Closing Bell - Closing Bell: Apple Sinks, Tesla's Worst Day Since Sept 2020 & Delta CEO 3/10/25

Episode Date: March 10, 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 Wopner live from Post9 here at the New York Stock Exchange. A very busy day. This make or break hour begins with sinking stocks again as the markets remain firmly on edge here. Investor optimism so strong in the fall suddenly shrinking as fears of a recession continue to rise. Take a look at the scorecard here with 60 to go in regulation on this Monday. Ugly from the outset today. Technology stocks are by far the biggest drag on these markets. Tesla is tumbling again. Nvidia sliding, Apple too, almost nowhere to hide here. Bitcoin below 80K for the first time since November. So it is decidedly risk off elsewhere.

The names most sensitive to the economy are falling from airlines to retailers to the banks, yet again, all of it taking us to our talk of the tape. The no good Nasdaq sinking deeper now into correction. It is the worst day since at least January of 2022, or June of 22, excuse me. We do have several reporters on the case for us today. Phil LeBeau on Tesla's historic losing streak. Steve Kovac on what's eating Apple yet again today.

Christina Partanavoulos on Nvidia's drop and the chip rack and Seema Modi on the continued momentum misery Phil though we do begin with you today this is the worst day in some four and a half years for Tesla and remember all those gains after the election that Tesla was racking up and people were like wow it's going to the moon no all of those have been erased either completely gone now take a look at shares of Tesla down more than 15% today. Look at this. If you go back to December 17th, down 51%. They're down with the entire market. But if you had to point to a catalyst today, you might look at the UBS note that came out. Joe Spack is the analyst

there. Reiterating a sell rating, cutting the 25 EPS estimate from UBS to 202 was 316. That's what they were previously expecting, or 315 from Tesla. Also lowering the Q1 delivery estimate. UBS now believes that for all of 2025, Tesla deliveries globally will be down 5% at 1.7 million. They had a slight decline last year. They're saying it's going to get worse this year and go down to 1.7 million. By the way, the street estimate, at least this morning, was higher than that.

Don't be surprised if more analysts follow and perhaps cut their estimates as well. As you take a look at Tesla over the last year, we should point out that UBS also lowered its price target for Tesla down to 225 from 259. Well, if you bought in now, you might get $3 if you hit that price target. But it's a rough and ugly day, Scott. I mean, Phil, you've seen the pictures all over the country too in some major cities. The protests around Tesla dealerships matched up against that stock chart. Right. And we've talked about this before, Scott.

You have to look at Tesla two ways. One is the automotive part of the business, the EV part of the business. That is clearly facing headwinds and challenges. The reason that this stock ran up after the election is because you believed in Elon Musk's close proximity to Donald Trump, making things easier on the regulatory front. You believed in their AI exposure, robotics, autonomous vehicle technology. That's the reason that the bulls are still with Tesla to the extent that there are people who are saying, yeah, get past this sell-off

because we'll go back up at some point. Yeah, 50% drawdown though from the high. That's what's so jarring when you look at the chart. Phil, thank you so much. Phil LeBeau on that case. To Steve Kovach now for what's going on with Apple, which is seeing a big drop in its own right, Steve. Yeah, Scott, and this is a big drop in its own right, Steve.

Yeah, Scott. And this is a big AI whiff that we found out about on Friday. I'll put it the way the city analysts did this morning. They lowered their iPhone estimates. This is after the Siri AI launch that we were expected to happen this spring. That big upgrade to Siri just didn't happen. They also removed it from their catalyst list that was expected to drive shares up a little bit.

And this big upgrade for Siri is now delayed until what Apple says the coming year, i.e. the iPhone 17 cycle. And there goes the iPhone 16 bull case. So far we've only had really minor artificial intelligence features on Apple devices up until now. That's stuff like the writing tools,

those notification summaries, and the chat GPT integration with Siri. But this was going to be the big one, the controlling your apps with Siri, reading what's on your screen, understanding your personal information, that real dream we've been having for so many years of a true digital assistant powered by artificial intelligence. That's not going to happen anytime soon. Now we've already seen some of this reflected reflected in iPhone 16 sales so far this cycle. They were slightly down year over year in Q1 and then overall sales in China, we saw

down 11% Tim Cook telling us at the time, partially blaming no artificial intelligence in some of those markets for those misses. And by the way, Scott, we're not really gonna have clarity on when this big Siri update is gonna happen until WWDC expected this June down in Cupertino, and in the meantime, you just have all these artificial intelligence competitors opening up Google, Amazon just had its big Alexa Plus debut a couple weeks ago, they're shipping these new

AI advancements constantly as Apple keeps lagging behind. So if you really are one of those AI believers that you think Apple intelligence, this bull case that is going to cause people to run out there, buy their iPhone 16s to use all these AI features, that's now pushed out to September for the iPhone 17, Scott. I'm really glad you mentioned WWDC coming up because it was going back to last year's WWDC, of course, where this has really been a benefit of the doubt stocks since then. Stocks started going up when you and me

were sitting together outside of Apple headquarters. It was given the benefit of the doubt of, you'll see, this is gonna be great. It's gonna be awesome. When it finally comes. Delay, delay. Now we're talking about another one. China's been an issue we know from revenues.

Now we're worried about China and tariffs and the components and it's all sort of coming to roost here. Yeah, it's all sort of coming to roost. And by the way, those AI features that we saw them announce, they seem pretty cool. This big Siri upgrade I'm talking about, this was supposed to be that big debut.

In fact, they were so excited about it, Scott. They were advertising it months before they even planned on launching it saying, your iPhone 16 iPhone 16 series can get so much better it's going to be able to do all this stuff go buy one right now Scott they pulled that out from YouTube last week. Interesting Steve thanks that Steve Kovac on the case force with Apple see memos watching these momentum names. Christina parts and others first though on Nvidia which is ugly today too and it's kind of been that way.

