Closing Bell - Closing Bell: Dramatic stock comeback, PIMCO's CEO on the market & Kroger's CEO on why food inflation is getting worse 5/2/22

Episode Date: May 2, 2022

Stocks staging a huge comeback into the close as May kicks off in the green. The Dow had been down more than 500 points at one point. PIMCO CEO Emmanuel Roman discusses whether there is more downside to the market and fears the Fed's rate hikes could spark a recession. Kroger CEO Rodney McMullen on how consumers are reacting to inflation and higher interest rates and why he thinks food inflation is still getting worse. And Meta VP of Global Business Nicola Mendelsohn on whether she sees an ad spending slowdown and when the metaverse will take off.

Here we go again. Stocks under heavy pressure as May gets off to a choppy start. The most important hour of trading starts now. Hello, everybody, and welcome to Closing Bell. I'm Sarah Eisen. Coming to you live today from the Milken Conference in Beverly Hills, California, where all the financial heavyweights are here talking about this market and this volatility. Here's where we stand with one hour left of trading. S&P down 1.3 percent. Dow just off session lows. Got as low as a little lower than down 500. Down about 450 points at the moment. NASDAQ outperforms. Communication services, interestingly, is the only sector that's positive right now in the S&P. The Russell 2000

index of small caps down 1%. And check out some of the most actively traded names at the New York Stock Exchange at the moment. You've got a mix there. AT&T with a bid. NIO, we've seen some strength lately in the EB names despite the broader sell-off. Nokia, Ford under pressure, and Uber down 5.3%. Some of the reopening names are getting hit right now. We've got a great lineup of guests for you here from the Milken Global Conference, including an inside read on the consumer and the impact of inflation with the CEO of Kroger, the country's largest groceries chain, Rodney McMullin, and a conversation with the vice president of Meta's global business group, Nicola Mendelsohn.

She'll talk to us about what she's seeing from the advertising market. Meta is a rare bright spot in the session. Let's get straight to the market, though. Stocks picking up where they left off following an ugly April, also coming off of four down weeks for the S&P. Take a look at the 10-year yield. Story of the day. Briefly hitting 3% earlier today, the highest level since December 2018.

Joining us first on CNBC is PIMCO CEO Manny Roman. Talk about good luck having the right guest for the right time. Good to see you, Manny. Good to about good luck having the right guest for the right time. Good to see you, Manny. Good to see you, too. Thank you for having me. Significance of the 10-year yield surpassing 3%. Well, it's been a very big move. I think the market expects the Fed to raise 50 bps.

And then we think that the Fed will raise rates by 225 basis points for the year. Meaning there's going to be a couple of 50 basis points. There will be more 50 points, maybe even a 75 basis point. And there's a lot of things we don't know. And it's a new market. It's a situation in Russia that doesn't seem to get better. And the Ukraine crisis. And then you have a lot of unknowns.

What it's going to do to consumer. I know you have guests coming on your program to talk about the consumer. The question is always the same. How much rates hike can you have before things start breaking? And that's really the interesting conundrum. Will things start breaking? Well, if we raise rates significantly, eventually the consumer will slow down. And what does that mean? Are you talking recession?

You're talking bordering on a recession, one or two quarter of recession, like we saw in the first quarter, and the consumer being much slower going forward. And I think that's perfectly fine. And I think that I always have this image of someone trying to land a plane when there's a lot of wind. It's not easy. So the soft landing is possible, but it's not always easy. And I think that's also the opportunity for a lot of us to find

place to invest and make money. Well, right. So how is PIMCO navigating this? Where are the opportunities? First of all, are you still underweight bonds? Do you think this will go farther? Look, if I had a crystal ball, it's slightly broken because it's been a difficult market to predict. Of course, market overshoots. And it would be difficult for me to tell you the exact moment when to add duration. We've been underweight. The reality is we're not that far away from a point where it makes sense to add risk. And then the fixed income market has an ecosystem with many different opportunities, from investment grade to mortgage bond.

And a lot of these things happen to be attractive now and are going to be more attractive over the months to come. And the skill is, of course, how to add risk to portfolio and how to find opportunity. And in a volatile world, it makes a lot of sense to be able to add alpha. And I think that's what we look forward to. And that will be the opportunity for the months to come.

The bond move, though, has been fierce and intense. Do you think we're near the peak, at least, when it comes to treasury yields in this episode? Once again, my crystal ball hasn't been working so much. I wasn't around in the 70s, but I was around in 1994 where I remember the move. And the move was pretty wild, but there was really no inflation. And the reality is,

is we don't really know when inflation is going to come back to a normal level, whether it's in three months or in six months. But that's all we know right now. And we'll have to navigate this and look at the data and make sure we make the best possible decision at the time.

