Closing Bell - Closing Bell Overtime: Lux Capital’s Josh Wolfe On China’s Threat; Rockefeller’s Ruchir Sharma On Why The Dollar’s Days May Be Numbered 4/5/23

Episode Date: April 5, 2023

Another mixed day for the averages with the Dow closing higher while the S&P 500 and Nasdaq finished in the red. Miller Tabak’s Matt Malehy and Meghan Shue of Wilmington Trust break down the market action and where to invest right now. FedEx stock went the other way, closing higher after announcing a reorganization and a dividend hike. Meanwhile, as Speaker Kevin McCarthy met with Taiwan’s President, Lux Capital Co-Founder Josh Wolfe discussed the threats China poses to U.S. companies. Rockefeller International’s Ruchir Sharma makes the case for why the dollar’s days of being the dominant global currency may be numbered. Plus, Betterment CEO Sarah Levy on the pulse of the retail investor. We get reports from our Melissa Repko on on weak March sales for Costco and Kate Rogers on how small business owners are rethinking regional banking. 

A mixed end for the major averages this Wednesday in a decidedly risk-off trading session. That's the scored card on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Ford is off today. Top CEOs, including Apple's Tim Cook and Disney's Bob Iger, are meeting with lawmakers over concerns about China. Coming up, venture capitalist Josh Wolf weighs in on what that could mean for the market. Plus, find out where he is seeing opportunities in the defense sector. Let's get right to the market action of the day. Joining us now is Miller Tabak chief strategist Matt Maley and

Wilmington Trust head of investment Megan Hsu. Good afternoon to you both. Matt, I'll start with you. We're getting some economic news this week, and today was no exception, that has been disappointing or has been weaker than expected. Are we in a scenario now where the market is actually digesting that, and instead of taking it as good news because it means the Fed is going to stop tightening, taking it as bad news because the potential for a recession may finally be here. Yeah, Morgan, I think we're seeing that shift, especially this week, where bad news is actually bad news, or bad news for the economy is bad news for the stock market. Now, the market hasn't been hit all that hard, so I don't want to alarm anybody. But, you know, we've seen these, you

know, with the whole thing with the banking issue, we seem to be past the worst of it in terms of worrying about, you know about a major banking crisis. But just look at two stocks that really stood out to me today. You look at Schwab. Remember when the SBB first one failed? Everybody was saying, oh, geez, Schwab is way down, way too much. This is ridiculous. Well, guess what?

It's down 6% more than it was at its worst closing day at that time and i think people are worried about their earnings i'm not worried about their failure uh but they're worried about their earnings same thing with john deere the stock's down two i'm sorry ten percent in just two days people are starting to worry about a recession these are the kind of stocks that are are starting to feel some pain and i think that raises the specter that a recession is coming, and that means lower earnings and lower earnings are not good for an expensive stock market. Megan, do earnings estimates need to come down? Yeah, I mean, I think they probably do. We're definitely in the camp of expecting a mild

recession this year. There's plenty of indicators to be suggesting that. And we've seen profit margins rolling over. I think the estimates between 220 and 225 over the next 12 months are a little bit too rosy. You typically see in a recession, earnings contract at least 5 to 10 percent, typically more like 15 to 20 percent. And so even in a mild recession, I think we need to see earnings estimates come in a little bit. And what's interesting is sort of what we've been seeing across different parts of the market, where even with all this banking stress and concerns about the future growth trajectory, you're seeing the large cap stocks do very well because they're being led by a very,

very narrow part of the market, whereas small cap, more of a cyclical tilt to it, has definitely been underperforming and we think is probably a little bit more representative of what the market should be thinking about in terms of growth prospects for this year. Yeah. Matt, I mean, we start getting bank earnings next week, tend to be seen as a canary in the coal mine for the rest of earnings season or at least set the stage for the rest of earnings season. We've seen the S&P not only recover its losses from the SVB collapse and the banking crisis of last month, but it has rallied beyond that. One of the sole exceptions has been the KRE regional bank ETF. Expectations around just how noisy earnings could be for the sector?

