Closing Bell - Closing Bell Overtime: Exclusive with Guggenheim’s Scott Minerd, First On CNBC with Ark’s Cathie Wood 4/12/22

Episode Date: April 12, 2022

Exclusive interview with Guggenheim Partners Global Chief Investment Officer Scott Minerd. He explains why he remains bullish in the face of hawkish Fed commentary. Plus, Ark Invest CEO Cathie Wood responds to criticisms made about her funds following Morningstar’s downgrade of the ARK Innovation ETF.

And welcome to Overtime. I'm Scott Wapner. You just heard the bells. We are just getting started in just a few minutes. We'll speak live to ARX Kathy Woods. So much to discuss with her today. We do begin, though, with our talk of the tape, the risks and rewards that lie ahead for investors. And there are both, at least according to our first guest today. He's with us exclusively. Scott Minard, the Global Chief Investment Officer of Guggenheim Partners, joins us now live. Welcome to Overtime. It's great to have you on. Oh, thanks, Scott. I appreciate you taking time for me. When we finish this interview, you are going to be releasing a note and the headline of which is that you think there is a runway for stocks to go higher,

perhaps for as long as a year, before we start to think more squarely about a recession. And the headline of which is that you think there is a runway for stocks to go higher, perhaps for as long as a year before we start to think more squarely about a recession. Is that right? That's right. I mean, I think we could talk about a lot of things here. We can talk about how negative sentiment is. We could talk about today's number and the inflation numbers and so on and so forth. But, you know, the thing that I remembered is Sir John Templeton's quote that the four most dangerous words in investing is it's different this time. And, you know, given the fact that the yield curve, you know, had inverted, you know,

could invert again, that's a signal that recession is typically, you know, 18 months to two years away. So we started to take a hard look at, you know, how do these categories or the investment categories perform, you know, in the run-up to recession. And so, you know, for instance, the 24 months or the next 12 months, let's just say, the penultimate year before the beginning of a recession, we would expect commodities to be the strongest performer. But, you know, on average, we would also expect the S&P 500 to be up like 7% or 8%. And, you know, in the final year before the recession, you know,

we would start to see a stronger performance coming out of things like investment-grade bonds and treasuries. So, you know, it's not a time to get really negative. There's a lot of interesting opportunities out there, both in the bond market and in the stock market. And, you know, I'll tell you, Scott, I don't know many people that are outright bullish here. And so even though we have a lot of economic uncertainty, history tells us that, you know, this is probably a good time to be buying if you're invested over the horizon of the next 12 to 24 months. I think they find it hard to be bullish because they say, don't fight the Fed. Don't fight it on the way up.

And then certainly don't fight it on the way down. And if the Fed is going to be aggressively raising interest rates, how do you go against that tide? I think that's how they would come back and say to you. Well, I got to tell you, every time I hear another Fed member talking extremely hawkish about action, whether that be rate cuts or shrinking the balance sheet, the more bullish I get. And the reason for that is when you start to look at rate, when the Fed starts to raise rates and the curve inverts, we see the long end, typically 10-year note yields fall by, you know, between a half and three quarters of a percent. If we have long rates fall, that's going to make a lot of stocks

look a lot more attractive. And, you know, the real question is, you know, when is the recession hitting? When are we going to get an impact on earnings? And that typically comes with a lag after the Fed starts to raise rates. And, you know, we've got some time. So, you know, I think that, you know, the fact that the market is climbing a wall of worry is exactly what you want to be bullish. Wow. Does that mean that you think the lows are in? Could we still go back and retest, if not break through the lows before we recover? How do you think about that? Well, you know, look, I mean, there's a lot of exogenous risk out there. And, you know, sure, we could go back and test the lows. But, you know, I did send out a tweet on the day of the

invasion of the Ukraine that I thought that marked the bottom. So far, that's been true. And again, I like to remind people, you've got to constantly ask yourself, are you a trader or are you an investor? You know, if you're an investor, you should be looking at a time horizon, you know, that it's a year or two or three out into the future. If you're a trader, you should be worrying about the next trade. And, you know, I always tell people that I've had the opportunity to do both. And if you really want to grow wealth, you should be an investor. And the time to buy is when nobody else wants to buy it. But you think clearly that we're ultimately going to have a recession. I don't want to put words in your mouth, but it's I mean, you're counting us down to a recession. It sounds like so you don't think that the Fed can pull off a soft landing.

