Closing Bell - Closing Bell: Late-Session Selloff, Tech Shopping List, The Mood from the C-Suite 6/9/22

Episode Date: June 9, 2022

Stocks tanked in the final hour of trading, closing near the lows, with the Dow giving up more than 600 points. Ben Emons from Medley Global Advisors explains why the S&P 500 could see another sizeable correction. Portfolio manager Kevin Landis shares his tech shopping list, with under-the-radar names to ride out the volatility. MKM’s Rohit Kulkarni breaks down the pressure on Facebook parent Meta, whose ticker symbol change officially took effect. And Yale’s Jeffrey Sonnenfeld discusses the mood from corporate executives, and whether or not CEOs are expecting a recession in America.

We've got right across the board today as investors await tomorrow's crucial CPI inflation report. Nasdaq's down more than 1.4 percent. We're near session lows. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we stand in the market right now. S&P is off a little more than 1 percent. You've got every sector in the red right now. Consumer staples are holding up the best.

Communication services at the bottom of the pack, down 1. half percent, along with financials, technology and materials. The Nasdaq, as I mentioned, down one and a half percent. So it's pretty much weakness across the board in the cyclicals, in the tech stocks as well. What's what's weighing particularly some of the big cap tech players like an NVIDIA lower today, small caps down one and a quarter percent. Here's a look at some of the most actively traded names right here, right now at the New York Stock Exchange. NIO at the top of that list. It's been there for a while, down 7%. We're actually going to talk about that later in the market zone with Phil LeBeau. The Chinese internet name is giving back some of their recent big gains, and they have been winners in the last week or so. Carnival Cruises down another 8.3%.

It's been slammed all year long. Coming up on today's show, tech fund manager Kevin Landis says it is time to put your shopping list together. Even as the Nasdaq sinks again today, he's going to tell us the three names that made his cut and what he calls all-weather growth industries. And speaking of tech, Meta officially trading under its new ticker symbol today as the stock sits about 50% below its highs. We'll talk to a bullish analyst about why he sees some big upside ahead for Meta. Let's kick it off, though, with the broader market. Mike Santoli taking a look at stocks versus bonds for his dashboard today, including we must hit those European bonds on the move. Yep. They've been working in lockstep, stocks and bonds, and it has been a global story. Sorry, you see the ECB today mostly as expected, talking about

ending QE and raising rates in the next few months. But the market wasn't quite positioned for it. This shows you the S&P 500 against this global bond ETF. So this is encompassing the world of fixed income. And you see over the last six months, they basically arrived at the same place. Obviously, stocks are more volatile than bonds. But it shows you the yield pressure, upward pressure on yields, upward expectations of what central banks are going to do and that impact on valuations. The S&P itself just sagging below the bottom end of this 10 day range. So clearly markets flinching ahead of the CPI inflation data tomorrow to your note yield going out at the highs into that number. So clearly people are thinking it could be hotter, at least can't take for granted that it's not going to be. Take a look at the effect on equity valuations, though.

UBS put this together. It shows you among the stocks in the S&P 1500, a broader universe, on average they are trading in terms of their price earnings multiples and in the 40th percentile of their own historical P.E. range dating back to 1998. So more than half of all stocks are cheaper thanE. range dating back to 1998. So more than half of all stocks are cheaper than they've been on average since 1998. Does that mean the overall market is cheap? Well, it shows you valuations less of a headwind, I would argue. And a lot of the work has been done to reset valuations. But we also we're not far from that point in 2000 before the

market continued to have a rough ride and arguably even still in 2008 as well. So if the fundamentals are going to erode from here, then it's not necessarily a broader buy signal. But if it's 2016 or something like that, then yeah, that's where bottoms are made if the fundamentals hold together. Remember the pigs? Remember when we used to call the European peripheral debt,

Portugal, Italy, because they were problems, right? They had high debt. We're seeing some of the highest yields there since that level. Bonds are selling off. The ECB today signaled that it's going to hike in July and maybe by a bigger margin. And I do wonder if that becomes, if we start to see those dislocations and those really higher yields for the higher indebted countries, if that becomes a problem for U.S. investors as well. You're seeing the spreads open up, I guess, among the European issuers, but it's not really as much about solvency. It's not really as much about can they service the risk or the market's going to refuse to finance those riskier or more indebted countries. It is across the

board. German yields, no better credit out there. The 10-year has gone from 95 basis points to almost a percent and a half in two weeks. So it's just basically stepping up the idea of what the ECB might have to do to fight inflation. Yeah, like we're seeing in the U.S., by the way, with the 10-year back above 3%. Mike, thank you and stay with us. Major investors are gathering right now for the virtual Sohn Conference david einhorn just announced his pick leslie picker with the details leslie what is it hey sarah yeah long a uh presenter at sown david einhorn said he believes quote powell is bluffing when he said the fed has the tools necessary to fight inflation as such einhorn is recommending investors buy gold the gist of his presentation centered around this idea that raising rates would

increase the amount of interest the public owes, therefore adding strain to the deficit and the Fed's own balance sheet. So he says the Fed can raise rates, but it's not clear it can raise rates high enough to, quote, get the job done. Einhorn said next year the, quote, rubber will meet the road where the Fed will have to choose between fighting inflation or supporting the Treasury. And he believes it will choose the latter. At that point, he said it's prudent for investors to hold some gold as an inflation hedge. Einhorn's gold pick was just one of the three investment presentations at the Sohn conference that we've seen so far. We also heard from Sergo Cap Partners' Mala Goncar, who recommended ServiceNow,

and Impactive Capital's Lauren Taylor-Wolf, who recommended Wex, Inc., which is a B2B payments provider. Sarah. The gold call is really interesting, Leslie. So it's predicated on this idea that inflation will stick around because Powell doesn't have the tools to fight it.