I wanted to ask you about a specific bond deal that PIMCO participated in last week, because it was a big deal for the markets. It was this Carvana debt that was sold. Apollo, we had the CEO of Apollo talking about it this morning, and I know PIMCO was a buyer as well. Well, I think when we find interesting position, and we have this tradition not to comment on any investment we make,

but when they are interesting transaction to do, we'll have plenty of capital and we'll participate. And we think that's the right thing to do. And as I said, the volatility of the market opens up the game. And it opens up the game to add alpha, and I think we welcome it. And I slightly disagree with the CEO of Apollo. I think that the reality is that the volatility is a very good thing for fixed income manager, broadly speaking, for Pimco, but also for others.

Well, you got paid a good yield on it, I mean, 10.25%. But I guess the question broadly on the markets is, is it sort of some kind of canary in the coal mine for high-yield credit, where it's going to get a lot harder out there for companies to access financing and they're going to have to pay much higher rates? So the high-yield market is in much better shape than it used to be. People have termed their loans and their debt. That being said, you would rather have a select number of high-yield issuers in a portfolio rather than the broad market, because the broad market encompasses many sectors that you may not want to own.

And so as the high yield goes, I think you want to be careful about the credit you decide to pick and how you're going to build your portfolio. And I think that makes sense that there's going to be opportunity also in investment grade at the bottom end of the investment grade spectrum where there are going to be great companies to own and earn significant yield. And I think to be able to encompass both the public and the private side and try to find the best opportunity is the way to do it. Where are you guys on the dollar, which just continues to scream higher?

Well, I think if the Fed keeps on raising rates fast, I think the dollar will do well. I think when you look at Europe, and I say this as a Frenchman, it's difficult to be overly optimistic. There are many problems. The Ukraine war being one of them, but there are many problems on the horizon and real social choices question in terms of what kind of country do people want and how they're going to be competitive and so on and so forth. And so— Not so bullish on Europe. Not too bullish on Europe. Not too bullish on Europe.

And I would very much say it's at least half a personal opinion for someone who's moved to this country a long time ago. Manny Roman, thank you so much. Thank you for having me. Don't get to hear from you often. So it is a treat.

The CEO of PIMCO, appreciate it. Here at the Milken Global Conference and after the break, shares of Kroger are handily outperforming the market this year. They're up around 20%. We'll talk to the CEO, Rodney McMullin, about what he is seeing right now

from consumers and whether food inflation is near a peak. You're watching Closing Bell on CNBC. S&P is recovering a bit. It's down less than 1% right now. We'll be right back. Just want to show you

what's happened in the last few moments. The Nasdaq has turned positive. It has been outperforming, We'll be right back. rollercoaster day on Wall Street, but it is being driven by strength in names like Facebook or Meta, NVIDIA, Microsoft. Still some pressure on Amazon and Apple after earnings last week, but there's a turn and communication services is higher. Check out today's stealth mover, Global Payments at the bottom of the S&P 500 right now. The payments technology company out with earnings this morning, topping EPS estimates, but guidance for 2022 was down more than 40%. Shares are down more than 40% over the past 52 weeks. It was the guidance that was soft, down another 10% today. Meanwhile, take a look at Kroger, also a stealth mover to the upside all year long, really. Shares are higher by around 20% in 2022, nearly 50% over the last 52 weeks. This, of course, coming as inflation hits a nearly 40-year high. Food inflation, a big problem. Joining us is Kroger CEO Rodney McMullin.

Great to see you, Rodney. Great seeing you, Sarah. So the market is telling us that there is some concern about this ugly mix of higher inflation and higher interest rates. Are you seeing any change from the consumer right now? We're seeing a little bit with consumers starting to buy more of our own brand product, especially with certain customer groups. But we still see people upscaling their purchase. You know, during COVID, people have learned how to cook, as we've talked about before. And people continue to like the premium products when you look at cheese, better wines, some of those things. So it's, for the most part, not a lot of changes.

Customers on a budget, you're starting to see them starting to switch a little bit to our brands, a little bit smaller basket size. But they're coming in more often now. Part of that could be COVID-driven as well. Are you expecting a wider consumer slowdown here. Are you expecting a wider consumer slowdown here? Are you expecting a bigger consumer slowdown? So far we don't. We just think customers really are trying to make sure they stretch their budget. And one of the things that we try to do is to make sure that we use our data and our

understanding of customers, helping them to see promotions that apply to them to be able to help stretch their budget. What about food inflation? Is it getting worse? Is it getting better? It's still getting worse. And if you look at PPI, there's still more likelihood, some more pain to come. And if you just look at raw ingredients in terms of corn, soybean, wheat, all of those things,

it still appears there's more to come. And we're going to do everything we can to minimize the impact on customers. The Fed wants to deal with inflation, but it can't supply grains from Ukraine, which is dealing with a war. So what is your expectation for how long this lasts on the food and grocery side of things? Originally, we had thought it would start slowing down later in the year as you start cycling. We would expect inflation to slow down as you start cycling the higher inflation later in the year. But we don't see anything that would cause it to go down. And probably there will be inflationary pressure.