Yeah it has been that way. Chipsox has a hold though have been taking a beating. Leading the Nasdaq 100 drop to your point. Nvidia Broadcom are the biggest chip drags from a point impact and that's after Apple that Steve just talked about. Nvidia hitting a six month low down what? Six percent now. Interesting Mellius Research earlier this morning said they still like it as a buy, but they've lowered their price target to 170 from 195. Some folks are even saying Nvidia looks cheaper now because they talk about their forward PE ratio of 24 times, which is less than Broadcom's, for example, you can see on your screen right now. But the pain really is just widespread. AMD, Qualcomm, TSM, CTI,

1 Semi, Intel, they're all down well over 4%. ASML really getting hit harder today, down almost 7% last night because of those tariff and export control concerns, 7.5 now. And if you're wondering how bad this is historically, during the 2020 COVID crash, the NASDAQ 100 actually fell about 13% from mid-February, about February 19th, early March, were already down about 12% during that same exact timeframe. So looking at the broader NASDAQ today's actually it's worse day. You talked about that, Scott, two and a half years. It's lost more than half of its 2024 gains in just 25 trading days thus far. So the momentum for this drop is quite big. And

then adding fuel to the fire, this AI sell-off really comes not only amid recession fears, we're talking about regulatory concerns, tariffs, export bans, but also China's new AI agent, Manus, that's turning heads. It's drawing deep-sea comparisons and it's suggesting China is closing the AI gap despite these hardware limitations. So that's another negative catalyst for the group. All right, Christina, thanks for that. Christina Partsenevelis, now to Sima Modi, who's watching these momentum names, euphoric on the way up and just downright painful on the way down.

Yeah, momentum unwinds, Scott. As Goldman Sachs said in its note to clients today, that tariffs, really the point of contention for investors, the wild card, without that certainty, questions are emerging on the size and the scale of these tariffs, and that's giving investors a reason to sell some of the big high flyers. Take a look at Cathie Wood's ARK holdings, a good gauge on momentum stocks in general, down again today and off about 30% from its recent high.

Palantir now trading below the average price target on Wall Street, and it got hit with a sell rating from Jefferies Analyst just just last week shares down another 12% today the demand story for artificial intelligence remains strong that was a big takeaway from Morgan Stanley's TMT conference last week where the commentary was really reassuring from the hyperscalers even in the wake of potential export control Scott in software just want to point out a couple names Shopify down a lot and of course we're counting down to Oracle earnings after the Bell one of the last software giants to report and an app loving not getting a

lot of love today and unwind here after the company was not added to the S&P 500 as previously rumored on Friday in Olson City today coming out to defend the stock with a buy rating, not really helping Scott. The stock is down about 13%. Yeah, not at all. Seema, thanks for that report. That's Seema Modi. Joining me now, Anastasia Amoroso of iCapital, Mira Pandit of JP Morgan Asset Management,

and Mike Road of American Century Investments. Good to have everybody here. Anastasia, you first. Your thoughts? Well, I think finally, Scott, this is starting to feel like a washout. This is starting to feel like a capitulation in the market. We've been waiting for the market to on a broad basis to hit oversold levels and I think we're going to get there today if not today most likely this week. And if you look at the Max 7 stocks that have

been hit really hard today they have already been oversold. So what we've seen Scott is really a buyer strike. We've seen a lot of sellers come into the market from the systematic investors hedge fund community has been selling retail traders have essentially by boycotted this market. So that's why we've seen this unwind but fundamentally Scott

I will say recession fear mongering I think is what's being listed as a catalyst for this but why do we have a recession all of a sudden what indicators actually point to a recession we have a relatively strong payrolls report we have a recession all of a sudden? What indicators actually point to a recession? We have a relatively strong payrolls report.

We have consumer spending that is still pacing three or 4%. So I don't actually see the reasons to fear a recession at this very moment. So what we need, Scott, is a circuit breaker, some sort of a catalyst to put an end to this. And I think we're gonna get it this week or next. Detox, detox is painful. I mean, the treasury secretary came on this network and used the word detox. That's what we're going to get it this week or next. Detox. Detox is painful. I mean, the Treasury secretary came on this network

and used the word detox. That's what we're going through. The only question is whether it was a juice cleanse or you needed to go away for a little bit. This is painful. It is painful, but I would agree with Anastasia in that we haven't really seen tangible evidence that the economy is slowing. And we are starting with such a strong buffer. Nine of the last 10 quarters we've had above trend growth. We look at profits expectations for 12% profit growth. If we get half of that, that would be in line with a typical year of pretty strong profit growth.

So there is quite a bit of a buffer in the markets and the economy to absorb some of this. I think what has changed is the only thing to fear is fear itself and there's a lot of that, especially around what are the pain thresholds. So there was an idea that the Trump put would support the market at some point. There was also for many years a reliance on the Fed put. But now if we're in an environment in which the administration says we're willing to take

a little bit of pain and disruption and the Fed says we still need to keep the eye on inflation above all, then that complicates matters in terms of who's going to swoop in and save the market. And if you layer on top of that the tech sell-off that we've had for so many instances in the last couple of years, tech has actually been pretty defensive, and that's not the case anymore. But we are seeing a genuine rotation into some of the other areas of the market that have previously been unloved, and I do think think that is somewhat encouraging amidst all of this.

Secretary Besson also said no Trump put. And it's debatable as to to what degree there's a Fed put. If you have a slippage in the economy, but inflation remains above target with the unknown of tariffs on top of all of that, with, you know, an early April reciprocal date once the report's reports in maybe their hands are tied for a bit. What do you do. Yeah it's tough.

What is interesting to support the call that hey there's not a recession around the corner. If you look at how yield spreads they're still near all time tightness right. So not indicating that there's something brewing right around

the corner. Why and why and a little bit why a little bit. Not as free sort of calm calm is where they were. As you would expect, but on a down thousand point day, there's not a lot of panic in that market yet. But you do have to remember, we entered this year with the S&P 500

trading at 22 times earnings. That's versus 16 on average. So stocks, especially growth, high growth, momentum tech stocks were priced for perfection. And now you have potentially slowing growth for slowing spend on phase one of AI. That mix with high valuation is a pretty tough environment. And so there has been a rotation.

It's a really good thing to be boring right now. Value stocks, mid caps, financials. Financials? Yeah, ugly. Yeah, it has been ugly, but we see very high quality. Capital levels are still really strong at a lot of these regional banks. Deregulation should help,

and there's no impact from tariffs, not directly. So there are pockets of this market that actually the sell-off creates some really good opportunities for active managers at the most Optimistic okay, you had calls that approached seven thousand right all right in the market for twenty twenty five on the idea that earnings We're going to be robust and they were only going to pick up and make for make up for a lack of Multiple expansion which we sort of said well, it's gonna be really hard to keep doing that. You really need to have earnings.

