Closing Bell - Closing Bell Overtime: 3/31/22

Episode Date: March 31, 2022

Despite a late-day sell-off, major averages posted their first positive month of the year. Can that momentum continue? Liz Young from SoFi and Stephanie Link from Hightower discuss. Plus, breaking news on Activision! Dave Michaels from the Wall Street Journal reports that authorities are investigating a meeting between CEO Bobby Kotick and a trader. And, Chinese internet names are getting hit hard this year, but Eduardo Costa from Calixto Global Investors says now is the time to start buying.

All right, Sarah, thanks so much. Welcome to Overtime. I'm Scott Wapner. You just heard those bells. We are just getting started, of course. Let's get right to our talk of the tape. That is the way we ended the strong sell off to end what will still go down as the first positive month of the year for stocks. The question, though, now is what this means, if anything, for where we go in this new month of April. Let's ask SoFi's head of investment strategy, Liz Young, plus CNBC contributor Stephanie Link, chief investment strategist and portfolio manager at Hightower, and Chris Senyak, he's the chief investment strategist at Wolf.

It's great to have everybody here. Liz Young right here at Post 9. This is not the way that you want it to end what was a pretty strong month for stocks, is it? Not the way you want it to end, but after everything we've been through to really come through this quarter and still only be down 5 percent on the S&P, not so bad. So I think the first quarter was this trifecta of bad news. We got hit with

a war erupting. We had inflation hitting new highs. We had the Fed start hiking rates. I think this quarter was as bad as it gets in the first half. So the second quarter hopefully is a little bit smoother. But look, things didn't get that much better, right? All we did was enter the hiking cycle. So I think some of that rebound we saw after the Fed meeting was a little overdone. Chris, there was this thought going into a new month that we had already borrowed some from April because of the strong month of March. Now, I wonder the way we ended, if it means anything to you about where we might go in this new month. I think it's really hard to extrapolate trends. You know, in the last week or two of trading, we had a big bounce as the Russian news de-escalated a bit.

And into the close, we saw, you know, probably some selling of names that hadn't done well, particularly as yields have been bouncing around. I'm very concerned about consumer as we look forward into the second quarter. Steph, do we take anything from this as we, you know, ask the question whether this momentum that we have and one day doesn't a trend make, of course, this new momentum that we feel like we have as we do enter April. Or do we once again get slapped in the face with all of the reality checks that still lie ahead? Well, look, I think today is quarter end. It's also the end of the bond buying officially. And we have a big jobs report tomorrow.

So I think today was just capitulation. Maybe it was some quant trading and that sort of thing. But, you know, you know where I stand on the markets. We've talked about this on Tuesday. We've talked about it for the last couple of weeks. We're at a trading rate, Scott, because we're not going to get any answers on the war. We're not going to get much answers on inflation or the Fed. Right. I mean, hopefully we'll get something on the war, but I can't use that as a base case. And inflation is everywhere. Did you see that core PCE deflator number, the highest since 1983?

And then you look at home prices up 19 percent. They're a leading indicator for rents. And, you know, rents and wages are much more sticky. So if we get supply chain fixes, great. But guess what? We still have inflation and we still have the unknowns. And I don't think the Fed moving seven, eight, ten times is going to really change the inflation outlook. And the weird thing about the Fed most recently is two weeks ago they raised rates, right? And then a week later, Powell gets even more hawkish. Like what happened in that week period of time? So clearly people are concerned about the yield curve. I am concerned about it, too, but not everywhere on the yield curve is flattening.

If you look at the three months to tens, that's actually steepening. And if you listen to Steve Leisman, he was looking at the Fed funds and the two year that relationship. So, look, it's not it's not it's very confusing. And that's why I say it's going to be very hard to get any kind of multiple expansion. And I think earnings are going to be probably just in line. You concerned at all, Liz, about the defensive nature of the rally? We talk about utilities doing great. Yeah, Apple and some of the mega cap technology stocks did fantastic.

Those now are viewed as defensive plays. Well, I think the real question is, where are we in the cycle? And that's what the market is trying to figure out. If we're late cycle, then the defensives should be doing well. Things like utilities, health care, consumer staples. I don't know that we're definitively late cycle yet. But even if we are, late cycle can last a year, year and a half. And stocks can still do okay in that period. But you do want to have some of that protection in your portfolio.

But Chris, exactly what happened to end this day, people were definitely getting out of positions. Now, you could say it's month end, it's quarter end. But what if it's something more? What if it's a lack of belief that this rally was justified in the magnitude in which it ran up to begin with? Yeah, very much so. I mean, you know, it was a bounce off of positive news flow with respect to Russia. We were way oversold on the Nasdaq in particular, and people were caught off sides. I think there's a lot of positioning that explains the move we've seen higher. And then that, of course, feeds on itself as other folks are caught off sides as well.