No, no, I don't think so. I mean, I think the biggest risk we have here, Scott, is not a recession. But the biggest risk we have is that there's something that happens, whether it's a sudden collapse in some sort of asset price, whether it be stocks or another category of asset like oil, where the Fed feels that it needs to pivot. And if we pivot too soon, then people are going to question the inflation-fighting credibility of the Fed. And then I'm not going to be as bullish as I am. But given the fact that the Fed has decided that they're going to come out hard, they're going to be very aggressive. This is extremely aggressive monetary policy. Then, you know, I think that until we start to

get closer to getting the signals of a recession, that we should remain bullish. And if you want a signal for when the recession arrives, it's when the three-month Treasury bill yields more than the 10-year note. That usually tells you that you're, you know, four months away from the beginning of a recession. That would be the time that I would get more conservative. I wouldn't get conservative now. Do you think inflation has peaked, as is being suggested today by Jeffrey Gundlach and others I know you have a lot of respect for. I think it's very likely inflation peaked. If it didn't peak in March, we're in the process of peaking.

When you look at some of the components in inflation, energy prices are starting to drop. That didn't really get factored very strongly into the March numbers because gasoline prices have remained high. You know, there are other areas where we're starting to see some relief, like in used car prices, so on and so forth. So, you know, I think we're still a fair amount of way before inflation is in the rearview mirror. But, you know, I've been looking at doing some technical work on oil. And if we break the lows, our recent lows, and let's just say the lows of yesterday in oil, you know, we could have oil at $80 a barrel pretty quickly. You know, that would be, you know, that would be very good for bonds. It would be good for the economy. It would be good for stocks.

And it would be good for the inflation narrative. So I think we have to keep our eyes open that we could be, you know, something out of the blue could hit us here that would be a positive surprise on inflation. When you were last with us, which was, you know, let's call it a month ago, you thought the 10-year was going to peak at 2 to 2.5. Now, we obviously have overshot that to the upside. How are you thinking about that call now? Do you think we revert back to the range in which you thought we would peak out at? Or are we going to just be in this range for a while? I think we're going to revert. You know, don't ask me the day or the hour, but I did some quick work on the bond market. And if you look at the long-term trend that's been in place for the last 40 years, basically,

we are now more than two standard deviations away from the mean. That would mean that we should expect to see know, to see something in the order of, you know, a couple of hundred days where we would trade outside of that spread from the regression line, meaning, you know, more than two standard deviations away from the mean. So far, we've only been out here 17 days, and there have been a couple of other incidents over the last 40 years where this has happened. So while, you know, I certainly don't feel, it doesn't make me feel warm and fuzzy that where we are right now, relative to the trend, there is nothing that I'm seeing in the data that's telling us that we're breaking the trend at this point.

So I think that we will breaking the trend at this point. So I think that we will revert back to the old trading range. It's just a matter of, you know, how many days until we get there. And possibly, you know, could we spike higher before then? As we know, bear markets run to extremes. And, you know, the overshoot can be far and painful. But I am still bullish from these levels on bonds, and I might be the last person in the world that is. You know, I don't know what, 12, 15 hours from now, we're going to be talking about the beginning of earnings season. You mentioned your hopes are, I think, sound pretty reasonable for earnings, although there's a bunch of gloom and doom that the numbers that are going to be reported, Scott, don't matter so much. It's all about the guidance. And how can the guidance possibly be good in the kind of environment we're in? How do you respond to that? Well, I mean, look, there's a lot of cross currents here. One of the cross currents, Scott, that many people aren't looking at is if you look at the number of ships that are, you know,

the port, you know, outside the ports, they're still, you know, looking to come in. We've had a dramatic decline in those number of cargo ships. That's telling us the supply chain is easing. You know, there's room for a lot of positive surprises there as the supply chain heals itself. The other thing is, you know, some of the increase here is good. You know, certainly this has been good for energy companies. You know, there's, you know, the cost increases have been, you know, many things that point to inflation are actually, you know, things that are being made by commodity producers, whether it's in agriculture or metals or whatever, it should be extremely good for those people because their costs are not being increasing at the same rate as their commodity sale prices are. So, you know, I think it's going to be a mixed bag of positives and negatives.