But now, if you're worried about a slowing economy and or recession, you have the prospects of earnings deteriorating further, thus putting more pressure on the multiple, which was already viewed by some to be too high. If 22 and a half times was too high, you don't want 16, which is the historical average, because if you put $269, which is the average street estimate,

and you put a 16 times on that, you're going a lot lower than where we are now. That's right. I hope we're not going there. But Scott, to your point, that's exactly what's been happening is the market had to reprice the multiple and the market also had to shave off some basis points or percentage points from that 13% earnings growth that was expected. The tariff uncertainty, potential inflation uncertainty, the dollar strength that we have seen, all of that shaves off some of that. And that's why all in this is a harder market that we've been accustomed to. Maybe we still get back to 6600 if the tariff news goes away or or the noise goes away and turns into tax cuts. But what what I would say Scott is that this is a time

to acknowledge that it's more difficult is the time to be discerning. And when you sit here and you assess the damage that's been done in the market you start to think what is it that you buy. Do you go back to the Max seven I don't think so

I think Max seven right now is not optimally positioned because they're not immune from the consumer slowdown they're not immune from the consumer slowdown They're not immune from potentially overspending on AI cap X and so they're also not immune for some of the foreign pressure So I wouldn't step into that but I would think about some of the more defensive trades and also domestically oriented trades whether it's utilities whether it's AI software if you really tempted to buy something in the market right now I think you look at the software,

which is really 88% of the artificial intelligence tap. So these are the types of things they have to think about. And also be looking for that circuit breaker. Maybe it's President Trump coming back around and saying that, no, I don't actually think there's going to be a recession. Maybe it's Fed Chair Powell next week, saying not only is the economy strong,

but we're gonna cut rates if we need to. So I think at this point, the market is poised for some sort of near-term positive surprise. Powell, the other day, was pretty sanguine about where everything is. It's the reason why the market rallied back. He sort of saved the day when he gave that speech midday for that booth event here in New York.

Essentially saying the economy's in a good place. These might be one-off price increases relative to tariffs. We just don't know. The textbook says look through it. Investors aren't looking through it. When do they start doing that? We need to see a little bit more of a genuine reprieve from the tariff dialogue. And I think that's when you start to see investors look through it. I don't know that we're necessarily going to get there this year, because if we think about the timeline for some of these trade deals being renegotiated, there is quite a

bit of runway there. So I do think we need to continue to center ourselves in what some of the fundamentals are doing, which right now, this is a sentiment-driven market. It's driven by who's saying what on what days, as opposed to what the data is showing. Well, I don't know. It depends what data you look at and what you believe. If you look at, now I know when you mention Atlanta GDP now, people say, oh, don't trust that data because it changes so much

and that's likely not to be what the final number is. That data is not good, right? Some of the ISM numbers haven't been good. Some of the numbers around the consumer hasn't been good. So what numbers should we look at then? I don't not trust the Atlanta Fed GDP number, but if you look at the components of what's driving it lower, a lot of that is around net exports and seeing a massive amount of importing.

That is not necessarily a reflection of actual demand. And in fact, that is somewhat of a reflection of some of the tariff challenges that we're seeing. If you look at things like PMIs, consumer confidence, consumer sentiment, that is really important because again, that fear can compound and change how businesses and consumers make decisions. It's been deteriorating, no? But we don't always see that an unconfident consumer results in lower consumer spending.

Well, which is what the Fed chair himself said last week as well. That's not a very strong relationship. So while we want to continue to monitor this this it does take some time for some of these things to truly decay and I want to see that in areas more pronounced that are their actual reflections of the economy as opposed to how people are feeling about the economy. Because that can change on a dime. You think that we're gonna have a further rotation as you said into areas like small caps. I just I don't know how that happens. As long as you and me are having conversations

like we are now, how does that happen? Yeah, well you have, near term, it's gonna be choppy. There's no question. We were at a conference last week. Every CEO we met with, we'd ask, what are you doing about the tariffs? And they said, I'm doing the same as you. My phone is here, I'm looking to see

what the next post on Truth Social is. I feel like I'm ready to make the changes, but I don't know what the changes are going to be yet. Okay. So for small caps, you're looking at an asset class that is trading 10% below average right now. And the ultimate goal of tariffs and really the ultimate goal of the Trump presidency is to bring manufacturing back to the United States, which is a real tailwind for small and mid-cap

companies in the US. You have to get a little bit further out over after the next six to 12 months. A little bit further out? I mean, you could say you're going to bring all the manufacturing back here, which is a novel thought, and I think people would be happy to see all that. But are you investing in that today? You can't build a plant tomorrow. You can't build it in six months either. But we're investing in good businesses that are trading well below average. That might be in a cyclical downturn

that no matter what, whether we head into a recession tomorrow or not, no one knows, but the higher quality companies not only will survive a recession, but actually take market share. So we're okay buying really good businesses for the long term. We talked about tech, albeit briefly. We led the show with some of the upset mirror that we've seen in the NASDAQ, down more than

4%. Until you get some stabilization there, and it's not just the mega cap names, all those names under the surface that felt so great, you know, shooting up Palantir, Aplovan, Vistra, Virdiv, there's like 30 names and they are crashing hard. How do you get the NASDAQ to stabilize until that stops? It might take a little bit of time because where we entered in terms of not only the run it's had over the last two years but also valuations at a starting point. So I do think you need to see valuations come down a little bit, take a little bit of that indigestion on, and you need to see a little bit of stabilization, some of those profits estimates as well,

which have been coming down a little bit. And some of that forward guidance is not looking as impressive as it has. Over time, you have seen some of these earnings surprises come down. So I think it's really about expectations coming down to fundamentals. But I think it's important to keep in mind that a lot of the fundamentals of these companies, of this sector broadly, are still pretty strong. It's just that the expectations got too high. So as we start to see those merge a little bit,

and again, that fundamental backdrop's still looking reasonable for a lot of areas of the sector, we might continue to see a bit of volatility here. The reason why, I, part of the reason, certainly why it feels and looks a little more painful than maybe many expected, is because positioning was off sides so severely. And I don't remember a time where you've had that

to this degree, where you come into a year feeling so much euphoria and excitement about this new administration that was pro-growth and they're going to do A, B, C, D, and E and all of it is going to lead to a higher market and a stronger economy. Now that may be the case later on in the year but right now it isn't. So all those who got all bulled up going into this year with these kinds of trades that are now unwinding, that makes the fall a little more jarring.

