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tv   Closing Bell  CNBC  May 9, 2022 3:00pm-4:00pm EDT

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about the same as the nasdaq right now. tesla was trading below 800 earlier this hour and has climbed a little above that level now. >> and you look at the other four horsemen, alphabet, apple, meta and amazon, amazon the biggest laggard, down 4%. >> thanks for watching "power lunch" everybody. >> "closing bell" right now. >> thank you, kelly and tyler. more pain for the major averages to kick off this new trading week the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen take a look at where we stand. the nasdaq down 3.5% more selling to start the week after five straight down weeks for the zs&p 500. the s&p is down about 2.5% the only sector that is positive, consumer staples utilities are faring a little better you've got heavy pressure on energy, giving back a lot of recent gains, down 7.6% as a
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sector real estate and technology is at the bottom of the pack small caps down 3.7% bitcoin falling below 32,000 there's the nasdaq below 12,000. and the dow down 1.3%. here's a look at some of the most actively traded names at the nyse at this moment. nio and ford continue to be on the list of the most actively traded the past few sessions ev is getting hit especially hard we'll talk about rivian later in the show p palantir down. we've got a great lineup, including adam parker, jason trennert, holly newman croft to help make sense of this. let's get to the top story, though, the sell-off and your portfolio. stocks making new lows for the year but our next guest sees some
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opportunities. joining us here, adam parker and jason trennert adam, let's start with you you put a lot of new ideas out there in your note including utilities. you don't like them, which is odd, because they're one of the best performing stocks in the market today, this month, this year actually one of the only sectors that are higher. why is this not a good safe haven for you? >> well, the note was today, right? so we are observeing that it's been the second best performing sector year to date and has been acting well even when rates rise, which is a little counterintuitive what really struck me when we did our work is 80% of the utilities now have negative free cash flow, 20% can't pay their dividends. so a lot of the people i'm talking to are looking for short ideas, but they don't want to short stuff already down 50, 60, 70%. this is an area of the market that a lot of people don't pay attention to, so i was just
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trying to throw some interesting short ideas out there where there is a lot of company specific risk and they're not crowded and so it was really of that ilk more broadly, i'm getting more constructive on buy ideas during this sell-off because i see earnings growing this year and i see prices down a lot. so today's note was really just trying to find some differentiated short ideas more broadly i'm getting more constructive, sara. >> we'll hit some of the areas where you're more constructive, but, jason, what about you your investing posture has not been to buy this market and buy on sell-off days, correct? has anything changed for you >> not this year, sara i think we've been much more constructive in the past and much more cautious this year i do think that the sell-off in energy is interesting. we've been relatively long-time bulls on energy for the past 16
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months certainly only one day doesn't make a trend, but if you saw the markets go down in energy, so the energy stocks go down a little bit more, i think that would be very, very interesting because i think there's some structural reasons why those stocks make a lot of sense we think they make a lot of sense at anything over $50 a barrel i would say the impediments of drilling more make it difficult to see prices coming down a whole lot in our opinion so i think you have to be much more selective these days than you have in the past the questions about inflation and interest rates i think are going to continue to put pressure on tech stocks for a while. >> adam, do you like that? buy energy we've got a down day today it's still a sector up 38% this year is it too late to get in here? >> i don't want to insult jason, but he and i are of the same ilk. we've both been around the block and maybe we're thinking the same thing it's been my top sector choice
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since we lost our business a year ago for me it's a triple crown it's got positive momentum and cheap valuation and i think demand will exceed supply growth for a long time. sure, we could get some things on sale, but things have structurally changed there and i want to be buying these dips and net long energy for quite some time he and i agree there for sure. in terms of kind of growth stock, we're still recommending an underweight position in growth stocks generally. you can only buy the ones with growth margin expansion and positive catch flow. as i look at this earnings season, i think it was better than these prices indicate what's in the price now is a huge deceleration in earnings and i think that will prove to be pretty good entry points. in particular i'm looking at semi conductors. 25, 30% down this year you know, the world needs these
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things as you're starting to get them at discounts to the broader market, i think that will prove to be a better idea than buying clorox or whatever is up 3, 4% today for some reason. i'm probably getting a little more optimistic on semis >> you just think too much damage has been done in that group? it's very cyclical weren't you a semiconductor analyst in your prior life >> i sure was, sara, back when we met a long time ago i just look at these businesses and think the world can't exist without them, whether it's semi caps or semis. the challenge is they are overearning and things are rolling over what's in the price is probably the next trough already. if you're willing to be patient and are an investor, i have no idea what things will bring in the next three months but if i wait one or two years, i'll sell them at higher prices. >> i'm curious, jason, what you think. i don't think you're touching anything in technology, are you, at this point? >> i want to be really careful,
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sara it all comes down to quality, balance sheets and cash flow as adam talked about. in my opinion, i'm not particularly worried about the earnings for the market as a whole, i'm worried about the multiple i'm worried about the multiple because real rates are still extraordinarily negative and low. and the fed has just begun to fight. and so you can have a situation where the economy does okay, earnings still get better, but you have a lot of competition from other assets that you haven't had in a while so i think you have to be very selective in tech. we have a market weight on tech at our company we're very, very nervous on some of the software high-flyers. some of the firms that adam is talking about, particularly in semi conductors, obviously are very, very strong companies and they are interesting, but i think for the market as a whole you have to be careful here.
