Closing Bell - Closing Bell Overtime: Market Tug-O-War. 05/24/22

Episode Date: May 24, 2022

Dow closes positive after being down 515-points at session lows. Professor Jeremy Siegel from Wharton School weighs in on the market volatility. Plus,star venture capitalist Rick Heitzmann from First Mark Capital talks about the next shoe to drop in the social media stock sell-off. And, Michael Santoli looks at “lines in the sand” in his “Last Word.”

Welcome to Overtime, everybody. I'm Scott Wapner. You just heard the bells. We right here just getting started. We're waiting on Nordstrom earnings. We'll bring you those numbers and the color as soon as all of that happens. Critical earnings report given what's going on right now in retail. I'll also speak today to star venture capitalist Rick Heitzman on what Snap's shocker means for the rest of the social space. We do begin, though, with our talk of the tape. The tug of war currently underway in this stock market. What that means to your money. It was on full display yet again, especially into the close today. Let's ask the famed Wharton professor, Jeremy Siegel.

He is back with us today from Philadelphia. Professor, welcome back to Overtime. It is nice to see you. Nice to see you, Scott. I do feel like we had an old-fashioned tug of war here, especially going into the close. Those who want to take the market higher, even if it's a bear market bounce, and those who say we haven't gone down hard and fast enough to really justify where we are.

Yeah, well, you know, the first three and a half, four months of this year, the decline was because of the rise in interest rates. The recent weakness is what I call the numerator, and that is earnings, because the price of stocks is earnings over interest rates. And, you know, we've had that rise from the Fed. And now there is, for the first time, concern about that earnings. And by the way, earlier today, you know, I look at the money supply as a very important indicator. We had at one o'clock announcement today the second largest monthly decline in the money supply in more than 60 years. Wow. You talk about contraction.

I mean, you know, you know, the big mistake of the Fed was 2020 when they put too much money in and 2021. We don't want to make too much mistake. Are they going to try to just take it all away in 2022? I'm I'm beginning to get a bit concerned about overreaction and maybe some of the weakness we see in the economy is because uh you know the the fed is withdrawing liquidity perhaps a bit too quickly i think they could go i mean professor you've been the loudest person on the network over the last couple of months saying the fed needs to do more now you're telling me they're doing too much they just got got started. I know. Well, first of all, their talk of what they're going to do, we've seen how that has tightened the markets, you know, bringing the long bond over three, bringing mortgage rates over 5%. I mean, you saw home sales today, Scott. I

mean, you take a look at some of these monthly reports. I mean, a snap. Is that a warning? Is what we're seeing from the retail is a warning? Now, listen, they definitely have to move up 50, but their July meeting, and I would just recommend that if they would look at the money supply, they wouldn't be in the position they are today back in 2020 and 2021. Are they going to say, oh, we're going to get the money supply all the way back down? You are for sure going to have a recession and a bad one in 2020, 2023. You know, my feeling is that maybe there's a lot of inflation in the pipeline. Listen, they can't do a lot about it.

That's all really because of the liquidity they put in. It's not like steering a wheel in a car. Oh, well, just turn this lever. Inflation goes down to 2%. No. Maybe they should accept the inflation in the pipeline, go easier, get us back down to the 2% to 3% long-term that they want. But, you know, right now, as I said,

I mean, that was a pretty shocking statistic for me because, you know, I based all my inflation forecast two years ago and a year ago on this money supply. I had never thought that I was going to see a decline. Wow. So pulling money out of the system at the same time that the economy may be weakening faster than people initially thought. You mentioned the home sales report. I mean, manufacturing miss, services miss, composite PMI miss, Richmond miss, your new home sales miss, month over month miss. But let me read you this. This from Bill Ackman today on Twitter, Professor, in terms of what he thinks would stop

what he calls the market spiral. What would end it? It ends, he says, quote, when the Fed puts a line in the sand on inflation and says it will do whatever it takes and then demonstrates it is serious by immediately raising rates to neutral and committing to continue to raise rates until the inflation genie is back in the bottle. Stocks of real businesses are cheap once again. Markets will soar once investors can be confident that the days of runaway inflation are over. Let's hope the Fed gets it right. I hear you saying to people like Bill Ackman, that is way too much from the Fed. And now you're worried that they're going to overdo it.