The fundamental picture, I think, is actually deteriorating. I think earnings this season will be much more mixed. I think management teams will have much more cautious outlooks given high oil prices, uncertainty over inflation, uncertainty over geopolitics, and rising interest rates. What management team is going to come out and really give aggressive guidance into all these uncertainties? So I think we chop around a bit here. We think there's a downside bias still to the market. We're going to enter a seasonally weak period starting in May through October.

No reason to go out and put a lot of risk on remain defensively positioned. Steph, I mean, this is the debate, right? Is the picture deteriorating or not? Right. Chris thinks that it is. You know, there are some people who are going to say, see, this 550 points at the end just shows you that this thing is not built on a strong foundation to begin with. You look at earnings, which are coming straight in front of us and not the too distant future. Estimates for growth in January, 7.5. Estimates for growth now, 6.4. It's undeniable.

They are coming down. Well, they are coming down, and we expected things to come down from the buoyance pace from last year, right, and the lack of liquidity in terms of fiscal and monetary. But the job market remains really, really strong. I mean, the JOLTS numbers this week were astounding, up 43.5 percent year over year. Wages are up 11.5 percent year over year. So I think the consumer certainly is going to have struggles with inflation. But I think that there are they if they want a job, they can get a job and they can get paid more for that job. I know inflation is the is the negative

and we'll have to see. And that's why I think we're in this kind of range. We're going to be debating. Are we mid cycle? Are we late cycle? Like Liz just said, I don't think we're in this kind of range and we're going to be debating are we mid-cycle are we late cycle like liz just said i don't think we're at late cycle just yet again i think the consumer is going to hang in there and let's look at the jobs numbers tomorrow look at another i'm not we get another wage number tomorrow um look at the chicago pmi number actually beat expectations so there's so many mixes here scott yeah forgive me for cutting you off, Steph. I mean, one thing, you know, we've been fixated in some respects about technicals, right? Where the market was, where it was able to come back to. I mean, the Dow still closes right now with this sell-off of 550 to end the day below its 200-day moving average. That's not a great place technically, Liz, to be.

Now we come back and we ask the same questions we were asking of ourselves a couple of weeks ago. Yeah, I mean, it's not a great place technically to be, but you could also paint the other side of that and say it's a good place to enter, right? It's a nice price to enter. Now, if you look at what I think the signals are about where we are today, it's, you look at the housing market, right? The housing market is sort of starting to roll over, but there's a lag between when rates go up, when mortgage applications start to come down, and when things really relax. So there's still time between now and a softening where stocks can do okay. And some of those cyclical sectors are going to get hit harder than most. But I think what's interesting about today, all three broad indices were down about the same amount. So it wasn't necessarily something where

it was like sell tech, sell certain things. It was kind of sell everything. Right. And I don't know that that's something that sticks. I think that this was probably just like others have said, an end of quarter flush out. Chris, tech goes out ugly, obviously, today. Right. More than 200 points, as Liz said. Sure. It's one and a half percent, just like the Dow and the S&P. But tech was up a lot. The Nasdaq was up the most since the lows. How does that trade look, given what we just experienced this moment as we head into April? Yes, we're hitting some upper resistance on technicals for sure with the Nasdaq 100. All eyes are on fundamentals. If we had to be somewhere in tech, we would focus more on

software, which acts more defensive, whether we're mid-cycle or late cycle. We'd be avoiding semiconductors here, even though fundamentals there may seem somewhat strong. I think that's much more of a mixed bag. But with tech and comm services, 40% weight in the S&P, it's hard to have a strong S&P 500 environment without tech doing well. And we're worried that you could get into an environment where there was a pull forward of tech spending because of the pandemic. And if tech earnings start to be revised down in a material way, that could be a very tough headwind the market has to face over the coming quarters. Steph, you've been adding to growth. You've been adding to things like Facebook. You haven't any doubts about that? No, not for the long term. Not not at all.

I think that Facebook is a bargain here. I mean, they are a profitable company and they trade at nine times EBITDA. They're they're struggling because it's a show me story. Right. And they have to get reels right in terms of monetization. But they still have two to three billion monthly active users and daily active users. They're not going away anytime soon. They've got a 50 billion dollar buyback. I still like Fortinet. You know, we've talked about that on Tuesday because I love the network firewall space. And that a couple of weeks ago was down 16 percent and it's rallied.

So if it continues to pull back, I would add to that. I have no idea why Target was down four percent otherwise, other than the people just selling off consumer discretion. And as I mentioned, I don't feel so bad about consumer discretion. So that's one on my list as well. You've got to take a longer time frame in this kind of an environment. I do have a little bit of cash, so I can deploy on weakness. I think, Scott, by the way, people just forgot in the last three years, the market on average was up 28 percent. People forgot that you could lose money in this market. And the average long-term return is 10 percent. So, yeah, you can lose money in this market. You just got to be careful. And you have to look at the fundamentals. This is much more of a stock picker's market

this year so far. And I think it's going to continue to be throughout the rest of the year. Let me ask you this. I was just noticing, as we put on the screen today, yes, the VIX is up 7% on the session today. It's still 20. Yeah. What does that tell you about the activity, not only today, but what it means for tomorrow, literally and figuratively? I mean, 20 is a lot higher than 10, which is what we were used to before this, right? 20, I think, is probably the range we live in, somewhere between that like 17 and 22. And that's going to be normal to us.