Yeah, that's going to be a big, important aspect about what happens going forward. One of the things that people have been talking about a little bit on the sidelines, but not so much, is how much lending is going to go on. We've talked about the credit contraction. That's going to be a lower earning. So if their earnings are down, it's going to be one thing. What is their guidance going to be? And if that's even worse, I mean, boy, you know, people are talking about in early May, we're going to get, you know, stuff from senior, the survey from senior bank loan advisors. And it's like, well, I'm not going to wait till May. I mean, I'm already doing, you know, talking to all sorts of people in commercial banking and in, I'm sorry, commercial real

estate banking. These guys are not starting any new, they're not lending any money to anybody in that area. And you look at the ABI data, the architecture billings numbers, they're already coming down, down four or five months in a row. I think they're going to come down even more. And of course, real estate is so important to the economy and so important to banking earnings. And of course, banking earnings are important to the whole economy, et cetera, et cetera. It does do worry that it's going to throw a bit of a wrench into the works of the market right now. Megan, when you've joined us, you've been cautious in recent weeks. Given the narrowness of the leadership and the fact that it is so many of those mega cap tech stocks,

is that where you put money to work right now or do you just keep cash to the sidelines or somewhere else? Yeah, I think it's a little of both. I think you definitely want to play a little bit of defense here and not be out of the market. Certainly, I think that would be a big mistake. You tend to see the market move way before it becomes clear to the rest of us that the all clear is in. And I think the other thing to note is that fund manager surveys, hedge fund positioning, futures indicators all suggest that the market is very defensively positioned. So you don't want to get too on defense because that could whipsaw pretty quickly. But we do have elevated cash. We are underway to equity, specifically in small cap. I think where you want to be focused is definitely in larger size and quality. And that's what has been working of late. And there is

definitely some overlap with growthier parts of the market in an environment where the macro growth indicators are deteriorating. I would not want to be too tied to cyclicals, which tend to have a higher representation and value indices. And then the other thing to pay attention to is what's happening with the dollar. We're seeing interest rate differentials between the U.S. and outside of the world really compress. European core CPI is still accelerating. So while we're talking about the Fed being near the end, there are other parts of the world that might not be. And I think that leads to some dollar weakening as the dollar becomes less attractive. That would help large mega cap stocks as well.

I'm glad you brought that up. We're going to be talking about the dollar a little bit more later this hour and certainly the dollar index at its lowest level since the beginning of February. Megan Hsu and Matt Maley, thanks for kicking off the hour. CNBC senior markets commentator Michael Santoli joins us now for the New York Stock Exchange with today's market dashboard. Mike, what you what you watching? Well, Morgan, one way of representing how narrow the market had been on the upside, especially in March, is just what percentage of S&P 500 stocks have been able to do better than the index itself. And you see, this is near multi-year lows.

This 36 percent or so through through into today, let's say, were outperforming on a three-month basis. So you see, that's pretty much as low as it gets. I mean, occasionally it's a little worse than that. That was the COVID crash. Now, if there's a way to spin this as less negative, it's that the majority of stocks have already been on their heels. They've already to some degree gotten sold out or at least have lagged enough that when the overall market is pulling back like this, maybe they're a little closer to finding their right level. But it should trend a little bit higher from here,

but it has not been a very rich stock picking environment up to this point. Another way of looking at the extremes in relative performances, the performance of JP Morgan shares compared to the overall S&P 500 bank sector. You see, it's just shot to the moon here. JP Morgan obviously seen as kind of the biggest, most fortress-like bank out there, the one that people run to when it's time to look for safety. But when it spikes, when it gets to a peak and comes down, that means usually the overall market is starting to relax and maybe able to rally. That was the very end of 2018. This, of course, is about April, March, April of 2020, as the COVID crash took hold. And now you see it here still scaling heights, not yet pulling back. But you can see everyone's crowded into the perceived safest name in finance. I mean, it makes sense, right?

It's this idea that the biggest bank also could potentially be getting bigger. We don't have the granularity of those deposit flows and how that's been shaking out over the last couple of weeks. But I got to think that's part of the story here, too. 100%. It's the size. It's the balance of businesses. So, you know, I would say Goldman Sachs has not underperformed to J.P. Morgan to a huge degree. But yes, you're absolutely right. It's a net beneficiary. If we're worried about other banks funding costs, if we're worried about deposit flight, it's actually the reverse when it

comes to a J.P. Morgan. But again, there's an extent to where this can get to where it becomes overdone and it should reverse. And that would represent the market gaining comfort that we're not going to have incrementally more systemic stress. When we reach that point, Mike, I expect a chart showing that we've reached it. OK, that is a future assignment for you. There you go. You got it. Mike, I'll see you later on in the hour. Let's turn to another big mover today. FedEx shares finishing up one and a half percent. The company announcing an overhaul of its structure, consolidating the operating companies into one organization that includes FedEx shares finishing up one and a half percent. The company announcing an overhaul of its structure, consolidating the operating companies into one organization that includes FedEx Express, FedEx Ground, FedEx Services, among others, also hiking its dividend by 10 percent. Joining us now

here on set, Broughton Capital principal and managing partner Donald Broughton. Donald, thanks for being here. You were at the meeting today. I was. Were you surprised to hear that they're doing this broad restructuring and bringing Express and Ground together? I was surprised at how dramatic the move was and how quickly they've made it. You know, Fred Smith, the founder, retired. And the meeting in June in Memphis, Raj, the new CEO, talked about what he was going to do next and the cost controls and what they were going to do. And might I add, the cost controls were clearly in place this morning.