Now, you know, I have so much faith in the American farmer and other parts of the world too, but, you know, I'm kind of biased to the U.S. And American farmers, I think, will really step up and, you know, plant a huge crop and hopefully the weather cooperates as well. Help make up for the losses. Rodney, we have not spoken to you since you disclosed that you had a conversation with Carl Icahn. He's in your stock now. He wants to have some board directors and he wants you to do better when it comes to gestational crates for pigs and CEO pay. Have you had further

conversations with him than that initial one? I have not. Our board has interviewed the potential candidates. And when you look at supplier responsibility, it's something that's been important to us and our board for years, and it continues to be incredibly important to us. When you look at the gestation crates, we've asked our suppliers by 2025 to move away and our suppliers expect by 2025 they will move away and our organization we deal with over 70 different groups around ESG topics on 40 different over 40 topics and we think it's incredibly important to engage with our shareholders and learn in animal

welfare is something important to us so So what do you expect from ICON? Are you expecting a fight? I have no idea. And, you know, when you talk to people, you get all kinds of different speculations. So we really don't know. And we're super proud of the things that our board has done over the years around animal welfare and pigs, and we will continue to be so. You said you're interviewing, the board is interviewing the candidates. The board has interviewed the candidates. So is that a possibility that they welcome that?

The board is recommending to keep the slate that's been recommended by the board before. All right, we'll see where that one goes. Speaking of your employees and your pay, which was an issue that ICON raised, I know you took a pay cut last year, but there still continues to be action from the unions. What are you expecting?

It's a tight labor market, wages are higher, and we've seen a lot of pressure lately from big retailers, especially from their unions. What do you expect on that front? If you look, as part of one of the things we did several years ago is we decided to invest an incremental $500 million in wages. We've actually invested $1.2 million in incremental wages, and our total average hourly rate, including benefits, has increased from $17 an hour to $22 an hour over the last four years. And our teams have

been able to work together to work at process improvements and other things, and we've been able to take over a billion dollars a year of cost out in things the customer doesn't see so that we can afford to pay our associates. And our associates have been through a heck of a lot during the pandemic. And we're incredibly fortunate we've been able to do that. In addition, we've added incremental pay

for supporting and improving pension benefits in terms of the sustainability of those as well. So you have, what, about 500,000 employees or so? About 500,000. And you're hiring still. Absolutely. How are you finding the hiring process? And do you anticipate those wages will continue to rise?

Yeah, we're assuming that wages will continue to rise. Right now, we have about 20,000 openings. We have a lot more full-time people than we would have had before. And that's one of the things that we're able to make sure that we're given a great customer experience by having more full-time people than we would have in the past. Wages keep rising. Food inflation keeps rising. Not what the Fed wants to hear. Rodney, thank you. Thank you for the time. Good to see you. Rodney McMullin, CEO of Kroger. Kroger, I want to show you what's happening with the market here because the

NASDAQ continues to gain up a third of 1% right now, buying in some of the beaten down names like a Netflix or a Meta. S&P only down four tenths of 1%. And the Dow continues its recovery as well. It's now down only 150 points. Coming up next, is the market nearing a sustainable bottom? Mike Santoli looking to break down a key indicator of investor exposure to equities in today's dashboard. And later, we'll talk to the VP of Meta's Global Business Group about the latest read on the advertising market and competing with the likes of TikTok and Twitter for ad dollars. We'll be right back on Closing Bell down. Well this is a bit of a change than what we've seen

Friday and some of the other recent final hours of trade we're gaining steam here and we're seeing some sectors turn green not just communication services. We've now got energy technology and consumer discretionary in the green. The

Nasdaq has turned positive just in the last few minutes after being sharply lower earlier in the session down only fifty nine points Mike Santoli taking a look at how the recent in the last few minutes after being sharply lower earlier in the session. Dow's down only 59 points. Mike Santoli taking a look at how the recent volatility, Mike, is impacting positioning for investors in the dashboard. What do you see? Yeah, Sarah, it's actually very defensive, not at extreme extremes necessarily, but in the bottom 10 percent of all readings since 2010.

