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tv   Closing Bell  CNBC  May 20, 2022 3:00pm-4:00pm EDT

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anything no, very few are benefitingfro higher prices. >> but we began the program looking at three great companies, apple among them. as powerful a brand as there is. we end the program with deere, as powerful a brand as there is. >> exactly if they're not benefitting who is. >> all suffering in today's economy. thanks for watch, everybody. have a good weekend. >> "closing bell" starts right now. thank you, kelly and tyler stocks giving up an early rally attempt with the dow heading for its longest weekly losing streak since the 1920s and the s&p 500 on pace to close in bear market territory. the most important hour of trading starts now welcome to "closing bell." i'm sara eisen we are off the lows. the dow is down about 350 or so right now but that early rally attempt just did not hold. s&p down 1.5%. we're now down more than 4% for the week
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two sectors green right now, real estate and health care, so defensive plays. consumer discretionary again at the bottom of the pack the nasdaq down 2.25%. it is down more than 5% on the week and check out some of the biggest losers on the week in the s&p 500. some shocking moves. it tells the story of what went wrong this week. retail earnings causing all sorts of concerns about broader health of corporate america and concerns about what inflation is doing to profits and concerns about the consumer look at target, losing 30% bath and body works, ross stores were hit it's the biggest of the retailers to have a disastrous post earnings move coming up we'll talk to the ceo of blue owl which has more than $100 billion under management. whether he sees any end in sight. plus, we'll check out the plunge in shares of kohl's as questions emerge about whether a takeout deal will actually happen we've got new details to you plus we will talk to the head of
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the activist firm which just penned a scathing letter slamming kohl's management and its board of directors threatening legal action. another ugly day on wall street joining us, keith learner and mark lehman. mark, you like tech stocks tech stocks did not do well this week and haven't since last fall why is now the time to get in? >> well, i don't know if now is the right time overtime we've proven that being a bull on tech with the right companies has proven out there are periods obviously there have been very tough on tech we're going through one right now. but i think as that continues to overtake the economy, you'll have to find entry points with some of the great companies. you look at apple down 30%, microsoft. there's nobody left unscathed. but if you have an opportunity to buy companies that are durable through this market, you're going to want to pay attention, down 30%. that's where we're paying attention here at j & p.
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everything is for sale right now. the only thing that's not in a bear market is assets under management that is waiting to be deployed nobody is going to hit the first -- the bottom, i think we're waiting for that window to put more money to work it has not happened yet and i'm waiting for that but if you have a chance to buy some of the best companies in the world, you probably wanting to start doing that. >> but i'm sure it's been a painful year for you you've liked these companies as long as i can remember. >> i was here on your show in 2020 when i said this is going to overtake parts of our attention. nobody wanted to pay attention then either. two-year charts and people are doing just fine. anything a year or less and you're not doing fine. fortunately, like a lot of your investors, you have to take a longer term perspective. it's very hard to call tops and bottoms. so you're right, it's been very painful in 2022 and late 2021 but if you take that longer term perspective over the course of my career and certainly the last
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few years, you've done really, really well. remember, tesla bottomed out at $35 a share three years ago. $35 a share. it's down 50% off its all-time high but it was $35 a share three years ago. nobody is talking about that right now. >> no, everyone is talking about how it still might be too expensive for this market. >> correct. >> even though it is a big loser today. keith, i want to bring you in here is mark right to buy tech, some of these bigger tech companies that drive the company like an apple or alphabet 30% off its highs? >> sara, great to be with you even though it's another brutal week we're underweight tech as we zoom out a little bit, a lot of these names have outperformed the market by a huge margin the last five and ten years and i think tech has a problem as far as positioning. remember coming into the year the top four or five stocks accounted for over 20% of the
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market so i think that's part of the issue is heavily owned and still what heavily owned we're not trying to call tops or bottoms either, but i will say today you made a 52-weeklow in tech we'd rather see some stabilization before getting more aggressive. the last point is the earning trends relative to the market are moving sideways. so we'd rather be in energy where earnings trends are moving higher, materials, health care, as opposed to find something to pick a bottom in tech. >> you're both in the market neither of you sounds downbeat or bearish on this market. keith, the story changed this week i pointed out some of the performance of retail. the two things holding up in all these worries about interest rates and inflation and recession were corporate america, earnings, revisions and the consumer
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those two things got questioned this week amid some of these earnings does that not make you change your minding about the market? >> we downgraded our view for the first time in two years in early april and stocks have moved down double digits since that downgrade what we're saying to our clients today -- >> but it wasn't an underweight, it was just -- >> no, but we moved from an extreme positive position to more of a neutral position we've reduced risk every single month since february february, march and april. now we're telling our investors at least a lot of this bad news and uncertainty is being factored in and we wouldn't be sellers for longer term investors. we're down 20% if you look at anaverage recession which people are concerned about. that's not our call. the average drawdown is 29% so oddly you're already pricing in about a 60% correction i do think as prices move lower, when you look over the next two, three, four years, the return prospects for stocks are moving
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up the only challenge that we have right now is still the fed and we don't have the fed put so i think that will continue to add volatility but on a short-term basis, i think the risk/reward is improving short term. >> mark, i guess you would agree with that in terms of the tech winners that you want. you mentioned tesla and apple. what about some of the higher growth names that have been harder hit zoom video, docusign, 76, paypal, 75% off the highs. do you see any winners there >> paypal around $80 a share is a company that is the ecosystem for the kind of payments environment that we're going to have for a while so i think what they own in terms of their assets, they're trading at mid-teens multiple is a name that you can start to lag into, down a fair amounting. paypal will be part of our payments ecosystem for a long time docusign is down a great deal.
