Closing Bell - Closing Bell: AI Demand, Big Tech & Crypto Plunge 2/21/25

Episode Date: February 21, 2025

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

Welcome to Closing Bell. I'm Scott Wobner live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the uncertain road ahead. The market's more defensive stance lately and whether it's a worrisome sign now for stocks. We'll ask our experts over this final stretch. In the meantime, your scorecard today is not a pretty one with 60 minutes to go in regulation. It's another down day for the majors. The selling pretty split as well. You can see the NASDAQ is off.

The Russell's down almost 3%. The NASDAQ's ugly today. The other majors are down. UnitedHealthcare, the big blow to the Dow today. On that report that the Justice Department is probing part of the company's business, we'll follow it. It's down 7%. NVIDIA is down ahead of its pivotal earnings report

next week. We are watching that closely, too, and we will in this last hour. Palantir is roughly continuing today. Shares are down yet again. Many momentum names are following suit. It is also worth taking a look at where yields are at 301 in the east today. There's yields. They are falling across the curve. So you have a flight to safety today in some respects as well. The VIX is reflecting the mood of the market. It is a spike higher today. There it is by almost 20%.

It does take us to our talk of the tape. Are cracks forming in the bull case for stocks? Let's ask our panel that question. Stephanie Link, Hightower's Chief Investment Strategist and Portfolio Manager. Cameron Dawson, Chief Investment Officer for New Edge Wealth. And Malcolm Etheridge, Capital Area Planning Group's Managing Partner. Steph and Malcolm are CNBC contributors. It's good to have everybody here. We start on the desk. Steph, what do you make of this sell-off? You could point to so many different things within this market. The rollover in momentum, the Palantirs, the Applovens, the Vertives, the Trade Desks, even the Walmarts.

Even the Walmarts this week. I know. I know. I think a little bit of it is that we're seeing a little bit slower growth, to be honest with you, at like about 2, 2.3 percent, the Atlanta Fed tracker. And I have said that I think this year we are going to see about 2 percent growth versus 3, 3.4 percent that we saw over the last two years. And we're not going to see 20 percent gains in the S&P 500. We're going to see maybe more like normal, like 7 to 10 percent. A lot of that is because we just don't have the fiscal stimulus that has been put in place over the last five years. We're not going to have it this year. The Trump administration is pro-growth,

but they're not going to drive that growth by issuing a lot of money and putting money into the economy. They're going to hopefully figure out how to lower taxes and do more deregulation, and that is positive, but it's just not the juice that we have had. That's number one. Number two, yes, the momentum trade absolutely is rolling over. These stocks, this part of the market has had an enormous run over the last several years, and the valuations are really hard to justify. In the meantime, you actually do have pretty good earnings growth, but you have earnings growth in other sectors, Scott, that's just as

good versus technology. In fact, some of the sectors are seeing better growth in earnings. And so you're seeing a broadening out, not only a broadening out with value beating growth, but you're seeing Europe up 10 percent, China up 20 percent year to date. And that's coming at the expense of the U.S., which is not horrible. We're still up 2 percent. There's still a lot of stocks that are up a lot year to date. But I just think it's prudent to take some profits where the valuations have gotten extended. But this, Cameron, hasn't started like many people thought it would.

This being the Trump administration 2.0 in the sense of what it's meant for the market. Almost everything is negative, by the way, since the inauguration. OK, the S&P is a fractional winner. One third of one percent. That is it. Why? Because there's a lot of uncertainty over tariff policy, other parts of trade, global alliances in question, tax cuts. We think it's coming. Pushed off deregulation. Still waiting. Signs that the consumer may not be as strong as we once thought. I want you to listen to a soundbite from the billionaire investor Steve Cohen.

He was speaking at FII down in Miami about his view of where we are in this economy. But the reality is you've got a brew of sticky inflation, slowing growth, and austerity in the government. And so I'm actually pretty negative for the first time in a while. What do you think of that? So when it comes to the economy, we do think that growth is slowing, to Stephanie's point. We think that there are these dynamics that feel a little bit staggy, given the fact that you have some signs of some resurgence in inflation in certain areas, growth slowing that certainly doesn't feel as good as moderating inflation and really resilient growth like we've had over the last two years.

We are not calling for a recession, so we don't see signs that growth is falling off a cliff. But when the market is priced at 22.3 times forward, when high yield spreads are at multi-decade lows that leaves very little room for disappointment and so when we think about what's driving the weakness that we're seeing today it is a lot of the unwind of the most crowded the most momentum names walmart went into its earnings season at 38 times forward earnings for a company that's growing earnings at high single digits low double digits so it's not all too surprising to see that positioning unwind and thus the volatility that we're experiencing the last couple of days. Malcolm, it's emblematic of the trade

that's worked of late, a more defensive posture to this market. Staples today only group in the green. We know about Walmart's run discretionary stocks week down more than 10 percent off of their highs. How concerned should we be by those two metrics? Yes, Scott, I think that sentiment overall. Right. So you're talking about sentiment being reflected by names like Walmart telling us that demand is slowing and that the consumer is less confident. I think that that shift in the narrative has really been emerging for the last four weeks, right? So a lot of what we came into this year believing we could hang our hats on as investors is starting to unravel before our eyes. Four weeks ago, we thought America was the leader by a long shot, all things AI. Deep Sea comes along and says not so fast.

We thought that deregulation and M&A was on its way and this year was going to be the year of mergers and acquisitions. Earlier this week, President Trump says not so fast. We thought that deregulation and M&A was on its way. And this year was going to be the year of mergers and acquisitions. Earlier this week, President Trump says not so fast. We thought that inflation was absolutely on its way down and the Fed had no choice but to start cutting rates. CPI ticked back up to something with a three handle. Not so fast. So all of these different things that were the narratives we were so sure about coming into 2025 in the last few weeks have just started to pull apart. And I think that the sentiment shift probably continues into next week, even though we'll probably get some dip buyers early in the week. Steph, part of your bull case over the last year or so has been because the consumer has been a lot more resilient in your mind than many people expected it would be.

