
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that what does that retrenchment tend to look like i'm certainly not smart enough and have no idea where we're going with that but that's the overhang on this group of stocks before you can say they're all sold out. >> the ark innovation etf is down 10.25% just today which brings its declines to about 65% off the highs. it's down 50% for the year it doesn't help that they own shopify and coinbase, roblox it's been a barometer, mike, for some of the speculative tech talks that worked so well during the pandemic, during super low rates and when everything was pulled forward just absolutely collapsing how do you view the levels here on this etf? >> look, it is all along the way up and down tracked an index, the goldman sachs index of nonprofitable tech companies whether that was the intent or not, and it wasn't the reason ark bought those companies but it was what it was about it was the hopes and dreams
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side in this case too, tesla has not been helping for a lot of the way, tesla was kind of covering up for a lot of weakness elsewhere and its 10% of the flagship portfolio and that of course is well off its highs for its own reasons and for the fact the market psychology has changed so much i guess all i can tell you is after the tech bubble burst, the nasdaq went down 75% and it happened over two and a half years. so a lot of that time i was asking, people were asking is it enough you just expect if it was enough until finally the ball stopped rolling downhill. >> not many advancing stocks today. many declining ones. heavy volumes i would say as well as technology bears the brunt of the selling those crypto related names also getting crushed today, significantly underperforming the broader market kate rooney joining us kate, why are crypto-related stocks down even more than bitcoin, which is also sharply lower? >> a lot of these names trade in
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sympathy with bitcoin but you've got a double whammy. mike mentioned the unprofitable tech names take coinbase, for example they are getting hit by lower bitcoin prices and then the idea that they're not profitable. this company reports earnings next week but have seen a slowdown in retail crypto trading in general, a lot less volume and less volatility there. there's things like competition. coinbase is down more than 13% today. so you've got some of these tech names that are getting hit by the idea of investors moving away from growth and you've got the bitcoin mining stocks. the same phenomenon. they're getting hit by lower bitcoin prices but capital expenses are high. energy expenses. and the cost of borrowing is going up as well so they're getting really hit harder than bitcoin, almost double what bitcoin is seeing in terms of
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losses again, not all of them are profitable it's sort of a different business model than the tech names but there's a lot more crypto proxies out there even a company like block which reports earnings today only gets 4% of its gross profit from bitcoin but has been trading on the same sort of sentiment-driven ideas as crypto jack dorsey has been very vocal about his vision for the future with bitcoin and block has become sort of a crypto play even though it's not getting a ton of profits from that particular business yet at least. >> 12% down right now ahead of earnings kate, it sort of raises the question what happens to activity levels of trading in crypto today bitcoin is down 9.5, 10% as we see big drops on some of these macro concerns, what happens to trading at these firms? >> it's interesting. at the trading firms, at least if you look at robinhood, they have seen a slowdown so the expectation is that people are not trading as much when it comes to bitcoin, there's a lot of investors that at this point are underwater so there has been a shakeout in
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crypto markets where some of the newer investors have just gotten out. they don't have as muc conviction as the long-term holders. the majority of bitcoin investors are buy and hold types that got in in previous years, see it as a decade-long investment and there's a little bit less of the retail trading one of the things that investors and analysts have said holding bitcoin and crypto prices back is the lack of new excitement and investors. there may be some that got in and got burned and are deciding to sit on the sidelines for now. >> down 9.4% on bitcoin. kate, thank you. we'll stick with the tech trade. joining us is an analyst from needham, covers uber, lyft, a airbnb and doordash. bernie, how do you view this sell-off what are the conversations that you're having with some of the investors in these names which are getting clobbered? >> yeah, two things investors are focused on one, what companies are trading at reasonable valuations
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we can't look at revenue multiples anymore, we have to look at ebitda valuations you're getting growth at increasing valuation and profitability. stock is trading 20 times ebitda and less than 20 times free cash flow the other area is where there's upside to estimates and we feel good about the end markets, travel basically which way you cut it seems to be on fire and for the summer airbnb is one of the few companies that still trades with double digit revenue multiple. we prefer to play the travel theme through a local property manager, less loft evaluation and we see significant more upside. >> let's talk about uber and lyft because that's been a real painful spot in the market, especially lyft coming out of earnings it doesn't seem to be a demand
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problem, but it feels like the market is waking up to the issues about driver shortages and the whole model around drivers and what that's going to cost these companies that aren't doing autonomous driving because they had to let that go as they were trying to become profitable for wall street. so where does that go? it feels like the market is pretty negative on that idea right now. >> it's a good point it's not only that the market is waking up to it, but the company is waking up to how much they have to invest especially with lyft coming out of omicron it's interesting, they dismissed the gas prices as a reason why they had to invest in driver supply now and it's coming out of omicron where supply takes a break and it takes a lot longer for supply to come back on i know the stock is down 33% yesterday but the company made massive strides during the pandemic to increase their profitability. you look at 2019 to 2021, that's almost a billion dollar increase net and ebitda that the company
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went through right now the stock is trading 10 times less ebitda but do you believe that ebitda estimate again, with the uncertainty and with these companies dealing with inflation, we're talking about inflation throughout the economy but really ride sharing was the leader in inflation when there's a supply and demand imbalance. we do a ride-sharing tracker that shows ride prices continue to be elevated relative to prelabor day levels. so there's some uncertainty, a, if consumers will continue to absorb this ride-sharing inflation and, b, how much do these companies, in particular lyft who took a break from investment, unlike uber who's been investing the past four quarters, if lyft -- how much more they have to invest other than what they called out in 2q. >> i know you like door dash thank you for joining us let's bring in david zervos from jeffries. david, i'll give you a little