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you've had insider buying over time and those are the kind of names over time that will turn to profitability in the next couple of years. they're certainly going to start slashing their costs and slashing their r & d i think we've had this economy where spend, spend, spend. you can always hire people, always spend more and get more market share that's tempering right now it's a good thing for the economy and a good thing for the future of how we pay and how we docusign and how we live our lives. that's why i'm putting companies like apple, docusign, paypal, that will be here for the long term i'm not calling the bottom here but you're finding great companies in an environment that's far more favorable. >> you went there. i picked the nasdaq 100 names that have been hardest hit and you like two of them mark, keith, thank you both for joining me today have a great weekend. >> thanks, sara. after the break, former macy's ceo terry lundgren rweigs in on the brutal week for big
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box names. later we'll talk about the market's losing streak with the ceo of blue owl which has over $100 billion under management as well the dow is down about 461. the low was 617. we'll be right back on "closing bell." ♪ ♪ what do you think healthier looks like? ♪ ♪ with a little help from cvs... can support your nutrition, sleep, immune system, energy...even skin. and before you know it, healthier can look a lot ♪ ♪ cvs. healthier happens together.
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s&p down about 1.8% today. today's stealth mover is allstate, the insurance giant, one of the weaker performance in
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the s&p after argus downgraded the stock from buy to hold the stock is down 3.3% it's been a terrible week overall for retail after disappointing results from names like target and walmart, both companies saw their worst days in the market since 1987. another stock getting hit right now, ross stores yesterday they reported earnings that missed wall street estimates. the company's operating margins were hit by transportation and labor costs. a common theme this week, plus they missed on sales joining us now is terry lundgren, founder and ceo of tjl advisers, former macy's ceo and chairman long-time retailer terry, what did we learn about the consumer this week >> well, the truth is, sara, about 70% of the retailers who announced first quarter earnings beat -- met or beat top line or expectations several of them missed the
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bottom line expectations and they got crushed i think the market is just waiting for some sign that we're heading toward some negative news here and we got it. we got it from the big guys. and frankly i was not expecting the shortfall in earnings from both walmart and target. but i do -- as i digested all of this information for the last few days, it does appear to me that there still is consumer demand out there the consumer is ready to spend you've still got $4 trillion more versus pre-covid in terms of savings it is coming down but there's money to be spent. so i'm somewhat optimistic still about certain categories of the business returning with positive performance. >> well, that's the key. what we learned from these companies, listening to their calls and digging into some of the sales numbers, terry, is that she is shifting her
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spending against discretionary items like tvs and into staples because inflation is really starting to bite i think it took the market by surprise that that is happening now. all we've been hearing is the consumer is in great shape, things are going swimmingly. >> right well, a couple of detail notes what we're all looking at is the aggregate of the february, march, april f february, march, was actually pretty good. the tail end of march weakened and april was not good at all. and there was clearly weather impacting. i didn't like to talk about it when i was running companies, but the fact of the matter is, it does impact performance of apparel in particular. and so when you have the coldest march and april in the last 20 years, it definitely has an impact on sales, one but i've also heard from those who are making comments, sara, that may got better and so is
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there starting to see that shift back for those other categories that didn't perform as well as you pointed out during covid the ones that did perform well, home business, home office, furniture, electronics, we've got those now. >> yeah, it's not happening anymore. >> so what don't we have and obviously we haven't needed apparel except maybe the waist up the last couple of years. and i think that's still got an opportunity for an improvement when we do return to the office, even if that's only three days a week. >> not activewear, which i think hurt kohl's yesterday. terry, on the profit side of things but that was pretty worrisome for the street and surprised people, just the magnitude of the misses from some of these companies. you have led macy's and other retailers for, i don't know, how many years have you ever seen a cycle and challenges like this >> this is a hard one.
