Closing Bell - Closing Bell: Falling Stocks, Rising Concerns 2/25/25

Episode Date: February 25, 2025

As stocks and yields fall, concerns about the health of this market are rising. Black Rock’s Rick Rieder gives his exclusive take on where he thinks stocks could be headed from here. Plus, the so-called “Dean of Valuation” Aswath Damodaran from NYU sets us up for Nvidia’s big report out in Overtime tomorrow. And, Goldman Sachs’ Tony Pasquariello tells us how he is navigating the momentum names right now. 

Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with high anxiety about this bull market. In just a moment, we'll ask BlackRock's Rick Reeder where things are heading from here. But first, let's show you the scorecard now with 60 to go in regulation. Stocks unsettled a bit once again. The major average is finding it hard to get a lot going. NASDAQ heading for its fourth straight down day. We're watching that closely in large

part because many popular stocks continue to unwind. Tesla getting slammed yet again. It is down 25 percent in one month. Palantir, Applovin, CrowdStrike, Vistra. A lot of the names we've been talking about every day. We continue to do so because they continue to fall. Goldman's head of hedge fund coverage, Tony Pasquarello, will be here in a little bit to tell us when he thinks the bleeding there might stop. All of this happening with NVIDIA's earnings on deck tomorrow in OT. That stock unusually weakened to a print as questions swirl about sky-high expectations and whether the company continue to meet them. The dean of valuation, Aswath Damodaran of NYU, will be here on set shortly to give us his take on that stock as well.

It does take us to our talk of the tape, falling stocks, falling yields, rising concerns about the health of this bull market. For some answers, let's bring in BlackRock's Rick Reeder. He is CIO of Global Fixed Income, head of the Global Allocation Team. And he is here with us at Post9. It's good to see you. Welcome back. Thanks for having me. Is this what a growth scare looks like? So some of it, I think, you know, I think there's a combination of factors. Whenever you move like this, pinpointing what is the dynamic is pretty hard. No doubt, start with retail sales, Walmart's projections. Some of the other numbers were a bit softer. So a little bit of growth. And then I would argue there's a little bit of momentum that's coming out.

There's a little bit of leverage on wine that's coming out. It would be interesting to hear what Tony says about positioning relative to that. I think there's a lot of degrossing that's taking place. That is, and, you know, the liquidity in the markets, you know, given, I think risk premia has gone up because the uncertainty is so high. And so the depth of some of these markets, single name index, and by the way, cutting across also the rates market, it's just people are very uncertain and you see jumpy markets.

Wasn't supposed to be this way. I mean, everything but the Dow is negative since the inauguration. I mean, and the Dow just barely positive since the inauguration. That wasn't the playbook. No, it's been pretty. I mean, it's been quite a ride. I mean, the you know, like I say, a lot of this comes up because policy uncertainty is just out there. When are we going to get tariffs? What types of tariffs?

What's the relationship? U.S. China, you know, putting all that together, anybody who can tell you, gosh, I figured out my model on growth or inflation without a wide error band, I think is lying. You just can't you can't do it. And that's why you get these jittery markets and why risk premia has gone up. It sounds like you are talking about a lot of the same things that, let's say, Ken Griffin of Citadel has talked about in the last few weeks. A lot of uncertainty around tariff policy, a lot of uncertainty around what have been our alliances for decades seemingly being unraveled. Is that going to be a constant overhang on this market? So I think it's going to, I think it's why risk premium is higher. I think it's why the liquidity in the markets is going to be higher. Listen, at the end, I'm doing a presentation on Thursday on zooming out. And so actually the title of it's going to be,

you can see better sometimes when you take off your reading glasses. And so the reason why I describe it as such is if you focus on every single headline, you can really get distracted versus what's the big picture. I still think you talk about pressure on some of these tech stocks. Tech is still going to take us to the next level in terms of growth. The spend on AI was interesting watching the Microsoft back and forth. That's still fundamentally going to work. Do we have to pause a bit? By the way, the notional sizes that people have of some of these equities has gotten pretty large. To manage your risk, to manage your risk going into earnings like a big one tomorrow,

and when the notional size becomes so significant, is tricky in a market that's filled with uncertainty and illiquidity. It sounds like, though, you're going to tell the room on Thursday, try and ignore the noise in the near term and focus on the prize of what we think is still coming, tax cuts, deregulation, better economy, animal spirits, maybe, eventually. Yeah, I still think you have that. I think you have to be respectful of the data. And by the way, it was interesting, last year, we got at about the same time this growth scare. Remember, like, the Fed's got to cut. They're way behind the curve. And then it happened again. Listen,