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>> you mentioned, adam, you think earnings aren't as bad as the market fears, but one of the things is earnings expectations haven't come down that much but they need to come down and that will reset the whole multiple of the market. >> i could have got guests that disagree more with jason and i i think we agree a lot i sometimes don't agree with the other people i'm on with look, i don't really think it matters if earnings have downward revisions i think it matters as long as absolute earnings are up what's in the price now is that '23 earnings are below '22 people think we're in a recession that's a little severe and that that will cripple earnings what i try to recommend to my clients is areas where i think relative achievability is better than others. so for me industrials look like they have very high estimates. they have come down but they hockey stick in the second half of the year. i'm cautious but energy and
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materials, select health care services, i think the estimates look more achievable it's always about finding the relative opportunity i think earnings will grow and ultimately the multiple for equities will expand over the next 12 to 18 months, only because other asset classes, including bonds, look even worse. >> bonds, bitcoin, everything getting hit. jason, adam, we'll leave it there. >> good to see you bye, jason. coming up, faang stocks are definitely getting caught up in today's sell-off the whole concept of acronym investing is falling apart he'll join us to explain what that means the dow is down about 420 points right now. you're an stitchwork master. but your staffing plan needs to go up a size.
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check out today's stealth mover. it's viatris the company formerly known as mylan labs it reported a big earnings beat and strong cash flow, although it did miss revenue estimates. the stock is up 6.4% the faang names getting crushed in this rising rate environment. facebook and amazon down 40% from their highs netflix is feeling the most pain, down 75% from it's peak. rockefeller national chairman sharma says thanks but no thanks, the folly of investing in acronyms. he joins us now to discuss
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you compare it to the bricks we remember what happened with that, also fell apart. is it the end of faang forever, do you think, or just until we get to a better environment in the market >> no, i think that this is something more fundamentally going on if you look at most of the faang stocks, they are part of the top ten companies in the world by market value that's where they were in fact even at the end of the decade. one of the analysis that i did here is if you go back many decades, what you find is once stocks make it to the top ten by market value in the world, in a particular decade, the odds that they will be there in the subsequent decade in the top ten by market value are very low, possibly less than 10 or 20% so i think that from such an elevated pedestal, these stocks
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are destined to underperform the market and even fall in absolute terms. so as a portfolio manager, i would not be allocating any capital to these stocks. now, there are one or two winners. historically microsoft has been a company that has consistently outperformed generally the odds are against these companies once they reach such an elevated level of valuation and ownership. >> do you think it's because -- because of the size or because they just got so trendy and memey when it came to marketing on wall street, different kind of products like etfs. >> both those things go hand in hand something succeeds, and once something succeeds, people make them into an investment fad. acronyms are invest fads these are very good companies that did extremely well. they compounded at an extremely
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high rate. once investors are all over these stocks, then you know that both the valuations and earnings estimates are too high and simultaneously the risks are increasing, whether it's the regulatory risks, the competitive environment is changing and rising interest rates obviously have an effect on multiples we have seen this happen decade after decade if you look at the leading horsemen, so to speak, of the 1990s bull market, once again, the top companies there underperformed dramatically in the subsequent decade. bricks is another example of that we lived through that. i saw that, how those bricks gut overhyped an after that people started to scramble to come up with new acronyms for new companies to capture that investment mania in emerging markets. something similar went on in the tech sector, and i think that this trend is now mature and
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major regime shift is under way in the markets. >> so where do you look next it's your job to come up with investment ideas and to figure out who the next share leaders are going to be and the next dominant companies what sort of industries or types of companies do you see? >> yeah. so i think that in terms of region, i'm looking at outside the united states, because i think that the share of the united states and the global stock market gap as we discussed today is extraordinarily high. so it's in some of the emerging markets and even in some of these tech companies i'm looking at places where the penetration levels are much lower in places like southeast asia and places like india and i know that your previous guests were speaking a lot about the commodities sector and i'm in agreement with that i think that the commodity area is where there's been a significant amount of