Well, I'm just saying that they've got to keep their eyes on two things. One is the interest rate and the other is the supply of liquidity uh you know don't forget we move from unbelievable fiscal stimulus to a situation a big you know biggest one-year reduction that we had since world war ii in in the budget deficit there's no stimulus coming from anywhere with restriction you know there's a question let's the the a lot of that inflation is in the pipeline. You know, you want to absolutely crush the economy to get rid of it right away or say, I'm going to let some of it just move through in immediately is to cause one of the, an extremely severe recession. My, my feeling is, listen, that, you know, I've been saying go to neutral, you know, that they've been too slow. I'm just saying they've got to look at money as well as interest rates. They never talked about money. Had they talked about money in 2021, we would not be in this situation today.

Hey, Professor, bear with me for two seconds. I want to show everybody shares of Nordstrom, which was reporting earnings and the stock is soaring. There it is by 17 percent. You talk about a closely watched earnings report at this particular time, given Abercrombie is down 29 percent today. And there's so much focus lately, folks, on retail. And maybe each story is going to turn out to be a little bit different based on how each of the management teams are dealing with the environment and how shoppers are different depending on which store you look at. You saw inventories up massively at Abercrombie and Fitch up 45%, Target up 43%, Walmart up 24%, Kohl's up 40%. Now, I promise you, as I always do, we're going to get the color inside this report. Courtney Reagan, our expert, is doing that,

and she's going to come on and let you know exactly what the story is for why shares are popping 19% as we're having this conversation. And, Professor, it leads me back into you to talk about the consumer. Maybe we're over-reading. We see one report, and we say, oh, the consumer's weakening. Then wereading. We see one report, we say, oh, the consumer's weakening. Then we see another report like this and we say, no, maybe they're not weakening at all. They're just being selective about where they're spending their money. And you have to have the right mix of stuff and you have to have the right amount of stuff back in the storeroom,

not overflowing to the rafters. Well, I think that both are important. I mean, listen, we all admit, you know, what's happening with gasoline prices is hurting the consumer. I'm more very worried about this winter because I see what's happening to natural gas prices, the main source of heating, another shock to the consumer. There's no fiscal stimulus. Yes, we've had way too much in 2020 and 2021. But now what are we going to do? Just say, all right, we're going to reverse all the hat, throw us in a recession and stop the inflation. Or yeah, you know, there's inflation in the pipeline. We're going to get ourselves down to a sustainable path and let that pass through. Don't forget the official statistics

on inflation are very lagged. We know that about housing. We know that there was a lot more inflation in housing than the official statistics show. So we're going to have that dribble of housing inflation that's going to go through the next two or three years. So if they really want to stop the CPI statistics inflation, they will have to go to a deflation now. And that would be tragic. So they've got to recognize the reality. They've made some bad mistakes. Are you going to turn 180 and slam the economy? Now, I'm not saying they're doing wrong. They've got to start moving up. They were way late on all these things. I'm just saying, keep an eye on, don't panic and overdo it. Yeah. Lower markdowns. I'm just saying, keep an eye on, don't panic and overdo it.

Yeah. Lower markdowns. I'm just speaking about Nordstrom before I ask you another question, professor, just because we're showing everybody at least a little bit of the color here, lower markdowns. So they're being able to deal now. I'm not naive to the fact either that Nordstrom has a higher quality, a higher clientele, if you will, not towards the lower end of the retail spectrum, obviously, like a Walmart does. And maybe that's playing a role. Courtney Reagan, you've gone through the release, or at least you're going through it. What's the story here?

Yep. Yeah, Scott, so obviously the shares are jumping here in reaction. Nordstrom is reporting a slightly larger than expected adjusted loss of $0.06. The street was expecting $0.05. But the revenue is much stronger than expected, $3.569 billion. The street was looking for $3.28 billion. So that's up about 19% total. The Nordstrom full-line stores, those sales were up more than 23%.

And the Nordstrom RAC, that's the off-price segment, those were up 10%. They're calling out sequential improvement getting towards pre-pandemic levels. And that's a key area that analysts are focusing on because that had been a weak spot recently. As you mentioned, merchandise margins improved, listen to this, as the company says, as a result of favorable pricing impacts and lower markdown rates. This company looks like they handled the supply chain issues well, and they're looking forward actually for their earnings above the street's expectations. So for full year earnings, they're looking at 320 to 350, and the street was only looking for 313.