I think the U.S. economy is still in pretty good shape. I think you've got, you know, consumer, a little bit of softness here. You see it in some of the retailing names. Sentiment. I mean, the number today was confidence was bad. So one thing I find interesting, surveys, confidence are not nearly as robust as the actual data. But when you start to see big companies that say, you know, we're seeing a little bit of softness, some of the quick serve restaurants a bit softer, you know, you've got to think of maybe the consumer is pulling back a little bit. Is it going

to roll over? Is the economy going to roll over? You've still got low unemployment. You've still got good wage growth. So you've got leverage that's in a pretty good spot. So I'm confident the economy is in good shape. At the margin, we're going to soften a little bit, but we're softening some pretty strong levels. Do you think that's why yields have been coming down? Yes, I think. I also think there's some short covering going on. I think people all got on the side of, including last week, European rates could move higher. You get more spend, you get more defense spend. I think people have gotten on the wrong side of that. And then you put that with a cocktail

of, gosh, there's a little bit of growth that you want to watch slowing down. So that's pushed it. Quite frankly, you know, I think you can sell a little bit into this. I mean, there's a pretty good move in a Fed with a Fed that I still think, including some of the commentary today, you know, a Fed that I still think is on hold for a period of time. They're going to watch the data like we all are. I mean, they seem and they've said as much, really. So it's more than seem. They're firmly on hold, it would appear. Yeah. Unless you get more of a growth scare turning into something else where their hand is forced. Do you see that scenario? So I'll tell you one thing I have my eye on is the immigration numbers. I mean, one thing that, you know, you're starting to see, you think about what created massive amount of job hiring in areas like healthcare, leisure,

restaurants, airlines, et cetera. We brought in a lot of people in this country. By the way, it was a big catalyst to create more nominal GDP when you got that sort of spend. The numbers are definitely shifting. I mean, I was pretty amazed when I looked at some of how it's, you know, clear initiative to try and slow that down and change the fabric of that. So that I've got my eye on because that can evolve things. And then listen, I think it's tomorrow's earnings report, how people think about CapEx spend. CapEx has been pretty good. In video, you're talking about, obviously. Yeah. And I think some of the discussion around that, I still think, personal view, CapEx is going to be strong. R&D is going to be strong. Software,

spend on software, creating efficiencies for company, that is still real. And I think that will continue. But markets are jumpy about if you get anything that suggests otherwise, markets have no patience for it. Well, I mean, we're seeing that in the unwind of the momentum stocks. And what is generally feels like a bit of a risk off environment. Bitcoin below 90. Tesla has been awful over the last month. All of those are signs of risk off for now. So I think all of those, it's hard to generalize it. I think there's some leverage at play. I think there's some gross versus net dynamics and you're creating some degrossing. I think there's some crowding in some positions. What has worked, people generally are in, have gotten bigger positions in, and I

think you're seeing some unwind of that. So I don't necessarily think it's a risk off. I think the markets need a cleansing, and I think you're going through that. And I think it's healthy, quite frankly, to get it. It's not a lot of fun, but I think it's healthy when you get that. Well, because you've been here before where you were, I mean, you thought valuations had gotten a little unhealthy, right? That we were too stretched. And a lot of people had been focused on the valuations of the mega caps when in reality, it's all these other stocks that went straight up into the right and their valuations exploded. Palantir, Applovin, CrowdStrike, popular names,

a lot of retail money is in those names and it's coming out like the balloon is letting the air out a little bit. Yeah. And I listen, I think some of that is crowding. Some of that is aspirational investing in terms of where we're going to go in the near term. Listen, I get comfortable with the mega caps because you're a your free cash flow generation is so incredibly high. Your revenue growth is still quite good. The buyback of your equity is still significant. So I generally think part of why I think equities will still finish the year with a decent return is I think those will continue to perform. Where we move around the edges of some of those high flyers is hard to say. By the way, I think software in the right places still makes a bunch of sense today.

You're head of the allocation team, and there's been a lot of talk since the beginning of the year about allocating more money overseas. Yeah. Right. Europe, China, China Tech is really woken up. What do you make of that? You on board with that? I am at the margin. The you know, it's still hard to get bought into. Boy, Europe's going to be a big growth dynamic. More fiscal spend, maybe more defense spend, maybe. Listen, I think the banks in Europe are interesting. We've definitely jumped on board some of the banks that I think make some sense. There are some good companies in Europe. They're not a tremendous amount of growth companies in

Europe. But I again get to amount of growth companies in Europe. But again, it gets to this crowding. Do a lot of people have Europe? Are the multiples okay? So we've done a bit of that. China's got some volatility to it. You jump in on some of it. But yes, I think this year, creating a bit more balance in the portfolio makes some sense.

And we've taken advantage of it. I'd rather do the regional than do the small cap trade. I'd much, I'd much more confidence in this regional growth and there's good companies in parts in, in some regions than when the economy may be slowing to say, gosh, I want to go down the small cap trade. Well, you've sat here and said that you don't get that small cap trade. I mean, you haven't gotten it for months. You've said as much on this program numerous times. It didn't make sense to you then. It must make less sense to you now, given we began our conversation talking about a growth scare. Well, so I don't know what the bar is for less sense. The reason why I don't think it makes a lot of sense, I think something extraordinary is happening in and around

automation, data capture, using software, keeping your margins up through cost reduction. Companies, big companies' ability to build moat is really incredible. And I think those companies that are able to keep revenues up, their margins up, their ROE up, generally is in the bigger companies. It's so hard to compete if you're a small business, particularly with rates where they are today. So I don't, it's not to say you can't have a good month, even a good quarter in small cap. I just think it's a durable trade. I think that is I think that's a harder one. By the way, I do think we have added some mid cap stuff, but it's more idiosyncratic than, gosh, it's just a better trade because they're smaller. Let me ask you a political question without getting political.