Sentiment read today was bad. Retail foot traffic is the lowest in a year in general. There's worry about tariffs. You're paying 10 plus bucks for a dozen eggs. There are just a lot of concerns on the mind of consumers right now. Restaurants been slow since the start of the year as well. Texas Roadhouse talked about that. They'll be on with Jim on Mad Money tonight. Is this now a point of concern for you? And if not, why? No, I mean,

I'm watching it for sure. But I think the labor market is the thing that I'm watching to see if we see any cracks there. And we're not. You're at 215,000 weekly jobless claims in the last four weeks. And you have wages at about four percent. And you do have inflation, but you have inflation that is down from nine percent. Gasoline prices are down 15 percent year over year. Still sticky. So there's all this stuff. And I will just push back a little bit on what Malcolm just said about Walmart. Walmart did not talk about a softening of a consumer. And they just put up a 4.6% same store sales number, a 20% digital sales number. And so slowing foot traffic probably is because digital is taking share from being in the physical

stores. We've been seeing that for years on end. So, and oh, by the way, retail sales, I know the headline was not great last week, but on a year over year basis, it's up 4%. So maybe the consumer isn't going out to the services, restaurants, and the hotels as much. We're a service economy, right? That's true, but they're still going. They're still going. Maybe they're just not going as quickly. Let me tell you something. I spend a lot of time on airplanes traveling, and they're still packed. The airports are still packed, and restaurants are still crowded. People want to go out. Maybe they're just not going out as much. We're going to get Home Depot and Lowe's next week.

We're going to get Target the following week. We're going to get some real-time companies, real-time focus. Do you think Target's going to talk a big game after what Walmart did? I don't think that they're going to talk a big game, but I think they're going to say very similar things in terms of what is actually working. I mean, Walmart said apparel was actually working. That's the first time I heard them talk about apparel for like years on end. Lowe's and Depot, you're going to hang your hat on Lowe's and Depot? I mean, the housing market's bad. The pro market is not bad. And they have 50 percent of their business is pro. And they just

made an acquisition, which is going to increase their pro exposure. And so, yes, do it yourself. Homes and focus in within the housing segment might be a little bit on the soft side. But if they're not buying homes, Scott, they're going to have to refurnish and do all kinds of things. And I think that's what we're going to see. I think you're going to have companies that struggle. Sure. But not everyone is going to struggle. There is a thought, Cameron, that the bull case is intact, that there's just a lot of noise that is influencing the way that consumers and investors and CEOs are thinking right now, but that the trend is still higher. Our base case for 2025 has been a wide, choppy range, meaning that because you went in at such high valuations, yes, you can get upside if everything works, but be prepared for that potential downside. And what we are seeing

is a few important things. The first one is cyclicals are starting to deteriorate versus defensives, industrials breaking down on a relative basis. That was a lot of people's favorite post-Trump's election win. You're also seeing things like investment banking rollover really hard, as well as home builders. That's very different than what we were seeing the last couple of years. Well, well, because, Malcolm, I mean, if investment banking is rolling over, maybe it has something to do with what many would think was a curveball from the administration, that the Biden era M&A rules are going to stay intact for now. Well, M&A related stocks would be hit by that, wouldn't they? Yes, Scott, my favorite trade coming into 2025 on the back of the election was

the XLF. It was the financials and specifically the money center banks, the GSIBs that earn a commission each time one of those transactions books. If we're now learning that that is not as likely to happen in 2025 or not as many of those transactions books. If we're now learning that that is not as likely to happen in 2025 or not as many of those transactions are likely to happen, that definitely has a ripple effect across all the other sectors. But it also has a ripple effect to the smaller banks, the regionals and the super regionals that others have been excited about and some of the other ETFs. And so I think we do have to at least recalibrate what we expected to be the major breakouts this year coming into 2025,

whether it was energy or financials or something else that we expected to be helped out by the Trump trade. And I think that's really what the sentiment shift is that we're talking about that has happened this week. Investors aren't as sure about whatever their favorite trade was coming into this year after watching what's happened with trade policy, after watching what's happened across the different federal agencies, as well as the M&A activity that we were all hoping for. Tax cuts,

another one you mentioned earlier, that we were expecting to have a little bit more guidance on by now within the first hundred days. It's looking a lot less likely that we'll get that as quickly as we had hoped for. Well, we're only 30 days in, so we will see. But yet another thing on the mind of the market today might just be a report of a new novel coronavirus discovered in China. Former FDA Commissioner Scott Gottlieb joins us now. It's good to see you. And I'm glad you came on with us because I'm trying to cut through this report and find out what's legit and what might not be. What's your take on what you've read? Yeah, I'm not too concerned based on this single report. They sample viruses from bats constantly over there and they find novel viruses from time to time. And sometimes these novel viruses that they stumble upon harbor

very concerning features. So this is not an uncommon finding. We find these things pretty routinely. I don't think we've ever identified a pre-spillover virus that went on to cause an epidemic. So I think the link to an imminent risk here is pretty flimsy, quite frankly. Probably the most concerning part of this story is that they did this experimentation in a low-security BSL-2 lab. And this was the Wuhan Institute of Virology. This is the same institute in Wuhan that has been implicated in potential lab leak related to SARS-CoV-2. So to see them still experimenting with novel viruses in a BSL-2 lab, that's not too reassuring. But from this particular strain that they found, I don't have any concerns that this is going to cause an imminent risk unless they have a laboratory accident. And one would hope that since they published these

findings, they're now taking precautions to treat this strain with greater caution. You know, it is interesting, if nothing else, some of the movement in stocks related to this report. I mean, the market itself seemed to take a bit of a leg down as this started circulating. Some of the vaccine stocks like Pfizer and Moderna shot higher, though they are off their highest levels, too. Some of the airline stocks and cruise lines were lower as well. But if nothing else, it does just remind us that these sorts of stories are still out there. The concerns exist and how ready we are to deal with the next pandemic whenever it is and whatever form it shows up in, I think remains a question for the market.

Well, setting aside the policy framework right now in the United States, I think from a scientific standpoint, we'd be pretty able to prepare countermeasures against this vaccines and monoclonal antibody drugs. This virus that they sampled, they did experimentation in human cells, human organoids, and found that it bound to the same receptor that SARS-CoV-2 binds to. So presumably you'd be able to develop a vaccine against it. So I think from a scientific standpoint, we would be able to pivot to countermeasures if, in fact, this spilled over, which I don't expect this to spill over, barring them having an accident with it, making a mistake with it, which I would hope that they're taking precautions to make sure that they handle this under tighter provisions right now.