I remember back 20 years ago at the 2003 analyst meeting, they gave us all iPod minis. And I went to compliance and said, can I take this? And I didn't even get a pin this morning, not even a pin. So obviously the cost control is firmly in place. But they talked about how the company is changing culturally. If I look at the last 25 years since UPS came public, basically UPS, to their credit, has tripled revenue in that time frame. But FedEx is almost six-folded revenue. But they've aggressively spent on CapEx to do so. They've spent, you know, 5.5% to 10.5% of revenue as CapEx, and UPS has spent, you know, 3% to 6%.

And what FedEx is basically saying is, look, we've caught them in revenue. We've built a dominant global transportation platform network. And now we're going to start harvesting things a bit. That was one of the messages. And the other message is that, look, here's our next agendas on costs and what we're going to do with capital. So you can almost assume that what we announced in June is already done or put in motion to have happen. Do you think we would be seeing these types of changes now if it wasn't for the pandemic and supply chain issues and the fact that FedEx in many instances was caught flat footed or at least appeared to be caught flat footed with its operating structure

as it has existed up until today and what that meant in terms of higher costs, potentially lost business and the fact that UPS thus or at least the stock was able to outperform? No, I don't I and what that meant in terms of higher costs, potentially lost business, and the fact that UPS thus, or at least the stock, was able to outperform. No, I don't think that's as much as it. Well, caught flat-footed, nobody expected the pandemic. Yeah. So we were all caught flat-footed. That said, I think what has happened is there's a combination of things.

One is that Fred Smith, to his credit, built this company over the last 50 years. But people used to talk about, when are we going to see more free cash flow? And I'm like, you're never going to see free cash flow. Jack Welch may have popularized the notion of being number one in everything you compete in or number two on your way to becoming number one. But Fred Smith actually lived it, actually made it happen in the marketplace. He would go find every little nickel and dime that was under the couch cushions of free cash and deploy it in building or buying additional businesses

for his franchise that he was building. But this is a new generation. This is a new management team. And they're clearly saying, hey, we've already built the biggest, baddest. So now let's, why don't we harvest what we've built? So what's your take on the stock? You're bullish.

I am. And here's why I'm bullish. If I look at what they were saying and what they've done, and I see that reduction in costs, I see that reduction in capex, and I look at the, I see a very clear path to more than $30 a share in earnings and a dramatically higher return on invested capital, which ought to drive valuations. And if I look at the valuation disparity between the two companies, I say, well, you know, UPS is basically trading for what? The market cap is basically relatively similar revenues, trading for 2.9 times the market

gap, almost three times the market gap. So if FedEx can do what they're saying they're going to do from a margin and return on invested capital perspective, then arguably the company ought to trade for three times the market cap. And usually a 3 X, even if it takes you three, five years to do, that's a decent return in any market. Does it also just, very briefly, does this also just speak to the fact that e-commerce has become such a big part of the business and that this is going to increase service and capabilities around that business to consumer market versus business to business? Right. The history is clear.

UPS was built on being a business to consumer market. And FedEx was built on being a business to business. And what has transpired more recently is FedEx's entrance into more and more BC. And that's where the growth is going to be. E-commerce is going to grow. I don't think anybody would disagree with that. And so if you've built a franchise that will allow you to provide those services, why not

figure out how to do the best at providing those services for the benefit of shareholders? All right. So we got the strategy today. Now they have to deliver. A little bit of pun intended. Well, there you go. Donald Broughton. Thank you. Don't miss Jim Cramer's exclusive interview with FedEx CEO Raj Subramaniam tonight at 6 p.m. on Mad Money. Up next, venture capitalist Josh Wolf on where he sees opportunities in the defense sector as tensions

between the U.S. and China continue to heat up. Overtime's back in two. Welcome back. Washington heads to Hollywood today. Bipartisan lawmakers from the House Select Committee on the Chinese Communist Party are set to meet with tech and media executives like Disney's Bob Iger, Apple's Tim Cook. The meetings highlight the rising concerns over business connections to China. Joining us now to talk about what this means and so much more is Josh Wolf, co-founder of Lux Capital. Josh, it is great to have you on the show. Great to see you.