And, you know, I think tech is not, you know, tech's gotten beaten up pretty bad. And there are some very, very attractive companies out there where we have extremely low multiples. And then if you go to home builders, which have been decimated pretty much, we're looking at multiples there in the five to six times earnings. So, you know, and it just, we've got a lot of cushion in some of these stocks to take for bad news. And if there's a positive surprise, then we could find that even some of the things that have been dogs over the last few months turn out to be winners for the next few months. See, I was literally going to say it sounds to me like you are describing that kind of an environment where you want growthy stocks. You want cyclical stocks,

and maybe that suggests that you also think some of these defensive stocks like staples and utilities that have done really well of late are played out, that maybe it's a growth scare that we've been witnessing and that people should rotate back to the more cyclical areas of the economy and things like tech. I would agree. That's exactly what I've been doing in my personal portfolio. You know, I've been investing in companies that suddenly became value stocks that, you know, were trading at three times the price, you know, just six months ago. So and their growth is still there. I mean, for instance, you look at a company like PayPal or Square, which I'm personally invested in, so I want to disclose that. I mean, those are companies that are not going to be adversely affected by a slowdown.

I mean, they will be by a slowdown in the economy, but they're not going to be affected by inflation. If anything, it's going to drive up their revenues because the average transaction they're doing. So there's a lot of interesting things out there to look at, from homebuilders to selected what we call tech stocks, which I'm not even sure PayPal is a tech stock. It's a payment stock. But, you know, I think that if you've got patience and you're willing to, you know, ride out any short-term volatility, that's how wealth is created. You mentioned PayPal and Square, now obviously called Block the last time you were on. Now you're turning into a table pounder for some of these fintech names. Is there a name? Maybe it's because I never get time to invest my own portfolio. And so when I do, those are the things I remember. But go ahead. You know what? And when somebody reveals what

they're doing in their personal portfolio, that pretty much says everything, right? It's your own money on the line. But let me ask you this. PayPal Square, I know you like those. Is there another name that you've picked up recently in the sell-off that you are equally as enthusiastic about as those? Well, you know, a thought that I've not invested in yet, but that I find very interesting is Micron Technology. I mean, MU. I mean, again, it's turned, it's a single-digit price-earnings ratio. And, you know, I think that any company in this country that's producing chips is going to be a winner, you know, as long as they continue the development of their technology, given the fact that we're going to onshore so much production. So that's another company that I think is extremely attractive,

but I'm not invested in. Got you. I so much appreciate your time today, Scott. Thank you so much for coming on Overtime. I'll see you again soon. Thanks, Scott. I appreciate you having me. All right. That's Scott Minard of Guggenheim Partners. And let's get to our Twitter question of the day. We want to know, as inflation hits a 40-year high, where are we in the current inflation cycle? Midway through? Are we near the peak, as you just heard Scott Minard suggest and others have suggested the same? Or are we not even close to peaking? Please head to at CNBC Overtime and cast your vote. We're going to bring you those results later in the show. Up next, another interview you cannot afford to miss. Fund manager Kathy Wood is on the record with us. Her ARK Innovation ETF is down nearly 40 percent this year.

What she is telling investors now and skeptics about that big drop. It's a can't miss interview and it's just moments away. Welcome back to Overtime. Tech has been the epicenter of a good part of the selling lately particularly higher valuation names associated with our next guest kathy wood is the arc invest ceo and cio and runs some of the most popular if not controversial funds in the world right now and she is with our bob pisani now at the ETF conference down in Miami. Bob, take it away. Thank you very much, Scott. And of course, good to see you, everybody tuning into the Exchange ETF conference. Kathy, great to see you. It's been a rough 12 months for you, Kathy. You've been down 45 percent on your flagship ARK Invest, and yet you have a remarkably loyal fan base. You just had a monthly update. Can you

explain to the viewers and to your loyal fan base, why should they continue to stick with you when you're down 45% on the year? Well, I think if we put in perspective what has happened here, you'll understand some of the loyalty. First of all, we give our research away, and I think we get it back in terms of, you know, people believe averaging down into a strategy of ours, believing that we're on to something, some very big exponential growth opportunities. But if you look at the last five years, and we do have a five-year investment time horizon, so let's look back and then forward. Back, over the last five years, I don't have the exact number, but our performance, our flagship strategy,

has compounded at close to a mid-20s annualized rate. And if you look at active management generally out there? I think that only 25% of all active managers in the last 10 years have outperformed. And of the large cap managers, I think it's 11%. So last five years, yes. COVID, we got killed going into COVID. And our mantra was innovation solves problems. We started doing a YouTube video. From the troughing COVID to the peak, we were up 360%. And at the end, I was saying, keep some powder dry. Now, down this much, we're saying, if you believed that at the peak, when we expected our total return for the next five years to be 15% at a compound annual rate.