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i can tell you this, i spent an awful lot of my career focusing on the details of planning and trying to get it right i would say to one buyer, okay, i'm all over you and your category let's go let's roll the dice and take a big move here and go forward that doesn't mean everybody. over here, i'm talking to this group. not so much over here. so i spent a lot of time focusing on those details. and what i'm seeing out there is this is one of the hardest times to actually plan performance by category that i've seen in my career so i think that's what's happening. i think some have planned better than others but i think it's going to continue to be complicated. and by the way, the supply chain issue which you and i have talked about in the past, it was difficult. obviously it was news last year. well, it takes about six months
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for that inventory to get produced and shipped and arrive into the store, so you're seeing that show up on the shelves. or as i said not show up in some cases on the shelves and that's another issue. that's going to continue because i think shanghai is one of the biggest ports in the world and has been basically out of business for months. >> but it's not just the supply chain, terry and there were some questions about whether it was poor execution here because there were other issues like overhiring and wages and managing the staff levels, marking down inventories those sort of issues raised concerns about execution, don't they >> they totally do, and that's planning for me. you have to plan that up front you plan your costs, you plan your inventory, you plan your receipt pattern, and -- by the way, you're going to take some risks in doing so, but i think over time you get some experience about these patterns and i think the ones who have planned most effectively have been able to manage that i do think that the inventory
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buildup is a concern, at least in many of the categories i supervise for my career often or cyclical and seasonal. and i think if you've got the wrong inventory coming at the wrong time, you are in trouble for some period of time. it takes a while to get out of those difficulties, it doesn't disappear overnight. >> so who are the winners in this environment vf corp is at the top of the s&p off earnings, tjx had a really good quarter and were rewarded how do you spot those companies? where do you see them? >> you know, i started to talk about earlier, i think the ones that are in the categories that haven't really fully reported by the retailers that have been reporting so far, those who are catering to the consumer who's going to purchase items, including apparel, for travel, when they start traveling again, when business travelers begin to
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get back on airplanesand travel, they're going to need more wardrobe changes. when you see people coming back into the office. i think all those businesses will benefit from that i think vf corporation is one of those, frankly and i think dillard's, their stock is getting slammed, but they're up 23% i mean that kind of blew me away and they're in all those categories that i just mentioned. i think beauty will benefit from this return as well. >> that's an interesting strategy we've got a bunch more retail reporting next week. terry, thank you terry lundgren, long-time ceo of macy's we're down about 400 or so on the dow. s&p is down 1.5% so we've actually come back a little bit off the worst levels of the session real estate is your only positive sector. health care is holding up pretty well and so are consumer staples. consumer discretionary at the bottom of the back but that's largely the story of tesla big tech is getting hit again
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and industrials. the nasdaq down 2.25%. coming up, we'll talk to jonathan duskin, the activist who just wrote a scathing letter slamming kohl's board and its management saying they withheld information from shareholders and raising legal action check out nft top search tickers. the 10-year yield on top there's buying of treasury as the concern on wall street shifts from inflation and higher rates to growth and slowdown 2.75 on the 10-year. there's tesla down almost 10%. apple, again rough week, down 2% the s&p 500 and dow rounding out the list we'll be right back. ♪ ♪ jerry, you've got to see this. seen it. trust me, after 15 walks it gets a little old. i really should be retired by now. wish i'd invested when i had the chance... to the moon!
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s&p 500 down 1.6% as we speak, tracking for a weekly decline now of about 4.5, a little more than than.
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joining us is bob pisani and frank holland. bob, let's start with you. what are you watching? >> the important thing is while tech was briefly up for the week or outperforming, i should say, not up, it's not the case here so the mega cap tech names are continuing to decline middle of the day. no particular reason why they're getting hit today. amd, nvidia and particularly apple and microsoft, both are which are down in the 25 to 26% range off of their 52-week high. so they're in bear market territory. there's two sectors that hold up very well. this week we saw consumer staples fall apart there were three, now there's two sectors. energy stocks holding up comparatively well with oil at 110, 113 or so marathon, apache exxon as a 52-week high. chevron is the best performer in the dow, up 40%. the other sector still holding up is big pharma not biotech, big pharma.