And then President Pete Nordstrom has an interesting quote here. He says, looking ahead, we're committed to driving additional merchandise margin improvement and increasing supply chain productivity to deliver incremental profitability. I mean, that is pretty fabulous stuff when you've seen so many of these big box stores really struggle to figure out how to manage these cost pressures that were really coming at them, that were external pressures. And then they're talking about strong apparel sales, shoe designer, the strongest growth since last year, when you're looking at last year with consumers refreshing their wardrobe to go back to events, occasion, and back to work. It looks like Nordstrom is in business this quarter, Scott. That's for sure. The stock certainly is. Courtney, thank you.

We'll hear from you again this hour if you find out anything more regarding this earnings report. Stock, as we said, is surging. Professor, I want to bring it back to you before I welcome in some other guests to continue the conversation. And that's about the market specifically. Just to give everybody and you an idea of how bad it's been of late, and this from Bespoke at 21 minutes after three today. The number of times the S&P 500 has traded in positive territory for the entire session over the last 100 trading days is the fewest since May of 2009. So that leads me

into a question to you as to whether you think that we are at a bottom, close to a bottom. You've seen a lot of markets over your years, Professor. We haven't had that capitulation event, the VIX go to 40 or beyond, as some people are saying you have to have. What do you think? You don't have to have it. You usually have it. I mean, one thing about the stock market, I don't think there's anything where you have to have something to call the bottom. I think we're still within 5% of the bottom. I still think earnings are going to come in well. And you're perfectly right. I mean, think about who is being hurt from this inflation. Lower income people where gasoline is so much more important. And also,

look at one third of Americans rent their homes. Rental prices, rental costs are up 20%. If you own your home, my God, you have bonanza. We all know home prices are up 20, 30, 40%. Home equity is fine. So look at the type of people that are really being hurt. It's the lower third, lower quarter, lower third of the entire income bracket and includes 80 million people. And, you know, you're right. Walmart, Target, they're serving those. Those people are really hurting. And that's why inflation is sometimes called the cruelest tax of all,

because it really hurts the poor the most. No doubt. That's a scourge. Higher clientele, Walmart, target, lower clientele. Yeah, we're not naive to that in any way and sympathetic, obviously, to what everybody is going through in terms of the prices that we've seen at the pump and everywhere else. As I said, let's expand the conversation if we could. Bring in Joe Terranova from Virtus Investment Partners, Eugene Profit from Profit Investment. It's great to have both of you here. Eugene, let me get your reaction first.

You are a Nordstrom shareholder. So what do you think off of what you've seen so far? Well, I've stopped holding my breath, Scott. I think that I bought Nordstrom about three quarters ago and they had missed the previous three quarters until the first quarter they came out swinging. They were a very poor performer in a pandemic. I thought that it was going to be a factor of whether or not they kept the pricing high enough and it kept this business line. That seems to be what they were able to do. They've been able to get their online strategy

in place and have the things in stock that customers want. But I was actually advocating for putting a put under the stock to put an earnings now just to make certain so you wouldn't get decimated if in fact the margins compressed. I'm glad they didn't. They're down 10 percent for the year. But this is a stock 6.6 PE that you had a 3.7 percent dividend yield in and you could

have bought that at the start of the day. So there are some stocks out there that are performing, but I definitely would buy insurance on them. Yeah, I can understand the nerves you must have had to going into this number. You take a look at some of those retail stocks of late. And today, as I said, Abercrombie down 29 percent. You see that going into an earnings print. You're like, oh, I hope they deliver. So what's your take, Joe? Joe Terranova, as I said, he's here with me at Post 9.

Well, where we are now, what I said was kind of like a tug of war feel today. Are we going to have this continuation of a bounce or are we going to give it all back deja vu? Real quick, when all else fails, authorize a 500 million dollar buyback program. That's what Nordstrom did. And that's basically what companies are doing right now. But listen, you have dramatic bifurcation in the market right now. And a lot of it has to do with the exacerbation of this condition in which liquidity conditions continue to deteriorate. And the professor spoke at length about that. And I think it's very important to understand the effect of that on the way risk assets are pricing. Think about the effect of liquidity in terms of on a Sunday

afternoon when liquidity is injected into the market, you basically open every door to the stadium. You let 80,000 people in as fast as you possibly can. When liquidity is removed, you close all the doors except one. And that's exactly what is going on right now. The reason why markets keep... I thought you were going to describe trying to get out of MetLife Stadium after a game. When markets keep rallying and failing because the magnitude in terms of the position size that correlated with hyper growth equities and the size of the Federal Reserve's balance sheet growing to $9 trillion is massive. There is no way that we have seen the leverage and excessive speculation in that component of the market been completely liquidated. And it's the reason why I keep trying to get people I'm advocating for, Merck, health care companies, Coke, Pepsi. That's what you want to own right now.