You get up to 25, above 25, closer to 30. That's when things are going to feel really jittery. I think we probably see that again this year, maybe more than once. But that doesn't mean that we're going to have a huge drawdown of 20 percent or something catastrophic. I just think we're still in a place where we need to figure out what headwinds are going to hit certain sectors harder. I think we're pretty used to what the headwinds are. And the Fed has us ready for a very hawkish year. I think there is a decent possibility that they have to make a dovish pivot at some point mid-year or even in the third quarter,

and that's a boom for stocks. I don't know, Chris. You know, Tom Lee was with us saying, well, the lows for the first half of the year are in. Do you buy that? Doesn't feel so great right now. I don't buy that at all. I think we'll see lower lows in the second quarter here. You have a seasonally weak period of time. You have very choppy earnings. And the consumer is starting to weaken. If you look at the Consumer Conference numbers that came out on Tuesday, they look at future expectations, less current conditions. And future expectations are very low because of inflation.

Real wages are negative. Even though wages are up 5%, inflation is higher than that. And I think higher gas prices, if sustained, will continue to weigh on a lot of parts of consumers. And the high-end spending, which accounts for almost 40% of the economy, when folks get their statements for bond losses and stock losses, it just slows down spending. And now housing is softening as well so there's just a a lot of events that make it i think a a choppy environment in q2 and no reason to stick your neck out i think as stephanie said you have to use weakness to scale into longer term

positions of high quality companies you have to look at balance sheets again and make sure the companies don't have too much leverage look in at that ugly picture right next to you right now. And that the three major averages and how we finish this day. Dow down 550 points. Still will go down as the first positive month of the year. The worst quarter, though, for stocks in a couple of years. That pretty much tells you everything you need to know. The great comeback.

And still, it has been rough sledding. Guys, thank you. Liz Young, thanks for being here. Steph and Chris, we'll talk to you again soon. We do have breaking news on Activision Blizzard. The Wall Street Journal now reporting that authorities are investigating a meeting between Activision CEO Bobby Kotick and a trader just days before a large bet was made on Activision shares. There are big names involved here. Joining us now on the phone is one of the reporters who broke the story. Dave Michaels, our own Steve Kovac, is with us as well. Dave, what do we know? Yeah, good afternoon. So, you know, what we reported this afternoon is a follow-up to a

story that we broke a few weeks ago in which we reported that Alexander von Furstenberg, Barry Diller, and David Geffen made a large options trade on Activision a few days before the Microsoft Activision deal was announced. And today we reported that one of the facts that authorities seem to be interested in is a meeting that Alexander von Furstenberg had with Bobby Kotick, who is the CEO of Activision, approximately a week or so before this this this trade was arranged. And what is what is Mr. Diller and some of the others? As we said, there are big names involved here. What are they saying? Well, Mr. Diller sent us a statement in which he disavowed the possibility that there was any thing wrong or any material, not public information communicated to Alexander von Furstenberg at this meeting. He said it was a social, you know,

meeting between Bobby Kotick and Alex von Furstenberg and that, you know, he would not, Barry Diller said he would not get involved in fraud. So he is, you know, and he said this before to us, you know, this was a lucky bet that they made. They didn't know there was going to be this merger announced. It was, you know, completely a coincidence. But it is, it was a very large trade, at least by the standards of most people. And, you know, from our reporting, you know, we understand that both the DOJ and the SEC are investigating. So it's interesting that that's where I'll take it next. I'm quoting from your story now. You say that Mr. Kodak's status in the investigation could not be learned, that he has not been interviewed by law enforcement authorities. Do we know why? Well, it could be that this is quite early. It is rather early

in the investigation. And one theory would be that the investigators are talking to the traitors first, right, and trying to establish the facts from them and from other records. And then they would move on to trying to interview Bobby Kotick if they thought they needed to. And when we said we don't know the status, his status in the investigation, it just means that, you know, we don't know how the authorities see him right now. You know, we don't know. We're not we're not implying that he said anything untoward to Von Furstenberg. But it but it appears that at some point the authorities would probably have to speak to him. You note that that Mr. Kotick and Activision have been under and you use these words intense scrutiny. Steve, you know that as well as anybody from covering this industry. And the glare has been on Bobby Kodak and the culture of Activision long before news

of this potential deal emerged. Yeah, that's right, Scott. So what's going on here is this is coming two days after Activision made an agreement with the EEOC to create this $18 million fund for claimants of sexual harassment and misconduct to kind of come forward and they can settle from that fund. On top of that, the board is telling me, as of yesterday, they put out a statement to me saying, look, they still, despite all these allegations, they're happy with the changes the company's made since they all first came out and they're backing Kodak through this's made since they all first came out,

and they're backing Kodak through this. So this is separate from the issue that we were just talking about in that report, but the scrutiny just keeps piling up. There are lawsuits separate from this EEOC agreement, even, with the famous Hollywood attorney Lisa Bloom representing at least eight women who are coming forward with really serious allegations about what has gone on at this company. And they are calling for him to be fired. They think they can get the courts to fire him. That's probably not true.

