Closing Bell - Closing Bell: Out of the Woods? 03/14/23

Episode Date: March 14, 2023

Stocks rebounded in today’s session – so investors are wondering if we are out of the woods yet? Adam Parker of Trivariate gives his forecast. Plus, billionaire investor Carl Icahn gives his take on the market, Fed and his latest activist target.  And Oakmark’s Bill Nygren reveals how he is trading the financial sector amid all of the uncertainty of SVB’s collapse. 

Welcome to the Closing Bell. I'm Scott Wapner, live from Post 9 at the New York Stock Exchange. This make or break hour begins with a bit of a stress relief for stocks, rebounding after the SVB shock. Investors now wondering what it all means for the markets, the Fed, the economy, and so much more. We'll ask billionaire investor Carl Icahn that very question in just a few moments when he joins us live. Here's your scorecard with 60 minutes to go in regulation. Major averages, they are all still in the green today. A really nice day for the Russell. Not quite as strong as it was, but nonetheless, that strong regional bank rebound is helping small cap stocks today in the Russell.

Yields reversing their recent declines as things stabilize a bit as well. There's the two-year 423. Brings us to our talk of the tape. Are we out of the woods for the time being? Simple question, maybe complex answer. Let's ask Adam Parker, the founder and CEO of Trivariate Research, a CNBC contributor as well. It's the question of the moment. What's the answer? No. We're not out of the woods. To what degree? Well, I mean, you know, it's multifaceted. I mean, even before this, I'd say a week or two ago, you know, we were telling people, look, you know, everything looks worse than it did three months ago, right? Valuation, speculation, interest rates, earnings expectations, all that cocktail.

You throw in here lack of confidence, I think it's a problem. I think everyone I know and I've talked to over the last five days kind of nonstop is moving deposits out of any bank they're worried about to one of the big three or four so is it over just because the things are bouncing today no it's not over uh how could it be so if you end up you know if you're a cfo or you're somebody you know in charge of making financial decisions for your organization you find out a month or two from now that one of the banks you're with isn't in business, you're kind of a chucklehead. You didn't move into something safer, aren't you?

What is that, a sample of two people who are moving money out of a smaller bank? Probably about 100. I don't want to make any... 100. I mean, every private equity investor, every private equity fund, every hedge fund, people since the middle of last week have been thinking about their balances and where they should move them and what bank's safe and what's not. You know, there's just the risk reward of going to something. It's just skewed asymmetrically now. So do I think regional

banks, do we need so many of them? No, we don't need so many. We have a very weird country, right? In the top 3,000 U.S. equities in our database at Trivera, there's like 300 banks that are public. Do we need 300? So the old system of you knew you're, I go see Scott at the corner. I'm like, Scott, he's my banker. That's become a bit of an anachronism. I don't understand what you're calling for. Are you thinking there's going to be a broader crisis within regional banks? I think several.

I don't want to have, like, I don't want things to get too, like, hyperbolic in, like, what's going to happen. Oh, my God, I'm 100 people pulling all their stuff out of the bank. But I just think more and more of these things are going to have problems with their deposits. I'm not, you know, you know me. I'm not, like, histrionic about it. Do I think that J.P. Morgan is going to be a share? Well, you're doing it in a very mellow sense. Do I think it'll be a share gainer?

Look, I think really there's two issues. One, and I don't know how, you know, we can go into the bank nerd stuff, but basically this whole to maturity part of the balance sheet that you're not allowed to access, if rates continue to be elevated versus where people made investments, then the banks are just way too expensive. You know, we wrote in our note, I think you saw, there's like an intellectually honest sort of loss adjusted price to, you know, a tangible book. So if you're going to be... The Bank of America is too expensive. The stock was, wasn't the stock below book value?

No, absolutely not. No. I mean, the stock was trading around one and a wasn't the stock below book value? No, absolutely not. No, I mean, the stock was trading around one and a half times. At or book value? One and a half times tangible into last week. If you look at what they reported in their December 2022 10K, it was around $630 billion or so of hold to maturity assets, about $100 billion loss on those. Their book value is tangible books $175. So then the things...

You use a different methodology than many. But everyone looks at price-to-book or price-to-tangible book. I'm just saying if you adjusted for the mark-to-market losses on a bank like that, then it's just much more expensive on price-to-tangible. It's not. Bank of America's fine in terms of viability. Don't misquote me in any way. I'm just saying it's not as cheap as you think it is on price to tangible.