That'd be good. The Treasury Secretary is really fixated on the 10-year, right, and keeping yields lower, while at the same time we're talking about adding to the deficit through more tax cuts and tariffs, which are a tax, which is what it is. Let's call it what it is. Right. Do you think that they can keep the 10-year from rising to an uncomfortable level? So, listen, I think the fact that the Treasury is focused on the 10-year, the fact that the Treasury is focused on spending,

the fact that the Treasury is focused on how do you, over time, create a better term structure of your interest rates, All those are really good. Can they keep them where they are is hard. I mean, it is really hard unless you're doing some form of specific, usually at the Fed, specific QE or QT. It's pretty hard to manage the back end of the yield curve. It is hard. What we have to hope happens is we continue to roll over our debt. We don't have as much international buying as we've had. Think about China, Japan, not buying, other than episodically in places like Japan. We need to keep rolling over the debt.

It is still the biggest risk to the markets. Quite frankly, it's healthy to see the bid come in again. But I think we're going to find out, similar to the equity market, I think we're going to find that you're going to have not a straight line in terms of what that rate market does this year is is that why you like the short end and the belly of the curve better than the long end so scott i think we're at a pretty amazing point in time there are so many factors that keep and if you can keep clipping yield in the front to the belly of the yield curve you can build portfolios six and a half percent and think about you know where that. If inflation has come down a 2 and 3, we could debate which metric

we use. Let's say it's high 2s. If you can create yield at 6.5, you don't have to go out the yield curve. You can stay in higher quality. Your real return, by the way, with an equity market that's a bit fatigued, if you've got a 7% return target and you could build a 6.5% portfolio, how can you do that? Fed's got to keep the rate here. Yield curve is still reasonably flat. Europe is still a place, particularly as a dollar investor, you can swap back European assets. It's a pretty good time. You don't have to go at the yield curve. I don't have to get that risky. And if you said to me, what are you super confident in this year? Just keep clipping coupon, just keep clipping yield, use the front to the belly. And I think that'll continue to work.

Outside of the treasury market, what do you love in credit right now? So securitized assets are awesome. You know, different parts of it and asset back, CLOs, parts of the CMBS market. I still like credit. Some of the investment grade markets have gotten tight. Other than the long end of investment grade that I think is interesting because the dollar prices, I think high yield is still in a good spot. Agency mortgages give you an awful lot of liquidity, so you don't have to stretch. I didn't mention EM because we buy a little bit of EM in hard currency, you don't really need the volatility today. There's so many places to get yield globally that you just build a stable portfolio and just clip coupon and marry that to an equity market that is going to gyrate for a while.

We're only 35 days in to the new administration. Everybody, you know, it's been a sort of very unsettled period in the market, but we're a little bit below 6,000 on the S&P. What seems reasonable to you by the end of the year? If the first half clearly looks like it's going to be a bit of a chop, then what? Listen, if you said to me by the end of the year where equity is going to be, I still think you can get a low double-digit return for this year. Double-digit. I do. I mean, you know, by the way, after two pretty incredible years, you're still throwing off great return on equity for a number of companies. The amount of cash people just every time I look at the metric about amount of cash that's out there across is 10 trillion in money market funds.

I mean, think about it. That amount of money, that amount of wealth that has to be rolled over. You're just not creating enough equities, including with the equity buyback. So, listen, we've got to get through a lot of stuff. We've got to create a little bit of clarity around growth, inflation, tariff, geopolitical resides. But I think when they finally do the tally, I think you'll have a pretty decent year. All right. We'll make that the last word. I'll always love catching up with you. Thanks, sir.

Thanks so much for being here. Thank you. That's BlackRock's Rick Reeder here with us at Post 9. Supermicro is facing a do-or-die moment of sorts with today's deadline to file its financial reports. Christina Partsenevelos is here with more on that. Hi, Christina. Hi. Well, they're racing against the clock right now.

If they miss tonight's 10 p.m. deadline to file their overdue reports, they're going to look at potentially delisting from the NASDAQ. It's wild considering all the drama. You've got an auditor that quit the DOJ and SEC investigations that are ongoing. And yet this stock is still up 54 percent this year. But big picture, still nearly 60 percent off its 52 week high. And you can see today shares are down about 9 percent. Investors are still worried maybe they won't make that deadline. But long term, Supermicro's CEO does remain bullish, betting big on liquid cooling for data centers and even eyeing a $40 billion mark for revenue by 2026. That optimism, plus a fresh $700 million in capital, has really kept some confidence in this name intact. Looking ahead, though, NVIDIA and Dell's earnings this week could really significantly impact Supermicro's stock. I say that because Dell's take on AI server demand