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underinvestment. and that's where you're likely to see the winners emerge from so countries, industries i think it's mainly out of the united states now and the u.s. is potentially destined for a similar decade to the 2000s where the s&p could ending the year, entire decade, given virtually zero returns so it is time to look outside and that's what happens in the u.s. the u.s. is a great stock market and great compounder over a hundred years or so, but after every great decade that the u.s. has, you typically end up getting a nowhere decade like the 1970s, like the 2000s, so i think that's where we're headed and the leading candidates of that bull market are also the big underperformers of the subsequent down market >> ruchir, thanks for your perspective. always good to talk to you interesting piece today. >> thanks. let's check in on the markets right now. we've still got a pretty sharp decline, down 2.4% on the s&p
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500. staples and utilities the only positive sectors it's energy, real estate and technology that are getting hit the hardest today. energy stocks down 7.5%, of course outperforming for the past year or so, up 44%. after the break it's been a grim few weeks for the bulls, but mike santoli is looking at one under the radar indicator with some hope. he'll explain next. then check out shares of uber getting crushed as the company has its annual shareholder meeting. we'll talk to an analyst who thinks they can turn it around and what the company is telling wall street today. we'll be right back. i could've delayed telling my doctor i was short of breath just reading a book... but i didn't wait. they told their doctors. and found out they had... atrial fibrillation. a condition which makes it about five times more likely to have a stroke. if you have more of these symptoms irregular heartbeat, heart racing, chest pain, shortness of breath, fatigue or lightheadedness,
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a clearchoice day changes every day. schedule a free consultation. stocks selling off again with the s&p 500 now trading about 17% from its all-time high mike santoli is here to take a look at how a bearish setup could actually, mike, spell future gains for global stocks what are you watching? >> in this case it's what companies are doing in terms of offering new shares or not
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offering them. this is from bernstein research. it shows you over time net equity issuance globally when this blue line is down here, it means there's negative net equity issuance. it means companies are buying back more stock so supply/demand gets improved. that was the global financial crisis this orange line is subsequent forward returns for one year but it's inverted. basically that is a huge gain in stocks, which comes after. also happened in 2020 of course, massively negative net equity issuance that's over here as a percentage of market cap and then great returns. here you are as the ipo markets closed you do still have the buy-back story. so we'll see it doesn't mean we bounced today, tomorrow or next week but it does suggest the slower moving supply/demand story is getting more favorable. >> and companies are getting so negative everyone is so negative on this
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market are you in the capitulation phase yet? >> it's getting there. it still feels a little bit too orderly and relentless as opposed to get me out at any price. but today it's really looking like another 90% downside day, somewhat washout but we're sitting here hovering above 4000 it seems like there's somebody or some machines that want 4000 to hold right now. up next, holly newman kroft, one of the highest ranked financial advisers on her advice for investors looking to diversify from stocks and bonds. we'll be right back on "closing bell." the dow is down about 500 points
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markets getting slammed today. the s&p is down for a fifth straight week. consumer staples a bright spot consumer discretionary, information technology and energy getting hardest hit right now. joining me is holly newman kroft. she oversees $4 billion in assets and is consistently ranked among the financial advisers i know you manage a lot of very wealthy people's money, but our viewers want to know what you're
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telling them to do in this volatile environment what are these client conversations like right now >> well, they're not as much fun as they were a year ago, i can tell you that. but also volatility is not necessarily bad and it's not unexpected we've got a lot going on in the world right now, a lot going on in the markets we've been positioning our portfolios more defensively the last little while to try to protect our clients against the volatility. >> what is defensive usually you might think bonds are a good safe haven. >> it means different things in different assets classes in the fixed income sector you mentioned bonds. we're seeing very, very short duration because you can get a one-year muni bond today yielding 2%. we think a year from now it might be higher but it's certainly better than cash we also like floating rate bond strategies that protect against inflation. in the equity sector, we prefer value over growth. your last guest just talked about the death of faang perhaps. we've been tilting away from