That's all. We wouldn't misquote you at all. You said the words on TV. The words are the words. Yeah, the words are the words. And I did not say that there was a viability problem with any of the big banks like that. But I think some of the marginal regional ones where they have sort of, you know, people were worried about deposits.

So what is the takeaway then? What's the takeaway for the market? When you have this kind of volatility and uncertainty, it should be rewarded with lower multiples. It's bad for the stock market. And I think the stock market's going lower. I think it's going 5%, 10%, 15% lower from here because almost all the major things I look at look worse. Now, it could be there's some big positioning argument. What are you rooting for with the Fed?

That's the conversation I've been on all day since CPI. What are you rooting for? Are you rooting for 125 bps and then a pause? Are you rooting for them to cut? I had somebody on the phone last night admit that if they don't cut by 100 basis points, the banking system doesn't make any sense. So I think there's so much smart people that are confused about what they're rooting for. That uncertainty to me means lower multiples. Forget about whoever is rooting for what. What should they do? What do you think they're going to do? I think they should pause.

Right now? Yeah. Kind of see where we are. And certainly I don't think they should raise anymore. I think the CPI is really an interesting metric. And the more all of us focus on in the last couple of years, most of the things that people need have deflated massively. You know, all the commodities,

look at Bloomberg Commodity Index, wherever you look at it. And then some of the things that, you know, are kind of more discretionary are still inflating. So I think you kind of have to parse it. The main thing that is an issue, which we talked about for a long time, is the shelter portion where, you know, home prices are still high and cost to borrow is high. So people are renting and that's propping up that owner's equivalent rent portion of CPI. But if you strip that away, a lot of things have deflated a lot, right? Oil and other products. But if I had to ask you that question last week before all this happened, I don't think you'd say they shouldn't do anymore. So are you profoundly changed as a result of what's happened? I think it makes sense for them to pump the brakes and pause. You have kind of a

crisis that causes them to, you know, I think take a step back and reassess. Last time you were here, you recommended financials as part of your sector ideas. Yeah. That's changed now? Well, good news is in my 15 years of being a strategist, I never once recommended regional banks. So I guess that feels good. We were recommending consumer finance, right? Discover, Synchrony, Capital One, et cetera. We wrote in our note this weekend, we probably would take that trade off. It went higher, it went lower. Net-net, it's been up. But I don't have confidence anymore in any of these things. And I just feel like, why should I be overweight at any financial institution at this point? With tight financial conditions, uncertainty about what the Fed's going to do, uncertainty about so many aspects of the economy, I just think the risk-reward skew to the negative.

All the way around. Yeah, all the way around and for financials in particular. I think the safest place is still going to be those mega-cap banks that you know are going to be around and probably gaining share. You've got to forgive me, but I've got to go. I've got a lot of stuff. Always good to be with you, man. Sorry, but yeah, it's a pleasure.

That's Adam Parker, Trivariate, joining us here at Closing Bell. Let's get to our Twitter question of the day. Are bank stocks a good buy right now? It's a simple question. We want your answer. Head to at CNBC Closing Bell on Twitter. Please vote. We'll share those results a little later on in the hour. And we are just getting started here on Closing Bell. Up next, a legendary investor, Carl Icahn, sets his sights now on Illumina, getting ready for a proxy fight there. We also, of course, get his take on the post-SVB market,

where he sees stocks heading from here, what the Fed should do next week. Don't miss that. You're watching Closing Bell. We'll do it next. Billionaire investor Carl Icahn finding his latest activist target in biotech firm Illumina, taking issue with that company's acquisition of Grail, which specializes in cancer testing, the deal being contested right now by European regulators. Mr. Icahn nominating three people to that company's board and gearing up for a fight. He joins us now to discuss that issue and, of course, the state of the markets, the economy, the Fed. Carl, welcome back. It's nice to talk to you today. Yeah, good to talk to you, Scott. You know, we're going to get to the Illumina thing in a minute, but just given where we've been over the past few days,