This experimentation was done a while ago, by the way, and the report was published two days ago. So this is not necessarily a new finding. I think it spilled into the market today because it was picked up by some prominent publications, but it actually has been circulating in scientific circles for a couple of days now. Speaking of circulating, I mean, avian flu certainly has. We talked about it already in the context of inflation and egg prices. How concerned are you about the current outbreak, if you want to call it that? Yeah, well, I'm very concerned about it from the standpoint of its risk to domestic agriculture. I think that this has now become endemic in U.S. cattle and in flocks, and it's

going to be very hard to extinguish. And this may be a persistent threat that farmers need to continue to contend with. I don't think there's going to be any easy answer to the egg shortage right now. The administration is going to announce some measures next week. They've hinted at what they are, basically not culling herds as aggressively, not culling flocks as aggressively as they've done in the past, and also considering maybe vaccinating fowl, poultry. Those two have downsides, too. If you don't cull the flocks, this spreads very quickly within a flock once it gets in, and it's 100% fatal.

So whether you cull the flock or you allow this to spread at some level, you may lose the flocks altogether anyway. And from the standpoint of vaccinating baby chicks, we export a lot of baby chicks in this country to countries like Europe and China, Mexico, Canada, the Philippines, Indonesia. And if we vaccinate them, probably other countries aren't going to accept the export of our baby chicks. And that's one reason why the industry, the poultry industry, has been against mass vaccination, because the vaccine itself isn't sterilizing. So you could still have a situation where a chick becomes infected with the virus and can spread it, but it's asymptomatic. So you may not detect it. So Europeans don't want our chicks if they've been vaccinated because they worry that

they could be harboring the virus. So there aren't any easy answers here. From the standpoint of a human risk, I think that hasn't changed. That's out there. There is a risk that this could mutate in a way that could infect humans. And the more virus you have circulating, the more that risk goes up. But I think it's a low probability risk at this point. But I think the more imminent risk is to domestic agriculture. We'll leave it there. I appreciate your time, your insight and your

sort of your your valuable clarity, too, as always, Dr. Gottlieb. Thank you very much for that. Thanks a lot. That's Dr. Scott Gottlieb. Another point of concern for the markets, no doubt the Fed. Steve Leisman joins us now because, Steve, this is a week in which there was a lot of Fed speak that leaned decidedly hawkish. Yeah, if you were hoping for rate cuts this year, you might want to have to take a step back and wait a little longer. I think one is still priced in. But I think the change this week, Scott, was you still have this inflation problem. And by the way, those numbers today in the University of Michigan, inflation expectations were not helpful to the Fed. You have this inflation problem. But more and more now what's happening, Scott, is Fed officials are taking that inflation issue and putting the issue of fiscal policy uncertainty

at the same level. So saying, look, we don't see ourselves cutting rates until one, we get the inflation problem still heading back towards 2 percent. by the way, they have confidence that's going to happen. And two, that we ultimately have some clarity on where these fiscal policies are going. Virtually every Fed speaker this week, and there were quite a few, mentioned it. Some a bit more concerned than others, even like Alberto Musilam talking about negative scenarios that could spin out from the certain fiscal policies that are currently under discussion. Allude to what was no doubt the more hawkish commentary of the week from the St. Louis Fed president where he used the words more restrictive. No one's used that commentary when talking about the potential outcomes here. And he said the quiet

part out loud. Yeah. And you always say to yourself, well, you know, it's a theoretical possibility. Is it just a theory? Well, why did he choose to mention it? What you just mentioned, Scott, flowed directly from what I had talked about, which was this notion that you have a possibility of immigration policy and tariff policy raising inflation, and you might get a decline in growth. And in that context, he could envision, again, a theoretical construct here. But in that context, you could talk about possibly being more restrictive. Most Fed officials have put forward this idea that, hey, we think we're restrictive now. We're above the neutral rate. So we don't think we think we're well positioned for whatever outcome happens

without having to raise rates. Alberta Muslim, as you exactly said, Scott, said the quiet part out loud. Steve, thanks as always. That's Steve Leisman, our senior economics reporter. Back to the panel. So, Steph, how much are you thinking about the Fed? Nobody had on their bingo card rate hike in 25. Nobody. But they don't know any more than anybody else about the trajectory of inflation policy. Do they? Well, I would be surprised. I mean, look, they're looking at the PCE.

That number next Friday is going to be huge. But the PPI data points that go into the PCE suggest that it's not going to be runaway inflation. It may just be stubborn for a while. It may just be two and a half percent PCE, core 2.6 percent. But I have always argued that if you have higher growth, you are going to, by definition, have a little bit higher inflation. And so we have taken off the the outcome of the Fed cutting this year. And I think that's what the market has kind of been telling us for the last couple of weeks. Well, I feel like the market might be telling you today that we are going to have lower growth than thought. But why are yields down today? I don't think they're going to be because of

the growth. That's what I think. That's what I mean. It's coming down. But 2% is still above trend. Trend is 1.5%. 2% growth is probably a mid-single-digit revenue number for earnings, in earnings. And it's probably like upper single-digit, mid-single, upper single digits for earnings overall. And that's not favorable. But you said that this was a pro-growth administration, which many believe that it is. It is. There would be no argument on that. It's not as growthy as what we have been seeing on the fiscal side from the prior administration.

We put in 60 percent of U.S. GDP in fiscal and monetary policies throughout COVID. We put a ton of money in the system. That is not going to happen this year. But that money that went into the system led to better growth, above much better growth, right? Three, three and a half percent. Now, if you don't have that, you probably grow something like two percent. That's not dire. And it's certainly not recession, to Cameron's point. It's not. It's just a recalibration. Okay, recalibration of expectations, too. Is that a single digit return kind of year? It could be, very much so, just because the best you could get in stocks would be the earnings growth.