This is a Deutsche Bank composite of equity positioning. It's not surveys. It's actually how people are exposed to equities right now through a combination of measures. And you'll see it right here. So the S&P down 15%, a little more than that at today's lows. Well, this was about a 15% high-to-low drop in 2015 into 2016. This right here was the 20% decline at the end of 2018. So it tells you you're getting in the zone of when you might be able to say that the market is looking a little

more sold out. Obviously, it can go deeper. Things can get nastier. This is 2011 when we barely touched a 20 percent drop. We had the big recession, debt default, sovereign debt scare of 2011. So it shows you it's one of the elements of why people are looking for perhaps some short-term relief eventually, even though the tape looks a little bit broken. We tested new lows for this move today, and now we're coming back off it. And Sarah, you mentioned this late-day comeback. Remember, a week ago today, we actually saw a nice one as well, a sell-off and then about more than a 1 percent recovery into the close. Didn't say much about what came next, but certainly better than the alternative. Well, what came next was another wave of selling

as we see the recovery continue. Mike, what about the fact that it's being led by tech? The chip stocks are up a lot today. Some of the beaten down communication services stocks, like a Meta or a Netflix up today? What does that tell you, given we are seeing this rate move continue? Usually that's a part of the market that gets hit. I think it's mostly a matter of the laggards getting a little bit of relief. It's kind of a first in, first out type of effect when you do have some people looking to get a little bit less negative. I think that's one way to look at it, too. Going into a Fed meeting, a Fed decision on Wednesday, people have it in their minds that last meeting in March, that was the event that kind of swept away a potential catalyst and actually gave the market room to rally in one

of its best bounces. The bounce didn't hold. Maybe we're not going to see a rerun, but it's definitely in traders' mind that you don't want to lean too negative when the market's getting oversold and you have one of those big catalysts less than 48 hours away. Yeah, a long way to Wednesday, though. Mike, thank you. Mike Fantoli. As we see this continued recovery down 31 points. At the top of the hour, we were near down 500. Coming up, the vice president of Meta's global business group on whether she's seeing signs of an advertising spending slowdown around the world. And then later, we will discuss whether it is time to buy those tech stocks after nearly 20% sell-off this year for the group. We'll be right back.

What a comeback for stocks in this final hour of trade. Dow about to go positive. Looks like it's just ticked up there for a moment. It's down only 37 points. It was down more than 500 just a little over just about an hour ago or so. S&P 500 also positive. And the Nasdaq led the way today. It's up about a tenth of 1 percent, continuing to build. This despite the fact that Treasury yields are higher, the dollar is stronger. Both of those have been big headwinds for the market lately. But clearly, there is some buying. And it's coming in some of the beaten down places like technology, consumer discretionary and communication services. Let's zero in right there because communication services, a notable winner today, up now 2%, gaining steam in the past 30 minutes or so. Meta is very much a part of that strength today,

up 4%, sharply outperforming the market over the past week, still down sharply for the year. Joining us now first on CNBC is Nicola Mendelson. She's Meta's vice president of global business. It's great to have you on the show. It's great to be here at the Milking Conference. Yes, a lot going on. Very noisy here, but clearly Meta is in a better place than where we were about a week and a half ago. There was a huge sigh of relief on user growth, and yet we did see the slowest ad growth in about a decade since the half ago, there was a huge sigh of relief on user growth. And yet,

we did see the slowest ad growth in about a decade since the company went public, I think. So that's your business. What are you seeing right now as far as appetite to spend from the big advertisers? So we were certainly pleased to see the user growth that was out there. And we're also seeing that, you know, as you were just talking about, it's been a bit of a tricky period for the overall market, but but also in particular the tech market as well in there what advertisers are saying to me and that's kind of the business that I'm in is that they're very much see us as an important place to help them reach the customers that matter to them to be able to help them grow their business they're excited about the advances that we're seeing

with reels which is one of our fastest growing products ever taking 20 20% of time on Instagram now. They're excited about the monetization opportunities there. They're leaning in with us on all things commerce and also on messaging as well. So there's a lot and they see the roadmap that we have ahead and they're excited about it. But you are affected by the macros. We saw the slowdown in Europe, clearly. Is there more to come on that front? So I think all the business leaders that we're talking to here have been talking about, you know, the slowdown as a result of what is happening in Europe with the war as well. We're also seeing some of the challenges that have been talked about more generally around supply chain. The pandemic, which let's not forget is, you know, it's still impacting people

and also, you know, different businesses in terms of, you know, it's still impacting people. And also, you know, different businesses in terms of, you know, not having people in that. But what I'm very excited about is the fact that with the users that we have, with the engagement that we have with people on our platforms, that we're a fantastic place to help people grow their businesses. So, you know, I think about here and another topic that's coming out very strongly here is around the metaverse. Everybody's talking about the metaverse. But I do wonder if the pivot that you are being forced to make now toward video to compete with TikTok and toward keeping engagement and user numbers up in light of what we've seen from competitors puts a crimp on what you're able

to spend right now on the metaverse and to focus. So what we've seen, I mean, we're a tech company and I've been at the company almost nine years. We've made some very strong pivots before. We made the shift to mobile, shift to stories. We know the playbook. We've got the muscles in terms of how to do that. We're investing at the moment, not just in the metaverse on our reality lab side,

but also on the core business as well. We're investing in personalized advertising. We're investing in privacy. We're investing in data. And of course, we're investing in brand safety. And with video now being over 50% of the time spent on Facebook, that's an important product that our advertisers want to be able to utilize. And so that's why we're leaning in there at the moment as well, which is exciting. When does the metaverse, as Zuckerberg envisions it, as the pivot for the company, when does that actually come to fruition?