Is that just a summary there of what you said? Exactly. Yep. And he gave this whole anecdote about his grandfather and how his grandfather was a gold bug and said that it will one day become necessary to hold gold. He doesn't know when that is. And Einhorn's basically saying now is the time because he doesn't have that faith that the central bank will be able to get inflation under control.

Now, this stands actually in contrast to what we heard from Sam Bankman-Fried earlier at Soane today, where he talked about why Bitcoin wasn't as correlated with inflation as a lot of Bitcoin bulls have said it would be. And he said, actually, it is, and that inflation was rising before the key indicators like the CPI were suggesting that inflation was rising. And during that time, Bitcoin tracked it. And he believes that the future expectation of inflation is actually decreasing. And that is why you're seeing Bitcoin decreasing as well. So kind of interesting, two different schools of thought here.

Everybody wants to be an inflation hedge. And nobody quite, Mike, is a perfect inflation hedge. If gold really was a good inflation hedge, it's only up 1% this year, a year where inflation exploded. Exactly. I mean, arguably what it's good at is capitalizing on negative real yields, and that really hasn't been the case. In fact, real yields have been going higher. By the way, Einhorn, in 2010, made a big bet on gold. In 2010, he was

bearish on the ability of the Fed to actually corral inflation. Inflation didn't really show up then. If you remember, he did get kind of macro in those days, even though it was rooted in, you know, stock picking, evaluation sensitive. Yeah. Isn't he one of those saying that the candy, there's some sort of metaphor there. If you give a mouse a cookie, I believe was the metaphor, which is like a children's book or something. Oh, yeah, I love that book. There you go. He'll ask for a glass of milk.

You don't know that book? Well, I guess I know it. When was Einhorn's last big hit? Well, I mean, there have been individual value names that he's done well on, I believe. I think he was bearish on Moody's in the early part of the 2010s. So, you know, I think that you have to take away the macro calls from what the overall portfolio is doing, which is a lot of it, I think, at times has done well because it has a value orientation.

Mike, got to ask your take on the market here because we've just taken another leg lower. We are now looking at the lows down about 370 or so on the Dow. And the reason I'm asking is because we have been in this sort of trading range in the last 10 days or so for the Dow? And the reason I'm asking is because we have been in this sort of trading range in the last 10 days or so for the S&P. A lot of people were looking at tomorrow's CPI report as a catalyst to break out. Is that going to happen before? Well, I don't know, to break out of the range. Yeah, we're slouching just a little bit below the bottom end of that range. So clearly the patience is running thin or just the idea that maybe staying out of the way ahead of that number. I would say you're now bracing for the potential for a hotter number

because, like I said, the two-year note yields at 2.8 hasn't been that high before. The implied expectations for how far the Fed's going to have to go have been rising. All of that kind of suggests we're there at least positioned for a higher than expected number or at least not a downside surprise in inflation. You've only had, Bespoke was saying, three downside surprises on CPI in the last year. So basically, it's been nine to three. Well, if you pull it apart and think about it, we know airfares are going to be high and hotels and a lot of those service areas are going to show high inflation.

We know food and oil prices are extremely elevated and have gone higher. But on the flip side, there's some anecdotal that the supply crunch stuff, the semiconductors maybe, and certainly used car prices have come down. Used cars, shipping rates, all the container shipping stuff has eased. The issue is, I think almost no matter what tomorrow's number is, it doesn't qualify as convincing evidence of what the new trend is. It doesn't really create a prompt for the Fed to change its story in a near-term way. However, it's probably better for the market to

go in, you know, bracing for something rough as opposed to assuming it's going to be benign. Always a silver lining with you. Mike, I'll see you soon. After the break, nearly 70 percent, 70 of CFOs in our latestbc survey say they are expecting recession in the first half of 2023 we'll ask jeff sonnenfeld whether those findings mesh with the tone he heard from ceos at this week's yale ceo summit you're watching closing bell on cnbc continuing to move south here down 380 on the dow welcome back disney one of the bigger drags right now on the Dow after announcing a major shakeup in management. Julia Borsten with the details. Julia. Sarah, Disney CEO Bob Chapek abruptly fired the company's most senior TV content executive,

Peter Rice, replacing him with his top executive Dana Walden, naming her chairman of Disney General Entertainment Content. Rice, whose contract ran through 2024 and was seen as a potential successor for JPEG, had moved over from Fox as part of the acquisition, along with Walden. Now, a source close to the situation tells me that JPEG fired Rice because he was, quote, not the right cultural fit. JPEG saying in an email to Disney employees that CNBC obtained that Walden is a, quote, collaborative leader and cultural force who has literally transformed our television business into a content powerhouse. All of this comes as Disney shares are down about 44 percent in the past year.