You don't get the valuation expansion. But we do think that the recalibration part of this cutting cycle for the Fed has been over, simply because there was not enough evidence to suggest that growth was falling off a cliff, that they needed to deliver further cuts, given the fact that even though they say they are

restrictive, you have been growing above trend the entire time the neutral rate has been positive. You've had easy financial conditions, which all suggest this wait and hold kind of mentality from the Fed. And we do think there's a very big difference between growth that is slowing and growth that's falling off a cliff that gets the Fed to act in a more aggressive way. We think you'd have to see a mid-fours on the unemployment rate to really see the Fed step in and deliver a lot more rate cuts. You know, Malcolm, and then we get next week, NVIDIA, you sort of alluded to it, that that company is going to report mid-next week. There's always a lot riding on it, as we know,

given what happened with the DeepSeek sell-off. And even though Jensen Wang, the CEO, commented on it, as we know, given what happened with the DeepSeek sell-off. And even though Jensen Wong, the CEO, commented on it, albeit briefly in the last 24 hours or so, this is really going to be our first look under the hood of what they're actually thinking about demand. We know what the hyperscalers are spending, but we're going to get a better look on where the environment currently is. Yes, Scott, you said a deep seek changed the game for NVIDIA and for NVIDIA shareholders. And I think that it might have actually done them a little bit of a favor in the sense that it gave them some cloud cover. Right. So Jensen had been making comments about the rollout of Blackwell or the shift to Blackwell, not exactly going as planned in previous quarters. And I think that maybe there's some of that sentiment, you know, that that gets a chance to get out there now under the cover of the deep seek news. And more than anything, it at least took away the conversation or the concern that investors had about aggressive valuation on that stock.

Right. We were talking about something like 40 times this year's earnings two quarters ago. And now the shares have sold off. They've recovered some since the deep seek announcement, but they haven't quite gotten back to where they were. And I think that might actually be a positive for NVIDIA going into earnings next week instead of hurting it as badly as we probably thought it would four weeks ago. Steph, what do you think? NVIDIA specifically, I think the expectations are still quite high and the stock is up 100% in the past year and everybody owns it, probably except me. But the expectations are high and I don't know if they're going to raise numbers as aggressively as

they did and they have been doing over the past year. I don't think it's going to fall off a cliff. And you mentioned the hyperscalers. The hyperscalers aren't cutting back. They're increasing the numbers, right? So that does help them. I just think the expectations are really high. So I think I wouldn't be surprised if the options market is pricing an 8 percent move either way. I don't think that's a really big deal considering how much the stock has actually run up. But I would wait in terms of buying other semiconductors. I would wait until they report. How big of a moment is this for the market next week as it goes into a new week a bit unsettled? Yeah, we think it is still a very important moment simply because it has such a large weight in the indices

and it encapsulates the hope of all the AI trade. And looking at the technicals of NVIDIA, it's not all too inspiring in the very short term. If 125 doesn't hold, we do think you could see something closer to 100. That's very normal for NVIDIA to experience that kind of volatility. But that kind of volatility is something that the market has not been used to over the last couple of years, since we've been in this very powerful, up and to the right, low volatility kind of trade. The stock was just back at 145. So in the momentum pullback and as tech had just started to reawaken and now these stocks are selling off a bit, almost across the board, you can go down all of the MAG7

names are certainly down today. And the only one that's positive on the week is Microsoft. And that's by this much. And MAG7 has been slowly losing momentum really to start the year. You've seen it trade now below its 50-day moving average. Its relative performance is waning. Tech has not been a leader effectively since last summer. So you've seen a lot of divergence within tech, big winners, big losers. But the point is tech isn't that super dominant leadership that it once was. And I think that that starts to raise question of who will take the lead from here and is it as sustainable? It was financials that those became momentum stocks.

That's really being put to the test over the last couple of days to see if it can be sustained. All right. Cameron, thank you. Malcolm, thank you as well. I still have some business to take care of with Steph. We need to talk UnitedHealthcare, but we'll talk to you all soon. I know we will. All right. Talk to me about this. Right. We need to talk UnitedHealthcare, but we'll talk to you all soon. I know we will. All right, talk to me about this, right? You have the story today. One of the reasons why the Dow looks as bad as it does today is because this is the biggest drag, obviously, given this report of a probe

into some of the company's practices. You've been a big defender of the name. You've been a buyer on weakness. Now what? And if I could buy it today, if I wasn't restricted, I would be buying it. You'd buy more. I would absolutely buy more, and it should never have been down 12%.

It should not be down 7%. This kind of issue, coding in general for Medicare Advantage, has been around forever, forever. And we still haven't gotten answers from last year's DOJ probe. And we don't even know if this is new or not. We don't know if this is past prior issues or is it going to be for going forward? I think it's past because they have changed the rules on coding and they're phasing in stricter methods for coding. It's called V28. It's very technical, but between now and 2026. So you're not going to have these issues going forward. That's number one. Number two, it's a civil issue and not a criminal. So I think there's likely it would be a monetary settlement.

They've got $20 billion of cash in free cash flow. They've got 0.5 times debt to equity in terms of on their balance sheet. So they've got no debt. And the stock is trading now at 15 times forward estimates and its historical average is 22 times. It's trading at six times EBITDA for the number one managed care company in the world. So to me, I think it's an opportunity. I think this is noise. It's not that it's not going to go away. It's going to hang around for a while. It's not going to go away so quickly, but I do think eventually we will get through it and they will be able to grow earnings 13 to 16 percent, which is their long term algorithm. Bill Ackman post earlier today on X, quote, My psychological short here is paying off and I would avoid this stock. When you find two cockroaches, it is almost a certainty that there will be many more.

And a half a trillion market cap for a health insurer makes no sense. What do you think? Well, if you're growing, if you're growing 13 to 16 percent on a compounded annual basis, and you have some blips along the way, but you're growing that kind of earnings, and you have a franchise like you do, and you have products and services and margins that are going to improve, I mean, I think you do want to take a look at something like this that's down substantially, and has lagged the past year, too, right? It's not even lagging just this year. It's lagged all of last year because you do have these headlines and they're not positive. Don't get me wrong. But I just think that they're

manageable and the company continues to generate good earnings. And I, again, the margin story, I mean, you had historically high utilization rates last year. You had lots of competition last year. That actually starts to abate this year but I mean doing it you don't think that the games changed a little bit around this stock I do like everybody knows what I'm alluding to we went through this in 2017 same thing all right I mean that we every so often the DOJ will look into this business that these practices and there are some issues with regards to coding but that's why I

say I'm not talking about the coding. I'm talking about the coverage. There are people who won't buy this stock now. This has now been put into a group that some people think is a no touch that is going to be under a lot more scrutiny, whether it's by the DOJ or by investors themselves. They have been under a lot of scrutiny over the last several years after the last couple of decades, to be honest with you. But I think that this is a company that has been able to deliver on earnings no matter what, no matter what kind of issues that they're facing in terms of legal DOJ lawsuits and that kind of thing. So to me, I think this is an opportunity. Sure, it may not be for everyone, but it's certainly up my alley because I like blue chip quality on sale.