Energy, too. I mean, you've been advocating for that. Energy as well. But, Scott, the liquidity deterioration, we are in a process where we're liquidating those hyper growth stocks and we are nowhere near completing that process. Okay, so, Eugene, I want you to react to what Joe just said then. We are nowhere near the end of that process. I wanted to ask you,

I mean, the NASDAQ has obviously been the epicenter of this downdraft that we've all been experiencing. Do you also feel as though the NASDAQ, let's speak about the NASDAQ specifically for a moment, since Joe was talking about growth, that that has a lot further to go down before it settles? Not necessarily. I think actually S&P and the Dow probably will come down more than the NASDAQ. You have the largest NASDAQ companies still trading above bear market territory, but most of those companies have earnings. A lot of decimation is already in place. I think, Scott, the biggest risk to the market is what the professor pointed out, which is the macroeconomic condition of interest rates and liquidity being taken out of

the market at a very rapid pace. I mean, that housing number today was pretty scary. And I think that you still can buy NASDAQ companies, but definitely stay with the quality companies that growth rates are sustainable. And even if the growth is reduced and earnings are reduced, if they're market multiples, they still are trading at a much lower premium to the market than they have been over the past three to five years. And my intention is to buy securities that are going to survive through the bear market or this downturn and be there over the next three to five years when we come out of it. And the day-to-day mechanisms are maybe going to kind of sleep a little bit better. But some of the riskier stocks, as I said, you probably want to put some portfolio insurance around your portfolio to get through this period. Yeah, and I think people are doing that.

Professor, to you on the NASDAQ as well, do you feel like it's come down enough or is that part of the market still overvalued? Well, first of all, this is absolutely not a 2000 situation. And some people say, oh, my God, we all know Nasdaq went down 80 percent. So it's down 32 percent. It may have another five, six, 7%. It's still an over 20 PE based on next 12 months while every other market actually in the world is in the teens right now. So, you know, if, you know, I still think the shift in psychology is away from high PE, higher PE stocks, and certainly as we see even today, again and again and again, those that were based on revenue and not on earnings. I still think we're going to have the value stocks outperform the so-called growth stocks over the next six months, as they certainly have over the over the last six months. Last question to you, Joe. I just saw a stat before the show started on energy. S&P energy sector is now closing in on five percent. All right. It was two percent in November of 2020. Gives you an idea of how much money has flowed to that part of the market. Is that in danger of getting hit as that last sort of sector that people have talked about that they haven't come

for yet. And you're not going to get that bottom until they take energy out. Because you've advocated for energy. You keep buying energy stocks. I do. And in Jyoti, we hold a 6 percent weighting towards energy. So my response to that would be I don't know tomorrow morning. And I hope that there's a favorable resolution between Russia and Ukraine. And if there is, energy is coming down. So from a risk management perspective, in terms of allocating towards energy, you're at the ceiling. Where do I want to go? I want to follow the path that the professor just spoke about, which is going towards other value sectors, health care, financials, select materials,

growth at a reasonable price. I would even include in there as well. So I think it's more of a reallocation. That's the right way to think about the strategic perspective. All right. Good stuff. I appreciate you being here. That's Joe Terranova, Eugene Profit. My thanks to you as well. And of course, the professor. I know that we'll talk to you again soon in the days and weeks ahead. Professor Jeremy Siegel at the Wharton School. Up next, we're breaking down the snap drop. The social media giant plummeting more than 40 percent today. What that move means for the rest of the social space that's coming up. Plus, is it time to trade the big banks? One halftime committee member making the bull case for that space.

We'll find out the name they are betting on. Overtime's back in two. The worst day ever for Snap shares today after the company warned the guidance it gave just three weeks ago is no longer accurate. Our Julia Borson here with the fallout as other social names get slammed as well. Not a pretty day, Julia. Not a pretty day. Snaps 43 percent decline today, dragging down the rest of social stocks as well. Metashares down 7 percent. Pinterest down 23. Twitter down five and a half percent. Other ad supported names are also suffering. Alphabet and Amazon, both of those companies trading lower, Alphabet down by five percent. Now, that's because Snap raised red flags

for the entire sector in its warning, quote, macro environment has deteriorated further and faster than we anticipated when we issued our quarterly guidance last month. Its quarterly revenue growth is now projected to be less than 20%. That's down from the 44% revenue growth that Snap reported at the beginning of the year. Now, SensorTower tells us that in the first seven weeks of the second quarter, the top 10 U.S. advertisers spent only 2% less than in the prior seven weeks. That means the declines are coming from the international and also the smaller ad buyers. Tomorrow, there are annual shareholder meetings from three of the companies whose stocks suffered today as a result of Snap's decline,