So the fully realized version of that really 360 immersive, that's some years off, but it's actually a continuum of where we are today. So we're already seeing a number of businesses jumping in, businesses like Wendy's that are utilizing our full video suite of opportunities there and ad products, but have also built a world in horizon that if you've got a quest, you can put on and go and experience what a virtual restaurant feels like.

But we're also seeing many more advertisers using our Spark AR production. They're making augmented reality filters and ads. So makeup companies like Sephora and Charlotte Tilbury, you can actually try on the products. Walmart have sold out on a desk where you could take a picture and put it into your living room. They sold out on that desk product with a filter as well. So it is a continuum of things that we're seeing before we get to that fully realized vision. How does the Twitter deal, Elon Musk taking it private, affect Facebook or Meta?

Well, that's not something we're focusing on. There's certainly a lot of conversation about it at the moment here at the conference, but one of the things I'm focusing on is what I can do to help those advertisers get the growth that they need. Is Twitter a major competitor on the ad side of things? Do you see it as an opportunity? As an industry, we face a lot of competition. I think sometimes people look out at the tech market and think there isn't a lot of good. There is a huge amount of choice out there. But what I know, what I'm confident about is that we've got the very best app products that are out there. And finally, just as far as consumer behavior, which you mentioned, we're in a weird place coming out of the pandemic. And there are some serious questions about

users and engagement. We saw the Netflix subscriber growth and just how we're changing our behaviors and whether social media has peaked. How do you see that? Now, what we're seeing, and we just reported that our user numbers were up, and we're also seeing that more and more businesses, both large and small, are leaning in and learning the lessons from the last couple of years about how they can reach customers in more efficient, more effective ways. That's where the whole growth that we're seeing in messaging is really coming to fruition because it's a much more personalized experience of how you can get information backwards and forwards to the customer as quickly as possible. So I'm excited about that as well.

Nicola Mendelson, thank you for the update on Meta. Doing a panel with her later here at Milken. She is the head of global business strategy at Facebook. When we come back, stock staging a major comeback. The Dow now firmly positive, up 87 points. It's all happened in the last 30 minutes. Here's where we stand in the market. Look at the Nasdaq. It's zooming now up 1.2%. What a crazy comeback. JetBlue feeling blue after Spirit rejected its takeover offer in favor of its merger with Frontier. We'll tell you the latest on this bidding war and keep tabs on this big turnaround with 24 four minutes left of trading we'll be right back. Welcome

back check out some of the today's top search tickers on CNBC dot com on this first trading day of the month of May ten year yield. Takes the top spot look at the ten year yield it's just below three percent we were above there we

got past that three percent level for the first time since twenty eighteen just keeps on selling bonds. And pushing yields even higher ahead of the below 3%. We were above there. We got past that 3% level for the first time since 2018. It just keeps on selling bonds and pushing yields even higher ahead of the Fed's double dose rate hike and potential trimming of the balance sheet set to happen this week. Amazon continuing its losses from earnings last week, down 1%. Apple also not participating in the tech rally that we are seeing right now. Tesla, though, is, and it point three percent. The S. and B. five hundred unbelievably turned positive

after a big decline earlier and it is technology stocks. That are leading along with communication services and now energy. Amazon I mentioned under pressure after a bearish note from Webb Bush following earnings last week. Coming up

we'll discuss whether more pain is ahead for that stock that story. Plus Scott Minard's biggest fear right now for the Fed, ahead of this historic meeting that we are facing this week. We'll be right back in the Market Zone next. We are now in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli is here to break down these crucial moments of the trading day, as always.

Plus, our own Philip Oh on JetBlue's battle for spirit and Mariner Wealth Advisors Tim Lesko on the outlook for tech stocks, which have turned around remarkably here. And this market is now higher across the board. We've been gaining steam all hour long into the close after some real selling pressure earlier in the session. The Dow is down 527 points at the session lows. It is now positive. We've got Reuters reporting this afternoon that Elon Musk is talking to high net worth individuals and private equity firms about getting financing for his Twitter bid. David Faber talked to the CEO of Apollo about that this morning. Here's what he had to say.