I want to get to the markets first, and I want your take on what you think has transpired here over the past few days from a market standpoint. Yeah, I don't think it's the last few days necessarily. I think we have some major problems are economy maybe they'll be fixed but uh... you have a useful to many many factors uh... we will provide you know bill is that these three and you know the rising

targeter hide let's all ships but yet a lot of people that are kind of not doing well obviously you know that that worked for the median householders as a as a about the basically and you uh... look at what is going on there i think

how will we have to rate interest rates sooner or later i'd i can't talk about next week or even next month, but inflation is the worst thing an economy can have, and I think people underrate that. If you look in history, every hegemony has been destroyed by inflation, or almost everyone. I mean, just go back to Rome. That's what happens. And what our major problems i think it

it does the car me right now it was only the shepherd on the corporate level you know if you don't politically and i'm not going to get into politics but i think you you do feel that in washington's traffic nobody knows what's really going on. But forgetting that, in our corporations, and I've lived with that all my life, basically, and companies today really have, with many exceptions, many, many exceptions, leadership

is worse than mediocre. And that's why we are so successful. I mean, not because we're geniuses, but because you go into a company today, and that's what we've done over and over and over again, and it's really horrible what you find in many of them. We'll get to your latest one, as I mentioned, in a minute, but I just want to drill down on this for a moment. So you think the Fed should keep going?

You think the Fed should continue to raise interest rates despite what we just witnessed with the bank failures? Well, the way they go together. I mean, bank failure is a manifestation of the leadership in our companies and the way they spend money. And you really have a moral hazard if you just keep bailing them out. In this case, I'm not going to opine on trying to save some poor people, although the depositors in Silicon Valley weren't exactly poor people. But that's not the issue. The issue is you have to stop inflation. So you say,

do we keep going on? I don't think you have a choice. If you don't keep going on, I really believe that the problem of inflation can become such that it's very difficult to get out of it. Hey, maybe there's something we can do that happens. Maybe it's a miracle, but you do have inflation. I mean, look, if you stop, you know, if they don't raise rates next week or next month, I don't know. But I really don't think this is a choice, Scott. I think you can't have inflation in this country. You're paying the price.

You know, if already got out of the business you spent the family wealth and you just keep spending at the end you pay the price for it i mean and that's what this country's done i want your reaction to what citadel's ken griffin told the ft about this very issue in which he suggested that the government should not have bailed out all of the depositors. He said, quote, the U.S. is supposed to be a capitalist economy, and that's breaking down before our eyes. There's been a loss of financial discipline with the government bailing out depositors in full. What do you make of that statement?

He also goes after the regulator, but what do you think about that? I can't opine on what Griffith is saying there, because I don't quite understand where it goes. But I am saying that he's right, that our system is breaking down, and that we absolutely have a major problem in our economy today. And I'm not going to opine on whether or not you bail out a bank or something like that. But you can't have the country feeling that it doesn't matter if they save. It doesn't matter because they could spend all the money they want. You could do whatever you want because the government will bail you out.

He's right about that. You can't have that. Now, should you bail this bank out? I don't know. That's a part of it. I don't like to opine on things that are not really that conversant. But I do agree that the system is breaking it out. One of the major reasons, not the only reason, obviously,

but one of the major reasons is that you don't have good corporate leadership. So you say, so what? But I'll tell you so what. If you don't have good corporate leadership. So you say, so what? But I'll tell you so what. If you don't have good corporate leadership in companies, yeah, when the tide is high and things are great, it doesn't matter. And all these guys that run these companies are partying and having a good time and giving themselves bonuses. But their agendas are different than the people who invest with them.

You know, they're looking to get their bonuses. And I tell you, I live it. So I go into it, and there's a reason that we make so much money. I mean, just to make the point, over the years, in 2000, if you invested in IEP, you annualized. You made it, and reinvested the dividends. You made an annual return of 15%. And the closest is Buffett, who I believe made around 9%. S&P made 7%.

But why? Because we go into companies and clean them up. And there's so much to clean up that it's getting much worse now. We're one of the worst countries in the world as far as corporate governance goes. And I can go on and on about that. But yes, I think the whole economy, the government is sort of right. The economy is breaking down. But I don't think he's right because you bailed out some investors.

But I do say he's right in the sense that our economy is breaking down. I don't understand the capital, how you define capitalistic system. I know that you've been fairly negative on the market for a while. You've been hedged, and I think you had given us an idea of how your positioning looked. I just had a guest come on and suggest that we're not out of the woods quite yet. You now have, you know, the stock market had a nice gain today, which was a bit of a relief rally, obviously, given a lot of that up. Do you feel like, you know, we still have some tough sledding ahead in the market?