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growth into value. we also at newberger berman we like companies that provide income andreturn money to thei shareholders so we like dividends and companies that have proven to be able to grow their dividends we're finding those in consumer staples, in utilities, in real estate and our managers rely on fundamental analysis to find the companies that will buffer the volatility and still be able to grow. >> is it too late now to get into some of these strategies where some of these groups like staples and utilities are near the highs? >> you know, sara, it's never too late it's proven if you look back to the history of the market from the beginning, the market goes up 80% of the time sure, market timing would be great if you could time it perfectly getting in and getting out, but you've heard the famous saying, the hall of fame of market timers is an empty room,
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so it's never too late what's really important is asset allocation and diversification we don't like to position any of our clients or any of their portfolios to be able to be disproportionately hurt by a single stock, a single sector, a single asset class we're also today moving money out of equities and into alternatives we liked some liquid hedge strategies that are providing some buffer to the inflation and we like private equity and private debt because that's where we're seeing larger returns. >> what about commodities? are you allocating more in this area given the environment we're in and some of these supply issues >> we are. commodities has been a bit of a hard sell because you haven't made money in commodities the last ten years but you've seen it's done tremendously well and we are still allocating to commodities. with inflation, rising rates, the war, stick with it. >> what about technology it doesn't sound like you're there, but at this point i do
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wonder if you're having conversations with people that are interested in value, with some of these valuations at this point. these stocks are looking like value plays. are we there yet >> no. we're still tilting more towards value and away from growth remember, these companies drove the market for ten years they grew disproportionately so we're not so surprised that they're getting hurt disproportionately also with higher rates, growth companies suffer more. we're not quite ready to tilt back from value to growth. >> if you had a new client coming to you tomorrow and asking what kind of returns should i expect in the coming years, what should you say >> what's your appetite to risk? how much volatility can you stand and still sleep at night my job is to provide risk-adjusted returns that still allow my clients to sleep at night. >> how much risk should you have in your portfolio right now? >> look, more risk, more return. it depends on are you your age,
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are you retired, are you spending your money, are you not spending your money? i think in our expectations for equity returns certainly aren't as high for the next ten years as they have been for the last ten years, but i think it's reasonable to build a moderate portfolio with a target return of 6 to 7% we'll have years that we outperform and unfortunately there will be years where the market doesn't help us as much. >> clearly what's driving a lot of this pain is the fed is raising interest rates aggressively for the first time we've seen in decades really to fight multi-decade high inflation. are you guys thinking this is going to drive the environment for what, five years, one year >> i think inflation if it's not at the top it's very near the top. we're seeing signs that inflation is starting to come down the market is also predicting more hikes this year than the fed is suggesting. so i think a lot of the hikes have been priced into the
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market we'll use whatever monetary policy we can to help slow inflation, but we're already seeing signs of that in the market today. >> and you like dividends. i just wanted to follow up on this one it's interesting, because there is an alternative now for stocks you've got bonds paying yields that we have not seen in years. >> that's right. if you remember, a one-year muni bond paying 2% if you consider the tax savings, that's close to a 4% return. it's a pretty safe place to park your money and certainly better than cash, which is still earning nothing. >> but why dividend stocks >> if you look at the long-term returning of the equity markets, 40 to 50% of the returns have come from dividend reinvestments. it also provides a buffer to the volatility and to inflation. so it's not only dividend stocks, but it's high-value companies that we like dividends and that have been proven to grow their dividends so they can protect in these rising rates and high inflation times. >> holly newman kroft, thank you for joining me
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good to have you on the show i just want to show you where we stand as we speak the dow is down 575 points right now. s&p 500 is below that 4000 mark. it's down 3% the nasdaq also sell-off picking up steam, down a little more than 4%. bitcoin breaking down, hitting the lowest level since july. coming up, we'll discuss why analysts see more pain ahead for the cryptocurrency we'll be right back on "closing bell." don't like surprises? [ watch vibrates ] proactive notifications from fidelity keep you tuned in all day long. so when something happens that could affect your portfolio, you can act quickly. that's decision tech, only from fidelity.