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merck was at a high, johnson & johnson has been holding up well, bristol myers, lilly those two sectors continue to hold up. the bears say eventually they may too fall apart but right now they're holding up quite well. i want to put up a point about the s&p from the dow jones indices. they're making a call on the bear market here if the index closes at 3827 or below, we will classify 3837 or below, we will classify january 3rd, 2022, as the ending of the bull market and starting date of the bear market, 3837. the s&p right now at 3843, sara, so just six points or so above that that just came out a little more than an hour ago from s&p/dow jones indices. >> so that's 20% from the highs, right? >> that's right. and their point is if we hit that, we close there, that
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will -- january 3rd, which was the old 52-week high, will mark the end of the bull market and start of the bear market if we go below that fig, 3837. >> it's been a rough ride since then bob, thanks. let's get to frank holland on the rough week for cloud and cyber stocks. >> yeah, another rough week in this sector. the wcld cloud computing etf will finish with its seventh straight negative week geo political uncertainty among the factors. those were like amazon, google datadog down 16% this week, now 54% off of its high. cloudflare down 18%. forward pe 2800 snowflake down double digits this week, almost 900 times forward earnings also 75% off of its high cyber stocks the one area working after a strong report from palo alto networks.
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after earnings, the ceo said demand is up because of the ukraine war and the company raised guidance well above what the state was expecting. tenable and sentinel moving positively after that report. >> frank holland, thank you. for more on today's sell-off let's bring in blue owl co-founder and ceo blue owl is an asset management firm which had its investor day today, doug. thank you for joining us >> well, it's nice to be down. i was hoping for a big update with our investor day but i see that our stock is actually up three cents on the day so i will take that as a victory. >> all right, doug so tell us how the volatility and the changing rate environment is impacting your business. >> well, listen, i was listening to the show before i came on and we are not in the equity markets. we are an alternative business
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we focused on three core cat c categories we have a direct lending business which is benefiting in this environment we have a gp solutions business where we take stakes in very large cap alternative managers and we have a triple net lease business i have to tell you when we talked about this today at investor day, a lot of companies are coming out, lowering guidance and there's obviously a lot of headwinds we actually have a lot of tail winds in our business and so we upped guidance today i'd say people came away pretty pleased. let me just comment one thing on what we're seeing on lending because that's our biggest vertical as rates go higher, you know, one of the benefits for us is all of our debt, all the loans we make are senior secured and floating rate. and so our investors benefit
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we bloat off of three month or six month libor or sofur and so our investors are getting higher and higher returns the second thing is with so much volatility and so much uncertainty, the banks have pulled out they started to pull back in '08 and it's gone on for a long time but right now if a company is asking for a bank to put a commitment on their banks, how does the bank do that? >> so you step in there? >> and we're in it for the long haul you've probably seen that recently we led a deal for a company called anaplan they are buying a world software plus. >> do you see more of those as software valuations have come down >> we have announced three and i
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can tell you we are working on quite a few deals. and the size of those deals range from a couple billion to well in excess of $10 billion. like a few years ago, would you have ever thought that direct lenders would be in a position to be stepping in and providing the capital to buy out greater than $10 billion but that is the case today if the market stays volatile -- >> there's more opportunities? >> well, yeah. >> so tell us about the dividend, which a lot of people like your stock for, growing it. how much confidence that you will have that you will not have to cut the dividend in this uncertain environment? >> well, for us cutting the dividend would be in my mind nearly impossible. and the reason for that is 95% of our revenue comes from permanent capital streams.
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and all of our income comes from management fees. so think about a long dated pool of capital where all of the revenue is from management fees. just to give you a great example, i laid this out at investor day today we did $523 million of distributable earnings last year we will earn that $523 million for the next ten, 15, 20 years so the question is how do we grow it? well, we have other pools of capital we'll deploy and start earning fees and that will roll into that annuity. can we grow beyond that and then, you know, continue to look for a creative acquisition so just to give you an idea, today we talked about getting to a dollar dividend per share. so i'll ask you a question if we get to a dollar dividend a share, can you see any scenario off of permanent capital, long dated pools of capital where we
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can trade at $10 or $11. i just don't see it. >> well, speaking of your trading, spacs have had a really rough time and i feel like you're one of the few that might -- did you ever break below $10 and didn't trade below the issue price? why is that? >> well, you're right. i think the spac index is down about 80%, but we used the spac as a way to get public it's really in the rear-view mirror for me and my team. we look at ourselves as the newest large-scale alternative asset manager. we don't think we should be judged on the route, how we went public, but rather what are the fundamentaling of our business and i can tell you that we think we have something that is differentiated, unique, versus all the other alternative managers in the marketplace.