And how are you positioned as we're having this conversation today? Yeah, my book is very easy. I try to keep hedged, right? IEP keeps hedged. So I don't, you know, I try not to bet on the market or pick, you know, the market's going down tomorrow. But sometimes I do talk about what I think is going to happen over a period of six months, a year, two years. I remember being on your show, I think the last time, maybe the last couple of times, a year ago, six months ago year to you don't remember being on your show i think the last time that would be a little as a couple of a year ago six months ago a bunch of other i think the same thing that this market could

really get hurt and i was right on that but big deal you know idea you really you can't make a living picking the market you know day-to-day month-to-month but if you ask me how I'm hedged, I've never, you know, the book is more short than long. And that's the way I've set it up. We have, at the law positions, one says, for the most part, we're going to be activists in or are activists in. So I figure, you know, I could do better in those companies than the market.

And, you know, you have some bad times and some good times. It doesn't work day in, day out. But that's how I feel. Well, if you're more short than long, you, I think at one point, your biggest, maybe your biggest position overall, but certainly your biggest short was commercial real estate related, which some are now suggesting is potentially the next shoe to drop in all of this. What are your thoughts? Well, we were in that three years ago, as I told you, three, four years ago. We bought that CDS of complicated derivatives audit. And yeah, they're coming to fruition pretty good.

But it takes time, right? And it's a very complicated derivative. I wouldn't suggest the average guy even thinks about doing it. But our real estate markets were completely, totally overvalued. These malls were completely overvalued. Even if you didn't have this mess, Amazon was taking a lot of business away. So you look at things simply. I mean, and so I said that. Today, there are actually some good companies around.

There are some bargains around in the meat and potatoes kind of companies that I like to be in. But generally, I think you can't justify buying, you know, some of the S&P stuff, these technology stocks and whatever, and they can't justify a price of value, meaning that with higher interest rates, which I think are here to stay, you really can't justify some of the prices of these tech stocks where you looked at the present value and said, well, you're better than an interest rate.

That was true when you were talking 2% interest rates, but not now. And even there, these tech stocks, they're run by people in many cases that shouldn't be running companies. I mean, I'm not saying they're not bright people, but I am saying they should not be running companies. And many of the ones that do run them, I don't think have the trust of shareholders to put money into them. Have you been buying anything in the last couple of days? You know, maybe bank-related, regional bank-related? Have you used any of the dislocations in the market to actually buy some stocks?

The only thing, and I'd like to get to it for a moment, is this Illumina, which I think is a quintessential example of what's wrong in corporate America. I mean, I'll ask you a question. I'd just like to say, if you own the farm, or you inherited a farm, and you found out that the manager of your farm took your best equipment and sold it to somebody that they knew, and then went back to them and bought it back at eight times what they sold it for, would you be justified in going in and questioning them and finding out what that is and not be satisfied with it? Well, that was business judgment. I mean, that's what goes on in corporate America. That's what went on at Illumina.

Illumina's a great company. But the stock lost. The management in that company managed to lose. goes out of corporate america that's what went on a little bit of a little bit great company but the fact the bad is that my company managed to lose a big deal the last year and a half ago fifteen billion dollars of shareholder value of the stock market fifty billion i think i don't really feel to try to buy it the jailer of the discharge rate

what the hell does this show to be made a lot of fun i got a flat corporations hard-line i don't know how these words Well, it's business judgment. What the hell does business judgment mean? And that is what our corporations hide behind. They hide behind these words. So you own... I mean, I own a chair. This is Sam Cometary. You own 1.4% of the stock. And your issue is really with their acquisition of the cancer testing company Grail, correct? Because they did it in your contention,

knowing that the EU was going to fight it and be against it. Is that the principal part of your argument? Yeah, well, the whole argument is it's insane because they went in and paid a huge price. So they had sold to a group of savvy investors. They sold the same company. They own this company, Grail. They sold it to them a few years ago at a very low price. The company hasn't really had any revenue since then. It's a good company. I'm not saying it's not a good company with some good ideas, but had no revenue since then.