and Blackwell GPU supply will be key. Supermicro currently is running at 60% capacity, waiting on those chips. Speaking of NVIDIA, we can look at shares down about 1.5% over fresh concerns about U.S. export restrictions. I have to say fresh concerns, even though if you're an investor, you know that these concerns have been looming for quite some time. They're still selling these H20 AI chips to China, but with demand spiking, there's fear that those will be next on the chopping block. NVIDIA is pushing back hard, arguing these export rules won't improve U.S. security. So with all of this uncertainty, analysts expect NVIDIA's guidance to rise, but maybe not as much as Bowles had hoped, but likely still adding at least $2 billion,

which isn't chump change. Scott. Christina, thanks. Back to you soon. Christina Partsenevalos. Let's bring in now the Dean of Valuation, Aswath Damodaran of NYU Stern School of Business is here with us at Post 9. It's great to have you here in person. Great to be back. So when you think about NVIDIA, the stock really hasn't traded well into the print, which is unusual in and of itself. But how do you see it today? Now, in September, when they came out with that bad earnings report, I valued them about $90 before the election, before the market downturn.

And they were trading at 108. Today, they're trading at 128. So in terms of perspective, even with the beating they've taken in the last few weeks, the stock is still $20 higher than it was in September of 2024. So I think that at that time, I said the stock is a great company, but I don't see how you can get to $120, $130 per share. Still? No, I think that's still, what I said then will still hold. They don't have the capacity in terms of generating earnings and cash flows to sustain a $3 trillion market cap. So I think that that still stands. And I think as the earnings report comes out tomorrow, my expectation is it's going to be a lot like September, a replay of September, where they will beat analysts' expectations, but the

market's going to be disappointed because the market seems to have set expectations higher than what analysts are seeing for the company. They would say, I mean, Professor, have you seen the capex numbers of these hyperscalers, what they say they're going to spend? And a large part of that, if not the majority, is going to go to us. And we know that it is. And you pay a little bit more for future growth like we're going to give you where you can't get anywhere else. Now, if you back out from the market cap, what the break even has to be in terms of revenues,

it's about $500 billion in revenues. So even if you bring in all of the spending, my meta and Microsoft, that still gets you to maybe $300 billion, $350 billion. The market is actually building in a surplus over and above that of other people coming into the game and spending immense amounts. So this is not a question of people are spending more than expected. That CapEx spending was already there in September. It scaled up. With DeepSeek, the question is, are there other people who might have entered the game? We're not going to enter the game now because their response is I don't need those Nvidia chips for what I'm doing. I can get there with much cheaper chip You think that's a new risk have you been thinking about it differently since the deep seek day?

No, in fact, I revalued it right after the deep seek you did you think it's that profound of a change? I my value dropped by about $10 because in my view, what it does, it reduces the total size of the segment of the AI market that needs high power chips and immense amounts of data. Because whether DeepSeek is a fake or whether it's going to pass by, what it opened people's eyes to, not all AI products and services need these incredibly powerful chips and huge amounts of data and huge data centers that you can get there with much cheaper devices and i think for many companies when they look at the ai products and services they have to develop they don't need this high powered stuff they don't need to spend the tens of billions of dollars up front so i think that's the real worry you have to have as

an nvidia investors whether those people will now hold back and buy cheaper chips and build cheaper centers. Did you at the same time while downgrading, for lack of a better word, NVIDIA, did you upgrade something else? Not yet, because I think what this is going to do is it's going to commoditize the product and service business, the AI product. We're all going to see more AI stuff because it's going to be cheaper and easier to deliver it. But I'm not sure any of us is going to be willing to pay for most of this stuff, because I look at the AI stuff because it's going to be cheaper and easier to deliver it. But I'm not sure any of us is going to be willing to pay for most of this stuff because I look at the AI stuff that I'm being offered as a consumer. In my reaction, it's neat, it's cute, but I'm not paying $5 a month or $10 a month. It's different, I think, in the business AI segment. That's where the NVIDIA chips and the big data will continue to prosper. I don't see anybody benefiting from the commoditizing of the

rest of the AI business because it's going to be free stuff that everybody gets and nobody's able to make money off. So when you look outside the public markets into the private ones and you see the valuations that are being given to the open AIs and the anthropics, what do you think about that? I wouldn't pay them. No, I think that people are paying on the old story of AI, which is you need these big, expensive AI systems to do it. I'll give you an example. I mean, there are AI systems to replicate accounting, fair value accounting, very rule-based, very mechanical.