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welcome back stocks are near session lows as we head into the close take a look at the nasdaq down 4% and the s&p which is flirting with that 4000 level we briefly breached it just a moment ago we'll keep an eye on it. check out some of today's top search tickers on 10-year yield getting the most interest again we see the 10-year yield about 3% there's actually buying today with a little lower yields which has reversed the trend rivian down 20%. david faber reporting ford will be selling shares along with another unnamed buyer or owner of rivian. that's killing that stock. nasdaq down 4% the s&p is the big averages, because that's where you're seeing the pain today, which is down 3%. and palantir down 21%. again, if you look at the
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market, it's energy, it's real estate and technology. those are the worst performers every sector is red except for consumer discretionary we're going to talk tech because it's tumbling again. jeffrey will be here on where he sees a buying opportunity and where we want to be. that story plus what is behind the plunging price of bitcoin when wta y iide keounse the market zone. everybody be cool, alright? with ringcentral we can pull bonnie up on phone, message, or video, all in the same app. oh... hey bonnie, i didn't see you there. ♪ ringcentral ♪
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plus kate rooney on bitcoin's breakdown. we'll kick it off on the broader market because stocks are sharply lower for the third day in a row this is the worst three-day losing streak since september 2020 mike, it feels like one day we're worrying about inflation and higher interest rates from the fed and another day we're worrying with growth, which is a bad combo. today it feels a little like the growth concerns because commodities are down a lot and we haven't necessarily seen that, including oil. >> absolutely. today and also a bid in treasuries so it does seem as if today the concerns maybe are a little more on the growth side but it has to your point become this kind of shuttle where there's no escape from this idea that the fed could make a mistake in either direction. too much or too little tightening investors are impatient to see confirmation that this idea of a peak has some credence to it yo beyond that it's just hunting for the most wounded parts of the market and most wounded players. if you look at the tech stocks
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that had massive concentrated hedge fund ownerships, they're massively underperforming. so whether it's liquidation for real or it's just people selling in anticipation or perhaps hope of liquidation, that's the phase we're in right now it's a pretty comprehensive flush lower. >> you're talking about this idea of forced selling, where we have hedge funds and some of the macro hedge funds, the combination of stocks and bonds and also bitcoin -- >> yes. >> -- where people have allocated in the last few years all selling off together is pretty vicious. >> yes and whether it's truly forced selling or just a sense of risk management when everything is going down in concert, you've had losses at one part of the portfolio, it makes you less able to have exposures in other parts so that's why people have been leaning on all assets. we'll see if we get any yields coming in at least today
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and even though the market is down a lot and it's cracked be be below 4000 on the s&p, it still feels like it's determined and relentless selling but it doesn't seem all that outright panicky. >> down below 4000 as we speak speaking of bitcoin, the weekend sell-off carrying into today the cryptocurrency falling below 31,000 to hit its lowest level since back in july our kate rooney joins us who are the sellers here is there a certain cohort moving out of bitcoin more aggressively, can you tell >> that's the interesting thing about covering bitcoin you can see the back-end technology where a lot of the buying and selling is going on they call it on chain data but it's really been selling across the board it's both the larger wallets, which they sometimes call whales and the smaller investors, in this case they're calling them shrimps, but both of those buying cohorts have been selling in the past week, and especially
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over the weekend it's interesting, some of the smaller buyers have been the more active market participants, at least in february and in march. they don't seem to be stepping in and buying the dip here there's a lot of questions about where the bottom is. 30,000 is a key level to watch a lot of investors have gotten burned there was data on the percentage of the market that's under water. that's about 40% of investors holding bitcoin at a loss or at least an unrealized loss and the shorter-term buyers, the cost basis is higher, it's around $47,000 with bitcoin trading around $30,000 there's a lot of people that have lost money so bitcoin is struggling to attract that new group of buyers. >> yeah, your numbers are pretty staggering on who's underwater what are you hearing from some of the smart investors you're talking to in bitcoin about what can turn it around
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does the nasdaq have to bottom what do we need to see here? >> the big thing people talk about and big investors i talk, to the idea that bitcoin has just been coupled and trading alongside with the nasdaq and qqq in particular. it's one of the side effects of bitcoin becoming a little bit more mainstream. with some of those bigger and longer term investors getting out, they say it needs to be sort of a shake-out here those investors who see it as a risk asset as they leave the market, they have really been setting the price in the past six months or so if they all get flushed out of the market, the only people that are left are the long-term holders who see it as a store of value so that transition needs to take place in order for bitcoin to decouple and trading as a risk asset. and then the bitcoin bulls would say if you zoom out and look at the one-year chart or ten-year chart, that's where they see the value. they say it's a long-term investment but it has been valuable for people in the near
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term. >> no question kate rooney, thanks. mike, how do you see the bitcoin correlation with the markets and correlation with the speculative trades that dominated over the past few years it got grouped in with the spacs and the meme stocks. a lot of those trades are cooling off. you could say they were in bubble-like territory. how far does bitcoin go? >> there's cross ownership no doubt among all those things pressure in one place creates pressure in another. but also it comes from the similar psychology of the great new thing that has amazing price momentum and that works a lot on the upside you're going back really only a little more than a year in price when it comes to bitcoin it's true, if you want to look at a 5 or 10-year chart you can say this has done great. the other side is it may be a long way down before we figure out what the right level is. all the way up it was about more adoption, more adoption. adoption for what?