Twitter, Meta and Amazon. So we'll have to see if in those shareholder meetings, they echo any of Snap's warnings. Scott? Oh, there might be something else on the agenda for the Twitter shareholder meeting, too. I can't wait to see what comes out of that. And I know you'll have more on that tomorrow. Julia, my thanks to you. That's Julia Borson. Now let's hear from the money. A shareholder in several tech stocks, including Twitter and Alphabet, Ryan Jacob of Jacob Asset Management. He's on the phone with us today. It's good to have you here. What do you make of this today from Snap? Well, you know, Snap's having some of its own issues that are specific to the company. I'm a little less inclined to believe that this is really going to read through too much in the rest

of the social media space. The story's really been competition. It's been TikTok, Facebook. It's really impacted the results. So now you have a bit of ad weakness on top of that, and it exacerbates their problems. Are you worried about Alphabet? As a result, I mentioned you do own that stock. And if this is beyond a social media story, if you will, and is more of a direct digital advertising story, are you concerned? I think the social media plays that have the higher brand advertising exposure. So when you look at a Snapchat, it's somewhere around 50% in terms of brand ads. And then when you look at a Google or even a Facebook meta, which we don't own,

you're looking more in a 10% to 20% range. And those are the kind of numbers or kind of ad spends that could get cut quicker than some other advertising spends where they're seeing higher returns on investment, where it's more measurable. So I think that's where you'll see less sensitivity and probably more sensitivity to those companies that have the brand market exposure. Curious of your view of the landscape in general. I mean, this is not your first tech blow-up rodeo. And I don't know if you just heard my conversation with Professor Jeremy Siegel of the Wharton School, who said this is not 2000 all over again. Do you agree with him or not?

I do. I think anyone who's been through that period realizes that that was more of a generational bear market, especially when it comes to tech. You had endless supply of VC money, funding companies that were just becoming customers of each other. When you look at the tech sector today, it couldn't be more different. Most of the largest customers to the tech leaders are Fortune 500 companies. I mean, we're no longer dealing with experimental-type purchases. These are core-type businesses for them or core-type expenditures, whether it's advertising, infrastructure, other types of tech spend they're making.

This is really to upgrade and move on to next-generational systems that are really important for them in the future, and that spending won't stop. It's good to talk to you, Ryan. I appreciate your time. That's Ryan Jacob joining us today. Let's get to our Twitter question of the day now. We are asking, is Snap's sell-off overdone? You can head to atCNBCOvertime to weigh in. Yes or no, we'll have the results later on in our show.

Up next, betting on the bank star analyst Mike Mayo made the case for the sector yesterday in OT. Now, one halftime committee member is getting in on that action. We'll break it down next. It is time now for a CNBC News update with Shepard Smith. Hi, Shep. Hi, Scott. It's happened yet again in America. Late breaking reports of a school shooting, a mass shooting at the small town of Uvalde, Texas, which is about 84 miles to the west of San Antonio. We now know at least two people are dead. Thirteen others have been taken to a local hospital and are now being treated, according to hospital personnel. In addition, an adult man and one of the students, elementary school students,

taken all the way to San Antonio to a trauma center there where they're being treated. What we don't know is details of what's happening right now inside that school. It's called Robb Elementary School in Uvalde, Texas. The authorities are planning to hold a news conference in just a few minutes, but there are varying reports of chaos inside that school and what may be a very, very disturbing scene. NBC News has confirmed that a shooter or a suspected shooter is in custody. There are also multiple reports that the shooter may have died throughout all of this. Again, Uvalde, Texas, 84, 85 miles from San Antonio. We're expecting a police news conference in just a few minutes.

Here's some video that just come in. This is from the police department there. They've been working in connection with San Antonio police. This happened about three hours ago, or it began about three hours ago in Uvalde, Texas. Again, confirmed now, two people killed, at least 13 injured in one hospital, two injured in another hospital, waiting for a news conference from the school that should be happening in just a matter of minutes. And we'll have details and a live report from the scene tonight on the news. 7 Eastern, CNBC. Scott, back to you. Yeah, appreciate it, Chip.