And as the company invests in content to grow its streaming audience. Amid speculation about why Chapek would fire such a senior executive, Disney's board issued a statement saying that Chapek and his leadership team have the support and confidence of the board. Sarah? So that's what I was going to ask, because all of this centers around the question, Julia, about whether Chapek, right? Because his contract is ending, and people don't know if it was going to ask, because all of this centers around the question, Julia, about with our JPEG, right? Because his contract is ending and people don't know if it's going to be extended.

So does the fact that he what? First of all, was this guy a potential contender to replace him? And so is this a good sign for JPEG and the board putting out this statement expressing confidence in Bob? Have we seen anything like that since the whole Florida debacle? Well, look, I think it is really notable that the board put out that statement so quickly. Clearly, they wanted to tap down on any concern about any lack of confidence in JPEC given such a high profile departure. But I have to say, Peter Rice was very well regarded, one of the most senior executives, certainly probably the most senior executive to come over as part of the Fox acquisition and a lot of speculation that he would be a potential JPEG successor. But I also want to note that he had been reportedly, according to my sources, had interviewed for some very senior jobs at Warner Brothers Discovery.

This idea that he could be a number two potentially to a David Zaslav. That didn't work out for any number of reasons, including the way Zaslav wanted to structure that company. But clearly Rice was in the conversation as a senior executive in the media space here. But I think Dana Walden is also very well regarded and had worked with Rice for a long time. So this elevates her in that role. But it looks like the Disney board wants to tamp down on any concern about Chapek's future and just want to know that his contract is up next February. Presumably they would have let him know by now if they were going to extend him past February. But that really doesn't mean anything these days. You never know. Right. But we haven't heard that anything these days. You never know. Right. But we haven't heard that yet, right? You'll stay on that, I'm sure.

They had not announced anything. But from what I understand, it would be typical to let a CEO know about a year in advance what they could expect going forward. So they have not announced anything, but I would assume since they had not announced otherwise that they had told him so. Julia Boorstin, 68% of CFOs surveyed by CNBC say they expect a recession in the first half of 2023. This comes as C-suite executives gathered this week at the Yale CEO Summit, and Yale School of Management's Jeffrey Sonnenfeld joins me here at the exchange, host of the summit. It's good to have you here at the exchange. So, so many CFOs that we polled expect a recession. What did you get from CEOs on that topic? Well, it was fascinating. And you saw it before your very eyes. We're thrilled to have you there. What a gap there is between the CFO

mindset and the CEO mindset. I guess it's a reminder that these financiers, these economists are trained in the dismal science and they're looking at worst case scenarios and the CEOs have just the opposite leaning across the board, you know, both on inflation. They were surprisingly optimistic, seeing things moderating down. Even the folks with big China exposures, you saw how hard we pushed them on some of the lockdowns and on issues having to do in particular with recession. One major major banker, humongous banker, she said this is to be a very strange sort of recession if it happens with so much cash, record employment, and also pointing out that these are very strong earnings. And a chairman of another very prominent, humongous investment bank, as we're supposedly off the record, had said, well, I'm in the business of risk management. Not naming names.

And Lloyd said, we have to, you know, just worry people, you know, get people to be ready for a surprise upside here. Yeah. Prepare yourself. Don't necessarily bank on recession was sort of the idea that I got. And then I pushed back on the Fed hiking and quantitative tightening. And they had a response to you on that. Just saying that, look, we're coming off of zero. So a move to, I don't know, 3% isn't that big of a deal.

Exactly. That was their response to you when you asked. And good for you for trying to provoke them. You made my job a little easier. I always try to provoke, as do you. Jeff, Ukraine was obviously front and center. You had President Zelensky there. I got to ask some questions.

You also heard from companies on what's been a pretty tricky but universal exit for Western companies on Ukraine. You've also been tracked from Russia. You've been tracking this. How's it going? Well, it's amazing. It's the first time in history we've seen this sort of thing. I was very close to many of the CEOs that led a 200 company retreat in the late 1980s from South Africa in protest over apartheid, which was very effective. This is five times that. You know, we have over a thousand companies, which is quite remarkable. And when we asked them how you feel about it, this group, as you saw that it was 100 percent, it was like 96 percent were in support of the exit and 100 percent said they were very much

impressed by and inspired by the sense of unity and courage shown by Ukraine. Yeah, which which is it because, though, Russia is such a small market anyway and not really a growth market? Well, you know, that's what surprised us, that that these companies didn't pull out instantly. Some of them stayed in. There are some small fragrance companies that was incredible. They stayed in for this reason. But they're only perhaps not even 1% of these companies that had as much as 10% of their earnings coming from Russia. Almost like 95% or so, a large percentage of them, were really drawing perhaps less than 2% of the revenues from there. So it wasn't a big hit. And in fact, as our research has shown, just published now, that the more dramatically a company has pulled out, the more

their shareholders have benefited. That actually, shockingly, that doing good is not antithetical to doing well. And the companies that had these big write-downs of assets were heavily rewarded in the market. Where are executives right now in terms of their worries about the war and what they're trying to prioritize and how they're trying to help after the initial pullout? Well, that's what they wanted to ask Zelensky about, President Zelensky. You know, this was the, as you know, the first time he's had an interactive session with any leaders, the United States Congress, the EU, the UN Security Council. He didn't have an open exchange. Here was an unscripted open exchange.