Those systems have been around for 10 years. You don't need super chips. You don't need past data. But people attach the name AI to it because it's sexy. So those are going to be a big chunk of the products and services in the business market. You don't need the high-powered systems. So when I see these really high market caps attached to companies just because I'm AI, I'm not sure that you need to spend that much on architecture given the products and services you're talking about. If you're seriously questioning the valuations of the NVIDIAs and some of the other

hyperscalers, I can only imagine what you must be thinking about the Palantirs and these momentum names which are still going through and unwind. Now Palantir is probably the most prominent example of a company that's actually tried to make money in the products and services. Almost all of the other AI winners are in the architecture side building the chips and the data centers and Palantir is one of the few companies it's actually done something with AI that I think will make the money because of the kinds of customers they cater to which is the Defense Department commercial companies that can use deep AI the expensive AI so

the Palantir's might survive the AI companies that can use deep AI, the expensive AI. So the palantirs might survive. The AI companies that I worry about are the companies that offer fluff AI. AI, which is, you know, AI in name, but you say, I don't need this front end of an AI to justify this. You're just doing, you know, what, you know, computing and data has been doing for a couple of decades in a little more sophisticated way. The hard thing for investors, I think, and maybe the market is going through this process now, is even if they believe everything that you do about Palantir, and it's an incredibly highly regarded firm, you still have to be willing to pay a certain price for all that deliverable that you just described is likely to happen. Hundreds of times earnings right now. Which we are, right?

That's what we're now. Yeah. That's a problem for some. And I think that's the way we paid up front for promise and potential, which we've done before. And the question with AI is, is that promise and potential,

that end game, the nirvana of everybody paying for product and services, is that realistic? I think on the consumer side, I think we're seriously overestimating what people would pay for AI stuff. On the business side, maybe not so. So I think one of the ways investors might have to think about it is what kind of AI products and services is a company offering

and discriminate across companies. 22 times is what we were trading at on the S&P. We're probably in that ballpark. Does that make you uncomfortable overall to assess the valuations of some of these other companies? What about the market itself? I started the year by estimating the market was overvalued by about 12 percent. Nothing to do with the politics and the chaos since. But I just said, given the earnings and the cash flows and the growth, this looks like an expensive market, especially because I have someplace else to put my money. I can put in T-bonds and make

4.7% a year for the next 10 years. Why expose myself to the risk of the market? I think the word that was used in the previous was cleansing. There is some cleansing that's needed in this market because momentum has been rewarded too much. People are making money just because they're in the right place at the right time. And they think it's because they're great stock pickers. And that happens in every market. And the cleansing will often require them being brought back to it, saying it's not that easy. Appreciate your perspective very much. And certainly you being here with us on set at Post 9. It's good to see you. Thank you. Aspat Damododer in NYU.

Quick programming note as well. Don't miss a CNBC special report tomorrow evening. We will hear directly from NVIDIA CEO Jensen Wong after the company reports results in overtime. You can catch that full interview tomorrow at 7 o'clock Eastern, a CNBC special report. Now to Seema Modi for a look at the biggest names moving into the close. Hi, Seema. Scott, 34 minutes left in close. Shares of Sempra is sinking after lowering its full-year profit forecast due to regulatory matters and higher costs. The Energy Infrastructure Company

also posted fourth quarter results that missed on the top and bottom line. The utility stock is down about 20 percent, trading at lows not seen since October of 2023. And then there's Cleveland Cliffs also trading in the red. The steel giant reported a wider than expected loss for the fourth quarter. It saw a 15 percent decline in quarterly revenue year over year. The company saying the results are a consequence of the worst steel demand environment since 2010. Shares are down around 10 percent. They were down tenth of a percent. Excuse me. For more on these results, Cleveland Cliffs CEO joins Overtime today. Scott.

All right, Seema, thanks so much. That's Seema Modi. We're just getting started here on Closing Bell. Up next, Goldman Sachs' Tony Pasquarello. He's standing by with what he thinks could be the next move for the momentum names. He'll join me at Post 9 after this break. All right, welcome back. Stocks again unsettled as investors worry about the economy slowing.

Yields falling as well, and the VIX is rising, reflecting that uncertainty, which has gripped the market lately. For more on the current state of this rally, let's welcome in Tony Pasquarello. He is the head of hedge fund client coverage at Goldman Sachs. Welcome back. It's good to see you. Thanks, Scott. What are you telling your clients? What is this market? What's going on? A lot's going on. I think the short-term challenges are a few. One is seasonally, this is actually exactly what's supposed to be happening.

The last two weeks of February are typically the worst two weeks of the year. Why is that? Because that is typically when retail money flow starts to inflect lower, which probably gets to the momentum story. I'm sure we'll talk about that. You also have, you don't need me to tell you this, a very active kind of headline roulette around policy. I think the order and the sequencing of that has been difficult for investors to figure out. And then lastly, for the first time in a while, you have some other rides to go on with your

capital in non-U.S. markets. And so it's a complicated mix. I take Rick's point, I share his sentiment. You want to try to see through some of this smoke through to the longer term arbiter of the market, be it growth or the federal technology. So I think there's a longer term story, but we're sorting through a fairly tricky period right now. If you play roulette long enough, you get hurt. Is that on the horizon for this market? Is there just too much uncertainty building around stuff? I think we feel pretty good about the core underpinnings of the market. So growth has clearly slowed in the first quarter, but we still believe full-year GDP growth this year will be 2.5%.

Again, a pretty friendly, sturdy setting for the market. The Fed's very much in the background, as you discussed, but I think they can avail themselves of 400 basis points or more of rate cuts should they need to, perhaps if the labor market were to slow down. And then you have the tech piece, which Rick hit on, which is just before our very eyes, I think we've seen this year the step change higher in the realized innovation, in the progress of technology. So I still feel pretty good about that. Again, I just think we're sorting through a tricky period right now. So this is just a scare? That's how you would sum it up? This is just a growth scare?