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well, we'll figure it out. it's not like gold where you can say at some level industrial and jewelry demand can cover a lot of the price here. rivian crushed today on news that ford is selling 8 million shares and another unknown seller is unloading 15 million sales. it comes after rivian's stock lockup period expired sunday the stock is now down more than 70% this year. phil lebeau joins us phil, was it a big surprise that ford and other early investors are selling rivian shares? the market is taking it like that. >> it shouldn't be a surprise. we reported back on the day of the ipo and many people have reported since that those early investors were likely to sell at least a portion of their stake in rivian once the lockup expired. now, when rivian was trading at 175 a share, people said, wow, this is a great, look at all the money ford is sitting on far different story now.
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when you look at rivian, there are three things weighing on the stock right now. they have a couple of times now lowered their production forecast in part because of supply chain issues and higher costs. the question is will they be profitable in 2025, which many analysts expect from this company. if you do believe that, that's a long time to wait to say, okay, i want to see a payoff here. we'll find out more on wednesday afternoon when rivian reports its q1 results. >> the other thing that could be playing into the sell-off today is ev stocks across the board are down 10% this group just continues to get hammered what are you hearing about the pain >> they're getting -- they're getting hammered and will continue to get hammered, sara, especially the smaller ones. forget about tesla tesla is cash flow positive. it has the money to support its growth in the future i'm talking about the small ev startups, many of which went public through spacs do they have the capital to make
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it to the point of production and sizeable production? if they don't, they'll have to go back tont capital markets and this is not a good time to go to the capital markets, especially when you're talking about building evs for down the road. >> phil lebeau, thank you. dow is down 761 points s&p below that key level of 4000 and the only positive sector, consumer staples, just turned red. so all 11 sectors are lower. staples and utilities hold up the best but both negative nasdaq 100 down 4.4% look at the travel stocks. underperforming the broader market seema mody joins us. seema, travel companies reported strong earnings and the stocks are getting punished. >> there's two competing things the macro and the bullish outlook. right now those macro concerns are pushing the stocks lower, despite marriott and hilton turning a profit, reinstating
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their defensive sending. booking holdings was a standout over the last week the stock was up 10% now reversing some gains saying summer gross bookings will be 15% above 2010 levels. i've looked backat prior economic recessions to see how travel has responded as expected, americans have come back on their travel budgets when the economy slows but executives i speak to say this time is different because we're coming out of a pandemic and pent-up desire to travel is so strong. are you going to cancel a flight to see your family because the economy is slowing >> maybe it pushes back the whole international. today definitely has a global growth fears kind of sell-off. the chinese currency was allowed to drop 1% today that's a big move. i want to zero in on
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technology because it is one of the worst performing sectors again today. nasdaq down more than 4.5% brent thill joins us i'll ask you a question you don't know the answer to but i'm sure you're having interesting conversations about with clients, which is when does tech bottom what does it need to see >> i think we have to have companies fundamentally cut numbers and acknowledge macro headwinds are in none of the companies have done that to a big extent so most of our clients are waiting for them to make the cut, and most of those cuts would come through the next earning cycle into the summer. so stocks are obviously well ahead of fundamentals. we've had valuations come down now we need the fundamentals to be reset and companies have to come out and acknowledge what has happened and give us a sense of where that's at until they do that, i don't think our investors want to get in front of it this has taken on more
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negativity than we ever could imagine. we have no buyers on our desk. there's max pain and it's darker than i've seen in the last decade in covering many of these names. >> who needs to lower numbers? apple made a pretty big warning about supply chain and china netflix seeing its user growth slow to the point of a decline it doesn't feel like these companies are particularly optimistic right now >> i think software coverage is delayed. my coverage is software and internet if you look at software, many of the reports are okay i think you ultimately have the settling in effect of what happens in '23 and do we see a recession. and so many of the companies have said, hey, things are fine, we're a pandemic beneficiary, this continues and everyone has parked in these stocks so i think ultimately many of the companies still have to give that i think investors want to wait and see how bad the fundamentals are this summer and then come