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credit because you were skeptical of the rally yesterday that we were seeing off the powell news conference so what do you make of the reaction today, which is so much steeper and more severe even than the rally we saw yesterday? >> yeah, sara. we were -- i mean it was just about this time when we were talking. i think it's -- this is a liquidation. this is a liquidation of a lot of trades that worked for a very long time and people need to respect the fact that we're seeing both stocks and bonds go down at the same time. things like risk parity, things like 60/40 people are giving up on them and i think rightfully so. this is not the year for those trades so we need to manage our downsides. and i think mike kind of hit the nail on the head earlier in your discussion when you guys were talking about places to hide there's just not a lot of places to hide here if your portfolio can't take a pretty decent double-digit hit,
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you probably had too much risk on this year this was a year where the fed was going to be raising rates and giving qt and you should have been prepared for that through lower allocation to risk overall or selling out some calls or something that was going to give you some advantage when things got messy. this is what's happening right now. >> so would you increase exposure in that environment to things like utilities, which are faring better today, only down 1%, which is a very small decline compared to consumer discretionary which is down 6.25%. >> i think this is a powder dry environment, sara. it's one of those things where nobody knows where the bottom is nobody knows how much they have to fight this inflation. we might have a couple more quarters where inflation stays much more elevated than we like. and in fact the q3 inflation data will be really tricky that doesn't come out until after the summer when the fed doesn't have a lot of guidance we saw a big dropoff in
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inflation last year during q3. that's when the word "transitory" started to look more correct q4 we exploded higher and q1 this year as well. so the comps are not going to be great going into the end of the year we're going to get two more 50s. then the fed will look at the numbers and say maybe it's not coming down as fast as we want it to and it could be kind of dicey. so the idea that you would bulk up didn't make sense to me yesterday and doesn't make sense to me now. >> what about the idea there was some relief powell wasn't more hawkish and ruled out the 75 basis point hike but in spite of the productivity data if you're worried about stagflation, lower productivity, higher input labor costs, that they're just going to have to be and if they're not going to do it now, they're going to have to do it later, which sets them up more for a policy mistake? >> well, there is some silver
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lining here and i don't want to be so negative in a big way. this is not inflation rising, fed inflation credibility is i think, and i know this is not cons consensus, is very robust. whether we look at 5-year break evens or the long-term surveys from the university of michigan, they're all pretty good so the fed has not lost it. they have to keep it and keep it probably longer than they had hoped and that's going to hurt and they're raising real rates risk-free real rates going up does not help you when it comes to owning risky assets the makes the alternative, which is owning risk-free asset look a lot better that's where we sit today. it's going to weigh on the market and be tricky but i'm not that beared up on the growth side or the employment side. we've got so many job openings relative to seekers. the data is incredible the housing market is still
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doing very well even with higher rates and i expect that to be a secular phenomenon so i don't want to get too negative i just think the fed has to do some very heavy lifting in the next few quarters to fight this inflation and act aggressively and to kind of take back that medicine that they gave us a lot of and felt really good but we don't need anymore coming off the medicine always creates the shakes like this we had it with taper tantrums, we had it in '15 and '16 and we had it again in '18. >> it doesn't feel good. >> it doesn't feel good when they take the meds away. >> no. well, there was a lot of stimulus meds, whatever you want to call it we just showed the 10-year yield. it's pierced above that 3% level and really is higher now and convincingly so. where does the 10-year end the year, david? clearly this is bearish for stocks at the moment. >> i think what the market has to figure out, sara, is how much are they going to do balance sheet, how much are they going
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to do short raets? we're not going to know that until the second half of the year they're going to do a couple of 50s. they're going to indicate they're going probably beyond that, significantly past 1.75, up toward2.50 or 3 and so i think one thing is for sure, i don't think yields are going to come crashing down. if they come down, we'll get balance street contraction and drive them back up so it doesn't have a ton of value to it in terms of purchasing at this stage. and we're seeing a steepening, which is always an interesting thing. usually we get bear flattenings. so that's telling you -- and that's a real steepening, not an inflation steepening, expectations of inflation. so the market is expecting higher long-term real rates. that's a fundamental change in fed policy. >> david zervos, thank you for
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joining us on this critical day where we're seeing the markets plummet. two minutes to go in the trading day. mike, what are you seeing in the internals? can't be good. >> very, very lopsided to the downside look at that, it's well more than 10-1 declining to advancing volumes. you finally got 90% downside day. we can argue about whether that means there's been a little bit of a decent flush and a shakeout the last couple of years, the equal-weighted s&p against the nasdaq 100 and s&p has held up better so, in other words, the nasdaq 100 has caught down to the s&p and it doesn't mean you've escaped any pain but it shows you it's mostly the biggest stocks hurting volatility index is at 31, well below the highs of a few days ago. people seem very hedged up so it's not reacting as much to this move. the s&p is where it was just before noon yesterday. >> as we head into the close, take a look at the market. we are off the lows of the session but still down more than 1,000 points on the dow, about
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1100 points. we were down 1300 a few moments ago. s&p 500 declining 3.6% every sector is feeling the pain consumer discretionary hardest hit, utilities faring the best, only down 1% into the close, it's the nasdaq hit the hardest today, down less than 5%. again, it was down 6% in the final hour looking a little better into the close, still ugly. that's it for me i'll send it into "overtime" with scott. >> sara, thanks so much. welcome to "overtime." you just heard the bells we right here at post 9 are just getting started. in just a few minutes i'll speak live to a man who told you stocks were poised to surge in may. so what does cantor's eric johnston think now i will ask him on a day when stocks plunged, yields jumped and uncertainly roared we begin with our talk of the tape this no good, awful and terribly painful day for your money how much worse it might get from here let's ask adam


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