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>> what about the ipo market freezing up, does that affect you at all are you involved in any of those deals? >> well, the ipo market freezing up is actually a benefit for us. if you're notgoing to go publi but you need funding, we have lots of ways here at blue owl to provide capital to you if you're an alternative manager and thinking of going public, we have the largest player in tp stakes we can come and take a stake in your usiness, give you that capital while you wait to go public if you're sitting with unencumbered real estate, through our triple net lease product, we can come in and write very large checks to free up capital as i said, we are one of the largest lenders in the market. so another source of funding is for us to step in and provide capital. i will mention just one quick area you know, we are one of the largest lenders today to the software space
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it's been incredible for us. $20 billion of loans, never had a default, nothing in arrears. the fund has generated about a 15% gross return we focus on two areas. one is we provide capital for new buyouts, but we also work with companies still sitting on the balance sheets or in the funds of the vc community. think about a company that is growing and it's used to always doing the next up round. well, we're in a position to come in when markets flatten out or like they are today where values have come down where we can come work with that company and come up with a solution to meet their funding needs. >> doug, it's an interesting place to be in this market with all this happening and an interesting time to be raising your guidance. thank you for joining us on investor day i've got some new reporting to share with you here on the
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kohl's sales saga speaking of deals. the major bidders are now sitting on the sidelines a person telling me that the company has been told that a deal cannot be financed in the 60s. remember, kohl's rejected a deal for $64 a share saying it was too low. in this deal, it's a big one, lenders are required, everyone, bidders and their financiers were pretty shocked by the surprise miss on sales and lower guidance yesterday yes, it happened to walmart and target earlier in the week unlike kohl's, they're not involved in a sales process. i did reach out to kohl's for comment, did not get one now, i can tell you according to sources, nobody has officially walked away from this process, but that the big players that were doing the most due diligence here on this deal are now officially on the sidelines and the prominent retail bidders
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are on hold. hudson's bay, sycamore group have been the top bidders. another factor weighing on that stock today, a scathing letter from shareholder mckellum calling the earnings extremely disappointing. they said it was alarming to learn yesterday that the current board appears to have withheld material information from shareholders about the state of kohl's in the lead-up to this year's we are and we are actively exploring claims against the board and will take legal action, if in iare, to protect our interests as a major long-term shareholder and the interests of our foal shareholder. joining us is mckellum ceo, jonathan duskin. i don't know where to begin. i can tell you according to well-placed sources are telling this company they're on the sidelines because they can't get the financing.
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>> this is the first i've heard of that. it's obviously disappointing to hear i'm a little surprised by that i've heard slightly different things i think you made the point about financing. remember, so much of this is going to be financed by the real estate that the company owns so i don't know how reliant it is on the debt markets if we're talking about pick your price. $9 billion, five or six could easily come from the real estate so the amount of real estate that they would need to finance this is actually relatively small and might be one turn of leverage on ebitda, so that's not significant. but i don't -- i don't doubt what you say that people are surprised and shocked and disappointed and want to circle back and make sure they understand what they're underwriting because those numbers as we point out were disappointing and obviously the company sat on material information and didn't share it with their investors it doesn't sound like they shared it with the potential
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buyers. >> right. >> so i do feel like this is such a failure of leadership and governance that they could even be in this position. remember, they have these offers back in january they rejected them had they moved forward and not put a poison pill in and done all the things they have done to entrench themselves and trying to maximize shareholder value, this company could have been sold a month or two ago. >> it's now in the 40s and i'm told that a deal can't get financed now in the 60s. so what is your plan of action here you've threatened legal action why don't you just walk away from the stock >> well, we ran a campaign two years ago. we think kohl's is a good company, could be a great company. we see tremendous value here we think it's being poorly run we think the opportunities are pretty significant for kohl's to perform better you don't have to look too far
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to see companies that are outperforming throughout this whole period, whether it's dillard's or macy's. even some of the companies that had hiccups, a walmart or target, those companies are still up significantly from pre-pandemic levels. even their sales were okay when they reported. they had some problems with gross margin and too much inventory, but kohl's sales were negative we're long-term holders, we want to create long-term value. we want to get the right board in there and the right board configuration. we didn't even touch on two of the top four senior executives leaving. >> one of them announced that they were going to dsw today so i think that cleared something up. >> you know, look, i'm a little bit skeptical. doug -- i believe it was doug howe had an $18 million change of control provision he had a $9 million severance
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package. it seems doug might have been given the signal that maybe he wasn't going to mang it. i don't know why -- >> so what is your end game here are you just pushing for a sale at any cost? how does that change shareholder value? >> when we started this campaign, m & a wasn't on the table. we nominated great directors we put tom kingsbury on the board last year. our intent was to help this company be a better company and create long-term value unfortunately, given the dysfunction in the board room, the mismanagement by the executives, they put the company in an unusual space, difficult space. you have to see what these offers are it's hard to know what to compare it against and it's hard