People could ask anything, and they did. Your opening question and wanting to know how business leaders could help was quite remarkable. And they came back with what business leaders could do with a show of force, how they could show unity, but also, as a number of them asked, what we can do about refugees or what are the big issues coming that they asked that are the unintended consequences. Zelensky said the people who aren't suffering great losses of life outside of Ukraine still around the world are going to suffer greatly by a massive famine that's coming because of what Russia is doing. He called it food genocide by Putin.

Food genocide. It was Jane Frazier's city group who asked about that. It's like 30 percent of the world's grain comes from Russia. And what Russia is doing is maliciously destroying the stockpiles, destroying the infrastructure for grain and inability to plant the seeds. It's not going to be good for Russia. It's going to be devastating for Ukraine. It's going to be bad for the whole world. So this is a huge problem. And then other CEOs were asking, the CEOs of Chobani were wondering what, and of course, Farouk Kothwari of Ethan Allen wanted to know what we could do about helping on a refugee crisis and

unintended consequences of all this. And they talked about hiring Ukrainians. If we have so much remote work that the companies in the U.S., companies in Europe can hire people, as well as this massive displacement of 15 million people displaced and five and a half Ukrainians driven out of the country itself, over three million into Poland. So what can you do to help invest in the new Ukraine? Give them jobs, help them financially. That was some of the advice. Weren't you surprised that he got multiple standing ovations from these people who don't usually want to take?

He's an exemplary leader. But business leaders taking political positions. It was it was impressive. So when they come to you, CEOs, and say, Jeff, you've been compiling all this data and pulling out of Russia and doing what's right and say, what else can I do? What should I be doing now? What do you tell the CEOs? Well, they don't want to hear about people's hopes and prayers. It's really what they want to know is how can you help by investing in the new Ukraine?

And when people want to know what's the end state, as Lloyd Blankfein asked, where does this all go? He said what we need to do is to stop Russia by doing what they're doing. When people had said early on, oh, the average Russian is not the source of the problem. Yes, they are. It is a certain complicity by the complacency, the average Russian is not the source of the problem. Yes, they are. It is a certain complicity by the complacency of the average Russian. And pulling these businesses out is a very sharp message, symbolically and substantively, that there are still some businesses that shouldn't be in there. I don't know if you want me to name names. Some U.S.

businesses. Yeah, who's still in there? Well, Huntsman Chemicals shouldn't be in there. There are some companies like Benetton that shouldn't be in there. Some companies like Versace that shouldn't be in there. It's kind of surprising that they are still there. For what purpose? With such low revenues, even the self-interest of it is hard to explain. But symbolically, as we saw with South Africa, as we saw what happened with Romania, as we saw what happened with the government change in Poland or East Germany, is that when they're seen as a pariah to the world, then they know the propaganda they're being fed is not true, that if they're an outcast, then they're also starting to suffer.

We're trying to make life a little bit more uncomfortable for the average Russian, so more than 4 percent of them will download a VPN and get the truth that they don't want to know. There's a great book that came out in 1995 called Hitler's Willing Executioners. And that book by a Dutch historian talked about the average German was being a source of the problem, and that somehow we don't just say it was Adolf Hitler himself. We can't blame Putin only here. It's that the Russian complacency is what makes this possible.

And these business blockades working in conjunction with government sanctions are what makes it more effective than just the government sanctions alone. It punishes the whole country. Jeff, thank you. Thank you for joining me here to recap some of what we heard. Jeff Sonnenfeld of Yale. Let's give you a check on where we stand in the markets. Down about 360 or so on the Dow Jones Industrial Average.

S&P 500 down about 1.4%. Every sector is red right now. Communication services is leading us lower. Staples and energy holding up a little bit better. But everyone's down. NASDAQ down one point eight percent. Still ahead by one strategist says there's a real risk of another 10 to 15 percent correction for the S&P 500. We're already down more than 15 percent on the year. Plus, what earnings results from Cignet and Five Below can tell us about where consumers are spending in this environment. We'll be right back. Stocks are sitting at session lows, taking a leg lower just in the last 30 minutes or so.

Here's a live look for you at the S&P 500 sector heat map. And as you can see, it's communication services down almost 2% at the very bottom of the pack today. Financials also joining it at the bottom there. You've got pretty much broad weakness in the communication services. Warner Brothers Discovery down almost 5%. Meta down almost 5%. Paramount's a lot of the media names, Netflix, Match, Disney, all at the bottom of the pack. Financials, as I said, down there along with technology and materials.