And that's what we're getting here. It may not get resolved near term. It may not even go up near term. But I think between now and the end of this year, it will. They called the Wall Street Journal's reporting, quote, misinformation. They said, quote, any suggestion. This is the United Health Group responding. Any suggestion that our practices are fraudulent is outrageous and false.

Just to reiterate what that company has said in response to that report. Steph, thanks. Thank you. All right. Stephanie Link here with us at Post 9. So Mackenzie Segalis now for a look at the fintech space. What are you watching? Hey, Scott. Coinbase shares are down more than seven and a half percent and trading at session lows, despite the SEC officially dropping its enforcement case against the exchange after nearly two years. Now, CEO Brian Armstrong called the case bogus and said that it marks a huge day for the crypto industry, hoping that it sparks a domino effect for others facing regulatory scrutiny.

Notably, Coinbase will not pay any fine and does not have to make any changes to its operations. But despite that legal victory, both the crypto market and fintech stocks are tumbling alongside the Nasdaq as high volatility names get hit hardest. Now, the Fink's ETF is down 4% with Robinhood, Affirm, and PayPal all in the red. Block is the biggest laggard, sinking 18% after missing Q4 estimates

and disappointing on 2025 guidance. Now, investors are concerned about flat cash app user growth and weaker than expected momentum in Square's seller business. The company is also losing market share to Toast, Clover and Shephor, which continue gaining traction in the SMB payment space. Now, while block shares had been climbing over the past year, today's sharp decline erases most of those gains, Scott, suggesting that investors are growing increasingly impatient with the company's execution. Mackenzie, thank you for that report, Mackenzie Segalis. To Seema Modi now for a look at the

biggest moves in the tech space this week. There are many, including a lot of red on that board today, Seema. Scott, let's break it down together. The tech trade has had its challenges this week, momentum fading in names like Applovin, Cadence Design, and Palantir following some insider stock selling and news that the Department of Defense is looking to cut its budget. That name specifically, Palantir, down about 14% this week. And we will hear from CEO Alex Karp, who was speaking at the New York Economic Club on Monday. Some of the other big losers in tech, CrowdStrike, Arm Holdings, and Trade Desk, all down around 10% for the week after today's sell-off. Software stocks as a whole are down on average

by 2% to 3% this week as investors count down to Salesforce, earning CEO Mark Benioff expected to provide an update on just how much money AsianForce is bringing in. That CRM report comes in on Wednesday. Intel actually a winner for the week, Scott, on a report that it may split, may partner with TSMC and Broadcom. So shares are outperforming this week. Elsewhere, big tech, just the larger cap names did hold up better than the pack.

Apple mostly flat for the week. And in focus today after removing its advanced data protection feature in the UK. Names like NVIDIA keeping weekly losses to a minimum around 2.5% ahead of earnings Wednesday. Investors will be looking to CEO Jensen Wang for commentary on the supply of its latest chip, the impact of tariffs, and of course, any fallout from last week's, last month's deep seek news. Hard to believe it was a month ago, Scott. Yeah, I know. Perfect setup for us,ma thanks so much sema modi staying with nvidia now earnings obviously front and center next week the latest checkup on the strength of the ai trade for more on what to expect and what

the current landscape actually looks like right now let's bring in first smart capital founder and partner rick heisman welcome back it's good to see you so let's just think about nvidia for a minute i mean in general what do you think is on the line next week for the AI trade? Well, it's really are people continuing to spend on CapEx? And we're seeing not only the hyperscalers, but also companies in the private market continuing to bet big on the long term on AI and therefore continue to buy chips for Inviton. So we heard within the last 24 hours from Jensen Wang, CEO, who addressed the fallout from DeepSeek, suggesting that the market got it wrong, that all it shows you is that you're going to need way more compute, not less. Some of the other hyperscaler CEOs spoke of similar needs following that really big upset that we witnessed

in the market. And I'm sure you watched it as closely as everybody else. Is that how you see it, too? I don't see it exactly the same way. Where's the nuance, then? I see that there are going to be open source and closed source data sets. And they're going to need different amounts of compute to be able to work together. But all the big models are going to need a massive amount of compute.

So maybe the hyperscalers will have some closed models, even OpenAI having closed models. But some of the open source models will be used by more of the startup ecosystem and people who need to be more capital efficient. Did you come away from that story thinking that it was less bullish for an NVIDIA or at least even to some incremental degree? Did you come away thinking that? A little bit, but not really,

because what you're seeing is that there's still this fundamental demand from AI. The important thing is DeepSeek immediately rocketed to number one on the App Store, which means there's still fundamental consumer demand for whatever AI products out there. And as much as you can track, fundamental demand equals demand for NVIDIA chips. And therefore, that demand will remain for the near term. You mentioned the amount of money that the hyperscalers are spending. I mean, it's extraordinary, right? How long does the market accept that? They have to accept it for the rest of 25, both on an offensive and defensive perspective. No one's going to say, no one's going to announce on their earnings,

oh, we're going to spend less because we believe less in AI. That's not going to be a 25 story. It's, hey, we have to be offensive and defensive. We're at least halfway across this lake. We're beginning to see with things like agent force, the AI is working. It's driving ROI. And we need to continue to double down on this. As a VC who's backed some what are now really big companies that were once just startups. Did you come away at least from the deep seek story thinking in any way

you're now going to be able to do a whole lot more with a whole lot less? I'm talking about money and how that impacts the kind of companies you want to invest in and the dollars you want to put. I think it was exciting from that perspective that, you know, there's more open source models. You'll be able to do them in different ways and they'll be much more, to your point, capital efficient than what we would have guessed six months ago. So you're not going to need, I came away less bullish on open AI. I did. It was closed models who were claiming you have to spend tens of billions of dollars to have these models work. And what DeepSeek proved, and they spent more money than they probably would have let on, is that if you have an open

source model and you have a data set, you could build smaller applications much more cheaply, which is awesome for the startup ecosystem. So then you were theoretically more bullish on Meta? More bullish on Meta. Well, because Meta that day, if you recall, was the only stock in the group that was up. And it just finished this week a 20-day win streak. Yeah, because they're open sourced. They want people to build on top of them. They want to be part of that model ecosystem as opposed to being closed

and having everybody just work within their parameters. So open in the long term generally wins and therefore it's benefiting Meta in the short and medium term. Probably the biggest theme of this week is uncertainty, right? I mean, everybody's thinking about it. I'm sure you are. Companies that want to go public are. Where are the IPOs and when are they coming? It's going to be longer than we would have guessed. I would have thought they would be starting to come in a month or two. I think uncertainty is the worst thing for IPOs. Uncertainty on inflation, which affects interest rates. Uncertainty of what are the rules of the road and where are we going? And just general lack of confidence in the investor marketplace.