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to know the validity of their own plan and that's why we think this company really needs to acknowledge that they did withhold material information and realize that this whole election was likely to be invalidated and they're going to have to get a vote again. >> you're talking about the -- you only received 10% of the vote do you really think that would have been materially different >> sara, personally i only received 10% of the vote but our two nominees received 40% of the vote we were very close to getting them on the board. and i'm -- i mean you tell me. if you had the information today before the vote, you don't think you might have voted differently that this company was going to materially miss numbers and have a significant drain in their cash they burned a billion dollars of cash january canner was the head merchant for macy's. you don't think as a shareholder you might have liked to know
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that their chief merchant was leaving and he's been thinking market share for kohl's might have been a good addition? >> idon't know when any of tha came to light or when they knew that but they were not the only one that was surprised this week, with walmart and target and there were plenty of calls that they should have warned jonathan, quick final comment and then we've got to get to the dow, which is coming back in a big way right now, about to go positive >> those other companies weren't in the middle of a contested election this company came out and misled investors and told the story things were great and vote for them they were in control and they were trying to sell the business as well it looks like they failed on almost every count. >> jonathan duskin, thank you for joining me on a big news day for kohl's. we are going straight into the "closing bell" market zone fast money trader dan nathan is here with me to break down these
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crucial moments of the trading day, subbing for mike santoli. good luck, dan stocks are well off their worst levels all three major averages tracking for major losses. down seven weeks in a row. look at this reversal. we had a bounce attempt at the open lost it all. got down 600 points and here we are climbing into the close. >> yeah, one word, sara, is apple. you just quoted the dow. if you look at that's the largest component in the s&p 500, it's not the largest component in the dow but it's having its way back to break even here and it looked a little nasty. this stock had been this week in my opinion a real leading indicator about where the broad market was going to go we had a day yesterday when the stock was down a couple percent, when the major indices were unchanged. it's telling me investors are starting to get around to some of the stocks that they were holding on to very dearly, but
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at some point were looking to raise some cash and that was the last place to do it. >> one stock that is not making a comeback today is john deere, heavy equipment maker, beating wall street estimates. but the company missed on revenue because of weaker than expected sales of tractors and other small agricultural machinery. our seema mody joins us. over the last year john deere has managed supply chain issues pretty well. the stock has outperformed it's been a beneficiary of all the tightness in the markets for agriculture. so what happened >> sara, you're right. this was a surprise miss from john deere it's been regarded as one of those industrials able to manage supply chain issues much better than its competitors this quarter a different story over a billion dollars of inventory in-house, inability to procure the parts it needs the demand story does remain strong yes, farmers are feeling the pinch with fertilizer prices up but its backlog suggests orders are there. the smaller tractor business tends to be a bit more tied to
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the housing business they like those lawn mowers. deere says that market is being impacted by higher interest rates. the stock on pace for its worst day in two years, so yes, the market may be off the lows of the session but this is down 11% with a price-to-earnings ratio 15 times back to levels not seen since 2020. >> do you buy it, dan, down 11.2%? >> no. >> why >> you don't buy this, you don't buy cisco. those are two negative revenue reports. again, i think the way that you just segued that to seema is really interesting these are companies that have managed the supply chain isssues pretty well. we've just seen one prominent analyst raise the red flag on that another name, apple, managed supply chain issues pretty well
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in that last quarter here's the thing, if we keep saying demand is good, okay, let me tell you something. what i took away from target is that consumer demand is changing right before our eyes here and whether we want to recognize it or not, i just think that if you're going to give these companies the benefit of the doubt when we've just had about six major u.s. companies, you know, disappoint for a whole host of different reasons and you want to explain it away on inflation and supply chain issues, i think you're doing this game wrong a little bit so i think we're probably closer to the start of these sorts of warnings than the end of them. >> but seema, didn't deere say that it was strong it was so strong it couldn't meet it because of the supply issues >> that's right. it's not that demand wasn't strong from farmers, it just doesn't have the ability to sell the products that are in demand because it's dealing with supply chain issues but i think dan raises a great point. is this a company that's just
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saying that's the story or is there more to it, with now the backlog much larger than expected and the supply chain issues not confined to deere general telectric, 3m citing those issues you've got to wonder if this company is positioned uniquely compared to its peers. >> let's hit amazon. amazon briefly back in positive territory. citigroup removing the stock from its focus list citing inflationary headwinds although they remain overweight on the stock saying it that remains well positioned for retail growth in the second half of the year joining us now, ron josie. so you still like it but don't expect it to be a big winner, ron? walk us through the call. >> well, sara, we're looking at near term, longer term catalysts. the next couple of weeks into 2q we just heard a segment about more difficult comps, impact on