They went back and gave these guys basically a profit of $5.5 billion to buy it back when that company didn't even have FDA approval. Okay, that's bad enough. But they did it. They did it after the EU told them that they weren't going to let them do it and told them they didn't want them to do it. And how do you do that without going? It's laughable. How do you go and spend it? I can understand if they could get it back for a billion dollars,

$800 million, okay, let's take a shot. But they spent $8 billion for it. And the thing has no revenue. So they closed over what the EU tells them. So the EU stopped them in their tracks. The EU won't let them touch this company. It's costing them $800 million. The EU is making them put in $800 million. So the stock went down about 70%, 80%. But how could you justify that? And so you say, well, judge, this is judgment. It's time. I think we're moving in this direction, that the courts are not going to accept this judgment anymore, to the extent they do. I think these guys violated their fiduciary obligations.

I think they were grossly negligent. And to take the attitude of, you know, we were, it's just that yesterday, we had somebody say, we want to do, we're here. We don't think I can't understand something about understanding the company. And we're not saying we understand. We're not going to tell them what to do with science. We're telling them, let us go in. We fixed up numerous companies. We just, the same guy that was putting on that board just did. Yeah, okay. So we just putting on that board just did. Yeah. Okay. So we just did some of those things just now. Let me give their response, okay?

Let me give their response. So you want three nominees on the board. Let's just get that out there. You're nominating three people for the board. In some respects, I would ask you, you know, you got 1.4% of the company. Why do you think that justifies having three of the nine people? I answer that. The chairman of the company doesn't know very much about science. And in my opinion, and he doesn't have any stock. So having no stock justifies being the chairman of the company and being on the board. So I don't see why you have to relate how much stock we own. And we own a lot of stock. I mean, it's not that we don't own.

We own much, much, much more than all the board members combined. Like you just said, you know, you know, I bet 2-3% because, you know, the company's a huge company, even though they lost a lot of money. So the whole board owns 1-1%. Are they justified

in being on the board then? I mean, if you use that logic. But I wouldn't use that logic because, you know, they're all good board members that don't own stock. But that logic is an absurdity. And everybody on our board, you know, that board doesn't have business acumen in my mind. Even the guys that are in business. No one that could do a deal like this has any business to queue in. And I'll tell you something, the stock went up.

I'm laughing, you know. People talk about when I did Apple, it went up like $17 billion, but Apple was a much bigger company that day. This stock went up $7 billion when they heard I was in it. Does that tell you something? Does that tell you how the shareholders feel about these guys? They say the company has responded. Let me give their response. They say that you're being, quote, unyielding in your demands, that any resolution should give you outsized influence and control.

They say your board nominees lack relevant skills and experience. Okay, so let me answer you get three-fifth so let's start with outside control i've got i would have three feet at a probably say they get out so i don't know i don't know if it gives you control but i think i could add three against twelve right it's also going to control

i do these regards because it's such a bad that we need three to influence boards. I know boards. Most boards are contrite when they do something wrong. Most boards you can maybe even with one or two you could do something. This board would be tough to influence with three because they are all, they all really look at this as nothing's wrong. It's amazing when you talk to them, you know.

They're like, oh, what the heck? I mean, we think it should be done. I said, well, it. It's amazing when you talk to them, you know. They go, what the heck? I mean, we think it should be done. I said, well, it's not your money, guys. And, you know, so I'll answer that, that we have to have that because otherwise we're going to get nowhere with these guys. And even with three, it's going to be hard to influence. But usually with three smart guys, the guys we have that are going on are very experienced in companies that are in a mess and have been put in a mess. And I think that the three is right. I don't understand control.

We're going to have three people out of 12. You do the mathematics. Right. I'm told that they I'm told, Carl, I'm told they've had numerous conversations and discussions with you before you went public. What did they offer you, if anything? You know, it's funny that they violated an agreement, so I guess I can't. We both agree we're not going to talk about what those discussions were. But they seem to have violated talking to you and all this about those discussions.

Well, I'm asking you what they this about those discussions. And we, I'm asking you what they were about. I just know that you've had them. I just know that they've had, you know, I really feel funny about talking about what went on at those discussions because we said we weren't going to talk about them, but it appears they talked to you about those discussions and,

and came to certain conclusions about them, which are ridiculous. I mean, so I don't understand the question. I mean, I don't want to go in verbatim exactly what they said and I said and they said, but I told them pretty much what I'm telling you. I mean, in a nice way, perhaps I wasn't as, I get a little strident sometimes, but I would tell you that it was basically the same thing. How the hell could you go and do something like this? That's really what the discussions were, basically. I mean, that's not telling a secret. And just pretty much what I said to you just now, that how I saw many violations over my