I think that's right. In a way, I think we were spoiled in 2023 and 2024. The market was so consistent. It delivered so much strength and so much convexity. And in a way, I think we've kind of evolved into a more normal setting where volatility has risen. The market, again, it's sorting through a lot of variables at once. And inherently, they're quite disruptive. I think when we're talking about the upending of a traditional political orthodoxy,

I think the convergence and the collision of very disruptive forces in the form of AI, there's just a lot for the market to sort through. I mean, coming into this year, I didn't hear a lot of people talking about this was the way it was going to be. President Trump on the campaign trail told you everything that he was likely to do, and the market still remained highly optimistic about what was going to be ahead. Now he's doing the things that he said he was going to do, and now the market is suddenly unsettled. Okay, so specific to that variable, again, I think the hard part has been for the market has been the ordering or the sequencing. And that's your point. I think we always knew

Trump 2.0, this administration would have a mix of carrot and stick. The difficult thing is we've absorbed all the tougher parts up front, right? Because maybe it's more stick than carrot. Perhaps, perhaps. But again, I think we're working through the tougher parts up front. Because maybe it's more stick than carrot. Perhaps, perhaps. But again, I think we're working through the tariff piece, right? We haven't yet gotten to the more market-friendly parts of the equation, be it deregulation or perhaps lower tax cuts. I also think, tax cuts themselves, I also think with Doge, I think the initial sensation was viewed as positive through the prism of the deficit.

And then now, as you kind of go through it, there's a worry locally about impingement on the labor market. I still think in the end, the ambition of this administration will be pro cyclical, pro business and ultimately market friendly. We're just working through, like I said, the harder part of that sequence, which would speak to the reason why through all of this noise, it wasn't what was it a week ago, we're talking about a new closing high on the S&P? That was Wednesday night. That's right. And again, so we've introduced more volatility into the equation. I think flow and positioning is also playing a decent role here.

So like I said, this gets into the momentum trade. Yeah, I want you to talk about that. Okay, so let's spend a second on it. So a scorchy move to the upside at the end of last year and the start of this year, and a scorchy move to the downside. Why is that? I think there's a couple things. I don't think you can de-link it from some of these local worries around growth. So what we've seen in cyclicals versus defensives, what we've seen in the Japanese

yen, what we've seen in treasuries, that all has a little bit of a growth scare component to it, right? Those stocks are high velocity stocks that trade better and risk on environments of animal spirits. Okay. So it links to that. I also think there's something to be said for sometimes short cycle vicious moves. They reach a point of fatigue when the money flow stops. And I'm reminded of the wisdom of Stan Druckenmiller, which is it takes a lot of capital sometimes to get a stock or a set of stocks up. It just takes the absence of capital to get those stocks down. So as the retail investor pulls back a little bit, as the professional trading community sorts out their risk and attends to their risk, you just got to pay the piper a little bit in the doing. So that's why things like the momentum unwind, Bitcoin below 90, Tesla down 25 percent in a month, yields down.

That would all play into that story. It would. It also speaks to dispersion, which is, I think, one of the themes of the year within tech and within the market more broadly, which is take the MAG-7 cohort as an example. And again, it gets back to what I said before about us being spoiled in prior years. 23, 24, uniformly, all one way, all higher. This year, much more dispersion. Think Meta and Tesla at the edges of that. It's not all bad. And again, I go back to the point I made over the weekend, which I think you referenced, which is when you look more broadly within tech, when you look at internet or cyber,

AI analog semis, there's still plenty of pockets of strength. It's just not as uniform as it was in the prior couple of years. The internet ETF in and of itself has been getting killed lately, which I'm sure you've looked at that factor also. For sure. And also now it introduces a little bit of this kind of concept of equal weight. So as we see today, which felt like a very difficult day, equal weight S&P is up on the day.

Equal weight NASDAQ, as I referenced, it's off the highs, but it's still 4% up 4% on the year. And so I think it's a little bit of separating kind of the local hand-wringing and the local risk transfer from the bigger picture, which I still think is inherently good for the U.S. market and for tech stocks. Before I let you go on that note, is tomorrow a clearing event with NVIDIA

getting the earnings out of the way? And does that ease some of the unsettled feeling around tech? Well, NVIDIA always holds huge sway for two reasons. One is it's the second biggest stock in the land. So definitionally, it carries so much market cap. I also think it is the I mean, really, it is the anchor point of the AI narrative more broadly. I always say you have people who come on the show have forgotten more about the micro fundamentals of NVIDIA than I will ever know. It seems those who are kind of the black belts, white speed to, of course,

table stakes is a beaten guide. And the question is, do they address for the first time in kind of a post deep seek world? Do they address the cyclical impulse to spend by the hyperscalers? My guess is they will continue to demonstrate huge demand for last question. They're going to kill me because I already have to go. But your clients, some of them anyway, well-known ones, have been buying China internet tech stocks. Yep. So it's akin to the trading rally, which I think we saw last fall, but of a different variety. That was the felt sense that there was going to be a policy pivot that in a way really didn't follow through.