If you believe that then, what has happened since? Prices have come down, but our models, actually, our earnings return expectations have actually gone up. So over the next five years, we're expecting, consider the source, it's our research. Our research, I think, is the best in the business, but we're expecting a 50% compound annual rate of return. And yet earnings returns may not be the most important thing to you right now. It may be the path of interest rates. You were here a little while ago. You said raising interest rates might be a mistake. We had Bill Dudley, the former head of the New York Fed, last week said to get inflation under control.

The Fed will need to push bond yields higher and stock prices down. They seem determined. What does this mean for the future of your portfolio? Well, it's interesting. I think the bond market is already sending off some signals. The yield curve, twos to tens, inverted last week. That usually means that growth and or inflation are going to disappoint or slow down relative to expectations. So the bond market itself, even though it's backed up, the bond market to this day does not believe that inflation is baked in the cake. It is interpreting what has happened as a series of supply shocks, starting with COVID, all the supply chain problems,

which I never would have expected to last this long. And now we have Russia's invasion of the Ukraine, food, energy. We've got labor shortages. Well, I'm going to say the same thing that we said during the depths of COVID. Innovation solves problems. We have more problems now. And I think our ilk of stock is going to is going to do very well if interest rates even if interest rates back up a bit

more and the reason I say that is we do believe cyclical inflation is near a peak. If you look at last year this time April delivered a 0.9% CPI read. Okay so that's our comparison and now we're seeing used car prices fall. I think energy even is down month to month. So I think we're starting to see cyclical turn down. Kathy, it's Scott Wapner. I so much appreciate you being on overtime with us today. And I would like to discuss some of the criticism of you and ARK. About a week ago, none other than Morningstar harshly criticized ARK. They downgraded your fund.

The headline of their report was invest at your own risk. Among other things, they said you have no risk management personnel, that you've saddled the portfolio with greater risk by slashing the number of stocks that you own. You've called your reliance on your instincts to construct the portfolio a liability. They cited your age at 66, saying you have no succession plan in place and that you've been careless in avoiding big drawdowns in wealth. This is your first chance to respond on the record. What do you say to all of that? Well, first, I don't think Morningstar understands what we do. It is very index-centric. We do not use any indexes as a screen for our strategies. We use our research.

And in talking about our research, he talked about the youth of our analysts and their inexperience in the financial world. Well, as I often say, you know, you can teach rocket scientists or genomics experts, biochemical engineers, how to read and understand financial statements a lot more easily than you can teach MBAs, which most analysts out there are, MBAs about biochemical engineering, genomics, rocket scientists. In terms of another thing that Morningstar does not understand is that our risk management is riddled throughout the organization. I should also say we have a lot of oversight. Our partner, Nikko Asset Management,

it oversees risk from all points of view in our organization. Because it is a minority owner, it has the right to do that. And as you know, the Japanese are very detailed and very focused on risk so we have eyes from the outside as well as the inside our compliance team within research we have a scoring system and we've explained this all to various consultants out there our scoring is really about risk when it comes to innovation. Where are the areas you really want to watch risk? Companies, management, and culture. You need

a visionary willing to stand up to short-term oriented shareholders. And I would say many of Morningstar's comments were very short-term focused in orientation. You need a visionary leader. We're looking for management changes all the time. We're looking at execution, but differently from other companies. We don't need to get 0.1 percent to the 0.1 operating margins each quarter. We want to make sure that our companies are investing enough in R&D and they're investing in the right places. I think that most companies actually

are in harm's way and they happen to populate the traditional benchmarks, right, around which Morningstar has organized its service. So we are making sure our companies are investing aggressively right now to capitalize on these massive opportunities. And it is those companies that leveraged up to buy back shares and manufacture earnings or pay dividends and that did not invest enough