The other thing that has been happening this afternoon is you have the speaker of the House, Kevin McCarthy, meeting with the president of Taiwan at the Reagan Library. You and I first came in contact there at the Reagan National Defense Forum a couple of years ago. So I do want to get your thoughts on the dynamics between the U.S. and China and how you think about that as an investor, an investor who specializes very heavily in something like defense tech. You know, it's interesting because it was right before COVID that we sat together on the stage. I think it was you, myself, Peter Thiel. And we actually raised China before this was a very serious national concern. And it is a national concern. We have to make a distinction, one that requires a mix of vigilance, which is that this is a very serious issue with a bit of nuance. And the nuance is this isn't China writ large. This isn't the Chinese people. This certainly isn't Chinese Americans. It is the Chinese Communist Party and the tactics that they have been hard at work over a decade with information operations and a form of warfare that is in financial, technological, and social terms that we all have to be very wary of. So what does that mean in terms of where technology is headed, how you're thinking about making investments, and this decoupling that we keep

talking about between the two countries where tech is concerned. I would categorize it as really two things. One is national resilience. So looking at our domestic manufacturing, and that's everything from chips and novel ways to manufacture chips. We spend a lot of money on fabrication facilities, and we've got a Chips Act. And I'm not too optimistic about it, actually. I'm much more optimistic about some of the entrepreneurs that are going to take a different novel approach at how we manufacture critical chips. We have important things like a company of ours, National Resilience, for biomanufacturing. How do we make sure that the critical medicines and biologics and proteins that we all take as drugs for life-saving medicines, we're not beholden to a foreign adversary? And then you've got other aspects, which are just a decoupling of systems.

You have mobile systems and 5G, you have software systems, you have alliances being formed between countries where infrastructure is being put in, in some cases to help surveil or suppress the rights and freedoms of people. And so it really is going to be a battle, a Cold War of sorts that unfortunately is becoming the case. I wish it weren't so, but it is a very tightly coupled system globally between US and China. We are the two primary adversaries. What it means for tech investing, we're spending very heavily on two areas, which I would consider hard power and soft power. On hard power, Lux is funding all kinds of companies in hardcore defense. So this

is companies like Anduril, which are all domain focused on providing the warfighter with cutting edge technologies, air, land, sea, and space. It's companies like Sail Drone that are going out and producing autonomous systems to reshape the fleet of the Navy and how we intersect threats, whether it's with allied nations like Australia andia and taiwan uh or uh or other peer countries uh it also involves uh surveillance in uh communication systems in space it is quite literally a new star wars there is a space race it is to get assets up into space to be able to monitor surveil communicate and prevent disruption or sabotage of which there are many efforts underway and many have been revealed publicly. Then there's a soft power piece, which a lot of people don't

talk about. Now, historically, soft power, we won the hearts and minds of people by getting them to buy our fashion and our movies and watch MTV and listen to our music, and then winning big medals on stages. And what I mean by that, of course, are Olympic gold medals and Dream Team USA, but there's another kind of gold medal that matters, and that's Nobel Prizes. And when you think about how you win a Nobel Prize, it's by having the scientists and having the scientific technology, the tech of science, the tools

that allow people to make big breakthrough discoveries. And I believe that there is going to be a gold rush. It's that. So how do you enable that from the U.S. standpoint? Education is obviously in focus. STEM is in focus. You don't sound like you're very optimistic about the CHIPS Act. So I wonder how you think about that intersection between the government and the private sector where that talent

cultivating is concerned. Well, the most important thing is following the talent. Capital follows talent and talent follows opportunity. And so if you look at where the opportunities are, if you take that tech of science theme that Lux is investing, these are things like cutting edge microscopes. We invested in a company, Icon, E-I-K-O-N, Nobel Prize winning scientist of Eric Betzig, who lets you see inside of cells for the first time in real time. And we brought on Roger Perlmutter, who ran all R&D for Merck and Amgen, one of the best drug hunters in history. This is a U.S. company, U.S. technology that is going to be highly coveted the world over. You take another company like Stratios, which is doing lab automation, also highly coveted technology, to be able to integrate AI and robotics to run labs 24-7. A company like Benchling that is taking the operating system on how we operate our labs. This is like the Microsoft OS, but for scientific labs. Those are all really ripe areas to invest in

where you can have U.S. dominance really on a competitive global stage. On the aerospace and defense side, again, all domain, air, land, sea, cyber, seeing, I think, better engagement between the private sector and government than ever before. I can tell you, people like Congressman Mike Gallagher out in the Valley right now with President Tsai from Taiwan, he's going around and making sure that Silicon Valley venture capitalists are returning to their roots. And those roots are not, you know, garages where we were just developing computers and halting and catching fire as the TV show went. The roots of Silicon Valley were electronic warfare. And so I think we're going to see a return to Silicon Valley, to matter that matters, as we like to call it at Lux.