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demand we just got off earnings with walmart and target so there's a lot of concerns going on there when we funding amentally take a step back and look at where our numbers are with amazon and think about this coming year with prime day and holidays coming up and amazon can absorb much of those. we're believers that you're going to see reacceleration even if the consumer becomes even weaker than what we're seeing or hearing about. so while we took it off the focus list, that doesn't change our conviction on the story at all. >> what about the other part of amazon i feel like this week really started to -- concerns materialized about i.t. spending and what that would do to the bigger cloud players like microsoft and amazon. >> yeah, it'salmost coming at it from a lot of different angles you are exposed to e-commerce,
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video, online advertising and of course the cloud there's a few different dynamics going on with the cloud overall. of amazon's core businesses we probably feel best about aws to be honest, understood about where tech budgets might go. but the overwhelming view and thesis of ours is that everything is moving to the cloud. that's not stopping any time soon in fact it's accelerating for a variety of reasons, one being cost savings as an organization looks to be more efficient so aws is one we're less concerned about on the retail side that's where we're hearing more of the concern and comps are going to get better and, frankly, even if the consumer does weaken, this is a time where amazon gains wallet share and emerges on the other side a lot better. >> do you agree, dan, with ron that it's a good opportunity ron has a $4100 price target the stock is trading just above
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2100. >> yeah, i mean obviously that's a little high. he's going to bring that down, right, ron but here's the deal. i think expectations remain very high, at least among wall street analysts 60 cover it and 58 rated it a buy. the stock topped out and it happened to be to the week that jeff bezos stepped down. here we are down 43% here. they overbuilt, overspent. they know a lot of the inflationary pressures, wage pressures, all that sort of stuff. if you want to take the playbook of satya nadella, that andy jazzy will put his imprinti on this company the next couple of years. i think this is where you want to start thinking about owning amazon for the next ten years. might it go lower? of course it might go lower. the whole market is a bit of a miss. >> so you just trashed it but then said to buy it? >> i tell you what i'm doing the last time i was on with you, you know how i'm getting
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exposure to these big names? i'm buying the qs. we know microsoft, google and amazon make up more than 35% of the weight of that etf i don't need the idiosyncratic risk in some of these names and what might be a very difficult next few months but i like averaging it into an index that is very levered to these handful of names. >> nibbling on the qs. ron, thank you for joining us today. i want to stick with tech and hit the semiconductor and chip equipment stocks because they're big underperformers today and a big drag on the nasdaq kristina partsinevelos joins us. applied materials earnings report seemed to trerigger a lo of today's drop. >> they make chip equipment and they said it's not because of demand that they're reviewing their guidance and lowering their guidance, it's because of supply issues. even the chip manufacturer is not spared from this supply constraint this comes at a time when a lot of companies are creating foundries, intel, taiwan
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semiconductor is the latest one. there's a report saying they're building a hub in singapore. these hubs require equipment it's a longer term fear that conversation is coming up with wall street analysts is the oversupply in 2023 because these foundries are coming on line in the next few years are we going to have an abundance of chips two other issues are product specific gpu units, graphic processing units, prices are coming down. supply is flattening out a little bit so this could weigh heavily on nvidia as well as amd. nvidia is the second largest drag on the nasdaq last but not least, some major chinese phone makers are reducing their outlooks. the apple se2 in china this is a concern about demand in china going forward for those with exposure to cell phones. >> kristina partsinevelos, thanks for running us through that dan, the quote from management,
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demand for applied materials supplies and services never has been stronger but we are constrained by supply chain issues what do you do with these stocks >> so demand, demand, demand we keep hearing this, right? you just said about some of these retailers in that last segment that these companies should have been able to forecast better or might have warned earlier if we know that they have this lack of visibility and we keep hearing the only positive thing they can say is that demand is really strong, what do you think the likelihood is in the current environment that we're in, where large parts of china are locked down and europe is likely to be in a recession really soon because they have a shooting war. we are halfway to a recession here where the u.s. dollar year over year is up massively the list goes on and on and on here, right? so the point is, i don't think you can trust those statements out three months i think you can trust them right now that that's what they think
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they see i think the likelihood of a global recession in the next six to nine months is a lot better than we think. i don't think that demand call by all these companies are telling you a bunch of other crap is particularly useful. >> you don't buy it. ev makers broadly lower. names like tesla and nio weighing heavily on the nasdaq 100, even chargepoint and evco are caught up in the selling as supply chain disruptions and material shortages weigh on the industry you mentioned tesla, dan you're nibbling at qqqs. would you be buying tesla? >> no, no, no. >> we don't know what's going on with the deal with twitter i guess the concern is china wedbush and morgan stanley raising the flag on china. >> i hate the fact that it's a top six name in the qqq. i think it's going to drop out of that top six in the not-so-distant future.