And then if you can see on the other side, consumer staples are holding up a little bit better. And so are energy names. But again, some pretty broad weakness across the board. The NASDAQ 100, more sensitive to some of the mega caps, down 2% right now. Stitch Fix shares are falling as well, down 9%. CNBC.com's Lauren Thomas reporting this afternoon that the company is laying off 15% of its salaried workers. Lauren joins us now. Lauren, were these layoffs inevitable given the pressure on margins and the stock price that we have seen over the last, I don't know, year or so? Yeah, absolutely, Sarah. You know, Stitch Fix is a company that has certainly been under pretty substantial pressure for a period of time now. I believe shares are down about more than

55 percent year to date. Last I checked at this point and just three months ago, Stitch Fix cut its revenue outlook for fiscal 2022 and also entirely withdrew its outlook for earnings guidance. And at the time, you know, the company said that it was really going to have to reevaluate its cost structure, you know, how much money, for example, it was spending on marketing because it just wasn't bringing in the active customer count that it had anticipated. And again, you know, Stitch Fix was really appealing to a lot of us, maybe when we were going to the office or, you know, looking for more formal outfits to wear. Certainly during the pandemic, it had to pivot its business a bit. But again, to go back to the headlines this afternoon, CEO Elizabeth Spalding did send out a memo to employees announcing these layoffs. Fifteen percent of salaried positions, like you said, that represents about four percent of the company's total workforce because it does have a

number of employees that are paid on an hourly basis. In this memo, Spalding really described that Stitch Fix is in the midst of a transformation. And she said, you know, while some decisions can be difficult to make, such as this one, it's really going to hopefully set Stitch Fix better for profitable growth over the long term. Because again, the company does report its second quarter results after the bell in less than an hour, right? And it's expected to post losses for this latest quarter. Yeah, looks like you scooped that with this announcement. Lauren, thank you. We'll monitor any other job loss announcements, I guess, as we try to figure out if there's a turn coming here in the economy and the labor market, which has been so strong. Lauren Thomas, you can read more

about her story right now on CNBC.com. Speaking of the consumer, the big picture today, we've got more signs the U.S. consumer is slowing down at the lower income level. Signet Jewelers, great quarter, a beat, stronger outlook. But CEO Jenna Dross is telling me the strength is in its higher price point jewelry and the wedding boom, and that in fact, quote, value-oriented customers are challenged, she says. She also says that once the stimulus wore off, traffic decreased and sales shifted to higher price points, but did add that jewelry tends to perform well in recessionary periods because it holds value, though overall she expects the jewelry category to be down low single digits this year after what was record growth last year. One reason, the slowdown in value-oriented consumers. Five below, also today,

reflecting that slowdown in spending on the lower end, too. The discount retailer plunging today after reporting a revenue miss for Q1, issuing lighter-than-expected earnings and revenue guidance. CEO of Five Below, Joel Anderson, saying he expects, quote, the macro environment to remain challenging. So the takeaways here, the lower end consumer is feeling the pain and consumers overall are prioritizing travel and concerts and weddings instead of goods. It's creating some big gaps in the winners and losers on Wall Street, even within that consumer discretionary basket. Booking Holdings, for instance, it's up over the last three months, while Target is down nearly 30% over the same period. Tells you what's working right now and what is not.

Up next, tech investor Kevin Landis reveals the three beaten down names he thinks are worth buying right now as the Nasdaq takes a leg lower. We're seeing the down now down more than 400. And you can listen to Closing Bell on the go by following the Closing Bell podcast on your favorite podcast app. We're going to be all over the sell off when we come right back. Another ugly day for stocks. Nasdaq seeing the sharpest declines right now, down more than 2 percent, despite the tech sector's recent underperformance. Our next guest says at some point it's time to put your shopping list together.

Joining us now is Kevin Landis from First Hand Fund. So I assume you say that some point is now with some of these names that you like. And I want to go through all three of them. But start maybe with the worst performer, which is Build.com, software player that does back-end financial operations for small and medium-sized businesses. Kevin, why are you going with an unprofitable company in this environment? Because a lot of the startups we've invested in

have, with a clean slate, chosen that as the best tool that they have. And startup companies are usually a good indicator of, because they don't have switching costs, they're usually a good indicator of who's going to be gaining market share in the future. And, you know, if you go back to before the pandemic, their revenue was less than a quarter of what it is now. The stock has over that, let's call it a two and a half year period. The stock is up, but it's up maybe somewhere in the

order of 50 percent, something like that. And so it's actually cheaper than it was back then. So it's a terrific growth story. Well, so growth story, but so how do you value a company like this in this kind of changing rate environment? It's come down a lot from the highs, I don't know, early last year, but it's still pretty elevated from where it began. Well, it depends on how far back you look. It's up a bit from pre-pandemic. So one useful exercise is you've got two, two and a half years. What happened to this company? Never mind the Matterhorn stock chart that they all have. How did this company change over the course of the pandemic? And what do they look like now? And that helps you put it in context. So look, it's a great growth name. We're heading into a recession. I want to own companies that

are going to grow. And I rely on people out in the world who are customers of these companies to tell me what they really like to use. And that's, it's a great name. And some of the smartest people I know have quit their jobs so they could go to work there. So you think we're heading into recession, but now is the time to buy some of the beaten down names, correct? That's not trading advice.