But at the same time, they're coming after him from this end because of the culture that they allege was fostered at the company, Scott. Didn't I also see a story today that some pretty prominent U.S. senators were asking regulators to block this deal in part because of the because of the culture issues at Activision. Yeah, there is a group of, I think, four Democratic senators who asked the FTC, which, by the way, the FTC is already reviewing the transaction, the Microsoft acquisition of Activision. But they're saying, hey, on top of all that, you need to look at Kodak's, the culture that Kodak has fostered here and all these allegations that have piled up and take that into account. I don't think the FTC is able to squash a deal like this because of no matter how bad a company culture may be. I don't know if that really rises to the level or the FTC's authority to take care of that. But it feels a little grandstanding to me, to be honest. Yeah. Dave, last word goes to you. I mean, the SEC is already looking into some of these culture

issues at the company as well, right? That's right. We reported, my colleague, Kristen Grime, has reported on that investigation, which is focused on the company and perhaps management in terms of how they might have or how they communicated, you know, the risks around this culture to shareholders. That, in theory, that could be an enforcement action that the SEC could eventually bring against Activision having to do with the disclosures they might be accused of not having made in the past to shareholders that the SEC claims that they should have. But that's in the future. We'll see if it gets to that. And just to be clear, this is just an investigation from the Justice Department. You're not alleging any wrongdoing by any of these men that you have written about in your story. Thank you for coming on, Dave.

I appreciated our own Steve Kovach with your reporting, too. I appreciate you as well. Coming up, more on this late-day sell-off. John Najarian making trades into the close. He's going to hop on the news line and tell us exactly what he is doing in the midst of this late-day sell-off. Plus, investing in the uninvestable. One portfolio manager dipping his toe now in some risky water. He'll tell you where and why. And later, we're breaking down the chips. A big debate on Intel ahead. Overtime back in just two

minutes. Welcome back. Want to show you how this trading day ended. The last day of the month, the last day of the quarter, and it wasn't pretty. The Dow finishing down 550 points. All three of the major averages selling off into the close, finishing on the lows of the day. About 1.5% declines all across the board for the Dow, the S&P, and the Nasdaq. For more on this, what it means for the month ahead, perhaps, Eduardo Costa. He's the founder and portfolio manager at Calixto Global Investors. Eddie, it's good to have you. Welcome. Likewise. Thanks so much for having me on, Scott.

I mean, you run a long, short equity fund that's focused on TMT, technology, media and telecom. Are you feeling like it's better to be long or short right now? This is one of those months where it wasn't fun to be either. You look at the end result and the NASDAQ was up 3% or so, I think, and you wouldn't believe it. I mean, if you think about the interim month swing that we had, there was a point where the NASDAQ was down high single digits. And a couple of days ago, it was up five. I mean, you're talking about a 1,500 basis point swing over the course of a two or three week period. It's a challenging environment to navigate. And that's what bear markets can often be.

Oh, is that what you think this was? Forgive me for interrupting you. But is that what this is, a bear market bounce? That's what it appears to be anyway. Anyway, I mean, if you look at what started with the FOMC meeting in mid-November and the massive rotation from growth stocks, which have outperformed tremendously, as one of your previous guests was saying, over the course of 20 and 21, you know, through the sell off that we've seen up until very recently. You know, that's exactly what it would appear. And we're getting some data points and some of the earnings that we've seen this week, you know, that coupled with the inflation that are indicative that this is what it is. Are you upping your shorts as a result in the space that I mentioned, TMT? You know, we're running some of our lowest net exposures that we've run. We run about 25 percent net exposure.

And we're you know, we're about 10 to 15 at the moment. And so what we've been focused on is finding companies on the long side that we think are going to be able to endure, if not accelerate during this environment, coming off of very reasonable valuations, while looking at some companies that we think are going to have a really tough time as the economy decelerates. Interesting. Eddie, do me a favor. Bear with me for a second. I do have some breaking news. I'm going to come back to you, but I got to get back to our own Steve Kovach, who has a statement now from Activision CEO Bobby Kotick's team. What are we learning, Steve? Yeah, Scott, Kotick is denying that anything improper was discussed at this brunch he had with Alex von Fossenberg. I'll just read off the statement for you here.