If you guys had participated in any way, it would have been on the credit side. Yes. People seem to be misinterpreting. Was that of interest to you as a potential credit? Absolutely. Why? For the same reason. Twitter and Elon's holdings in Tesla are infinitely bankable.

The question is whether it will be a good investment, and that will be what Elon and the entrepreneurial team does with it from the equity side. Yeah. David joins me now with more, as we're both here for this conference. Yes. So what have you learned? It's not clear to me that there's any truth to what Reuters is reporting about necessarily interest.

I mean, you heard Mark say, sure, we would have potentially been there. He got $13 billion from the banks. He's got a $12.5 billion margin loan. The real question, I think, is whether he's going to be able to in some way syndicate the $21.5 billion equity guarantee that he's made. That's a big number. But that's not where Apollo would necessarily play or other private equity or other firms that are providing credits there. They would be playing on the credit side. And so the question then becomes, can you lever it even more if Elon can

somehow take his equity commitment down a bit and replace it with debt? But that's not really what I'm hearing. So this is an extraordinary transaction in so many different ways, including, of course, even the enormous equity check that he's writing. Rowan made it clear they might have been there if they could have been for credit, but the banks were there. Bankable? Yeah. So is there, does any of this actually question whether this deal is going to get done,

these financing nuances? No, I mean, that's a good question, but no, I don't think so. You know, the interesting part will be that Musk equity guarantee of $21.5 billion, right? You've got $12.5 billion that he's using as a margin loan Tesla stock for that, $13 billion in traditional financing, which is going to be paid back by the cash flow of the acquired company, just like any LBO. But the $21.5 billion, he's already sold a bunch of Tesla stock to try to help pay for it. How many people will he go out to to try to get to come in for a billion here, a billion there, or maybe more, who believe in what Mark said, that he's going to be able to transform the business in a positive way and so that you're going to end up with a

more profitable company? I think that's going to be the key question. We do believe, I think there's a belief that he would love to whittle down that equity check if he can. The question is by how much and with whom. And what happens to Tesla stock, which has turned higher on the session, is near session highs. It's up two and a half percent. The whole Nasdaq turned. So not sure we can pin it exactly on this, but it has been a question for Tesla as it relates to his share sales. Well, clearly he was part of the selling pressure that we saw. I mean, that was what, eight, nine billion dollars worth of stock. Unclear whether or how much more he can he can raise in terms of stock that's not already committed or that he wants to in some way. I mean, he's the world's richest man. There's

plenty of ways for him to go about doing it. And perhaps there's some sort of security that they can, that some, you know, some of these credit funds can come up with. It's kind of a hybrid itself that can replace equity. But my sense would be he's simply going to go out to guys like Marc Andreessen. Hey, you want to give me a billion dollars? You think I'm believing what I'm going to do? Very supportive of him on Twitter. Yeah, or any of these other types, or maybe some sovereign funds. That's sort of where we should focus. Unclear whether he's going to sell more Tesla, which obviously is a key consideration in the marketplace.

So you're here, we're here with all the biggest dealmakers in the world, and I'm sure the Tesla story comes up in our conversations. Is it just an anomaly? What does the pipeline look like now that we have seen valuations come down for a lot of these companies? Yeah, I mean, a period like this, you know, obviously Twitter is a one off. I mean, the world's richest man spending forty four billion dollars, twenty one and a half billion of it, his own money basically is not something you see very often, if ever. The volatility lends itself towards not doing deals right now. You know, it's very hard to price your stock,

price your sale price and or what you want to buy at. We have this adjustment in multiples right now, as you all know, Sarah. So, you know, you typically see M&A sort of get pushed back a bit in that kind of environment. But there's still a pace of deals. And I do wonder if for the first time in a while, it's the public companies that look more interesting to some of these PE giants than the private companies, just because of what's happened, the carnage out there.

Yeah. And the other question is how you mark your privates. I mean, there are plenty of hedge funds that have enormous private investments. Given the complete downdraft in overall valuations, where are they marking their privates is a good question. It feels like it needs to come down is what I'm hearing. And that takes a few months. David. Nice to see you here at Milking, Sarah.

Glad to be here. I'm learning a lot. Very nice to have you here to our conference that we've been covering for years. I'm thrilled to be included. David Faber with news, as always. Thank you for having me, Sarah. We have seen a tremendous sell-off turnaround. Big down day turned into an up day with the Dow up 17 points right now.

S&P and NASDAQ both attempting to hold their gains as well. Mike Santoli, anything spark this turnaround? Because we're still seeing yields higher, dollars stronger. Those have been pressures. What's the story? Yeah, I don't know that there was necessarily something in the way of a headline that sparked it. But we're trading very technically right here. We definitely probed to new lows for this move, got the S&P back to these levels from March 2021. A lot of folks were looking at that 40, 80 or so. You mentioned the yields are up. Yes, they are. But the real kind of mechanical selling in stocks started late this morning when you finally got a tick of the 10-year Treasury yield to 3%.