in innovation and who are increasingly populating the broad-based benchmarks, they are in harm's way. So we are thinking about risk management every step of the way. But there are some who suggest that the kind of losses that Bob referred to at the very top of the interview are simply inexcusable, that you take on too much risk, that you've taken too big of stakes in companies and then reduce the number of companies you hold, which only increases the overall risk of the portfolio. Is that fair? Well, I did put in perspective for you the last five years, the COVID performance, the setback and our expectations for the next five years. Our clients have been very loyal to us. We've had net retention last year, $17 billion in net inflows,

and this year we're inflowing as well. And I think one of the things that we are doing that maybe others are not is we are very open, very transparent, radically transparent with our research, with our trades. We just held our market update once a month. We do that. Anyone can ask questions. We have a quarterly update next week. We are there for our clients, no matter what kind of environment we're in. And I think that our clients really are

looking at the world with a five-year lens. They see the ground shifting underneath them, and they know, they know that they don't understand everything that's going to impact their portfolios, and they want to hedge against the risks in their portfolios. Many of them have the S&P or the NASDAQ as core to their portfolios and they would like a hedge. If we're right, those indexes are going to underperform innovation strategies during the next five years. And I just want to get back to one more focus in terms of risk management. I have done this, I have been in the business for 45 years and been around the track, meaning many cycles. I have found that the best way to manage risk in a downturn when it comes to innovation strategies is to basically say to our analysts, and we have 12 brilliant analysts, and to our

director of research, Brett Winton, who is also brilliant, during downturns like we've experienced first quarter through this entire last year, we started at 58 names. We now have 35 names in the flagship strategy. We have concentrated towards our highest conviction names. What did we do with it? What about those other 22 or 23 names? Well, our analysts had the freedom as we were going through a downturn, I say to them and to our director of research, okay now is the time if there any of our assumptions are in doubt, let's sell those stocks and concentrate toward those names where our assumptions seem to be very much proving out. So you've said that many of you... That's a form of risk control, Scott.

Many people... Yeah, yeah. But just so that I can say that. That actually is a major form of risk control, Scott. Many people, yeah, yeah, but just so that I can say that, that actually is a major form of risk control. And there's another thing that happens when we do that. We create tax losses. We're selling stocks with a loss. We're buying it to stocks which also have losses, usually. And so what we're doing is creating tax efficiency in our strategy. Now, we don't say that explicitly, that it's a tax-efficient strategy. But during periods of volatility, we use those losses, we create those losses to put against future gains and minimize capital gains taxes.

I can hear the passion in your voice as you defend yourself and you defend the methodology and you defend ARK. And I want to know whether you think this criticism from Morningstar, that of others, the ETFs that are literally designed to bet against you and ARK. Do you feel like all of this has gotten too personal? The fact in the Morningstar report they cite your age of 66, your lack of a succession plan. Has it gotten too personal for you? Well, you know, I'll let other people comment on that, whether in our organization or elsewhere. But what I do find very interesting, I've never seen a situation. In fact, Bob mentioned it to me. There hasn't been another situation where an ETF has been created to bet against another ETF. And my attitude towards that is,

wow, they are so sure that American innovation is not going to be a sensible place to invest, that they have created a fund to short our strategy. From my point of view, if we are right and I trust our research, they're doing no research. They're just making a judgment call, I think, on valuations. But based on our research, if we're right, they are going to have to cover their shorts. And I actually just learned that the organization that constructed that ETF has been sold. So there's the conviction in that strategy. Well, I think they've been merged. It's ASX. But are they really betting against disruptive innovation or are they simply offering a vehicle for people to do that? I mean, look, you've said repeatedly your companies are going to have 50

percent revenue growth for the next five years, and that over time that's not going to be a problem, and that interest rates and inflation are not going to be a problem over time. But this isn't really a play about revenues or about earnings. It's a play on multiple contraction, which is what happens when you have interest rates go up and you own a portfolio of stocks, many of which don't make any money right now. This is a normal contraction of the multiple. What do you say to people who say,

it's not about, we're not betting against innovation, we're just saying there is a multiple contraction that's going on that happens historically? Yes, and if individuals, investors are using another strategy, a shorting strategy to hedge during difficult times, I get that. I get that. I just don't think betting on innovation is a long-term strategy.