It's, quote, Mr. Kotick had a social brunch with his friends at a popular restaurant. He, of course, didn't share any information with them regarding a possible transaction with Microsoft. So that's about as full-throated of a denial that anything improper was discussed about the Microsoft deal at this lunch leading to this probe. All right. That's Steve Kovach with the latest. You'll keep us up to date on anything else that develops. Eddie, I come back to you. What I find so interesting in one of the most beaten up and perhaps controversial parts of the market, these Chinese Internet names.

You say now is a time to actually start buying some of these stocks. That's very surprising to me. Why? So we've been very cautious on the Chinese internet space in China, more generally over the course of the last 12 months. It's been the most harrowing period to invest in that region.

If you look, the K-Web, the Chinese internet index in the US is down over 60% over the last 12 months. And everything is basically for sale. And if you look at the reasons that have driven that, it's predominantly been regulatory intervention. It started with the anti-monopoly measures on Alibaba, the scuttling of the Ant Financial IPO, moved to the for-profit education sector where they caused a lot of these companies like EDU and GoTo to become non-for-profit companies, culminating with Didi's IPO in the middle of last year where they didn't get the appropriate permissions from the Chinese

regulatory authorities, and now a lot of the noise around potential delisting. And so the positioning is all on one side of this. And there's a lot of volatility and it's not going to be an easy path. We've had some of our lowest exposures to China over the last 12 months. We've been thinking that now is a good time to start slowly adding exposure. And we've got a couple of names that are very high conviction that we think are going to be able to navigate this environment and are coming off of the most depressed levels I've seen in 20 years of investing in China. You know, I'm not going to let you tease me like that without telling me what these names are. So our two big positions, one is ZTO Logistics, which is like the FedEx or UPS of China. It's the largest player in the e-commerce delivery space.

The other one is a very interesting one called Boss. The ticker symbol is BZ. It IPO'd alongside Didi almost in the same week last year. And it's the largest online recruitment platform in China, over 24 million job seekers hitting the website every month. Is the company doing $800 million a year of revenue, growing at over 100 percent? And, you know, all of these stocks trading at incredibly depressed multiples. Eddie, I appreciate it so much. And thank you very much for bearing with us as we had that

breaking news as well. I'm sure we'll talk to you again soon in overtime. That's Eduardo Costa again with Calixto Global. Absolutely. Thanks so much. Investors, you take care. Up next, one of the traders is making some late day trades into the close during this sell off. We're going to give you those details. And I have news on a stock split that you need to hear about. And that stock is on the move. We're going to do it next. Breaking news on GameStop. That stock is skyrocketing higher in the O.T. Steve Kovach. He's our man of the hour. He's here with more. What's going on? That's right, Scott. You cannot get rid of me. GameStop, they're doing they're doing a stock split through a dividend.

This is kind of similar to what we saw with Tesla the other day when they did their five to one stock split. So they're going from 300 million shares to one billion shares. It will be through a dividend and will need shareholder approval. That's the news sending shares up. Looks like 11 and a half percent right now. Scott. Yeah. Let me ask you this.

Ryan Cohen, obviously chairman of the board. Who knows if this is orchestrated by Mr. Cohen, but certainly you have to believe it has the seal of approval at very least of him. And by the way, I mean, he pledged his support or if not double down or whatever you want to characterize it as recently. He bought 100000 shares in GameStop something like a week ago. Yeah, he's been picking him up. And then also we know GameStop's been on a new tear with this whole new resurgence in meme stocks between this and AMC. We're seeing it again. It feels like early 2020 all over again. So, yeah, this is the split is setting the shares higher just a couple of days after they approved this split. Yeah, I always

find this so interesting is that, you know, someone would come on and suggest, well, it doesn't change the fundamentals of the company. The pizza pie, so to speak, is still the same, even though you do a stock split. But when you already have a company that's in the public consciousness like this one has and tends to have outsized moves, you know, unrelated to some of those other stock splits, I'm looking at it, you know, look, the 52 week high here is $ hundred and forty four dollars and change. You've got a bid ask right now of one ninety six, one ninety seven. So it's still a long way from that point. But it is yet another move that some of those kind of investors, the retail investor who has played this name for the better part of the last couple of years is going to potentially gravitate towards. Yeah, that's right. And we know the stock doesn't trade on the fundamentals.

It kind of trades on these hopes and dreams that they keep saying. I mean, the big next shoe to drop as far as things that the company plans to do and really move forward from their traditional business is this idea of an NFT marketplace that they're going to have where, you know, game developers can kind of come in and sell NFTs and so forth, just like they sell physical collectibles now through GameStop. So we'll see how that affects the stock, too. But right now, it's the stock split moving it. All right, almost $200 a share. You knock if you have anything else. That's Steve Kovac joining us once again. Yeah, exactly. Time for a CNBC News update with Shepard Smith.

Hi, Shep. Hi, Scott. From the news on CNBC, here's what's happening. Russian troops are no longer at Chernobyl. That from the Ukrainian state agency today that manages the area. The state power company says some of those soldiers were exposed to significant doses of radiation after they dug trenches at the radioactive site. The defense rested today in the trial of four men accused of plotting to kidnap the Michigan governor, Gretchen Whitmer. Only one of the defendants took the stand.