It backed off then. And we didn't make new highs in yields. It just kind of wavered around there. And, you know, I have no idea if it matters, but the regular session in Treasury futures ends at 3 o'clock Eastern. And that's when we kind of released higher. I just think it's very much a low conviction market. You have these air pockets because you have this very stressed tape. Sometimes you pull the rubber band back and it snaps, and sometimes it snaps higher. I think factory data this morning didn't help either, coming in a little bit light from the U.S., not contracting, but coming in

light. Take a look at shares of the airlines.S. Not contracting, but coming in light. Take a look at shares of the airlines we're watching today. Spirit, in particular, hit pretty hard after the carriers board rejected JetBlue's $33 per share takeover offer because it doesn't believe the deal would win approval from regulators. JetBlue responding by offering a $200 million breakup fee if the merger is not completed. But Spirit rejected that, too. Spirit had, remember, agreed to be acquired by Frontier back in February in a cash and stock deal worth roughly $22 per share. Phil LeBeau joins us. So, Phil, where does this leave us? Spirit has rejected JetBlue's two offers. Is it over or could JetBlue come back? Oh, JetBlue could come

back, Sarah. It's a steep hill, given the fact that Spirit has made it clear they do not think that any kind of combination with JetBlue, at least as its constitutor right now, would get regulatory approval. So now this sets up the question, does JetBlue, and they hinted at this in their letter, that all options are on the table? Do they go hostile here? Do they do some kind of a proxy battle? Do they do some kind of a tender offer? You've got the Spirit annual meeting taking place next week. So I think that we're going to see something happen here over the next several weeks. Now, whether or not it is a hostile offer or if JetBlue ultimately says, you know what, we made our best effort. We made two runs at them and Spirit said no. Hard to say at this point, but clearly we have not heard the last of this.

Clearly. So, Phil, any other consolidation possibilities as a result of this? Are there other players in the mix, Hawaiian or Alaska? Could they go after them? No, not really. I don't think so. I get no sense from talking with people in the industry that there are other options that are out there that JetBlue is looking around. I don't see this as JetBlue saying we have to do a deal just to do a deal. JetBlue believes that Spirit and JetBlue

combined is the best option that's out there. And that's why they're making this play. Yeah. See if they come back. Phil, thank you. Phil LeBeau. Take a look at shares of Amazon under pressure today, but off the session lows along with the broader market. This, of course, follows Amazon's worst daily performance since 2006. That was Friday after the company reported a net loss and lighter than expected revenue guidance in its quarterly results. Some on Wall Street are starting to turn a bit more cautious on the e-commerce giant like Wedbush for moving Amazon from its best ideas list earlier today. Mike, the stock has recovered a lot.

It's barely down right now. But has there been a big change in thinking about this company? Not in terms of formal sell-side approach to Amazon, no. I mean, this is kind of a lukewarm downgrade of an outlook, but it's not to a sell. You've still got 48 out of 52 analysts of Amazon with buy ratings. You've got four holds. So, in other words, you almost like to see more downgrades. The stock is a third off of its highs.

And so it still seems as if just the multi-year brute force appreciation in Amazon seems to have completely, you know, gotten analysts in this mode of just not ever wanting to fight the stock. And, you know, I'm not saying you have to capitulate and everyone has to turn negative, but it seems as if the sell side is not going to necessarily be, you know, the play caller on where this one moves next. What is valuation telling us about Amazon? What's it discounting at this point? It's always tricky in terms of figuring out valuation. Amazon's earnings are kind of residual for how much they're investing in a given quarter or not. There's no way you can call it cheap, but you can call it a whole lot cheaper than it was a year and a half ago based on some kind of reasonable earnings outlook.

I do think you might also start to see whether buy side or sell side further calls for some other restructuring of the business. A lot of investors in Amazon aren't thrilled about owning the logistics and all that, what it takes to run the retail side of things. And not saying that there's a split in the offing anytime soon, but that's the kind of chatter that you'd want to see

to show that people are getting impatient with it. Meantime, Amazon scoring a win in a labor union vote in New York City. Deirdre Bosa has been following that angle. Deirdre, what are the details? So, Sarah, this is the second Staten Island warehouse to vote on unionization. It was defeated by a wide margin, 618 against the labor organization, 380 votes for the ALU. That's the Amazon Labor Union. Now, our audience might remember that that first Staten Island facility did vote in favor of unionization. That was a surprise victory in the very first in the U.S. There's another vote that's happening at a Bessemer, Alabama warehouse that is still being decided. But Amazon union efforts here in the U.S., they have gained traction over the last year or so. Today's defeat, that may be a setback for organizers, but this is unlikely, very unlikely, the end of their efforts.