But nonetheless, I understand. But what I would also say is if you look at the private markets and the valuation of innovation, I mean truly disruptive innovation in the private markets, it's multiples higher. And sure, you're having the odd down round because companies that we don't think are very innovative are losing their valuations. But if you look at others like blockchain.com, its valuation over the past year has tripled, while Coinbase in our portfolios is down 40 percent. That makes no sense. Coinbase is a far better and well-diversified company, right?

And I would argue better managed company. And this is up threefold in one year and Coinbase is down 40%. Does that make any sense to you? I think the private market has this more right than the public markets. And the reason the public markets aren't efficient is they're not doing the research. Everyone is using a benchmark as a screen. By definition, S&P 500 28% in tech, we own none of them. We don't think those are the disruptive innovators. So the people who are benchmark sensitive, benchmark aware, benchmark hugging, are doing their research around the benchmark companies. Our companies for the most part are not

in benchmarks, not in the broad-based benchmarks at all. And so we're really offering something highly differentiated, as many large-cap growth portfolios out there are starting to look more and more like each other, and the benchmarks, they have up to 50% in the FAANGs, Microsoft, NVIDIA, and our beloved Tesla. Tesla, we think, has miles to go and is truly disruptive. We don't think the same is true of those others. OK, now, Kathy, when you when this is Scott again, when you start talking about Tesla, I obviously think of Elon Musk. And because I think about Elon Musk this week, I think about Twitter.

Now, did I see correctly that you sold some Twitter the other day? Because when Elon said he was joining the board, I literally thought to myself, I wonder if Kathy is buying more Twitter shares on that news. And then when he decided he didn't want to be on the board, maybe Kathy was then selling part of the position. Can you just tell me exactly where you stand on that and your view, given your view of Elon, how that played into it, if at all? Yeah. So, well, you know, we use Twitter pretty intensively. We give away our research. We're out there commenting all the time. I think it's a powerful public town square or global town square, as Elon calls it. And, you know, maybe the model isn't right around advertising. Maybe it is subscription. I don't know what is exactly in his mind.

But one thing for sure is in his mind is it should not include censorship. And I think he feels very strongly about that. In fact, I know he feels very strongly about that. In fact, I know he feels very strongly about that. He's out there all the time talking about it. And I think what he did in Ukraine with Starlink, you know, basically getting that information out, it's awful to look at, but it's delivering a message to the rest of the world that they would not have otherwise. And so I think he's thinking— delivering a message to the rest of the world that they would not have otherwise.

And so I think he's thinking— Did you cut the—forgive me—did you cut the position, though? Or did you sell in recent days when he decided not to take the job on the board? Was that a deciding factor for you? No, we had been cutting back on Twitter after Jack Dorsey handed over the reins. We had been selling, and we know there is now going to be a lot of management distraction, maybe board distraction, with or without Elon. He's going to get his message across probably even more effectively not on the board, which may be the reason he is not going to be on the board.

So I think there's going to be some drama. And we don't know if the advertising model, the subscription model, some combination of that is going to prevail. There may be some dissension in the ranks. But when we see management change, and again, as part of our risk scoring system, when we see management changes, we tend to act if we are uncertain about the ramifications. You are down to 35 stocks now from about 60. So it's a concentrated portfolio. Give us a sense of what you're looking for next. What company, and if there is a company, please tell us that might be the 36th company on the list. What, what is there one and what would be the parametersth company on the list. Is there one?

And what would be the parameters of what you're looking for right now? Well, first of all, if I can use this moment to say, I thought you were going to ask me a different question that I'm going to answer. Sorry. No, we're going to put out a refresh of our Tesla model on GitHub this week. And here is a good way to control risk, as speaking to Scott again, and to you, of course. You know, putting our models out there

and having people, you know, basically argue about our assumptions is a really good way to control risk. If we're making an incorrect assumption now, we want to know about it because we're looking at exponential growth trajectories. And we're going to do this with Coinbase, Zoom, Exact Sciences and Roku in the next few months. We are open sourcing our models. You're going to explain the rationale about why you own them and what the models look like. Do people want to change the assumption on your models? They can play with your model. Yes. They can use