It does. And maybe the extent of the fall is jarring, but I don't think the sequence is all that surprising, Scott. And we talked about this, that as exuberant as everyone was about tax cuts, the first thing that was likely going to come are actually tariffs. And that's exactly what we're getting. But I think it is a natural rotational. So Scott, after two years of Mach 7 leadership, guess where people are taking their profits?

Where they have them. And that's what those stocks represent. So I think it's a natural transition. You need to focus on parts of the market that may give you some insulation from that. And one of our highest convictions for the year was that we always like some exposure to private markets. But at this point in particular, having that private market exposure, whether it's in private credit or infrastructure,

or maybe some hedge funds, that could be a critical piece of your portfolio. And private equity, I mean, we talked about those stocks have gotten crushed too. We'll leave it there. Anastasia, thank you. Mira, you as well. And Mike, we'll talk to you all soon. With me now on the phone is Jonathan Krinsky of BTIG, just publishing a note as we began our conversation today.

It's good to have you on. Asked to reach out to you because you asked a question if we're there yet and suggest that now's the time to buy, in fact. You say it's the worst day of the year, but we would dig in here. What does that mean? Hey Scott, so if we take a step back, coming into the year the market had gone uh... you know entire calendar year without testing its two hundred moving average we thought that a test was like in the first quarter we did test that last week

uh... we're obviously gone below that today but we're starting to get some washout signals that you typically see in the later innings of corrections uh... one being downside volume on the NYC or, where above 80%, that's the highest of the year. They're finally hitting the winners. You have a name like Walmart, which was a massive winner last year, down almost 5%, one of the biggest moves of the year. You have different factors like cyclicals, force, defensives, the most oversold since we've seen during COVID.

And then you have the VIX curve, which we look at spot VIX for second month future, that spread has blown out to the widest levels of the year as well. So there's things that we didn't have in place over the last couple weeks that now we're starting to see and it lends us to believe, look, if you were looking for a pullback at 6,200 know this is your spot in our view for a tactical yeah i mean it's as you acknowledge to you know yes we could be oversold but the market

is so uncertain and there's so many different headlines driving things that are still have to do that that oversold can get more oversold you know that's that's early case in that you know what we we published a note yesterday thinking that that you know we're at a tactical bottom and obviously we come into that even even worse so you know it's a tricky part of the market where you have to have a little flexibility but again I think in the big picture you know if you are looking for a pullback we're now eight or nine percent off the highs and

look to be fair we don't think this is the final bottom by per se but we think a tactical rally three four or 5% from here makes sense. Okay, this is your chance. Those were your words. Jonathan, thank you so much for calling in. Appreciate hearing your voice during this market coverage. Renaissance Macros, Jeff DeGraff joins us now. He also watches the key technical areas of this market, joins us now.

Do you agree with that? Krensky says, quote, this is your chance. I think we're pretty close. We've done several of the things that we were hoping to see back from the fourth quarter. I mean, the one that I'll throw at you is beta was in the 99th percentile of

a performance historically. High beta versus low on the 6th of December. And we warned about that. And now we're the first percentile. And I will tell you when we when we warned about it we're thinking we go from the 99th percentile to something that's below 50%. You know a lot of times you'll get down into the 10th percentile, but to go to the first is is pretty extraordinary. So that performance differential, and it's all the names that you hit right, Tesla and Planter and the

like, has really taken a lot out of that and I think that's the good news There are a few other things that we're watching for that, you know proprietary. We we look to triangulate some type of low Regrettably, we're not quite there yet, but I think we've done I'll call it 80% of the work and we'll see if Today's final figures give us some more of those touch points. Is the VIX spike telling you anything? I mean it's not an explosion like we saw with the unwind of the carry trade in the early part of last August, but it is a sharp move higher of late. It is.

The VIX in isolation doesn't work that well. I know people love it, but mathematically it's not that great. What we'll do actually is look at the difference between the expectations of volatility, because really what the VIX is, is nothing more than the equity market equivalent of credit. And so we'll measure those two things against each other. And the good news here is that equities are far outpricing the downside than what we're seeing from the credit market. So that's a condition that we look for. Right now we're in about the 95th percentile of that historically, which is good news. But that's a good, it's a good setup.

But the VIX in isolation we don't use, but within the context of how we look at it with credit, it certainly is, is important and is supportive here. Couple downgrades of U.S. equities today by various firms. You say your favorite markets right now are outside the U.S. equities today by various firms. You say your favorite markets right now are outside the U.S. In fact, Hong Kong and China. Tell me more. You know we've been bullish on China and Hong Kong

for at least six months now. It was pretty taxing there for a while to be frank. But it never did anything that looked to us to be you know troublesome from that standpoint. So look I think there's three things going for China and Hong Kong.

The first is that the valuations, if you look at the quote unquote Buffett indicator and apply that to Hong Kong and China, it's very, very favorable. Market caps are below 100% of GDP, which is good news. I think the sentiment there is great. It was quote unquote, uninvestable for so, so long. And those for us aren't good enough. We need some technical affirmation around that. And we got that last year.

We had the 50 day cross above the 200 day. We had escape velocity, which is this massive expansion in 20 day highs in those markets. So really bullish things taking place there. And we think that that's got a long runway to go. Probably the next two or three years at least. Let me ask you about the so-called death cross that we saw recently in the SMH coming to stop the the chip stocks

just can't find any footing that's another big problem isn't it? Yes and no I mean keep in mind that the semiconductors were so overblown in terms of sentiment. We made a call on those names back in late summer that they were deteriorating. We took a lot of heat for that, and it's proved to be right. I think you've seen a lot of this sort of flow through from interest rates. You're seeing it in home builders. You're seeing it in those related types of names. Certainly there's a cyclical component of semiconductors that we keep our eye on.