Thank you. We'll join you then. We're getting some fresh developments out of Washington as well regarding Russia. Our Kayla Tausche has that story for us. Kayla. Well, Scott, we've learned that the Biden administration is pushing Russia closer to a default on its debt. The Treasury Department allowing a waiver to expire that allows U.S. banks to process payments for that Russian debt, which will expire tonight at midnight. So beginning tomorrow, U.S. banks will officially not be allowed to process those payments. And that will cause Russia to encroach even closer to a default on its debt. The administration's previous message has been that Russia needs to

make a choice as to whether it decides to fund its debt obligations or fund its war in Ukraine. But Russia has continued to get revenue from energy sales to Europe, India and China. And so it's been able to continue paying that debt. And we'll see what this change does to that prospect. Scott. All right, Kayla, appreciate that. Thank you, Kayla. Tell us your force in D.C. In today's halftime overtime, another bullish call on the banks. Less than 24 hours after Mike Mayo sang the sector's praises here in overtime, halftime's Josh Brown also says now is the time to buy the big banks. I think J.P. Morgan, Citi, Bank of America, they're buyable right here. You just have to live with the fact that the first 10 percent might be down, not up. I can live with that because I'm a young man. But that's the way I would look at those names. And I think JP Morgan here in the low 100s is a home run.

All right, Joe Terranova is back with us. A matter of fact, you just bought JP Morgan yesterday. I did. Off the meeting? Sure. I love the confidence from Jamie Dimon. You want to see that from the C-suite. I agree with Josh's comments. I think you could accept here maybe 5% to 10% on the downside, knowing that there's a tremendous amount of upside.

I think that Warren Buffett really set the tone here a couple of weeks back, announcing some of the purchases. Oh, the Citi purchase. The Citi purchase. Okay. He set the tone there. Keep in mind that in 2021, which was our record year for buybacks, 25% of overall S&P buybacks came from the financial sector. Those companies are going to be buying back their shares here. So I think we're continuing to look for a market bottom.

Well, in financials, the market has already kind of found its bottom. You're seeing credit conditions, high yield, investment grade, perform better in recent days. Credit spreads no longer widening. Brian Moynihan and Jamie Dimon both talking positively. So I think financials benefit here. And to your point previously, if you see that energy is at the ceiling and there's a little bit of a reallocation trade, I think financials are going to benefit from that. Maybe energy. Some money comes out of the energy trade and goes into perceived value trade like the banks.

You own Bank of America and Morgan Stanley as well. And T. Rowe Price. And T. Rowe Price. And T. Rowe Price. And Joe T. owns Regions Financial and Fifth Third. So you have some regionals in there as well. Asset managers actually have a high sensitivity to an improving environment for equity. So if you think the second half of 2022 is going to be a good one for equities, you want to take a look at asset managers, T. Rowe Price, BlackRock, and you'll be rewarded for that. All right. Appreciate you sticking around. That's Joe T. here at Post 9. All right. Still ahead, venture capitalist Rick Heitzman sounds

off on Snap's big drop, why he's calling it a canary in the coal mine for the consumer. He'll join us ahead. First, though, Christina Parts-Novellos, always tracking the action in the OT forest. Hi, Christina. Hi. So we have another retailer that's warning inflation is eating into margins. And we'll get another look at the U.S. housing market with Toll Brothers' latest earnings. All of those names and much more after this short break. Let's get a check on the biggest movers now in the OT. Christina Partsanovalos has that for us as always. Christina.

Well, we're going to start with shares of Toll Brothers. Moving on earnings, the top estimates, the stock is up over 3%. And we know the housing market is still hot by historic standards, but the market is cooling slightly because of record home prices and rising mortgage rates. We got that news earlier today. On this particular earnings report, the CEO, Douglas Yearly, saying demand is still solid, but noting it has moderated over the past month due to that exact reason, mortgage rates increasing in other macroeconomic conditions.