a Cathie Wood model to figure out their own portfolio. Now, if you think about this, the first time we put out our model, I can't remember the exact year, but people just didn't believe it, the numbers we were using. And lo and behold, what did Tesla do? Not only did it not run out of cash, but it was able to scale manufacturing after all, and now is taking a huge share of the market, 60% plus in the United States, right? So those, in terms of next steps, you know, some of the names that we sold during this concentration period, we will be getting clarification in terms of some of our assumptions. So we may go back to them. Kathy, real quick, a stock that looks to me like you just bought recently, and maybe it's the first

time you've bought it, is Blade. Eight dollar stock. And to Bob's earlier point doesn't make any money is this really the time to be buying unprofitable companies well they just got another contract today to fly from LA I believe it is to the maybe Coachella and so I think I think we're beginning to see signs that, you know, people would they're willing to pay for time, right? People value their time increasingly. And so I think anyone thinking that this is going mass market anytime soon, we're not thinking that.

We think this is going to scale over time because with autonomous vehicles, the costs are going to come down to get from point A to point B. Congestion is going to increase and Blade will be in a beautiful position to take advantage of that. I know you've got to get going. You're going to be speaking to the conference attendees in 10 minutes. Kathy Wood, ARK Invest. Thank you. Very generous with your time. Thank you, Bob. My pleasure. Thanks, Scott. Scott, back to you. All right. Kathy, thank you. Very generous with your time. Thank you, Bob. My pleasure. Thanks, Scott. Scott, back to you. All right, Kathy, thank you so much. Break a leg on stage, Bob.

I appreciate that so much for coming on Overtime with Kathy Wood. It's time now for a CNBC News Update with Shepard Smith. Hey, Shep. Hi, Scott. From the news on CNBC, here's what's happening. We have new information and there's a manhunt underway across New York City and beyond after a gunman shot up a subway car during morning rush hour in Brooklyn today. Police say 10 people shot, at least 19 others injured. A surveillance camera in that subway station was not working, they tell us. But there's late news that the cops have a cell phone video of the suspect.

Police say the man put on a gas mask and was wearing an orange vest when he set off a device that released smoke and then started shooting. Now police say they've recovered the man's bag, some fireworks, and a gun. It's described as a Glock handgun that was apparently used in the morning attack. Authorities say they now believe that gun jammed. It's unclear exactly how the shooter got away, but this afternoon investigators have asked that authorities and others be on the lookout for a U-Haul van with Arizona plates that may be linked to the suspect.

Tonight, the latest on the investigation and the search for that suspect and motive on the news, right after Jim Kramer. 7 Eastern, CNBC. Scott, back to you. And we look forward to that, Shep. Thank you. That's Shepard Smith coming up. Fresh reaction to our newsmaking interviews with Guggenheim, Scott Minard and ARX, Kathy Wood. Overtime's right back. Mike Santoli is here for his last word. Miner, Kathy Wood, I mean, take your pick. Well, Kathy Wood, I mean, very consistent message there,

an assertion of her strategy and her belief in it. But I did think one element of it drew some scrutiny, or at least for me. This idea that she expects 50% annualized returns from the portfolio she has right now because she expected 15 when it was double the level. Just what it would take for that to happen. It is a large-cap portfolio, three dozen stocks. Tesla's 10% of it. If Tesla goes up 50% annualized in five years, it's a $7.5 trillion market cap. If that doesn't happen, the rest of the stocks have to do that much better.

It's exceedingly unusual for large-cap stocks, and 60% of them are large-cap, to compound at that rate individual stocks, let alone, you know, on a net basis, a portfolio of them. So, yes, lowest average cost wins. Bill Miller said that she seems to believe that that could be fine. But I don't think you want to pencil in 50 percent annual. I mean, it's amazing. She's unwavering in her defense of herself and her firm and even her strategy with with the blade investment, which was new, unprofitable, eight dollar stock. And she is still betting on the future., which was new, unprofitable, $8 stock. And she is still betting on the future. Joe Terranova, you're with me as well.

Virtus Investment Partners, of course, a member of the Halftime Investment Committee. I'll pivot you to Scott Minard and this notion that this is not the time to be bearish. What do you make of that? I agree with Scott. I just think we're in a process where we're already taking time. We're having an issue with Joe's audio. I'll ask you, just not the time to be bearish yet. You have a runway for stocks.