And so it's uncomfortable. But I can't say that just because the semis are weaker, that's going to be bad for the market. I mean, one thing that's really been surprising, and I think it's very bullish globally, is financials have been one of the leadership groups for most of 2024, particularly the back half of 2024. The European financials look good. The Chinese financials look good. The Japanese financials look good. It's really, really hard for us to draw a link that this is going to be something that's more nefarious and deeper and longer when you

have the support of the financials. And I know they're correcting, but when we look at relative performance, when we look at some of the other things that help us to discern where the leadership is, they're still very, very good. And importantly, they're good globally. Jeff, let's bring in Mike Santoli, our senior markets commentator. He sat down next to me to help us make sense of what's going on here. What do you think? I remember a couple hundred points off the low,

at least in the Dow, but the NASDAQ's still down 4%. Krenzke making the call that this is your chance to graph as you just hear, we're getting close. Yeah, I mean, pretty much most of the things you'd want to see line up have done so, although I have to say, there's always a few things that stand out. You could make the argument that treasuries,

as well as the VIX, are kind of underreacting a little bit here to what we're seeing in equities. A part of that is that for much of the day, you had one third of all stocks were up, there seemed like there were places to hide there's been enough dispersion to kind of keep the indexes from going into freefall. Some of the action though, in the last hour or so really did look forced. So you started to see the former kind of momentum favorites really

get disorderly on the downside. Maybe that means people are getting cleaned out. So I think you're at that point down eight nine percent in three weeks in the S&P 500 where unless you're really expecting a near-term economic calamity of some sort and you're you know you may always get some kind of fun blow up. We could hear about some kind of stress event in the capital markets that we just can't handicap right now, but that's just one of those, you don't bet on the black swan, you kind of put the probabilities in your favor.

It feels like things are lining up for some kind of relief relatively soon. I know there's not a lot of, we didn't spend a lot of time in this particular area of the S&P last year. I know some of these downside targets have been hit were below the summertime highs. So some people are saying, oh, down 2% from here, that's the real one. I mean,

you can't be that precise about these things if your game is to try and put things, you know, slightly in your favor tactically. I mean, there are some on the street today while, you know, tactically negative for the near term, are still keeping their eye on the long-term ball, trying to see the forest through the trees. The problem is when you have this type of scorched earth approach, the wrecking ball approach in some respects, like Doze, for example, has done, things break. Things get broken and it's a little hard to pick the pieces up when they're shattered

on the floor. If you are a stock picker, it's very hard to see the circumstances under which in the next few weeks you're going to be raising earnings estimates for your companies, right? I mean, yes, something can happen on the one off and maybe the market has kind of discounted a little bit of softness so you're okay there on the valuation, but it's just difficult to say that earnings where we expect them right now is actually going to be higher in a few months. That being said, again, the market moves faster than the fundamentals, so at some point, you get it to a position where short term,

it looks like, hey, we're gonna rally no matter what happens. It's kind of close your eyes and buy time at some point, as opposed to believing that therefore, it's gonna be all okay and we're going back to the highs. Jeff, I got a lot of targets that are 1,000 points higher from here at minimum. Look, we think the S&P closes somewhere around 6,800 on the year and I'm comfortable with that.

We went into the year seeing the biggest number of strategists raise their year-end price target that we'd ever seen in the history of our data, which is about 30 years old. And it just said to us, look, there's going to be a consolidation. It's probably going to be a decent year. That was about a 13, 15% move from where we were. And we thought it'd be a much better year if we could buy an oversold condition in the first quarter, which we thought would happen. And so we're right in that zone. I think that can make for a really, really good year. One thing I would note, Scott, you look at Tesla today, the disaster that's happening in Tesla, pull up the CDF charts, the credit default swaps. They're actually trading at the lowest lows in three years.

So, clearly there's some disconnect going on here. People are looking at the stock much differently than they're looking at the realities of the business. And I think there's a lot of that taking place. All right, I appreciate your time, Jeff. Thanks very much. That's Jeff Degraff, Renaissance Macro. Mike's gonna be back with us, of course, too,

as we approach the end of the day. The prospects of slowing growth and sticky inflation putting the Fed in a very tough spot just as it was feeling pretty good about where things were heading from here. Let's welcome in Richard Clare. He's the former Federal Reserve Vice Chairman, now Global Economic Advisor to PIMCO. It's good to see you. Thanks for coming on today. Yeah, thanks for having me on.

What's the Fed thinking right now? Well, you know, I think the Fed has a lot of experience looking at very volatile markets. I don't think that anything has changed relative to what we heard from the chair on Friday. They think that they're in a good place. They think the economy entered the year strong, but the chair did correctly highlight

there's a lot of uncertainty right now. Trade policy, tax policy, spending policy, the year strong, but the chair did correctly highlight there's a lot of uncertainty right now. Trade policy, tax policy, spending policy, immigration policy, and geopolitics are all quite uncertain. And so I think markets are reacting to that. But I don't think the Fed's fundamentally doing anything different than we heard on Friday from the chair. What happens if the economy weakens like the market fears, but inflation is still above

target and we still have unknowns relative to tariff policy. What does Chair Powell do? I was looking intently to see if the chair on Friday would repeat what he has said at recent press conferences, which is that they would cut rates if the unemployment rate went up, if the labor market or the economy slowed sharply. So I take them at their word. I think that they have a dual mandate. Ideally, they would like to cut rates

with inflation back all the way to target, but I think they've pretty consistently made the case that if we see a pronounced slowing in the economy and an elevation in the unemployment rate, that they'll begin to adjust rates lower, and I'd expect them to do so. So you're essentially saying that the Fed put is alive and well? Well, certainly if you actually get a tangible weakening in the economy, I don't think that they would cut rates into a forecast of a weakening.

I think they'd have to see it in the hard data. But yes, just based upon what the chair and others have said, I think if they see that in the hard data, given right now where we are in inflation, you know, Scott, on a 12-month basis, the inflation numbers are likely to continue to come down for the next several months. And so I think at least over this timeframe

through the first half of the year, if we do get that sling and Let me say I don't expect that that's not my baseline But but in a scenario that you lay out it yes, I do think they would be cutting What role does this market upset play in their thinking? Well right now, you know markets are still quite close to all-time highs You know if I were still back in my old seat I didn't be interpreting some of this in the stock market as perhaps, you know, a

welcome adjustment to markets that maybe have been a bit frothy. And I think some of your previous guests were making similar points. You know, obviously markets can go up and go down, but when you're close to all-time highs and close to all-time highs in terms of valuation, I think right now to them it looks like more of a reversion to maybe somewhat more sensible levels. Again, profit outlook for the year from what I understand is pretty solid, so I think that they'd also be focusing on that.