And it's really the cutting edge technologies to put them in the hands of the women and men who don't sleep well at night around the world so that we all can. Yeah, Silicon Valley, Silicon chips. Have you found that there has been a shift among private markets, venture capitalists, entrepreneurs to get more engaged in this sector in Silicon Valley or elsewhere in the last couple of years? Because there was a time where we were hearing about protests at Google, about working on Project Maiden. But then you see Russia invade Ukraine, and it seems like there's been a shift in the sentiment. Has that actually been the case? And are more dollars flowing to the sector? You know, there's a slightly pithy comment that, you know, hard times create, you know, strong leaders and weak times create weak leaders. I think we're in a time period

right now where people woke up a year ago in Q1 last year, where you saw a major sovereign attack by land, another sovereign. Suddenly people realize the world is not kumbaya. It's not idealistically simple. It's complicated. And there are people that will do harm to people who are not well defended. I do think there has been a sea change the past decade, for sure. When you had Google employees walking out protesting against Project Maven, simple surveillance of figuring out how do you discriminate between a good person with a pickaxe coming home to feed their family and a bad guy with an AK-47 going to shoot up a school. That was really unpatriotic. In contrast, you saw folks like Microsoft say, we are an American company and we're going to develop

American technology for American government. And I think that's the right approach. I think you're seeing a sea change of people who also don't want to work on ads and nonsense BS stuff. They want to work on matter that matters. Companies like Anduril have really led the charge of saying it is OK if you are a cutting edge technologist, an engineer, an entrepreneur, a software developer, somebody in AI, somebody in optics to work on these really hard, important problems because they are literally shaping the future. So, yes, big sea change. OK. I was having a conversation with some VCs earlier this week, and what they're talking about is the fact that we've seen this pendulum swing from just the world awash in capital, lots and lots of deals, high valuations to almost no deals getting made, unless, of course, it's AI related. What's your pulse on the landscape, the startup landscape right now and what it is to invest in it?

So two aspects here. One is the cost of capital is higher. Always and aspects here. One is the cost of capital is higher. Always and everywhere here. I mean, we went from really easy money and FOMO and people tripping over themselves to fund startups and doing all kinds of silly things. And the cost of capital being low, man, people's horizons went out 20 years. They were funding Hyperloops and all kinds of stuff that attracted, you know, the kinds of stuff that Elon's able to readily raise money for. Now, they became 20-month frenzy projects. Today, the cost of capital is much higher. The number of companies being funded

is way smaller. The talent that is able to attract capital is far scarcer, all of which shapes up for what we believe is going to be one of the best investment periods in the past 20 years, where capital is scarce, valuations are low, really important things are getting funded. I'll say one more thing. If you look at the past 10 years, the best capital allocator has not been Seth Klarman and hasn't been Warren Buffett or Charlie Munger. It has been Xi Jinping. Why? Because beginning 10 years ago, if you followed Xi Jinping's dictum, which was basically, I'm going to allow entrepreneurs to start companies. I'm going to allow foreign capital to come in and capitalize social media, mobile, ad tech, video games to an extent, logistics, transport. All of those things got built up. And then about a year and a half ago, coincident with the downturn, all of those things

got decapitated. Where has Xi Jinping said now capital and talent is allowed to flow? Defense, aerospace, satellites, biotech, semiconductors. The world is going from a SaaS software world of the past 20 years that got eaten to a hard tech, deep tech world. And I think there are a handful of investors and a ton of great entrepreneurs that are poised to capture that. Josh Wolf, it is so great to speak with you, especially on a day like today. I look forward to having you back on the show and appreciate your insights. Morgan, always a pleasure. Thank you. Josh Wolf from Lux Capital.

Costco's monthly sales results are out. Melissa Repko has those details for us. Hi, Melissa. Hey, Morgan. So the results are just in. And for Costco, net sales came in at $21.71 billion for the month. That represented an increase of half a percent from a year ago. Its comparable sales were up 2.6 percent year over year, and its e-commerce was down

significantly, 11.6 percent year over year. That excludes a change in gas price and foreign exchange. Some of the categories that are leading the way are food. That continues to be going strong for Costco, as we've heard from some other retailers. Weaker performing categories, on the other hand, are home furnishings, toys, and jewelry. And that's kind of a continuation of that narrative we've heard from retailers where they're seeing people pull back on discretionary spending. That may explain some of the stock reaction, too, as its stock is down on this news. Morgan?