And let me just say, by the way, scheduling me to come on is, I'm gonna just say, I think it's bad luck. It causes the market to go way down because the last three times it's been really painful. But I think you can't time the bottom here. You just have to put together your list of companies that you're going to be glad you bought two, three, four years from now. And for those, you're going to get your best pricing right in here when everyone's very, very fearful. And so that's the simple thinking. And then ChargePoint is on your list, down 60% from all-time highs.

Market not really feeling the EV plays and the sort of future growth companies right now. Right, right. So ChargePoint is probably got the best built-out network of all of the charging companies. And, you know, I can tell you from firsthand experience earlier this week, having taken a little bit of a road trip in a full EV, that charging network's really important, particularly when they forget to plug your car in overnight. So range anxiety is a real thing. And as more and more people get these EVs, they're going to have to keep building out these networks.

And that's going to end up being a pretty good franchise. Maybe not as good as a cable company or a wireless carrier, but it's going to be a really great network to have. It's had a rough quarter with the inflation story and the supply chain issues, Kevin. How much do you see that hurting the whole space? Well, I can tell you, looking at ChargePoint, I've been frustrated lately because, you know, I think I just missed the bottom and kind of wanted to step in and build that position back up. I think it's a long-term play. And the thing to do in these market meltdowns is to ask yourself, not what trade can I make, because trading is crazy and it'll just drive you nuts,

but what can I own right now that will come out of this smelling like a rose? And typically, it's a really good, strong company in an emerging market. It's a good growth story. And while everyone else is missing their numbers, these guys will be making theirs. Yeah.

Well, putting yourself out there, Kevin, thank you on some of the hard hit names. Kevin Landis from First Hand. Meta, one of the biggest drives right now. It's down about 5% on the day of its ticker change today. We'll talk to an analyst about what's driving the decline and says to buy. That story plus a top strategist says more pain could be ahead for the bulls. He'll explain why when we take you inside the market zone with the Dow down 488 right now. We are now in the closing bell market zone. CNBC senior markets commentator Mike Santoli here to break down these crucial moments of the trading day. Plus, MKM's partners Rohit Kulkarni

on Meta's plunge and Medley Global Advisors, Ben Emmons on today's late day sell off. Stocks are under pressure right now. We're down about 500 points on the Dow Jones Industrial Average. Nasdaq's lagging the major averages. It is down a little more than 2 percent. And Mike, every Dow stock is lower now except for Home Depot. Goldman Sachs, Visa and Caterpillar are the biggest drags on the Dow. Is this a setup ahead of CPI tomorrow? Would seem a little bit of a loss of nerves just at the last moment ahead of CPI. Now, the market has really been held in check and has been in this very narrow range for almost two weeks right now.

And you've kind of just broken below. What's interesting is we're trading at these levels. It was right before this big Friday rally before Memorial Day. That was, you know, one of the last trading days in May. It was the 27th. And that was sort of the area that was being protected. The market seemed like it was being quite resilient, given the fact that you had the ongoingness of all the known issues with, you know,

Treasury yields inching higher. Obviously, oil has been largely relentless, even though it's backing off today. And now you have the central bank story kicking in further. So enough to worry about. Really doesn't change really doesn't change too much about the overall picture. But I do agree it sets it sets up the market to be in a defensive crouch ahead of that inflation number tomorrow. I'm just looking at some of the performance of the mega cap tech names today. Apple is weighing the most on the triple Q's. You've got meta lower, which we'll talk about NVIDIA, Alphabet, AMD. It has felt like a more constructive environment for some of these names

in recent days. I don't know if you call that a bear market rally, and I don't know how much conviction was in there. There was some relief in some of those. Of course, Amazon had its little run and it was showing a little bit of disengagement from things like crypto that were weaker. But, you know, I think the burden of proof remains pretty high on that group just because it arguably it's it's the last area of the market. It's really holding on to something of a valuation premium while most of the rest of the market, you know, has had its wiped away. Let's hit Meta because it is one of the bigger decliners right now in the S&P 500. The company officially leaving behind its FB ticker and has started trading under Meta. The move aligns with its rebranding to focus on the Metaverse.

Joining us is Rohit Kulkarni from MKM Partners. So they finally got the Metaverse ETF ticker and are launching as Meta with a ticker symbol. It's just it's a reminder, Rohit, of how strategically this company is changing. Where are they in that process? They remain very early, but they are very, very serious about this. They were hoping to do this change last year. They pushed it out by a few months,

and then they kind of pulled it ahead. And now, again, finally, we are seeing this change in ticker. So again, Meta, or formerly known as Facebook, is very serious about what they want to do with the company going forward in the next 5, 10, 15 years. Again, they have had a lot of hits over the last few months. Sheryl Sandberg leaving advertising-related channel checks and all the industry ecosystem kind of data points aren't glowingly positive.