life of boards. I mean, even in Occidental, when their overpaid like crazy for a black belt but they weren't going to tell you that the power wouldn't have been the call for all of uh... a government agency with that kind of money when you put what you put in that kind of money and i did that in this case

you have been by the stock from people that she had told that they've stopped to and i i certainly chastised her but at least i mean nobody was close to what they're doing here and it's an absurdity what they're doing so that's what i basically told him that i maybe i didn't mention that you know but i i said that same the same thing you know so do you i want to get to the bottom of the do you want them have this company grail or or not They have a real problem now, even from a financial standpoint in my mind,

because they feel, oh, they can borrow any money. They're Illumina, and they can do it in this environment, knowing that this company's a quicksand now. They're not going to be able to. Where are they going to get the $800 million that they have, that the EU says they have to spend to fix this girl up? Girl doesn't have any income. This is what's amazing.

They don't have any income. They've got to spend $800 million in the next year. So I say what they should be doing, and I think most shows would agree with me, they've got a great company in the Lululemon. And they, you know, in gene sequencing, they should get rid of this girl that they own in a way, the following way, because they did it in such a way, so haphazardly and so amazingly, ridiculously, they put it in a way that if they sell it to somebody, it's going to be somewhat difficult, because they're going to have to pay big taxes.

Even if they have a big loss, I'm not going to get into how why this is. But they did it in a way that the guys that they sold it to don't have to pay taxes on their great gains. I mean, it's amazing. So they put out a... Let me say something. So what I think should be done is they spin it in a way with a rights offering. So money, so if you want to buy, so if you're a shareholder, you're suffering a lot.

So you can sell the rights to somebody that wants to buy it, or you could exercise your rights and be a part of Grail. And that money that you put in doesn't go to this company. Illumina doesn't need that money because they are making money. That money would go into Braille to do what Braille has to do. So the shareholders benefit by owning Braille at a cheap price and having a good management team in Braille. And these guys, Illumina, go back to what they seem to know best or think they know best and run their company. That's what should happen. Okay. So they've got 450...

I didn't even demand that they do that in these discussions. I didn't even demand that. I was really reasonable in what we talked about. However, now I'm saying that's got to be done because I realize how stuck in this thing these guys are. Okay, so we're making some news then on what your actual ideas or demands are. So they threw a 10K and said— I didn't make the demand. I want to make it clear. I guess with this discussion, that's the first time I'm saying basically what should be done, in my mind. Okay, that's what I mean. I'm certainly going to listen to the other shillers.

I'm going to call other shillers, you know, big shillers and see what they think. And if the other big shillers like what they're doing and I don't go to go with them, hey, so be it. You know, I made a profit in the company, but I think it would be crazy to let this company go with this management team calling all the shots. I mean, because they say that they've recorded a $450 million reserve, which is the amount that the EU may fine the company. That's number one.

And they also give a statement suggesting that the divestiture work, if it needs to go in that direction, is already underway. That's in their statement. They say it's already underway. Now, I suppose they could... Can I speak? Let me finish real quick. Let me finish real quick. That's nonsense. Let me finish real quick.

The divestiture is going to take years to do this. Because we're going to go to court and find out, okay, what's the defense? What do we have to do? How do we do it? They'll argue over that for two, three years. I am telling you, I've seen it. I've seen these legal things. There's never going to be, the EU feels very, very strongly about this.

And I'm not saying they're wrong, by the way. I mean, I can see the EU's point here. I'm not getting into that because I'm not a lawyer're wrong by the way i mean i could see the eu's point here i'm not getting into that because i'm not a lawyer i don't have it really studied it but they're going to go and they said they're going to keep these guys from doing this okay now in court if they tell them they could do it it was going to be something i think there'll be a diverse issue when they say on the way that same thing that they've been doing all along. They're obfuscating these issues. They don't think they have to tell you the facts.