It's interesting because that has been this theme, right, that people are pulling back on discretionary in a high inflation environment. And given the fact that folks are a little bit more uncertain, we've seen higher end consumers trading down into, you know, store brands, essentially, whether it's Costco or Walmart. I wonder how you think this jives with what we've been hearing from Walmart, which reaffirmed its guidance over these past two days as well. So Walmart is really taking a cautious tone by reaffirming its numbers, and it talked a lot about trying to be more efficient and productive with the sales it has,

knowing that there may be a tougher year ahead. So it's expecting a 4% sales growth rate in the coming years. But CEO Doug McMillan talked a lot today about how the company is focused on increasing profits and kind of squeezing more juice out of the lemon with all the sales that it does have through automation and increased productivity. They're also looking towards higher margin businesses as sales are under pressure and people buy a lot of those low margin items like groceries and so they're looking at things like advertising for example that could draw higher profits more profitability to offset some of the

softness and discretionary sales all right Melissa Repko thank you shares of Costco are down 3% in the after-hours trade and Walmart which popped in the session today is actually under a little bit of pressure perhaps in sympathy as well well the dollar has been in the doldrum actually under a little bit of pressure, perhaps in sympathy as well. Well, the dollar has been in the doldrums recently, down more than 8 percent over the last six months. Up next, Rockefeller International Chairman Rashir Sharma on whether the dollar is entering a bear market and why. Stay with us. Welcome back to Overtime. It's time now for a CNBC News update with Bertha Coombs. Hi, Bertha.

Hey, Morgan. Here's what's happening at this hour. Former Vice President Mike Pence will not appeal a federal judge's order that he testify in the special counsel's probe of former President Donald Trump's attempt to overturn the 2020 election. However, Trump could still pursue an appeal to try to block Pence from testifying about their communications ahead of the January 6th election certification. A Delaware judge, meantime, says he's inclined to force Fox executives Rupert and Lachlan Murdoch to testify in Dominion Voting Service's defamation suit against Fox News. Dominion's attorneys also asked the court to compel live testimony from former House Speaker Paul Ryan in a letter to the court on Wednesday. And House Speaker Kevin McCarthy and a bipartisan congressional delegation meeting with Taiwanese President Tsai Ing-wen in California. McCarthy

is the highest ranking U.S. official to meet with the leader of Taiwan on American soil since 1979. The meeting has increased already growing tensions between the U.S. and China. Morgan, back to you. Yeah, we're going to be watching China now to see what this means in terms of possible military exercises around Taiwan, if it's going to be anything like what we saw with Speaker Pelosi last summer. Bertha Coombs, thank you. Check out the dollar sliding 11 percent off of its year high. Our next guest says the U.S. currency is facing both cyclical and structural headwinds in the years to come, and every indication is showing

a dollar bear market has begun. Rockefeller International Chairman Roshir Sharma joins us now. Roshir, great to have you back on the show. Thanks. Why do you think we're in a bear market? Well, if you look at the U.S. dollar's history, ever since it became a freely floating currency back in the 1970s, the dollar has tended to alternate between bull and bear markets, which last about five to seven years each in duration. The dollars had a very extended bull market over the last decade, where its valuation reached levels that we saw pretty much close to the peak of the past dollar bull markets, whether it was in the 1980s or then again that we saw afterwards in the 1990s. So I think that what I expect now is that the dollar is going to be in a multi-year

bear market because the valuations got very extreme. The U.S. is still very reliant on foreign funding. The U.S. current account deficit is close to 4% of GDP, the largest that any major developed country is running out there. And I think there is a real desire by foreign investors, especially central banks, to diversify outside of the U.S. dollar. So I think these are some of the cyclical reasons why I think that the dollar is set to decline over the next few years. Then, of course, there of the cyclical reasons why I think that the dollar is set to decline over the next few years. Then, of course, there is the major structural reasons which we can speak about. And the single most important point is this, that the decision by the U.S. to impose financial sanctions on Russia over a year ago in the way it did in terms of throwing Russia off the grid will go down as possibly one of the biggest geopolitical

mistakes, because every country in the world, from China to India to Brazil, they're all thinking that we cannot be this dependent on our dollar system. And I think that has far-reaching consequences and makes me more structurally negative on the U.S. dollar. I want to pick up right there. You said Total Energy is finalizing an LNG deal settled in Renminbi in recent days. First time we've ever seen something like this. You have the Saudis and the Chinese getting closer, although I think raises a lot of questions about whether and if you're actually going to see the Saudis sell oil to China in Renminbi as well. Is the dollar's dominance really actually under threat here, or is this just talk about the possibility of it?

No, these things tend to chip away. So a lot of pushback when I speak about the fact that, you know, we're at peak dollar. And remember that this is coming from someone who used to be very bullish on the dollar in terms of a couple of years ago. I think that the problem here is this. It's the arrogance of power sometimes. Because people think there is no alternative to the U.S. dollar, the dollar will continue to dominate. But I think what's happening here is that when people are pushed to a corner, they will come up with alternatives. So we are seeing these bilateral deals that you highlight. The other very interesting development that we've been seeing over the past few months is what's happening with gold. That gold has been steadily increasing.