Daniel Harris said he never agreed to try to kidnap the Michigan governor, Gretchen Whitmer. Only one of the defendants took the stand. Daniel Harris said he never agreed to try to kidnap Whitmer. The jury is scheduled to hear closing arguments tomorrow. And two people are now dead in North Florida after severe storms ripped through the South again last night. The Washington County Sheriff's Office confirmed those two deaths and two other injuries after a tornado touched down in the small town of Alford about an hour north of Panama City Beach. The sheriff there says it's total devastation. Severe storm warnings from the same system across the Mid-Atlantic and the Northeast through tonight.

This evening, an American combat veteran working to evacuate Ukrainians. His story on the news right after Jim Cramer, 7 Eastern, CNBC. Scott, back to you. I look forward to seeing that, Shep. Thanks so much. That's Shepard Smith. Dr. Jay is making two late day trades. He joins us now on the news line in overtime. Dr. Jay, what are you doing? Well, Scott, a stock that we used to call Flextronics. They obviously make devices, everything from phones to anything by an original manufacturer. These guys might be making it for them. So they put these things together. They've certainly put a lot of calls together today.

Buying the May 18 calls in FLEX today. They were buying a 5,000 and then other buys at higher strikes above that. That was an in-the-money call, Scott. So that was interesting. It was trading at about a dollar premium to its in-the-moneyness. And we bought those calls, the May 18 calls. Second one was PVH, the company that, of course, has Tommy Hilfiger and Calvin Klein and a bunch of brands. This one, $77.50. They were buying the April 80 calls, just $2.50 out of the money, two weeks to go. They paid about $2.45 for those. And it was well over the open interest, meaning this was opening new trades.

And in both these cases, Pete and I joined them on these trades, PBH and FLEX, Scott. Hey, Doc, I want to ask you for your opinion on GameStop. Well, we just reported that their company is announcing a stock split. You know what? And for that matter, I'm going to bring in Mike Santoli, too. Sorry, guys, in the back, but we're just going to do it in that order. Dr. J., you first. This stock split from GameStop. Yeah, well, you know, it's the same thing that Pete talked about.

Whenever we see, whether it's Tesla, GameStop, Apple, whomever, it makes the shares more approachable and certainly better consideration from retail investors. Institutional investors, it doesn't change a thing. Retail, it does, because as much as there are fractional shares, Scott, we all know nobody really likes to trade those. They want to buy a regular commitment to the stock, whether it's 100 shares, 500 shares, 1,000 shares. And it's really tough to do that when you're talking about a $300-plus stock. So seeing something like this that will make it more approachable, perhaps as much as that

3-to-1, since they're taking shares from 300 million to a billion shares, that's implying, of course, that 3-to-1 ish sort of move. And I think that's great for retail. And certainly this has been the darling of the meme stocks, which means retail is all over it. Yeah. Mike Santoli, I think you are with me. Yeah, I am. There you are. What's your take? Well, the hilarious thing, first of all, this is clearly the playbook. If you just want to pump up your stock, whether it should matter or not, it clearly matters to parts of the market, and you do get an immediate pop. What's hilarious to me is that this is, before this news, $160 stock.

It's not like Tesla, which got up to $1,000 again, and they're talking about a split. It's not like Alphabet and Amazon, which have four-digit stock prices. It's $166 at today's close. So exactly how cheap do you need to make it for the option trading folks to really have enough firepower to care? And there's also, of course, Ryan Cohen, he did buy more shares in GameStop. If you have a really good idea that announcing a stock split can give you an immediate payday, I think it's just it's amusing. It's fascinating. It's it's or it's, you know, we're going on a year and a half now of this company supposedly getting remade with very little evidence of it being remade. It's just become, you know, this social phenomenon.

You know, it continues as such. Let me ask you this, and maybe this is a controversial question to ask you. Is it a good thing that retail is, if you want to use the word, being incentivized even more to play a stock that's been as volatile as this one and that has been at the forefront of this whole meme madness? You know, I think in general, it's great if people are more engaged and they want to play and they want to, you know, learn the hard way in some cases or make big scores in other cases by playing individual stocks and options. I think that all over time is probably a good thing. In general, though, I mean, if this stock itself, if you were in at the highs and then saw it crash 70 percent, it didn't sort of tell you

that there's no way to actually orchestrate these things. And it can't actually just be this kind of fake story of a squeeze and everything else going on. Then, you know, if you play at your own risk. Yeah, I'm still going to see you for your for your last word. Dr. J, I'll give you the last word on this one. Well, and Mike hit on it there when he spoke to the short interests and or the shorts just getting carved up in these kinds of decisions and the moves that happen subsequent to those decisions. I think the likelihood that more people will employ this against short sellers, whether they're legal or illegal short sellers,

I think you'll see a lot of companies looking to do this same sort of thing because of the damage they can do to those shorts and thus obviously drive the stocks significantly higher than the split alone would have done without that big short interest. It is certainly one of the narratives that we take from the month of March is that meme stocks in a large way. We're back at least at points in time and at least here. GameStop is ensuring that as we begin tomorrow, GameStop's back again. We'll see how it all develops. Guys, thank you. As I said, Mike Santoli, I'll see you a little bit later for your last word. Dr. J., I'll see you soon, I know.