They were the one to answer what I did, and it's completely wrong. This thing is not going to be done. This company is going to bleed and bleed and bleed looking ahead if they don't get rid of this albatross. It's not an albatross to other people that have money to take this company and make it work. But it's an albatross to these guys, okay, because the EU will not let them have it. I can understand a company that could go in. Even then, I would have been against this, but I wouldn't have fought it, I don't think. If they did this and the EU the use of time come on and then maybe make i think they all the play like crazy

but even then you could say well that's my business judgment what they did it is gross negligence at the least that may be worse okay okay so it i mean three theoretically they could win however unlikely you think it is. They may win the appeal with the EU. If that happens, will you stick around or will you sell your stock and leave? And if you do get on the board through this proxy effort or even through some sort of an agreement,

do you want the CEO to stay or not? You're asking questions I can't discuss on this program, obviously. But I will say this to you. You've got to understand what WID means. When you're up against an agency like this, as you know, First Energy we finally turned around

by going on, and we did a great job. These two guys that were going on this did First Energy. What I will tell you is W, they don't understand this. They really, I don't think, understand it all. And it's gross negligence for them because they blew $8 billion. And when they say they reserved $450 million, what about the $3.9 billion they wrote off already for this little venture that they got into. How much work did they do on it?

You know, when you talk business judgment, there's going to be more definition for business judgment. And I think this board might well be personally liable, personally liable for just ignoring this whole damn thing. And I think there's got to be, there's got to be looked into. But you can't let this, and this might be a watershed case in the future about what the hell goes on in corporate America and why there is no accountability. And by the way, Scott,

that's why one of the major reasons that we have problems in this country is the average worker doesn't understand what the hell goes on in the boardrooms. reasons that we have problems with this country is the average worker doesn't understand what the hell goes on in the boardrooms. And we really have problems in many, many, many companies, not every company. So that's why this might be a watershed case of what's going on. Okay. Let's leave it there. I got 20 minutes left in the trading session here, and I want to get back to what's happening in the market, because as you know, it's been volatile.

We'll talk to you again soon. Thank you so much for your time today. Okay, Scott. All right, that's Carl Icahn joining us there, Icahn Enterprises. Chairman, we do have the Dow, which as you, I think, saw during our interview, dip negative, is working on another gain here. We're up 157 or so on the Dow in what's been a fairly volatile session. Again, coming up, we're talking financials, the epicenter of all of this. Oak Mark's Bill Nygren joining us with how he is

positioning. Talk about his holdings in that space when we come back on Closing Bell. All right, 15 minutes to go before the Closing Bell. Let's get back to Christina Partsenevelos now, who has a look at the key stocks to watch today. Christina. Well, shares of AMD are leading chip makers higher today, surging about 5.5 percent on the launch of a new fourth generation processor for networking, security and storage. There was also a key bank note out today. And analysts are pointing out that cloud demand is getting stronger, led by AMD's 10 percent month over month growth just in February. That stock is up over 33% year-to-date.

And we're seeing shares of Meta also jumping today, about almost 6% after announcing another 10,000 job cuts after the company already laid off 11,000 workers back in November. Recall, we know this, that Mark Zuckerberg has called 2023 the year of efficiency for Meta, and investors seem to like the cost cuts. The stock is up almost 60 percent just this year alone. Scott. The year of efficiency. Christina, thank you. Christina Partsenevelos. Last chance now to weigh in on our Twitter question of the day. Are bank stocks a good buy right now? Head to at CNBC closing bell on Twitter. The results after this quick break. Let's get the results of our Twitter question. We asked are bank stocks a good buy right now? The majority of you saying yes. Sort of split, but we'll take

the majority. 52 over 48. I'm going to ask Bill Nygren that exact question next when we take you inside the Market Zone. 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, Bill Nygren of Oakmark on the rebound in bank stocks. Mike, I begin with you. Interesting action here on the tape over the last 20, 25 minutes or so. Bit of breathing room just because obviously seems like the bank stabilizing a little bit. Able to rally. No further blowups that we know about. And then, you know, a little bit of

a general sense out there that maybe we're on target for a palatable size Fed rate hike next week. The thing I would point out is the highs of today in the S&P were almost exactly to the point of the highs on Friday. So it seems like we're trading pretty mechanically here within this range until we wait and see. And until the two-year note yield stops moving 20 to 30 basis points a day, you're probably not going to get fully comfortable and have real traction in this market, even as we hold the bottom end of this range. So we're back into watching, you know, extreme rate volatility and the impact that that has on the trade, which is not, wasn't good the last time it was extreme, and here we are again. We don't know if it's a passing storm in that direction

just until we get a little bit of a fix on what's happening next week with rates. But there was a massive short covering rally in the short end of the Treasury curve yesterday, and it still seems like there's aftershocks to that. All right, Bill Nygren, famed value investor, joining us right now. So Bill, we've absorbed these events now over the last few days. How are you feeling about some of your holdings, the bank stocks in general?