And why is it going up? Because the biggest buyers of gold in the world over the last few months have been central banks. Central banks are buying up gold in a pretty sizable way. So they are, again, whether it's China, India, other central banks, everyone wants to diversify outside of the U.S. dollar. So the dependence on the U.S. dollar has gotten so big that people are looking for alternatives. And the fear factor that has come after the way Russia was thrown off the system, while maybe the morally correct thing to do, but every country in the world is in self-preservation mode, that what if it happens to them, even if that's an irrational fear?

They're looking for alternatives that they do not want to face such an event, because obviously the financial consequences are very far-reaching if that happened to them. It's such a crucial discussion. It's one we're sure to have more of. And it is key to that rally in gold, which is now well above $2,000 an ounce, which is pretty incredible. Rishir Sharma, thank you so much for joining me and breaking this down today. Thank you. Well, up next, Mike Santoli looks at the recent uptick in the volatility index and what that could mean for stocks. Stay with us. Welcome back. CNBC's senior markets commentator, Mike Santoli, returns. He's taking a look at the recent uptick in volatility, specifically in the volatility index. Hi, Mike.

Hi, Morgan. Yes, and it's been a grudging uptick, I think you could argue, since that March spike we saw after SVB went down. You see the curl a little bit higher, still 19. The index itself, the S&P, has been relatively range-bound with a lot of this rotation. Some people pointing out maybe there's the budding uptrend going on there, some higher lows in this index. So, you know, keep an eye on it. But within the market, it's been very tactical. Individual options, huge volumes. They have now listed options for every day of the week expiring. And you've seen the CBOE, the Chicago Board Options Exchange, the publicly traded shares

of that exchange have been huge performers relative to other brokers and exchanges. This ETF basically does cover that sector. And you see making new highs right here, and it really is just all about volumes, people really tactically trading a market that hasn't made a lot of net headway in one way or another. So you could say that that's a speculative fever, or you could just say people are just using these low-cost, low-risk ways of playing smaller moves in sectors and the indexes. Morgan. Yeah. I also wonder if it's just a reflection of uncertainty. You know, maybe things are OK right now, but we don't know what they're going to look like in the coming weeks or coming months.

So if you want to make money on the market, maybe maybe you think about it in a much more short term, near term right now way. Yeah, there's no doubt when you give people more tools that are more flexible, shorter term, you have very clear payoffs. You know, you know what the underlying price has to be for you to win or lose. Yes, absolutely. It's going to encourage people to do that when they don't have a lot of long term conviction to take and hold risk. All right, Mike Santoli, thank you. Up next, we will take the pulse of retail investors with the CEO of Betterment and find out what is driving the company's record net deposits. Stay with us. Welcome back to Overtime.

Online investment advisory firm Betterment seeing its best quarter on record in terms of net deposits. CEO Sarah Levy joins us now to discuss what is fueling the inflows. Sarah, it's great to have you on the show. I mean, we've had this banking crisis over the last couple of weeks. We know deposits have been moving out of smaller banks into larger ones, but we've also seen record inflows into money market funds. Have you been benefiting as well? We have. Absolutely. Thank you, Morgan, so much for having me. It's always a pleasure. We are seeing this is our highest order on record for inflows overall, which has really been powered by the cash reserve product, which is our high yield cash account. In terms of that

high yield cash account, you doubled FDIC insurance for eligible clients that are using that. Why did you decide to do that? Has that added to the demand for the product? Yes, absolutely. So we, you know, after we saw the sort of what we'll call the banking crisis start to unfold, what we heard from our customers is they were looking for safety, they were looking for yield, and they were looking for liquidity. And our cash product really provided all three already, but we saw an opportunity to raise those FDIC limits. And we now offer $2 million limits for individual accounts and $4 million for joint accounts. And so, if you imagine a couple coming together, they could actually qualify for

$8 million in FDIC insurance, which, you know, who knew that FDIC insurance was something that the average investor was going to come to understand and really care about. But the minute we saw that and heard that from our customers, we thought there was a great opportunity to build on the trust we have and they have with us and offer that security for them. Yeah, I mean, you just touched on it, but are you seeing more and more clients on your platform chasing yield? And if so, how are they doing that? We absolutely are. So we right now are offering 4.2% yield in our cash accounts, which again is a completely liquid account. And the way we're able to do that is through a sweep account with 12 different program banks. And that's why we're able to do that is through a sweep account with 12 different

program banks. And that's why we're able to offer a higher FDIC limit. And so what we've been seeing really is that the lion's share of customer deposits are either going into cash or going into retirement. And the place in the short term where they're putting fewer funds is in taxable investing accounts. All right. Have people changed their risk profile? And I ask that because you're a robo-investor. You go on, you sort of decide as a client, you decide, you know, what your risk appetite is, and then the options are put in front of you accordingly. Have you found that with all of the market mayhem, all the volatility, folks have been reassessing or rethinking what they're willing to do and how they're willing to do it.