You know, in January, IPO anticipation was at a three-year high. If you look at the Jeffries report, the buyers had more buying demand than what you'd guess in years, the highest they ever had. My guess is, although the next quarter is not out, that's waned significantly, both in terms of inflation concerns, as well as just overall market volatility. I mean, speaking of January, you had the slowest January for dealmaking in decades. I mean, again, not exactly expected by many how this year was going to start.

Now you've got news this week of fewer deals, perhaps because the Biden era regulations are staying in place. Number one, were you surprised by that? I was surprised by that. But you know, you're talking when you talk to the banks, they see a huge M&A backlog of even some of those regulations staying in place. It's still going to be loosening. If you talk to the hyperscalers or corporate development groups are busier than they've

been in years. We've had eight exits in the last two quarters at very good multiples. So we're starting to see those corporate development groups, either in vertical software players that we announced a company called CCC, bought a company called Evolution IQ, or CyberArk, buying Zilla, shows that people are back in business

when they were sitting on their hands 12 months ago. What I'm thinking of as you're talking about those companies, for many they're going to say, well, sure, those are smaller, more middle market companies than very big firms that are going to try and do deals that thought maybe they could. And now they're rethinking that. They're not rethinking it yet. I think they're waiting to see how this plays out. And I think you're going to see more public to public deals. You're going to see more large scale private deals and the pullback in the IPO market might open up a little bit in the M&A market for folks who want liquidity. I appreciate

you, man. Thanks for being here. That's Rick Heitzman, First Mark. Once again, here at Post 9, shares of HIMS and HERS are sinking in today's session. Brandon Gomez is here with what is behind that move. Brandon. Hey, Scott. Yeah, HIMS, which offers compounded Wagovi and Ozempic plunged after the FDA announced the shortage of those drugs, is now resolved. Remember, HIMS, which offers compounded Wagovi and Ozempic plunged after the FDA announced the shortage of those drugs, is now resolved. Remember, HIMS sells those cheaper versions of GLP-1 drugs by combining ingredients to customize treatments. But we're only allowed to do that during this shortage. So now the FDA's guidelines do have an off-ramp for HIMS. It says they have until May 22nd to compound, distribute, or dispense their product.

The company's CEO, though, saying this isn't the end of the road. Posting on X, we will continue to offer access to personalized treatments as allowed by law to meet patient needs. Well, what does that mean? Well, what it could mean is that legally the FDA permits compounding to keep taking place if it addresses a patient's clinical needs, regardless of a shortage. Just need a prescription, and the drug has to have some fundamental difference in terms of its formula, something for investors to listen to on Monday's earnings call when the company reports. But, Scott, I'd anticipate some back and forth in terms of the legal ramifications of compounding

here. All right, good to know. Big mover today. Brandon, thank you. Brandon Gomez, back to SEMA now for a look at some of the other stocks that she is watching. Tell us. We are combing through this market real time here, Scott. Shares of Akamai tumbling after posting first quarter guidance that was weaker than expected. It also revealed that TikTok is a bigger customer than Wall Street had realized. The cloud computing company getting hit by several downgrades today, including Bank of America,

Piper Sandler, analysts at B of A specifically writing that they see limited near-term catalysts as the company undergoes sort of this year of transition, but they remain positive on the long-term story. Stock is still down about 20%, trading at its lowest level since May of 2023. Celsius is surging after the energy drink stock reported record full-year revenue, fourth-quarter earnings that topped estimates. The company also announced it will acquire rival Alani Nutrition shares of Celsius. You'll see up about 27 percent, pretty commendable given the down day today, Scott. All right, Seema, thanks so much for that.

Seema Modi once again for us. Joining me now, Ed Yardeni of Yardeni Research. Good to have you on this. Well, unsettled end of the week, I think we can say. What's your opinion of it? Well, yesterday was largely because of Walmart's guidance that kind of spooked everybody about the outlook for the consumers. Today, we've got the UnitedHealth issue. And so I think you've got a couple of very expensive stocks that are taking a little bit of re-rating here. I mean, that's what Walmart's doing.

They have a forward PE of 38. I think the consumer's still okay. I'm looking at weekly data like initial unemployment claims, and it looks like the jobs are still there, even with all the craziness going on in Washington. And I'm also looking at the weekly retail sales series, and that's up like 5 percent on a year-over-year basis. So I'm not particularly concerned that we're suddenly looking at a correction or a bear market. Bear markets are caused by recessions. I don't see a recession. And corrections are caused by fears of a recession. And maybe the tariff thing is doing it, but I don't think so.

Some look at the divergence between discretionary and staples. I don't know if we can throw, you know, a chart up that shows what I'm talking about specifically, but the trend has not been great in terms of discretionary is the worst. There we go. Thank you. The discretionary is the worst of this year. And there's been a lot of money going into staples concerning to some, not you. Well, I think it's a short term issue here in terms of the fundamentals. The fundamentals still look pretty good across the board for consumer spending. Yeah, they're spending on consumer staples. But I've noticed that even with a weakness in home sales, furniture sales have really been very strong over the past several months.

Car sales have been volatile, but they were very strong at the end of last year. A lot of discounting. So there was some weakness in January. Consumers are definitely spending on durable goods now. And that was something that they stopped doing for a while after they went on a buying binge following the pandemic. So from a fundamental perspective, I'm not particularly worried. I mean, I played earlier a soundbite from the billionaire investor owner of the New York Met, Steve Cohen, who's down in Miami, who talked about how he's feeling less confident about the economy for a variety of

reasons that, you know, are on the mind of a lot of investors, including the likes of Citadel's Ken Griffin, who talked about tariffs, our alliances globally, and just the uncertainty that it has caused in their minds, perhaps unnecessarily. And I'm wondering how you think the average investor should think about that. Well, you know, life doesn't come with any guarantees and there's always uncertainty. And I think now with this regime change between Biden and Trump, we certainly have uncertainty. But that seems to be the nature of our political cycle. We go from, you know, one president to the next. And before you know it, we have a radical change in policymaking.