In fact, they are more and more negative as the days go by. But in this realm of profitable tech, meta is holding up. So that's a good sign. So the stock is off 52 percent on some of the reasons you just gave, including the slower growth that Facebook has seen. Is now a good time to get in? At these levels, I think for near-term focused, heading into year end, I think there is a balanced risk reward. It is not an extremely compelling valuation year. There is probably 10% to 12% downside, 10% to 15% upside, in our opinion, for near-term focus. If you are willing to digest some haircuts to sell-side numbers in the next three to six months, I think Meta is a very good buy heading into next year. But next three to six months, there is downside, maybe 10% to 15%, upside 10% to 15%. That's the band I think Meta plays in before breaking out.

Probably that happens early next year. But, Rohit, the problem is, as you said, they're very early in the process of transitioning into the metaverse, which is going to be very costly. We know they're spending billions of dollars on it. And at the time, with growth slowing, before we're really starting to see some economic weakness that the market is now anticipating with all these global rate hikes, the question is, what kind of leeway is Facebook going to have or Meta is going to have to be able to make this transition? I think the company is cognizant of that. They are already sending signals that they are willing to pull back on pet projects on the side. Earlier today,

they tried to signal that the AR glasses is going to be put on hold. They're kind of clamping down on hiring. So come September, October, if we are in the current state, probably we wouldn't be surprised if they pull back on extra spend on Metaverse. They kind of pull in the cash burn. They are in the $10 to $15 billion cash burn per year. If they say in August, September that the cash burn is going to come down, I think that is the point you get into Meta. Down about $300, I'll just say, on the Nasdaq right now. Mike, how does a Facebook, given some of these challenges and changes that it's going through, hold up if the economic environment weakens more? Well, it's already looking like the market doesn't quite believe

there's much of an immediate growth trajectory, which is another way of saying that the stock looks quite cheap based on present earnings. And yeah, I agree that the street sort of craves some sense that there's some cost discipline, that the company is not just going to bet, you know, in an unhinged way on whatever the future is. But I think in the shorter term, they have to show that digital advertising is not going to be severely impacted. They have to show that there's going to be demand. That's the next couple of quarters, not the next few years. And that's probably what would get rewarded is if the platform showed on the ad side that it was holding up pretty well the next couple of quarters. Rohit Kulkarni, thank you for joining us on Facebook. Let's hit the EV stocks because they are getting caught up in the selling pressure.

Tesla turning lower even after UBS upgraded the stock to buy from neutral because of record high order backlog, margin momentum and a competitive edge in key supply chains. Also, look at NIO. It's down about 7 percent after the Chinese company reported a decline in gross margins and also issued weak guidance because of higher commodity costs and supply chain challenges. Our Philip Bo joins us. Phil, how much do Tesla and NIO's outlooks depend on those EV deliveries in China? What do we expect there? Well, more NIO than Tesla. And both of them, while they are going to be ramping up deliveries as the lockdown in Shanghai expires, it's not going to be able to make up all of the deliveries that they lost. And when you take a look at Tesla, it's really more of a global viewpoint. That is what UBS highlighted today. In the world of EVs,

they've got three advantages nobody else has. What are they? Backlogs in production, much stronger in terms of where they are now than any other competitors. Strong margins in pricing. That's not changing anytime soon. And they have supply chain advantages. They've got a head start of many, many years on their competitors. That's what they're taking advantage of, and that's why UBS upgraded them today. And then when you look at NIO, look, it is growing. But remember, NIO comes

off a very small base in China. I hear this question from people all the time, Sarah. They're like, what's going on with NIO? It's very small. It's growing, but it's very small. It is interesting that it's one of the most actively traded names here at the big board every single day, like for the last month. Yeah. Phil, thank you. Small, maybe people, you know, high momentum there. Philip, stocks are sinking here into the close. We're down 2 percent right now on the S&P. The Dow is down more than 500 and it's the Nasdaq bearing the brunt of the pain, down 2.4 percent. Ben Emmons joins us, Medley Global Advisors, managing director of Global Macro Strategy. And Ben, we've been talking about how we've been in this trading range for stocks in the last 10 days or so, and we're starting to

break below it ahead of the CPI report. What is today's action telling you? Hi, Sarah. Yeah, we're in a perfect downtrend, right? It's so technical that way. You know, if you look at the S&P, you're sitting right below the 4,200 level and the 50-day moving average is moving down and the 100-day moving average is moving down and the 100-day moving average is moving down. So it all points down to further, maybe again to 3,815, that last low or lower. And it's really the reversal of last year where every dip was a buy, it's now every peak is a sell.

And so I think this is the sentiment here. Obviously, the ECB outcome doesn't help. I think there was also a lot about fears of eurozone slipping eventually into the recession sooner. And that's, I think, weighing on markets again today, too. So we're sitting in this downward momentum. Energy is faring a little bit better than the rest. Well, I don't know. Energy is down a bunch today, too. Now, consumer staples, industrials may be doing a little bit better. But are you still in the reopening plays?