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i think the stock has a lot of room to run. if a large part of the premium in this stock is because of the aura of elon musk, he's unraveling before our eyes on twitter. the company that he wants to personally buy but can't afford to buy it because tesla stock keeps going lower. so i think this is a big mess. i'll just say the last thing i've been in the markets 25 years, sara. every single mania and every cult stock leader have all imploded this is the last one and i think it's starting to happen. i would not be buying this whatever he thinks is funny about the price of the stock. >> okay. let's hit the broader market because we have seen a pretty strong rebound into the close. huge intraday comeback dow, s&p 500 and nasdaq on track for reekly losses. real estate, health care, energy higher consumer discretionary and industrials are lower. technology just popped into the green as well. the dow down only 14 points.
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what are your thoughts heading into the weekend >> i think things were getting pretty nasty i was looking at jpmorgan just an hour ago making a new 52-week low. we know the banks are not the ep center of what's going on here but a stock like that had been leading the s&p to the downside. never confirmed any of the new highs in december or january so i guess the point i would make is that things were getting really, really oversold. the precipitous drop in an el or tesla, look what happened to consumer staples they absolutely got nailed this week i think a lot of negativity was wrapped up in this week. we had that down 4% day in the s&p and 5% in the nasdaq that felt slightly todacapitulay we've been taken 16 or 17% since the highs. we've had some fits and starts i think it's one step forward,
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two steps back. >> the dow and s&p are about to go positive. for all the hoopla about the bear market, it doesn't look like we're cholosing in a bear market for the s&p 500 the dow has just turned positive on the session really quick, dan, you think this is just a tradeable kind of bounce, doesn't change your outlook which sounds very bearish to me? >> well, it's not very bearish i think it's going to take some time for this bear market to play out. >> what do you mean, you just said recession in six months. >> maybe the stock market will start to discount a recession. we're not going to know there's a recession until after the fact here i just think that you have to take a step back here. i'm not calling for a stock market crash i think large parts of the stock market have already crashed. now we're waiting for some of these larger components of the major indices to do it so i think you're going to see lots of stock and major indices
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retrace back to those pre-pandemic highs the s&p, that's 3450 it's down 30% from the all-time high >> a lot of the bad news has to be in there already with these kind of levels we are 19% off the all-time highs on the s&p dan nathan, it's been great to have you here for market zone. we won't tell mike santoli into the close, the dow is remarkably turned positive we were down more than 600 at the lows of the day. we started the morning higher, gave it all up and then some just in the final, i don't know, 10 minutes, 15 minutes, we've rallied back into positive territory. we're still down on the week, eighth week in a row lower for the dow and seventh week lower for the s&p. health care, real estate, energy, and technology are your best sectors consumer discretionary worst hit on the day and the week where all the major losers came from
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discretionary and staples. those are the two worst performing groups after a lot of big misses, target, walmart, kohl's there goes the bell. the nasdaq is lower down 0.25 of 1% it's still down sharply on the week, seven down weeks for the s&p. have a good weekend. that's for it me on "closing bell." now into "overtime" with scott wapner welcome to "overtime." thanks, sara it's good to have everybody with us you just heard the bells, we are just getting started in just a little bit i'll speak with dan ives on when the pain at apple and tesla is likely to subside. we do begin with our talk of the tape the body blow this market keeps taking and when it might end maybe it got off the mat a little bit today let's ask "mad money's" jim cramer it's always good to have you i feel like the market did a little rope-a-dope at the ending here. >> it felt lik


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