I'm wondering what you think of what the Treasury Secretary told our network late last week, the idea that there's no Trump put. The market has assumed, I think investors have assumed, that if there's enough pain that the president, as much as people want to believe he pays attention to every movement of the stock market, is going to take a little bit of the pressure off to avoid a deeper sell-off. How do you see that yourself? is going to take a little bit of the pressure off to avoid a deeper sell-off. How do you see that yourself?

Well, I certainly did take note of that statement. You know, the tricky thing for the secretary and for policymakers is sometimes markets go down because the economy's going south, and so I think in his case, as with Chair Powell, they'll be trying to disentangle a signal from noise but I would defer to the secretary if he wants to say there is no Trump put. What happens if they actually want the Fed to be put in a position where they have to

cut rates? I don't think it's any shock to suggest that the president himself, because he said it himself, likes low rates. So what happens if they feel like they need to do this to force the Fed's hand? Well, I think in that scenario, and again, I don't expect that, but I think in that scenario they would not succeed if it's not in the data. I don't think this is a Fed that is inclined, and I think we heard that message loud and clear from the Chair on Friday in New York. This is a Fed that's certainly not inclined to cut rates based upon a forecast of weakness.

Maybe a parallel here would be useful. Back when I was on the committee in 2019, we had some tariffs, but we had a lot of trade policy uncertainty. Inflation fell by half a point down to 1.5, the ISM fell to 46. I'm telling you, if inflation falls to 1.5 and the ISMs at 46, they'll probably be cutting, but I don't necessarily think that the forecast

of that is going to get them off hold. Mr. Claret, I'd like to bring in our Steve Leesman, our senior market correspondent. Of course, into the conversation. I'm not sure if Steve you heard Rich says hello. It's good to welcome you. It sounds like Mr. Claret doesn't see near the level of maybe conundrum

that some have pointed to of a Fed that has to make a choice between a weakening labor market but still elevated inflation. If the labor market weakens, Mr. Claretta says, Fed's cutting, full stop. What do you think? I'm gonna pause anytime I think I have an agreement with Richard who's taught me more about monetary policy than maybe any other individual, but we might have a slight semantic difference and it may have to do with timing. Scott, I'll give you an example. If you look at the Fed funds futures market, there's a very interesting change between

the probability of a cut in May at 41%. It then doubles to June for 83%. It tells me the market is thinking about maybe the same thing I'm thinking about, which is the idea that the Fed has to wait to see what happens with tariffs and how they work in the system. So for example, you get a month's worth of tariffs in the system, they're going to raise the price level. You might want to wait a month to see if, for example, non-tariff goods are also going

up. If that trend that Richard talked about of lower inflation is still playing out and pulling down, I embrace the conundrum, maybe just a bit more than than Richard does because I think the Fed would have a hard time saying we are cutting interest rates on a month when the CPI index went up by half a point or a point or whatever that number is going to be. I don't suspect that's a big difference with Richard. I think that what I've heard the Fed say is this idea that we're going to look at which of our mandates is deviating more from our target and be more likely to address that one.

So a big drop in jobs and growth. Yeah, the fed addresses that. But if it's a closer call, the fed would wait a little bit longer. Rich, they don't say timing is everything for nothing. Well, Steve, I think if you heard my entire comments earlier, you and I are on the same page. I'm not really getting into May versus June or July. What I did say is the pal I thought made very clear

on Friday in New York that they're in a good place. They don't have to react to a forecast on either variable inflation or the labor market. What I did say earlier in response to a question is if we see a tangible slowing in the hard economic data and a tangible rise in the unemployment rate, I think they will cut. And whether or not it's May, June, or July, I think we are in a mode where a forecast of a slowdown or a forecast of a pickup in inflation from tariffs is probably not going to get them off the dine.

So I think it is going to have to start showing up in the hard data. And I think you framed it well. We're in dual mandate territory now where they may have to make a choice at some point. But again, I was struck at how firm the share was on Friday in response to in the conversation with Anil Kashyap and in the opening remarks about the fact that if, you know, they think the labor market is in a good place, they wouldn't welcome softening in the labor market from here. So I think that's also going to be relevant. But to be clear, Richard, before Steve, you respond,

to be clear, you suggest that if that takes place and they cut because there was a material and meaningful deterioration in the labor market, there was an uptick in the unemployment rate. While at the same time, inflation remained above target that they would not hesitate in your mind to cut. Yes, certainly along what we're looking at for the rest of this year, as I said, the 12-month numbers are going to be coming in pretty favorable. And it's going to take some time for the tariffs to pass through.

And again, as we've all seen in the last couple of weeks, there are announcements and then there are deferrals. And so I think that's also going to be part of the assessment as well. Steve? Yeah, I'm not going to disagree with that. I just think there are some interesting things coming down that the Fed has to figure out. I think the tariffs are one thing. I'm very interested in this idea, Scott, that one of the targets of the Trump administration

is federal spending. Federal spending is a circuit breaker that is typically there when the economy weakens. It's interesting this time around that it could be that federal spending is not only not a circuit breaker But perhaps one of the causes of the weakness we see So ultimately that may prove Richard more than right in the sense that if the Fed sees that the federal government is not going to Be there with with a certain amount of spending that it's causing some of the weakness They may feel they have to come in and be the so-called only game in town to help the economy here. So we're just going to have to watch how much this sentiment issue, and I agree

not only with Richard, but one of your earlier guests, who said the recession is not in the data right now. It's in the sentiment data, it's not in the hard data, and you want to take a little bit of, I don't know what you call it, a pause here in getting too concerned about it this issue though that the Trump administration officials have said we're not that concerned about what's happening in the market and that there will be some pain causes you concern and Scott I keep thinking about what the people on fast money or the brokers out there are telling their worried clients today what is their story that says this is all going to be okay? It's a very tough story to tell right now.

Yeah. And Richard, before I let you go, I guess this is a real time look at why when some have suggested that the Fed share was pretty darn close, it certainly seemed like to declaring victory over this fight against inflation that he was just Redicent to do so because you just never know what's gonna happen Yeah before inflation fully gets back to target that jumpsuits gonna have to stay in the closet for a little longer Well for sure and again as I said earlier at least following your another coverage It looks like the earnings projections for the year still quite solid

So some of what we're seeing is just a you know changing those price earnings ratios I think ultimately stocks are going to come down to the earnings trajectory so we'll leave it there mr. Clarence I can't thank you enough for your your time today thank you Steve thanks for rushing to the camera for us too good to add you to that conversation Steve Leesman Bapasani's just sat down at our desk here at Post 9. What's on your mind? What sticks out the most to you today?