Does that still work, even in this kind of downtrend that you describe? To an extent, I think. I mean, we have to be encouraged that Asia is reopening, that challenges for China, but it starts to reopen. Take example of Japan. There's actually a big reopening there, a lot of tourism. So some of that global reopening play is still there that you could have as an offensive play, but you have to otherwise be completely defense. It's everything about high dividends, high cash, high cash flow yielding type stocks,

very low beta stocks in order to weather this environment. They basically hug the flat line, if you will, right? So offense-defense strategies flat on the year so far, but the indices are down 15% or more. So I think that's what you have to stay in until the bottom does hit. And that's an inflation story. It's really clearly about what will happen tomorrow and the following reports that will determine, I think, the bottom of the markets. So, Mike, when people ask you, how long is the average correction or bear market in history? And what does that tell us about where we are at this point in it? Because it feels like

we've already endured, investors have already endured a lot of pain, but everyone keeps saying that we could see another big correction. Sure. Well, it's been five months. I mean, if it's a cyclical bear market, I think that, you know, on average, they go a little bit less than a year. You know, this gets into some semantics here. We got down to barely above a 20 percent decline. That's not really the marker of whether this is a bear market or not. To me, it's the breadth of the damage and the fact that it's been going on for months. You're in this defined downtrend, as Ben was saying.

So I don't think there's a way to put a marker. To me, the big, big debate is not so much, oh, how long does this typically last? It's if this is a rerun of the major 2000 and 2008, more 2000 style, multi-year, multi-wave downtrends associated with a recession, that's a big if. Then, you know, stop talking about where the bottom is. But if not, then this is some kind of major valuation reset that often happens at the outset of a tightening cycle. And you just needed to take care of some, you know, expensive pockets of the market and adjust for lower growth. Then arguably, you know, you're kind of there and, you know, you're down 15, 16, 17 percent or something

like that from the intraday highs. The lows that we saw were about 20%. If there's a retest that was, you know, the lows were three weeks ago, if we retest that pretty soon, that's not going to be an unusual pattern. And that's down whatever it is, a couple hundred S&P points from here. And theoretically, it should work until the Fed tightens too much, until the economy really starts to feel the pain and then could signal a policy shift. Ben, which one does it feel like to you? Something long, more prolonged, multi-year in terms of a downtrend, or you're just waiting for a buying opportunity until the work is done? Yeah, I'm still on the latter camp, Sarah. I think that I echo Mike's comment. We have seen a lot of

damage underneath, and it looks a lot like the year 2000, when a lot of overvalued stocks are down 70, 80 percent. So we completed that phase. The Federal Reserve is, I think, regaining some level of credibility in markets to get ahead of the inflation problem, but has more work to do. So we have to accept that the economy will slow down, maybe skirt towards the edge of the recession. But we are also coming off a pandemic, and that's a very different dynamic.

So I think combined, it's more the latter camp. You're going to see some overtightening, but eventually if the market settles out, it does find that bottom, I think. It's just not going to be at these levels. It's going to be somewhat lower. Ben Emmons, thank you for joining us on this final ugly hour of trading here. We've got two minutes to go. We are down now about 600 points on the Dow, Mike.

What do you see in the internals? Yeah, it's quite skewed to the downside, Sarah. If you look at the New York Stock Exchange split, it's close to 10 times as much or more than 10 times as much downside volume as advancing volume. So this is a little bit of a pickup in the general level of activity and selling pressure ahead of that CPI number. Clearly, people stepping back from risk, not wanting to go in there exposed to that number tomorrow. Again, it could turn out to be a positive thing in terms of the setup tomorrow.

Take a look at the refiners, the Global Oil Refining ETF, CRAK. It has tested a multi-year high. The all-time high is back in 2018. So far, pulled back from that a little bit. Maybe we'll see if we get some relief in there. That shows you tight refining capacity, upper pressure on gasoline prices that we know all about. The volatility index has perked up, but it's still just above 26. Not really doing much, but the range has been from the mid-20s up above 30. And so you see kind of around that floor, Sarah.

As we go into the close, Mike, even Devon Energy just turned negative on the session. That was the only S&P 52-week high of the day. The S&P is down 2.35 percent right now. And the market action has been pretty ugly and bearish just in the last hour of trade or so. Every sector, as I mentioned, lower. Communication services down the most, down 2.7 percent. It's the media names. It's the tech names like a Meta, like a Netflix, Warner Brothers, Paramount, all weighing on that group. Technology has.7 percent. It's the media names. It's the tech names like a meta, like a Netflix,

Warner Brothers, Paramount, all weighing on that group. Technology is also done sharply. That is why the Nasdaq is underperforming on the day. And you're seeing it across the board. Consumer Staples holding up the best, but that group is down one and a half percent. There goes the bell. We are down 2.4 percent on the S&P, two and three quarters percent on the Nasdaq. That's it for me.