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back to these names. i can tell you with my conviction that the biggest names in wall street right now are sitting out there and waiting. we did not see that volume at this point on our desk it doesn't mean it's not happening anywhere else, but certainly right now the conversations we have are those investors want to wait >> no buyers. >> no buyers there's a massive buyer strike right now. >> so, brent, what do you tell them where they should be, where they want to be, when a turn, if a turn happens and we could be waiting a long time for it. but as you look at these valuations get crushed, what are you telling them what looks best right now? >> rotating to the highest quality stories that have good growth and profitability companies like microsoft, intuit, cyber spence is going to continue regardless of what happens. the environment in palo alto is in a great position now. if you look at amazon right now, you're getting the retail
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business for free. if you look at the aws and ad business, the sum of the parts equals the market cap today. amazon at some point will get the retail business fixed but they'll come back. google still remains in a great position so right now i think many of our clients are long these big bellwether names, short all software and internet. that's worked phenomenally well. at some point that comes unwound and everyone will want to come back to the snowflakes, the datadogs, the high multiple names. but you're continuing to see those names go down 5 to 10% every single day, consecutive days in a row. again, i don't think we're at the bottom yet for software valuations yet. >> well, it's confusing because what we heard from microsoft and even ibm, this time around the companies are not looking for companies to cut their i.t. spending and i.t. budgets that we've seen in previous slowdowns
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and the pipeline looks really strong and that's a priority for companies. it hards to figure out what that means for some of these software names. >> it's a priority but don't be confused about what these management teams are saying. they have been huge beneficiaries because of the pandemic the comps are hard, the multi multiples are tough. if you believe that why wouldn't the ceo and cfo in snowflake be selling stock? they'd be buying stock are they buying stock right now? no, they're selling. they sold in q4. so it's a counter to what they're saying, which is they're saying one thing but doing something else with their own stock. i have huge admiration for these management teams but i think you have to basically say they're saying this because they haven't seen things. the deals that they were working on last year, they're closing now. >> there's a lag. >> the pipeline -- yeah, it's a
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lag. what's the fall and early '23 going to look like and that's the concern no one knows but ultimately that's the concern >> we've got to leave it there we're a minute to the bell brent, thank you really interesting and especially on what the managements do and not what they say. mike, what do you see in the internals. >> very, very negative, sara another 90% downside volume day. either the second or third in the last few days. you see these in clusters. it does show you very, very heavy liquidation. it burns itself out but there's some dislocations most likely. new lows versus new highs extremely lopsided you don't normally see more than 300 versus 25. volatility index is up around 35 and not racing to new highs even though the s&p is lower. it shows you people are hedged up and it's been a relatively orderly move down for now, sara. >> a tricky market, here we go
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the dow is down 656 points s&p 500 down 3.2%. it is below that 4000 mark the only sector positive are staples, just barely energy, real estate, discretionary hardest hit. nasdaq going out with a loss of 4.3 4.3% that's it for me on "closing bell." i'm sendin it to "overtime" with carl quintanilla. >> welcome to "overtime. you just heard the bells and we're just getting started we'll begin with our talk of the tape and another major sell-off on wall street all three major averages plunging again today new 52-week lows in tech taking the brunt of the pain. the nasdaq down about 4.25%. 10% over three days. is there more selling ahead or is the worst over for your money? let's ask avery sheffield, from rockefeller capital management on an historic day you might


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