Look, if the cycles fit prior to tightening cycles, it is true. It stays late for a long time in late cycle, and equity returns tend to be pretty good after the Fed starts tightening. There's a reason there's the old three steps in a stumble. First three tightening moves maybe don't really hurt stocks. And I do believe that expectations are low. The BFA fund manager survey today says risk appetites, risk exposures are rock bottom right now. So, yes, I get that trade. I thought it was very, very interesting. His counter trend call, if you will, what he said he's doing in his own personal portfolio,

rotating back towards cyclicals and growth and getting out of the areas like staples, defensive utilities and things that have run a lot lately. They have run a lot lately. I think there's a rebalancing move to have. Look, he even says bonds, you know, are worth a bid right here. And this has been the worst start to a year in history for a 60 40 stock bond portfolio. So you're going to get the benefit of mean reversion at some point, one of those legs along the way. All right. I'm going to give Joe Terranova gets Santoli's last word, I suppose. Joe, you're back. Your audio is working. So I hope you heard the question. And I think you did. But this notion from Scott Minard, you can be bullish right now. I think if you were an investor, without question, you can be bullish. But I think

you're doing it with the expectation, focusing on reasonable valuations. Let's remember the cost of capital, Scott, is no longer free. And I think speaking towards Cathie Wood, there are a lot of companies that she owns. Well, they're going to need capital and that's not free. So I like what Scott said. I heard a suggestion on PayPal, Micron Technologies, which we own in GOT. That's a technology company that has a fair valuation. I would err on looking at Teradyne. That's a name to give consideration to.

And I think in terms of asset allocation, look at the emerging markets, look at cyclicals, look at some growth opportunities, doing it in a very diversified way, but respecting valuation, because as we move forward, you're going to continue to see that an aggressive Federal Reserve is a credible Federal Reserve and they're not backing away. All right. My thanks to Joe Terranova, of course, to Mike Santoli as well for his last word. Still ahead, our two minute drill. We have some health care picks for your portfolio and coming up on Fast Money, is oil heading to $150 a barrel? It will be unbearable. Paul Sankey of Sankey Research is laying out what's in store for that space. Overtime's back after this. Let's get the results of our Twitter question where are we in the current inflation cycle the

majority of you think we are near the peak it's jeffrey gundlach among others said today all right it's time now for the two minute drill today's focus on health care joining us now is bruderman asset equity analyst akshata balkeri it's good to see you welcome um thank you for having me on all right let's do some stock picking. Organon, O-G-N, that's number one. Why? All right, Organon. It's a dividend stock. It's a pharmaceutical company that was spun up from work and has a focus on women's health care.

We've seen people, you know, underlying secular trends are really supporting this. As people are getting married later, they're having children later. And as that process, this really leads to an increased use of, you know, longer-acting contraceptives as well as the need for later stage IVF treatments down the line. And this really makes Organon an opportunity because not only does Organon offer services on both ends of the spectrum, including their Nexplanon implant and fertility drugs, but it also offers its investors an attractive 3.2 percent dividend. Ah, that's exactly where I was looking, 3.2% dividend yield. Next, Progeny. Tell me about that one. It's a small cap. Yes, it's from Progeny, a small cap firm. It's also

in the women's health space. It's a fertility benefits manager that offers patients as benefit solutions through their Smart Cycles program. And, you know, again, as family planning moves to later stages in life and non-traditional paths to parenthood increase, we see Progeny really benefiting from this trend. And the company's plan really is designed to improve outcomes, shorten time to pregnancy, and reduce total fertility-related costs, which is why it's become very popular among employers, especially a lot of blue chip companies. Got to be real quick on your last one.

UnitedHealthcare, been a stalwart, really. I mean, the performance has been phenomenal. Why will it continue? Well, you know, we believe UnitedHealthcare is one of the best-in-class managed healthcare companies with an experienced management team, high margins, and ample runway for growth. You know, we see an aging population that's moving into Medicare and Medicaid, and that's the primary driver of their top-line growth. But UnitedHealthcare also has its scale.

You know, it's with its large size, able to better allocate costs and maintain its margins. And we see a growth diagram. I got to go. I'm sorry. Akshata, I will have you back. That does it for us. Fast Money begins right now.