So I think in general, I would say yes, in that the sort of risk-off posture is why we're seeing so much activity in the cash inflows. But I would also say that as a robo-advisor, one of the sort of philosophical underpinnings of what we offer is about long-term diversification and providing sort of a port in the storm in times of volatility. And so we've also seen, very interestingly, historic low outflows. So I would say outflows low and inflows shifting more risk off. I'm going to ask you about crypto because you launched an offering back in October of 2022. We've obviously seen the crypto contagion, but we've also seen this incredible rally in Bitcoin specifically in recent weeks. Has that affected behaviors

of your retail clients? So we have seen inflows into crypto. I think you're exactly right to say that in October, when we launched a diversified crypto product, it was sort of the crypto winter had begun. And so the good news for our customers is that customers who joined us when we entered the crypto game are now up anywhere from 25% plus in their portfolios. And the behavior that we encouraged was small recurring deposits. So they've been putting in money kind of slowly and steadily as part of a diversified picture. And again, I think one of the things that's important about our advice to them, because fundamentally we're an advice platform, is that we recommended keeping that allocation to crypto below 5 percent of their overall investment dollars. And largely,

our folks have followed that advice. Sarah Levy, great to have you on. Thanks for joining me, CEO of Betterment. Thank you so much. Up next, we will break down the huge move higher by the utilities sector. What's been powering it? Stay with us. Welcome back to Overtime. Check out the utilities sector, which keeps outperforming the market, finishing the day up 2.5% and leading the S&P higher. The sector is, well, the S&P wasn't higher, but this was. The sector is now up nearly 8% over the last nine trading sessions, as we've also seen yields come under

pressure, too. Leading the sector today, American Electric Power, Accel Energy, First Energy, and Centerpoint Energy. Coming up, regional bank stocks have not been so lucky. They've been crushed since the collapse of Silicon Valley Bank, and now they may be facing another big headwind. We've got those details when Overtime returns. Welcome back to Overtime. Following the collapse of Silicon Valley Bank and Signature Bank, some small business owners are rethinking their relationships with the regional banks. Kate Rogers has the details. Hi, Kate.

Hey, Morgan. That's right. In the wake of those collapses, some small owners are reevaluating those relationships and also facing new challenges. We spoke to Jason Duff. He's the founder of Small Nation. It's a real estate development company in Belfont, Ohio. Duff is restoring historic buildings downtown there and was turned down for a loan on one of his projects in the last month by a community bank. The same week that SVB had its announcement, we were presenting in front of loan committee. And unfortunately, just based on the amount of capital that we were requesting, the loan coverage ratios the bank needed, they turned us down. And that was disappointing news to hear that because we have small businesses that were ready to move in. Now, he was able to move to another community lender to secure that funding, but he says he's assessing his relationship with all three of his banks and understanding how they work, he says, is key in this environment. Duff is not alone. We know that money is being moved around.

It's evident in data from the Fed through the week ending March 22nd that shows a drop off in deposits held at smaller banks since the SVB collapse. Morgan, so very interesting stuff at play here. Back over to you. It is very interesting, Kate, and it raises the question that what is the bigger picture lending environment right now for small businesses overall? Do we know yet? It sounds like it's still early days remains to be seen. We're going to hear from the NFIB on Tuesday. They have data on this front, but we do have some new data from the National Small Business Association. It shows that more than half of owners that responded to a recent survey they put out said that they were not able to obtain adequate financing in the weeks after SVB. A third also said terms had become less favorable. Only 9 percent, though, say that new challenges have arisen post-collapse. So

perhaps some of these issues were already in play. They talked to more than 500 small business owners for this survey. We'll continue, of course, to be in touch with owners on the ground and keep reporting on this. Yeah. And of course, quickly, Kate, I mean, when we talk about small businesses, we're talking about some of the most robust job generators in the country. Yeah, certainly. And those jobs continue to be created by these Main Street businesses. And so many of them rely on these regional and community lenders to keep them afloat. We saw it with PPP. I mean, that really, you know, finalized and cemented the relationship between those two parties. And they turned to them for those loans when they needed them.

And they continue to really rely on them in times of need, for sure. Yeah, it's a key story. It's one we know you're following closely. And we will bring you on as it develops in real time. Kate Rogers, thank you. Just going to get a quick check on the markets. It was a mixed picture today. The Dow eked out a gain of 80 points.

The S&P finishing down slightly. 40.90 was a level there. The Nasdaq was the big underperformer, down 1%. You got Levi's Constellation. You also have jobless claims tomorrow. That's going to do it for us here at Overtime. Fast Money begins right now.