They now have five days to appeal. And the ALU tweeting shortly after the vote count that this fight has just begun. Sarah. Deirdre Bosa, Capus posted on that. As Amazon just turns positive on the session, it follows stocks staging a massive comeback into the close. The Nasdaq leading the rally after closing at a 52-week low on Friday. Joining us is Tim Lesko, Senior Wealth Advisor at Mariner Wealth Advisors. Do you have any faith in this comeback?

Would you be buying into it that the worst is behind us, Tim? Or we just simply don't know at this point? I think it's really hard to try to pick bottoms in the market or pick tops in the market. Certainly, you're having a revaluation of the market based on higher interest rates and certainly a market that was due to correct at some point. So hard to pick today. You might have picked Thursday and then invert on Friday. So I think what we're seeing is that we've, over the long run, we've had a very high allocation to stocks and people are starting to rebalance as there's some competition for stocks now in the marketplace. But do you think that earnings for some of these mega cap tech names in particular,

like a Meta or an Alphabet or an Apple or an Amazon, changed the story, changed the appeal of these stocks? Because for so long it was about higher interest rates. You don't want to go into long-duration technology names. But now there's a real focus on fundamental slowdown for some of these giants and the fundamentals that they're facing. Right. We've basically been importing inflationary factors from other areas of the economy,

whether it's the conflict in Europe creating higher energy prices or supply chain issues creating higher commodity prices and higher grain prices. So you have a lot of things that don't really affect the technology sector affecting the rest of the economy. So absent the higher interest rates, you might think that technology would be a pretty good place to invest because they don't have the same inflationary pressures on the cost of goods sold. So not really bearish on technology,

just that we're having the highest valuations come in when interest rates go up. Is there anything you like? Any massive dislocations here as a result of the selling? Well, I know any time that you have massive dislocations across the market are times for people who are long-term investors to seek bargains or seek reasonable prices for things that have good earnings. And tech writ large has had pretty good earnings. I know we're picking on retailers that are a combination of retail and tech because their retail businesses are struggling a little bit more. So I don't see any reason why the long-term secular trend of technology isn't going to continue. And finally, a lot of people are making the valuation comparison, I don't know, to the dot-com bubble, to other periods in the market,

like the financial crisis in terms of some of the moves we're making. How do the tech valuations stack up now versus some of those other pain points in history? Well, just certainly on a real basis, the valuations going into this correction of the market were much lower, right? Back in 2000, you had an S&P at 32 times earnings at one point, and you had a NASDAQ at 60 times earnings. And we did not enter this correction at those kind of nosebleed levels, even though the interest rate environment was about half of what it was in 2000, in 2000, 1999, 2000. So hard to make a real good comparison. We also don't have the pressures of Y2K that really led up to the bubble in technology.

So I don't think you can make a great correlation to that, but certainly it's never fun seeing the volatility we're seeing in the marketplace now. Tim Lesko, thank you very much from Mariner. We've got two minutes to go before the bell. We're up now 80 points on the Dow. NASDAQ solidly higher. Mike, what do you see in the market internals as we go into the close? Yeah, they've improved, Sarah, as you might expect. Actually, not even that terrible when

the market was at its lows. It was still a relatively narrow decline. Take a look at the advancing versus declining volume. So somewhat more to the upside than the downside. Still a pretty well-mixed day. The NASDAQ looks better on that score. Did want to take a look at a balanced portfolio, 60-40. What's it done year to date? This is the AOR ETF. That basically reflects 60-40. You see it underperforming or barely outperforming stocks, the S&P 500 year to date. But that's a very unusually nasty move in a balanced portfolio on a three- or four-month basis. Eleven and a half percent shows you why people are on the defensive in this. And now that this tape is very over. So volatility index actually could be significant coming off of the thirty five level pullback toward thirty two by the close.

Three points off a high sometimes means something, you know, in a very short term. Maybe the fever is getting reduced, even if it hasn't broken yet, Sarah. Mike, thank you. Less than a minute to term, maybe the fever is getting reduced, even if it hasn't broken yet, Sarah. Mike, thank you. Less than a minute to go here into the close, and the turnaround holds. The Dow, after being down more than 500 points, going to end higher by 84 points, led by Microsoft. UNH is the biggest loser. S&P up more than a half a percent, and the Nasdaq gaining 1.7 percent into the close. A big rebound, especially for technology.

All the big names, except for technology, all the big names, except for Amazon joins the party as well as Microsoft leads the triple Qs. That's going to do it for me here on Closing Bell from the Milken Conference.