Are they a safe place to be right now in your mind? Well, thanks for having me, Scott. And if I was allowed to tweet investment opinions, I would definitely have been on the side of the, yes, it's a good time to invest in bank stocks poll that you conducted. I think it's important for people to understand just how different SVB is or was compared to other bank stocks. Not a diversified source of depositors. Almost all of them uninsured. They had a very large investment in long-duration securities,

so much so that their book value would have been negative if all marked to market. And you contrast that with some of the names that we own at Oakmark that sell six to eight times earnings, like a Capital One, Ally, Bank America, First Citizens. And those have diversified sources of depositors. They're almost all individuals. Over 80% are insured, so under $250,000. They're mark-to-market. Book value is significantly positive. I just think they're in a very, very different situation than SVB. And as you'd expect at Oakmark, we've been in contact over the past two days with almost all of our bank holdings, and the consistent message we hear is that customers are behaving as they normally would.

It's business as usual. You know, I am curious, though, because let's just take Bank of America and Citi. And I'm just wondering if, in your mind, the investment thesis or paradigm has changed at all as you get your arms around what may happen next in terms of more regulation, higher interest rate on deposits, which has an obvious and immediate impact on net interest margin, which is so often cited as one of those key drivers of profitability for the banks. And if that is materially changed, then I can't imagine you wouldn't be thinking about what happens now. Well, we would agree that if interest rates go higher, it's likely that the cost of deposits go up.

But it's not a one-to-one ratio. The banks throughout most of history have passed through less than 100 percent of the changes that we see in treasury rates on the deposit side, but on the loan side, that gets passed through more quickly. So yes, there could be a short-term drag on net interest margin, but we don't think that affects the long-term value of the companies at all. Do you think that loan growth is going to be impaired as a result of this? I can't imagine that it won't be in some respects. Well, I think a lot of what we've seen over the past week has made the consumer more fearful and probably slows things down a little bit. Maybe that gives the Fed some room next week.

But these companies, the story for owning these stocks is not dependent on unusually high loan growth. It's the slow growth in net income, slow growth in revenues, slight improvements in efficiency, leads to reasonable net income growth and return of capital to shareholders makes the total return on these stocks better than an average company. And you're paying less than half the market P.E. multiple. You know, it, look, people have different metrics

in the way that they look at stocks and decide whether they're cheap or too expensive. And he suggested that Bank of America was too expensive in the current environment. I said, well, it's, you know, it was ad or even touch below book in the slide. He's like, no, it wasn't. So everybody has their, it's always in the eye of the beholder. But how would you counter that? Well, we think Bank America is one of the best run banks in the country. It's got some of the strongest, most durable deposits. So a tremendous deposit franchise. And on current estimates, it's selling at just a little bit over eight times earnings. So we view it as a far above average bank selling at a too large discount to

the S&P 500. We think it's a really well-managed company. Hey, Bill, that sound effect was a two minute warning. I'm going to have to let you go. We'll talk to you again soon. I so much appreciate your time. Bill Nygren joining us from Oakmark as we count down to the close here. Mike Santoli here for his last word to 321 points up on the Dow now better than one percent on the S&P. I get the volatility, but wow. And just the last 20 minutes kind of jumpy, within this range. It's a little headline-driven, and we have an expiration coming on Friday. A lot of things people are looking at. I think the theme that's been pretty consistent the past two days is the market is reacting to the real disruptions in financials

and this idea that there might be some other kind of treacherous capital flows going toward those companies that generate capital and away from those that consume it or might have it at risk. Second day in a row, Microsoft's going to be up more than 2%, having nothing to do with Microsoft, really, unless you're more excited about the new version of ChatGPT. So it really is this trade. People are willing to migrate toward the mega cap growth stocks that are self-financing and all the rest. We'll see how long that lasts. I'm not sure that's going to be the trade of the year, but it is a handoff from buying steel stocks, you know, at the beginning of the year and the industrials. Now, semis are still holding up OK as well. So for now,

it's movement within the index. It's not sort of a game over. We have to get out because all of a sudden a recession is more likely. But very wide swing factors in terms of what it's changed about potential Fed policy and what it's changed about, you know, just the underlying growth dynamic in this economy. You mentioned Microsoft, Alphabet, Meta, obviously, Meta announcing those additional job cuts. Maybe some looking at that as cover for others in that space to announce more themselves. That's going to do it for us.