So, Jungeer's Urban Outfitters, which also has anthropology and free people under its umbrella, posted some weaker-than-expected earnings after the bell, missing both on the top and bottom line. The CEO stating, quote, Unfortunately, the impact of inflation on our costs of doing business more than offset the benefit of record revenues. You can see shares are about half a percent higher right now, but still down over 40 percent this year. And lastly, the maker of TurboTax and Credit Karma. Intuit, seeing its shares move in the OT to the upside almost 3% higher, the company beat on earnings and revenue

and raised their revenue and operating income guidance for 2022, driven by small businesses and self-employed individuals. Scott, back over to you. All right, Christina, thanks so much. Up next, our two-minute drill where one money manager is finding opportunity in this volatile market. We'll be right back. Let's do the two minute drill now and bring in Victoria Green, the CIO and founding partner of G Squared Private Wealth. Victoria, it's nice to see you. Let's go through some of these picks if we could. Devin is the top pick that you have in the energy space, liked by Lee Cooperman, who I've spoken with before. Jim Cramer likes it as well. Why do you?

Well, I mean, I think I liked it first, maybe. I'm going to give myself a little credit here. We've liked them a couple of years. We'll give you props. But look, they've got awesome free cash flow. They're printing money. They're paying out their fixed plus variable dividend. Their break evens are low. They're paying out their fixed plus variable dividend. Their break-evens are low. They're only about 25% hedged now. And even at $90 a barrel oil, their free cash flow yields about 14%, right around where we are right now. At $100, you're talking about a 16% free cash flow yield, and they're continuing to buy back their share.

There's a lot to like here, and they just have great acreage, and it's really a good place to kind of bunker right now. You're going to get paid. You're getting a great yield back. And I don't see energy prices coming down anytime soon. I know we've had this huge spike. I really don't see this coming back down like it did in 08 just because of the supply and demand disruptions. We like the energy space in general, but this is definitely our top pick. And it's a great way to kind of weather some of the volatility we're seeing right now. All right. Now, speaking of things that have come down, NVIDIA, which is choice number two. You're still smiling when I talk about NVIDIA, though. It's come down a lot. Is that why you like it here? Because it's gotten so much cheaper than it was?

I think they're a diamond in the rough. I understand right now getting in the tech sector, recommending tech, especially a semi is catching a falling knife. But I think these guys are best of breeds. And you look at some of it, it's not all chip manufacturers are the same. You saw AMD come in with pretty solid results, even though Intel struggled. And we think they have a superior product. And don't forget, they have a lot that they have going for them with the graphics chips and the self-driving cars. So I see this also at the play going forward. This year, their data centers might actually outweigh and out-earn what they did in gaming, but that's okay. We like a

company that continues to evolve and has diversified income streams and always looking forward. Victoria, I appreciate it so much. I've got more breaking news. I'm going to have to run, but we'll see again soon. That's Victoria Green. Let me get back to Shepard Smith now. More on this just devastating news out of the state of Texas, Shep. And Scott, it's gotten much worse. I'm sad to report this afternoon. The Texas Governor Abbott now reports 14 elementary school children are dead and one adult is dead after a shooting at Robb Elementary School in Uvalde, Texas. It all began about 1 o'clock Central Time, local time, so about 2 hours and 45 minutes ago, with a lone gunman, a gunman who our own reporting indicates is an 18-year-old male who is now said by police to be no longer a threat.

We don't know if that means he's in custody or if he may have died during this. At any rate, he's said no longer to longer a threat. We don't know if that means he's in custody or if he may have died during this. At any rate, he said no longer to be a threat. Two children were killed or notified dead at the hospital. And since the governor has announced that including those victims at the school, a total of 14 elementary school children have died and one adult is dead. The shooter is no longer a threat. Uvalde, Texas is about 85 miles outside of San Antonio. Two victims were also taken to a trauma center there. An adult man and a younger person, though we don't have details on that one. In addition, local hospitals have another 13 people who are being treated.

We don't have any clue yet about motive, what may have sparked this, where on campus it went down, who this 18-year-old suspect is. But we are expecting a news conference from police in just a matter of minutes from Uvalde, Texas. We're told that there is no longer any threat at all, that authorities have the school locked down. We don't know yet about the status of the other students who might have been inside that school. But again, it all happened just about an hour and 45 minutes or so ago. Fifteen dead after an elementary school shooting in Uvalde, Texas. More as we get it. And tonight on the news, 7 Eastern, Scott. I appreciate it, Shep. Thank you. We'll be right back.

We're back in overtime. Another check on shares of Snap today, finishing out the worst day ever for that stock. So what is the next shoe to drop in the social stock sell-off, if any? Let's ask star venture capitalist Rick Heitzman, Firstmark Capital founder. It's good to have you back. Hey, thanks, Scott. What's your big takeaway from what's happened with Snap today? Well, I think it's a bigger story than Snap. If you looked at the Walmart earnings, the Target earnings, you're seeing a consumer that's really in trouble.