And I think it takes a while for all this to settle down. But certainly there's concerns about tariffs. There's concerns about getting a budget together. And then, of course, the whole geopolitical situation looks pretty messy right now, clearly. But at the end of the day, the stock market is driven by earnings and valuation. Valuations are stretched. So we're seeing some re-rating to the downside. Even the Magnificent Seven have at least stopped going up on a valuation basis. But the earnings picture still looks really bright to me. And I think that the AI, robotics, humanoid, technology-led productivity boom is still very much with us. And I think we're going to continue to see that in better-than-expected profit margins and better-than-expected earnings.

I think earnings are going to drive this market for the rest of the decade. Well, I mean, they've certainly surprised many how earnings season performed. Mike Santoli, our senior markets commentator, is at the desk with me, Ed, as well. I wanted to bring him into the conversation. I mean, you came into the year, Mike, thinking, I mean, I remember back when I'm sitting in Beverly Hills with Todd Boley, and he mentioned animal spirits. It's just this idea that there was so much pent-up demand to do deals and to have a better and more loving embrace of business, if you will. Yeah.

Taxes, deregulation, Fed cuts, so many more things that now we're questioning all of a sudden. We're only 30 days into the new administration. Yeah, we're questioning certainly the sequencing of things and the fact that pretty much the storm of proposals and efforts that are out there now on a policy front are mostly if they affect growth at all, they're growth negative or they add friction to the system. Been saying that for a while. I do think, though, that everyone recognized we weren't going to see a massive boom in the first quarter

in massive IPOs and huge M&A deals. It was going to be something that could build along the way. What I did probably expect is that you had a starting point, very strong economy. Earnings are doing their part. That's really not the thing to be concerned about. Revisions are not great, but they're fine. I really do see this sort of cumulative evidence of just a stutter step in growth. Consumer fatigue, all the things you're talking about, the January retail sales, the Walmart numbers, today's services, ISM services, shortfall or PMIs, just enough to exacerbate this idea that we're not accelerating.

Now, market action itself is down to the 50-day average. We were here earlier this month. It's not really shaking the trend, but it's very listless. We've been talking so much in recent days about this magical rotation that's keeping the indexes out of trouble. And you had some, the gears are grinding on that rotation here a little bit. In part, it's because the defensive parts of this market can't carry the load all the way, especially when UNH can't help healthcare do it. You know what I mean? The pharma stocks are all up. And so I think it's looking like it's a little worse than it might otherwise because of all that.

But, yeah, an expensive market with high expectations has to, you know, has to reckon with these things. Speaking of, Ed, I don't know that there's a stock in the market that has higher expectations than NVIDIA, which always does. And it's going to again next week. And maybe the stakes are higher given the way we're ending this one. Well, that's true. They are. They are higher. And everybody will be looking at NVIDIA as the harbinger of where AI is going. But we'll see. I mean, Elon Musk just spent quite a bit of money on thousands of nvidia chips that he put together and within a few weeks or maybe months they put together a large language model which is very competitive with the other ones i i think the fact that we've got everybody scrambling to build the the next best uh length

large language model and every week we seem to have another one i think that's great progress in terms of what the users of this technology are going to be able to do another one i think that's great progress in terms of what the users of this technology are going to be able to do with it i think that that's already uh that's already happening so yeah i think nvidia is very very important uh but so are 493 other stocks besides the magnificent seven and i think they're going to continue to crank out better and better earnings. Well, that's the big question. If we're going to now start worrying about growth, maybe that broadening trade to the 493 comes into question, no? Well, look, it's only been a couple of days here that the market's got a pullback.

I think, you know, I always like when Mike calls them pullbacks rather than corrections and bear markets. I think it's a pullback. I think, you know, I always like when Mike calls them pullbacks rather than corrections and bear markets. I think it's a pullback. A pullback occurs every now and then. It's a natural development. It's only a couple of days. I mean, we were at a record high on that only a couple of days ago. So all in all, I think it's premature to conclude that the economy is slowing down. I think the consumer is going to continue. I think they can stay. The retail sales number in January was, you know, when in doubt, blame the weather. Yeah, a lot of it was weather related. I think it's going to bounce back sharply in

February. And then with the S&P Global Services Index, pay no attention to data that doesn't support my story. I'm not a big fan of that particular series, quite honestly. And at the end of the day, it's going to be the officials, NMPMI, the non-manufacturing PMI, that will drive things. And I can't imagine that services are slowing down the way the S&P Global Index is indicating. Yeah. I mean, I was just going to say, if you think that this economy is pretty much on cruise control and we're not seeing any bit of a slowdown, it's giving you an opportunity. Industrials, small caps and banks are all trading back into the November 6th gap. That was the big surge in cyclicals and Trump trade that happened the day

after the election was decided. So, I mean, the market's expressing some reservations and a little bit of a reset of cyclical expectations. Look at the transports. Yeah, exactly. So that's one of the weaker parts of industrials. Of course, you're also losing the defense stocks. Yes, you are. So here's the thing. I kind of agree that nothing radical has changed.

But when the market responds in a way to these data points that could otherwise be shrugged off, it was like I said yesterday when, you know, oh, they're going to cut the defense part at 8%. That shouldn't affect Palantir. Well, guess what? Palantir's down 10% in two days because it was the time for a stock that was too stretched to sell off. Steve Cohen said almost exactly the same thing to us in late January

about being concerned. And this is all growth negative. And we're probably getting close to some kind of a top market. Wasn't ready to hear it. It just didn't matter. Now the market was ready to hear it today. Yeah. Good stuff, Mike. Thank you. You'll stay for the market zone. Ed, thanks so much, as always, for joining us on the fly here as we're watching this close. And a bit of a nasty one, obviously, at the end of the week. That's Ed Yardeni. We are in the closing bell market zone now. CNBC senior markets commentator Mike Santoli is still with me, of course, along with senior markets correspondent Bob Pizzani to break down the crucial moments of the trading day. Bob, what jumps out to you?