Well, sure enough, what, 45 minutes ago the VIX went into backwardation and this is a really good short-term indicator. The VIX hit 29. That's a little more than one standard deviation above usual. And what happened is the VIX yield curve, the curve for the VIX, that is short-term options, the ones that came out in the that is short-term options, the ones that came out in the immediate future, March and April, that those options are trading at higher levels than those further out. That's called backwardation.

In the past, that's a very unusual situation. In the past, that is usually associated with short-term tradable bottoms, and I'm very specific on this. I say short-term, and Mike you've talked about this this tradeable bottoms because ultimately we don't know where this is going once you start getting concerns about a slowing economy or even the R word the recession word it is very difficult to call any bottom at all so usually that kind of movement when your VIX is in backwardation is associated with a short-term tradeable bottom sure enough when that happened the VIX started the market started turning around a little bit. The Krensky and De Graff calls.

Those are very traditional metrics. Short-term, tradable bottom. If we're not there, we're getting close. One says we could be there. The other one, well, we're awfully close. Yeah, the problem here is you can't call any real bottom because the, when you actually are in a real economic slowdown, we don't know, you just heard from Steve, we don't know if we are or not. If we actually are, a real economic slowdown, we don't know, you just heard from Steve, we don't know if we are or not. If we actually are, there are multiple legs down that happen in that, and particularly when the analysts start lowering their estimates, as we all know, the analysts are slower, the market moves ahead of the analysts.

The analysts at some point, if they believe there really is an economic slowdown and they're hearing it from the CEOs, they'll start lowering the earnings estimates and then you'll have another leg down. We don't know if that is actually happening or not. We went from a situation where the economic surprises rolled over, the market ignored it. That was happening for weeks. And so now I think we're almost swap places where the market, if you look at it from an

index level, perhaps is exaggerating the near-term or expected weakness in the economy, whereas before it was ignoring it. I was looking at the industrial sector earlier, XLI, it actually peaked and started falling well before the S&P 500 did. The last couple days, it's been outperforming. It went down as much as the S&P, but the S&P has now caught down to it. The point is, we've had this kind of rolling situation for a while, and you have to be open to the idea that just as in the last two years, January and February data were super hot, made everybody think the economy was racing ahead of us. Now, you've got Jan-Feb a little bit soft, you just don't know to what degree you can extrapolate that.

So, more open-mindedness than making a call that the market has it wrong here. But I do think that this complete purge in the mega cap and a related AI and Momentum names has been this massive exacerbating factor that isn't really about macro. It really isn't it's mostly about Kind of positioning it's about the crowding of the market and you know its initial conditions The market started out with an expensive highly concentrated market This is the way the market's dealing with it.

The market for sure is pricing in more than just tariffs here. I mean, in a worst case scenario, we've been passing around these numbers for a month now. Full implementation of massive amounts of tariffs. We talked about 6%, 7%, 8% reduction in earnings. That's very significant. But the S&P is already down today 9% from its recent high. It's already pricing at like maximum, maximum tariffs, and we don't even know if that's gonna happen.

Of course, the president could change that at any moment. This is what makes people a little crazy every day. I mean, the market was already sort of screaming to you, defensive, it's a more defensive tone, healthcare and staples. If you're wondering why, especially healthcare woke up, in large part it was because people started to get a little more defensive before the worst of what we were seeing on the screens over the last few

days started taking place. They haven't been selling the defenses. Look, Kimberly-Clark new high today. A lot of various consumer stocks were hitting new highs. Those are holding up. The consumer staples sector today is close to an historic high. In a sense, Mike, you could argue this isn't the product because they'd be selling those if this was really a serious actual desperate.

Get me out at any cost, yes, for sure. But also the cyclical trade has just left the country. The cyclical trade is in Germany, it's in the rest of Europe, it's in Asia. So it's not as if everything is completely synced up globally in terms of where we are, at least perceived where we are on the cycle. All right. Bike you stay.

Bob, thank you for rushing up here. Appreciate you. Let's talk more about the financials getting hit hard yet again today. Leslie Picker follows that money for us here at CNBC and joins us now. Just when you thought maybe it was going to stop, it hasn't. Yeah, no, Scott, great point. It's just another rough day for the financials. joins us now just when you thought maybe it was going to stop it hasn't. Yeah, no, Scott, great point. It's just another rough day for the financials. The banks specifically, you look at Morgan Stanley down nearly 7%, Wells Fargo down 7%, Goldman down 5%, Citi down 5%, JP Morgan, Bank of America also getting hit hard. Now you all were talking about

kind of the impact on analyst revisions and when we might start to see those relative to expectations for the economy. Well, the banking sector is a perfect example of this. And Wells Fargo analyst Mike Mayo has a perfect summation for how this downward bias actually does have an impact into near-term earnings. The first he says is that policy uncertainty can delay lending and capital markets acceleration. This is this idea that if there's uncertainty about how things play out in Washington, that may kind of create this chilling effect over doing big M&A and IPOs as well as big financing deals.

Second, he says that the expectation of a greater chance of recession can lead to reserve bills that has a direct impact on earnings as well. And the third thing, he notes, is a lower forward curve can reduce the degree of benefit from fixed asset repricing. This plays a role in a couple of companies, namely Bank of America, which was set to really benefit from that. So in those three ways, the market activity as well as the psychology is having a direct role potentially to the earnings. I mean, obviously, it's still kind of midway through the quarter, but just something to note as we think about the overall psychology and how it plays a real role in the accounting here.

An unbelievable moves, Leslie, in private equity names over the last month. Yes. Trading like high valuation growth stocks. I mean, down is KKR 27% over that period of time. Aries is down 26%. The losses today alone yet again are just startling to look at. You just don't see stocks like this

trade like that very often. It's exactly right, Scott. A lot of these firms have a portfolio of kind of private equity buyout type companies. They are aging and there's some question marks surrounding whether they've actually took the marks that they needed to years ago when the market did sour, you know, when rates were rising and now kind of what that looks like on their balance sheets, whether they're seeing significant losses, at least least on paper for those companies. And then on the other side you have private credit, which Mike and I talked about earlier

today, which if there is a worsening picture for the economy, this asset class has just grown tremendously in size and scale. So a lot of people have been warning about a deteriorating economy and what that means for the asset class and therefore what it means for the private act, private publicly traded companies that hold a lot of exposure to this. Yeah, Blue Owl looking at it right now down 4% today, 21.5% over a month. Les appreciate you. Thank you.