They still haven't attended to the demand side of the equation. I think this much more has been one part deep seek and the new world that was revealed there. And probably secondly, and maybe more importantly, Premier Xi putting his arms around his tech national champions. So my guess is there's a little bit more runway. Meeting with Jack Ma and some of the others, whereas before we're like, where's Jack Ma? And that is a very different story from D.D. Ant. Where is Jack Ma circa 2020 and 2021? So for me, the big question, I still think China has a lot of problems as it relates to growth,

as it relates to debt. The big question is, will structural capital commit to that space? We didn't see it last year. That was a hot money, fast money trade. That's the big open question now. Appreciate you, man. Thanks for being here. Thank you. That's Tony Pasquarello, Goldman Sachs. Up next, Bitcoin. We just mentioned it sinking to a three month low now falling below a key level. What's driving that drop? We will talk about that more when the bell comes right back. We're back on the bell. Bitcoin dropping to a three month low below ninety thousand dollars tonight. McKeel is here with more on what's behind it. We were just talking about that tonight. It's been kind of unsettling in its own right. Yeah, really interesting time,

Scott. Bitcoin at sort of a critical juncture here for people who are not long-term holders, hovering under $90,000, as you said, which is the bottom of the range Bitcoin's been trading in for the past three months. What you're seeing is concern about economic growth spilling over from the equities market. And it's interesting, Scott, because bullish sentiment and the enthusiasm around our new pro-crypto administration is still very high. Bitcoin rallied to 90K after the election. It hit an all-time high on Inauguration Day. The thing is that since we got Trump's executive order on crypto at the end of January, which was widely anticipated and I think pretty well received by investors, the industry had not really, it hasn't really had a clear catalyst to get them through

this macro uncertainty. So those I spoke with today are actually warning that Bitcoin still has room to pull back as far as $70,000 if it's unable to retake $90K here. But that would be without compromising the long-term thesis that this asset class will thrive under more favorable regulations and leadership in Washington. So there should be plenty of demand there at 70K for investors who maybe sat out when it was stuck at that level last year to finally come in and help push it higher again. Scott? All right, Tania, thanks so much for that. That's Tania McKeel. Up next, we are tracking the biggest movers into this close. Christina Partsenevelos is back with us for that. Christina. Well, we have a sweet stock that's turning sour, plunging over 20 percent after a major earnings miss.

Well, another in the beverage space is, of course, bubbling up on strong results. I had to. The details next. We're less than 15 from the bell. Let's get back to Christina now for the stocks that she's watching. Tell us what you see. Investors losing their appetite for Krispy Kreme. Shares are down right now over 21% after missing Q4 expectations and issuing weak guidance. They had a cybersecurity attack and soft demand just weighing on results, putting the stock on track for its worst day since its IPO back in 2021. Over in the food and beverage space as well,

Keurig Dr. Pepper is popping after Q4 results beat estimates. The higher prices, so higher prices helped offset volume shifts. Shares are up around 2%, Scott. Christina, thanks so much. We do have some breaking news out of Washington. Let's get to Eamon Javers for that. Eamon, what are we learning? Scott, that's right. We are now learning the name of the official that the White House is

saying is actually running Doge, the Department of Government Efficiency. Remember, there's been this weird back and forth between the White House and in court filings. You have the White House, on one hand, in the public saying that Elon Musk is the guy leading the effort for Doge. But in court filings, they say Elon Musk is not actually in charge of Doge and doesn't actually work there. He's just a special governmental employee, an outside advisor. So that's led to the question, who is running Doge? Who is the administrator of that entity? The White House press secretary, Caroline Leavitt, was asked that question in a press briefing earlier today. She said she wouldn't answer it in the press

briefing. But since then, they have now put out a name. The White House says that Amy Gleeson is the person who is the acting administrator of Doge. Now, Amy Gleeson appears to be a person who was affiliated with the U.S. Digital Service. That was an entity that the White House took, an existing White House entity that this White House took and turned into the Doge organization. So this Amy Gleeson official is somebody who was pre-existing there under the previous administration and now seems to be continuing on. But Caroline Leavitt in the briefing today said that Elon Musk is leading the Doge effort. So unclear what the exact org chart is there. Maybe a little bit more clarity today. One other thing to flag for you, Scott, is that we're now getting multiple media reports. There has been a minerals deal of some kind between Ukraine and the United States. We don't know the exact terms of that deal.