Well, what I see here is I think the problem today is that we may have an additional market risk that's emerging. So remember what we have already that's already in the market. First, we have concerns about inflation and Fed rate cuts. And second, we have tariff risks. And then third, we have these Washington headline risks where every day some sector might get hit by some comment out of somebody in Washington. Today, though, it seems like there's an additional problem, a bit of a growth slowdown issue. You saw the yields drop this morning, 9.45, 10 o'clock in the morning.

This is when we got some of the PMI numbers that came out. Then we had some of these Michigan consumer confidence numbers that looked a little weak. Existing home sales looking a little bit weak. I think there's a little bit of a growth slowdown to add to these other three issues that are going on here. And if you look today, I mean, look at the laggards today. These are all cyclicals. It's, you know, the transports are all weak today, like Old Dominion or some of

the classic big middle sector industrial names like United Rentals and material names like Freeport, Macmoran are weak and Cummins in the industrial space are all weak. And what's up today? Scott, it is a it is a strange day when the upside leaders every single one of them are defensive names when Hershey is your upside leader in the S&P 500. That tells you something right there. This market is very defensive right now. So it that's the bad news. The good news is on the volumes, I don't see huge selling going on here. A little above normal, but not a lot. The

VIX at 18, not a big worry. Earnings, I agree with that. It's still good, but coming down here. So today's a bit of an air pocket, let's call it. And let's watch that growth concerns that I think are popping up right now. It is why, Mike, some still say, and I think the majority of people still feel good about where this market is. Sure. And it's dangerous to get too negative knowing that you do have what is perceived to be a pro-growth administration. Sure. You think you're going to get, you're going to get tax cuts in some form. You're going to get deregulation in some form. And you may get tariffs in some form, too. And you'll have to weigh one versus the other or two versus one. I think you're definitely getting deregulation. It's already

in train. Whether you're getting tax cuts or you're just getting the extension of the current tax code, we'll see. Maybe it'll be marginal cuts on that front as well. I do agree that you can't get into too much trouble if things stay at, you know, 2% real GDP, 2.5% inflation, 4% plus unemployment rate. I mean, these things are fine. The yields are also, you know, at some point maybe take some pressure off, even though right now they're expressing growth scare 10 years down on the year in yield. So, you know, I mean, I think that's true. One of the issues, though, is just exactly what the process of bringing expectations back in line looks like. So we've had this rolling sort of corrections or resets of psychology.

Housing has obviously been stuck for a really long time. It's not a help. Employment has been OK, but in this fragile equilibrium with not that many openings. So I do think that you might have to work through a little bit. The other part of it, though, is, of course, it's happening right on time when we all know seasonals get a little bit tougher. I've been talking about the expirations and how that today is one of them. And afterwards, sometimes the market can get a little more squirrely. Maybe this is all of it. It would be kind of too cute to say it's going to happen on the day and that's the top. The other piece of it, I know you're talking earlier about this report about the

new form of COVID or whatever it is in this research that's been out a couple of days. Yeah, a couple of days. I am 100% convinced the reason if that's having any effect on the market, it's because we're two days past the fifth anniversary. And the takeaway from everybody on Wall Street of the fifth anniversary of the peak in the stocks before the COVID lockdown was, wow, the market really didn't see it coming, did it? We didn't price anything in until we absolutely had to.

And so to me, I mean, I think that's another thing. If that's what this is about, it's probably fleeting. Let me ask you another thing, because you know Berkshire Hathaway so very well. Yeah. And you always make the pilgrimage with all those people who go out to the annual. They report their earnings tomorrow. And you have a lot of people wondering what is going on with that mountain of cash. They continue to light up,

lighten up on their positions. And is it they see something we don't? The same questions we've been asking quarter after quarter after quarter because the cash pile has gotten larger and larger and larger. Yeah, it's growing passively is the way I would think about it. I think there's a lot of portfolio manicuring going on. Clearly wants to kind of get the financials holdings back below certain thresholds, get Bank of America's stake below 10%. Apple got quite expensive relative to where he bought it. He sold a bunch of it, not much more recently. Berkshire's been kind of on hold

with Apple. That said, they clearly don't see enough big, full companies to buy at a proper price. Not a great price. That's it. I mean, and that's the only thing that you can say is they're not making a macro call explicitly, but implicitly, which we know. We know the market's kind of fully or richly valued on most fronts. I also do believe that given at some point in the not-too-distant future there's going to be a CEO transition here, that maybe Warren Buffett is interested in preserving so much flexibility in terms of how the company is positioned with the cash and not making any huge additional bets in the short term just to give maximum flexibility for the new regime. So all that's, I think, at work.

It's obviously, you know, kind of confounding. I think I know for a fact they love getting paid on what cash is paying right now and all the dividends on the stocks that they hold. You know, 20 percent of every dollar of dividends American Express pays goes to Berkshire Hathaway. And so I feel as if it's not so much a sell signal as it is, you know, if you're buying today, not because stuff is cheap, but because you think the economy's. Yeah, it's just interesting. You know, it's the danger of speculating. But how can you not speculate when it's Warren Buffett and Berkshire Hathaway? You know, Bob, the other thing that jumps out to me today and certainly this week is the activity in China tech.

Alibaba, a PDD, JD. You could throw some other names in that basket, too. Just as the conversation about investing outside the United States is really percolated. Yeah, this is a very interesting moment to get mean reversion. And a lot of people, we had a big debate about this earlier in the week on ETF Edge. Why is Europe suddenly outperforming? Why is China and particularly China Tech outperforming? But even some emerging markets like Poland are outperforming at this point. And the early speculation has been that this push for global

deregulation would make some kind of difference. We also saw Xi Jinping, the head of China, meeting with people like Jack Ma this week. That, to a lot of people, was a sign that perhaps he's gone too far in the other direction. He's now having to court these people that he previously had shunned. So I think a little bit of hopes for better global growth on some deregulation, as well as maybe a little bit of a pivot on China. It's about time, Scott. You know as well as I do that global investing has underperformed the U.S. for 15 years now. And the U.S. version is going to be red.

Perspective, though, we did hit new closing high on the S&P this week. Closing exactly to 50-day average. It's kind of cute. Yeah, all right. Stay happy to hear it, Mike. Thank you, and thank you to Bob as well. We'll send it in overtime for more of a wrap-up on what this week has delivered with Morgan and Don.