That's Leslie Picker. Joe, Christina parts in Nevelis now who is watching the key stocks today as we inch towards this close. Cristina. Well Scott, let's take a look at Nova Nordis. The shares are sinking right now over 9% after the pharmaceutical giant released disappointing trial results for a developmental weight loss drug. This would be Cagrasima.

It helped obese or overweight patients drop about 16% of their weight after 68 weeks compared to a previous estimate of 25%. So a difference there and that's why you're seeing the stock down almost 10%. Meantime, Redfin shares soaring right now. So a bright spot after, Rocket companies said it would acquire the real estate listing platform in a $1.75 billion all-stock deal. The deal will connect Redfin's nearly 50 million monthly visitors with Rockets suite of mortgage products and that's why you can see Redfin shares up 69% but rocket on the other hand is down 15% and the Bell is about to ring which is why the screen kept changing behind me because

they always do this show around this time yeah well we have about six minutes to go yet Christina thank you that's Christina parts of Neville us we're now in the closing bell market zone. Senior markets commentator Mike Santoli is still here to help us break down these crucial moments of the trading day. Taneya McKeel is watching the sell-off in Bitcoin and crypto and Seema Modi is looking ahead

to oracle earnings out in overtime. Energy's green. As you said, utilities are green, but that's about it, along with the VIX, which is up 20% at 28. Yeah, under-owned and somewhat more stable areas of this market. Look, it's one of those things you can never quite put a pin in it in real time, but it did seem the selling intensity from like 230 Eastern into 330,

that's the margin call window, it did seem to get a little bit frenzied and you had a bit of a crescendo there. Does not mean we can't open down tomorrow and still have some reckoning to do. I will still say that the treasury market, it's not exactly getting this massive safety bid. Yes, yields are down, but the 10-year is still above where it was a week ago.

So you'd wanna see some other things, it's not the fattest pitch you ever saw in your life, but you know, you don't usually take a 9% decline in the S&P 500 over three weeks and say nothing's going on. You can at least start to make the case that we're in the overshoot phase in the short term. All right. I don't know whether, you know, Bitcoin Teneya has decided it's done going down, but it's been volatile and it was below

80 the last time I checked 80 K that is it might not be done going down Scott a brutal day for crypto prices Bitcoin at a three month low like you said under 80,000 almost 30 percent off its record and look at crypto stocks down double digits Coinbase pacing for its worst day since July 2022 and Coinbase and Robinhood both almost 50 percent off their 52 week high. A lot of bearishness for traders, but investors are quite used to these large pullbacks. Crypto, of course, not immune to these recession fears and still without a clear crypto specific catalyst, there isn't much on the immediate horizon

to temper growing concerns about an economic slowdown. Many, of course, were hoping that that Bitcoin reserve we got more details on last week might be that catalyst that brings more buy pressure into crypto. But as we discussed, a lot of disappointment on that front. So while the regulatory tailwinds for crypto are still intact, it's still got a good long-term story. Traders are refocusing on the monetary policy,

which is what governs crypto prices for the most part before the election. Alright, Taneya, thank you very much for that report. Taneya McKeel, now to Seema Modi with a look ahead to Oracle. Those earnings come in just a little bit in overtime. And Scott, you remember it was late January when Oracle founder Larry Ellison, he stood by President Trump, Softbank's Masaoshi Son, and OpenAI's Sam Altman to unveil the Stargate project, a massive data center project.

Oracle shares initially shot up, but since then have waned and now are negative on the year. When the company reports tonight, investors will want more concrete answers on the return on investment for Stargate. And the scale at which its cloud infrastructure business is growing above 50% is the running estimate. Plus, whether a deal with TikTok is in the cards

is still the Chinese app's most important U.S. partner. That deadline is approaching and we are watching shares Oracle sell off along with the broader tech sector down about 4% ahead of that print, Scott. Seema, thank you. See what happens. We'll look for you then. That's Seema Modi. Dollar.

You're watching the dollar? Yeah. Because that's been on a, I don't know if you want to call it a freefall, but it certainly has been weakening pretty substantially. It did, yes, although it has kind of halted that process a little bit here today. It does seem as if it's gaining a little bit of the benefit of whatever sort of safety bid is out there. Also, keep in mind, we got nothing new on tariffs today.

This has much more been about, you know, kind of the dam broke last week in terms of selling and in terms of the perception out there that economic pain comes before gain. But it's not necessarily about a lot of this global macro stuff. Equal weighted S&P, I'll point to it again, it's not percent and a half on the day. It's outperforming by well over a percentage point today. It's basically flat on the year. So you wanted a broader market this is sometimes what it looks like which is be careful what you wish word of the

market that is seven stocks seven expensive stocks with lots of like hopes and storylines embedded in them have unwound and and left you know the rest of the market to have to try to fend for a lot of barnacles hanging on to those big big fish too right there? For sure, yeah. They're continuing to look pretty bad. Exactly. And any way you slice it, I mean, if you have an outright recession call,

then the market is not at the right price. It still has more to go down. But if it's not, then what we're talking about is a huge reset, taking the S&P back to mid-year levels of last year year really resetting sentiment as well positioning institutional positioning is definitely more underweight versus the the recent year's average all this stuff is is kind of coming into place unless some kind of you know real inflection point

has been reached in the underlying economy. It's great points you make it's the if right the uncertainty with the if you don't want to be playing guess the earnings number then guess the multiple and if you're going into a recession the earnings multiple the earnings number is probably too high and the multiples too rich. Essentially that's kind of the game but sometimes the market gives you the perception that a lot of it is very predictable or at least the market's willing to pay up for perceived predictability. That's the story of of mag-7 really over the last several years. It's the game, but if the game changes faster than you expected it to,

it's hard to adapt in a really short period of time. Mike, thanks for helping us get through here. Bell's gonna ring in just a moment now and it's gonna ring out a lot of red. We'll be off the worst levels, at least for the Dow, which was down more than 1,100 points at the low it's still going to be down around a thousand. As back the real pain point is looking at a loss of more than 4% more than 700 points down for the Dow.