No confirmation from the White House yet. So we'll watch that space for more information. All right, Eamon, thanks so much for that update. That's Eamon Jarvis in D.C. Up next, Tesla shares under pressure again today. We're going to tell you what's weighing on that name inside the market zone next. We're 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. Plus, Phil LeBeau on the continued sell off in Tesla shares. And Giorgio Bosa is watching Instacart ahead of its earnings in overtime. But Mike, I'll give it to you first on your thoughts on this trade today. You know, it's still looking at root like a very messy, somewhat disorderly rotation as opposed to just an all out liquidation. The market has taken on a tremendous amount of high velocity selling

in the highest risk, highest momentum, lowest quality stuff. And it's largely been offset, not totally offset, by other stuff, boring stuff. The low volatility stocks in the S&P are up 6% year to date, five percentage points better than the index itself. So that much is to the good, the fact that we've been able to kind of not just have it spill. But there is hints of a change of character here. I mean, in the Nasdaq today, 70 new 52-week highs, 350 new lows. There has been a good purge. That can be kind of reconciled in a positive way when you say, look, a lot of the hot money got cooled off. They're chasing.

They've sobered up. And now we are on better footing. If it didn't come along with that overlay of doubt about growth and front-loading a little bit of the economic friction as opposed to the benefits. So I think it's kind of OK in that respect. Banks down, yields down aren't great. But honestly, outside of the very largest JPM and B of A, the banks are doing OK today. Yeah. Your point about the Nasdaq and some names like Tesla, for example, Phil LeBeau, which just continues to suffer in this market. Tell us, you know, from your vantage point, what you think is going on. Well, there's a catalyst and it came out of Europe. Look at the shares of Tesla and how they tumbled out of bed today.

Down now under $300 a share. Well, now they're back over $300, but the market cap is below $1 trillion. The news out of Europe, negative sales for the month of January down 45%. And this at a time when its market share, it's fallen to 1% versus 1.8% last year in terms of EV market share. The industry EV sales, by the way, in the month of January were up 37.4 percent. Scott, I want to show you the chart of the day, going back to election day, climb the mountain and come down the mountain. That's what we did with Tesla, pretty much back to where it was back on election day, might be a few dollars ahead of it. Remember, their shares are down 37 percent since the high on December 16th. I mean, Elon Musk, Phil, is

learning what it's you know, what it's like to be a highly polarized political figure, you know, accused of meddling in the German elections. And obviously what's been taking place here with Doge and his place within the Trump administration orbit, some of that has to be at play, too. Look, there are plenty of reports out of Europe of people saying, I don't want to buy a Tesla because of what Elon Musk represents. Having said that, Scott, the number of times over the years I have covered monthly sales from Tesla, and they've been way down, only to come back in subsequent months.

I've seen that time and again. We need to see this over a couple of months before you can definitively say, yeah, people are truly turning away from the Tesla brand. Phil, thank you. That's Phil LeBeau. Deirdre Bosa, we are fixated, obviously, on the earnings that are going to take place tomorrow, but you've got a big one coming up in overtime as well, and that is Instacart. It's Instacart, also known as Maple Bear. So along with Dash, it's really been the best-performing gig economy stock over the last 12 months. Year-to-date, it's up 16%.

And one of the biggest arguments against the company is competition. DoorDash, Amazon, Walmart, Uber, they all play in the space, making it competitive. But Instacart was early to advertising for the gig names at least. That unit has a nearly billion-dollar run rate this year. Also, the company has a lower price-to-earnings multiple compared to DoorDash, which Mizuho pointed out in its coverage, where it initiated in January at Outperform. BTIG, I thought this was an interesting point, points out that Instacart is unburdened by the RoboTaxi risk

that hangs over some of the other gig names, ride sharing in particular. So we're expecting transaction sales growth at about 11 percent and advertising growth at nearly 10 percent. Back to you. All right, Dee, thanks so much. It's George Abosa. I'd love to get your thought on what you're witnessing with Tesla. Yeah. I mean, which is caught up in the momentum downdraft, but then you add the political polarization issue on on top of Musk and what's happened in Europe with sales. It's sort of a whole pot full of stuff that's impacting this. It's almost a full recoil of how

it kind of got built up before this peak in December. A lot of these even mega cap stock got meme-ified. And honestly, that's how they traded. That's how Tesla traded. That's how Palantir traded into the highs. It was not just about we like the long term story. It was as long as we are revving the engine on retail trader aggression, these are going up. And now you have, I think, a little too much in the way of potential concerns on the demand side to ignore. Untenable valuation had been for a long time, but now this sort of rat-a-tat of what seems like collective, you know, kind of displeasure with Musk that's just not going to go away for a little while. So he was an emblem on the way up and on the way down.

You know, as Phil mentioned, I mean, we actually are above Election Day levels on this stock. So it's not as if there's no more to give up or it's not as if they're cutting into this, you know, kind of crucial levels in terms of the market cap. But it does just show that that particular kind of energy that was flowing through this market is in retreat. I mean, the Robin Hood move, all of that stuff. Obviously, Bitcoin is another parallel. Yeah, Palantir, Applovin, CrowdStrike. Yeah. Quality companies.

It's just they ran up so fast. Yeah, many, right. Exactly, yeah. You look at the charts of those stocks. And it was a very select group that really, really got the afterburners on. You know, they just basically traded them every day. And so, again, the net positive is that it can kind of cool off and you can rotate toward a little more stability. The issue is the confidence surveys aren't everything, but animal spirits is a big part of the bull case.

That's now a little bit being questioned. All right, good stuff. Mike, thanks so much.