Up next, more on today's late-day sell-off. The end of the quarter, the NASDAQ dropping 1.5%. The chip stock's really taking it on the chin. We drill down on that move when overtime returns. We mentioned the Nasdaq sliding into the close today. One of the stocks to the downside and rather sharply, three and two thirds percent. It's Intel right there. The stock below fifty dollars a share. Let's bring in Gilman Hills, Jenny Harrington and welcome back. Hightower, Stephanie Link. We're going to have a little debate. And the reason we're going to do it is because we had a big debate on halftime earlier

where Jenny and Jim Cramer weighed in on Intel. Stephanie Link, you used to own this stock. You threw in the towel and sold it. Why? I mean, a long time ago, Scott, so I haven't been involved in a long, long time. But look, I think that this company, yeah, for a reason, right? I just, and by the way, if you go back to June of 2018, the stock was at the same price. So you really haven't made much money over the long run. But I just don't think they're going to be competitive until 24, 25 at the earliest. And so as an investor, I think there's better opportunity elsewhere. We know they're losing market share to AMD. That's going to continue. We know they're having

manufacturing delays. That actually is continuing. And Apple is insourcing their own architecture. So they have to invest, which I applaud very much. But when you do that, that sacrifices earnings and free cash flow. In fact, at the analyst day, they talked about free cash flow being negative to neutral from 2022 to 2024. Again, I just think there's so many other semiconductor companies I'd rather be involved in. So, Jenny, same prices in June of 2018. That was a mic drop moment for Steph. You're a long term investor. If I'm a long term investor, I say four years. Are you kidding me? Same price as four years ago. I'm out of here. Why should it be anything but that? Yeah, because we always talk about this. Like, you know, when does your investment time frame start? It starts today. You want to go to where the puck's going. That's not really useful to me to look back and say it

was flat over the last four years. Frankly, I look at that and I say, what a wonderful opportunity. We haven't been holding it for the last four years. We've been holding it for about a year. So we're kind of flat to dead money on that. We're, as I always joke, we're early, which also means wrong. But if I stand here in front of you today and I say, what do I think is happening from here today? What I think, and this is exactly where I've been all along, is I think we've got about three and a half bucks of earnings coming to us this year.

I think that that grows to six. That assumption was before they started talking about the foundries, right? And by the way, I want to make one point, which is we own this in our growth portfolio, not our dividend portfolio. So we don't own this for that dividend yield. Anyway, so if we get to six bucks of earnings and we get a reasonable multiple on it, a multiple that would be a fraction of peers, let's call it 15 times. 15 times six is $90. We all know that we don't know when you get the kiss. And this is where I go back to things like I bought Target at,

I think it was like 53 bucks and sat flat on it for a long time. And then it all comes at once when you get the kiss. With Qualcomm, you need to just be there. It's like the New York lottery. What do they say? Like you need to be in it to win it or something, right? You need to be in this to win this. And I don't know when that happens, but what we know is that when sentiment shifts, it shifts hard and fast. So Steph, one thing, actually you said there are still production delays. Actually, since Pat Gelsinger took over, there haven't been production delays. And by the way, they've crushed earnings forecasts for five quarters straight. For the past five quarters, they beat earnings by between 20 and 55 percent. That's significant. At some point, the good news

also catches up to this. So it kind of stinks that I've been sitting on it for a year flat. But you know what? This is why you own a portfolio, too. This is a two and a half percent position. If I make no money on a two and a half percent position for a year, fine. I've got 30 plus other positions that are working their tails off to more than make up for that. And then when I get to that six bucks of earnings, I think I've got a double on the stock. And then once the foundries kick in, free cash returns, I get even more. Steph, do you have a better chance of hitting the Powerball or Intel hitting 90, which was Jenny's, not her target, but at least she did throw that number out there. What do I feel better about?

Weren't we talking about probabilities earlier, Scott? This is an easy probability. Steph? And Jenny and I agree on so many names, I have to say that, right? And I understand the valuation. I understand the yield, even though you don't own it for the yield. He's hell-bent on keeping that yield, by the way. So I understand that.

But, yeah, they actually are having, they did have one push-out in one of their nodes, in terms of their process nodes, at the analyst day. Not a big, big deal, but it just suggests to me it's hard. This stuff is really, really hard. They have to be perfect, right? And they're going to invest, and hopefully it works, but that's a hope. We don't know. We only know his track record, which is pretty good, but it's going to take time. And he's, in the meantime, expecting PCs to remain pretty strong off of a very high base.

You know PCs grew from 2019 to 2022 by 40%. So that's not going to stay like that. And GDP is falling, so they're susceptible there, too. So I just feel like you have better opportunities. And we can chat in 2025. You guys take it offline. I've got to go. Real quick, Jenny.

Real quick. One thing. Okay, Steph used an important word. She said they have to be perfect. When you're trading at 12 times earnings, you don't have to be perfect. When you're NVIDIA and AMD and you're trading at 48 times and 28 times, then you do have to be perfect. But there is a huge margin of safety in that low multiple here. No one's expecting anything. They're not expecting perfection.

Anything that's decent should be rewarded. All right. That's the last word. Their execution has to be perfect. Okay. Thank you very much. Coming up, it's Santoli's last word next. All right, Mike Santoli is here for his last word. I don't know what it is, but after this sell off, I wonder if that influences it at all. Well, in a way it does, but the word I was thinking of was cushion because the rally we got in the past three weeks from that March 8th low

did build up a cushion underneath the market. And the question is how much of it we're going to need on this pullback. So I would say another 3% down from here in terms of the S&P 500 would still be okay in terms of looking like there's a pretty good bottom that was set at the recent lows, February and March lows. It would give kind of a higher low. So all the technical things would say you can still absorb that much of downside. I think the market also is somewhat more back into balance, if you will. It came into today kind of overbought. Maybe now we're neutral. Sentiment did overshoot toward the pessimistic side. Now we're back toward neutral. So it's an uneasy equilibrium, Scott. I would certainly grant that because you do have this defensive tone to the market here at the quarter end.

But I do think that you still have a little more room to work with before it's time to worry about, you know, we're going to break lower to new lows. OK, that's interesting you say that because, you know, I'm thinking like, OK, you ask people, well, what do you make of today's 550 point sell off? And we close the lows and we sell them to close. And then the comeback is it's just one day. Big deal. But you actually suggest that it's meaningful in its own right because of what you said about the equilibrium of the market. Well, I think it's meaningful in the sense that it sort of used up a little bit of that slack that we had in the market. But I also think that one reason you might want to take it with a grain of salt is it's quarter end. It seemed like there was some mechanical stuff going on toward the end of the quarter. See how we open tomorrow.

So I'm not saying that today was somehow significant that showed you the market is going to be back on its heels for a while. It's much more a matter of, you know, this chase we got into Tuesday's high had to be tested, and that's what we're doing. I mean, April's typically good. Now, I don't know if it's going to be good this time around, because maybe we borrowed some from what would typically be, at least if you go by history's sake, which you look at history, a pretty decent month. Yeah, I mean, it's funny.

You're down 6% year-to-date. Does that mean you've pulled forward a lot of gains from April? I don't think that that's how really the game gets played. I think you can lean on some of the pretty significant momentum and breadth indicators that came off the low, that immediate shot higher, that at least even people who are skeptical say, oh, that usually buys you a little bit of a benefit of the doubt going out a few months, not necessarily immediately to say that it's something more meaningful in terms of a new uptrend as opposed to just a reflex bounce. So these are the cross currents we face coming into the new month. All right. Good stuff. As always, Mike Santoli. Thank you.

Coming up next, it's a health care triple play. We have some under the radar picks in our two minute drill. We're back in overtime right after this. Want you to take a look at that right there. It's the 210 spread as we are on inversion watch and we're pretty much there. We're within one basis point. Again, a key recession indicator doesn't always mean a recession is in the cards, but you've never had a recession without an inversion of this part of the yield curve. It also should be noted that some economists would suggest that this isn't even the best part of the yield curve to look at when trying

to decide the strength of the economy and other parts of the curve are steep, which they say would mean the economy is a lot stronger than worries about a recession would otherwise indicate. But that is something to keep an eye on. Again, the way we closed this month, the way we closed the quarter on the lows, at least as it pertains to stocks. But this is something that's going to be talked about for certain tomorrow. You get a jobs report, so you'll get a real instant read on where the economy is certainly backward looking, but it's something to talk about, which is going to potentially impact where yields go at 830 tomorrow morning. You know, we're going to be all over that. Certainly when you think you're going to have to come into a new month when the direction of the

Fed is going to be very much debated. You've had a lot of people come on this week and suggest the economy is strong. We're not going to have a recession at all. And that's one of the reasons why they point to continued strength in the stock market. But Steve Leisman, who joins me on the phone right now, here we go again, Steve. Yeah, I mean, I'm showing here that we did have a minus point one inversion here, unlike the other day when it was flat. And it will certainly raise the questions again about whether or not this particular spread is showing the way to recession. As I indicated earlier today, it looks like the Fed has not ruled out the possibility of it, either because it happens on its own or happens of their own accord. Yeah. All right, Steve, I appreciate you jumping on the phone. I know it's quick, but nonetheless important as we watch that inversion in the yield curve of the 210 spread.

Fast Money picks that story up right now.