Even right now, consumer sentiment is lower than April of 2020, and that was the peak or the trough of the pandemic. And what you're seeing is things stack up, saying the consumer sentiment's poor, and therefore you're going to see poor results not only in the social media sector, but the ad and media sector on the whole, and even continuing through the whole commerce sector. But I could point to other reports, earnings reports,

that suggest that the consumer is doing just fine right now. And the issues for Walmart and Target had nothing at all to do with a lack of shopping. It was a different way of shopping coupled with runaway inflation, which is hard for those companies to manage. It seems to me to be two entirely different things. If you look at Amazon as warning the same thing, you're seeing maybe even more so at the lower end of the consumer market where things like gas prices and other consumer staples where inflation is really eating into that cart size, you're seeing a bunch of negative sentiments stack up of not only inflation coming, but also lower consumer demand, also consumer sentiment. Housing affordability is down now lower than 2008 given rising interest

rates. So you're seeing a lot of people say, hold on a second, rising interest rates are having a much broader effect than just social media spent. Is it really possible that the environment could, and maybe it is, I want your general expertise here. Is it really possible that the environment could deteriorate so fast that just three weeks ago, Evan Spiegel and team could say we do revenue growth of 20 to 25 percent and now it looks like it could be maybe 15 percent or so if we're lucky. Is that bad forecasting, a rapidly deteriorating environment or somewhere in the middle? I think it's somewhere in the middle. But if you look at what Snap said, I mean, obviously, Snap faces challenges in terms of competition from TikTok for their demographics time.

But the things he talked about was war in Europe, rising interest rates, increasing competition for those ad dollars. Those are all macro factors. And what you're seeing now is as tech companies are pulling back, and a lot of their advertisers are pulling back, you're seeing a shift from brand advertising dollars, where Snap makes most of their money, to performance marketing. And you're seeing, you know, a downdraft as folks are starting to get concerned. And you've heard it from Apple to Twitter to, you know, Amazon. Every major company now is rethinking their plans for 2020,

which is calling for a lot less spend. What's it portend then for the Alphabets or the Facebooks? You know, really, what is a essentially a duopoly in terms of the digital advertising market? X some ancillary and smaller players, obviously. Yeah, they have so much power and so much market power that should be all right for them. I would say I'm much more bullish on Google because obviously they have a lot more performance marketing. And what we've seen in prior recessions is performance marketing stands up. They have a demonstrable ROI, and that stands up even in recessions.

Meta or Facebook has a lot more brand advertising and has a lot more competition from folks, some emergent advertising players like Amazon, like TikTok. And I think that this should portend for, you know, a weaker 2022 for Meta and, you know, even a weaker 22 for Google, although they should be less affected. Let's talk Twitter. Shareholder meeting tomorrow. Thirty five.

Seventy six is where that stock closed today. That's a heck of a long way from fifty four. Twenty. How's this all end? How's this all end? What happens now? Yeah, I think I'm in a minority. I'm a contrarian. I think they recut the deal with Musk. And I think Musk closes on a deal that's closer to 40 or maybe even forty42 if he keeps his streak alive in the 50s. But I think there's a price cut and the deal closes somewhere north of where it's trading today. I think the board has to do something. Because they're that desperate?

I think they're going to see the same impact on their business, maybe even more so than Snap. They have a less resilient business than Snap. They have a less resilient business than Snap. They have a less engaged customer base than Snap. Their go-to-market is kind of the same. So I would imagine that they would have to cut their forecast as well, and they want to come out of this with a clean sale prior to facing this consumer headwind. I appreciate the time.

As always, that's Rick Heisman. No problem. As always, great seeing you, Scott. Yep, you as well. I appreciate the time. As always, that's Rick Heisman. No problem. As always, great seeing you, Scott. Yep, you as well. I'll see you soon. Let's get the results now of our Twitter question. We asked, is the Snap sell-off overdone? 48% of you say yes, 52% say no, which wins out after what has been the worst day in Snap's history for that stock. To the last word now, Mike Santoli sitting right next to me. What do you have today? Well, looking at some lines in the sand,

and there seem to be some that people are paying attention to in this market. This 3,900 level in the S&P 500, we've been below it for the last nine trading days, haven't closed below it. We've kind of flirted with that line that would be the minus 20 percent decline level in the S&P. That's in the low 3800s, have not obviously closed there either. The thing about lines in the sand is they seem like a boundary until somebody steps over. You have to figure out what happens with it. They're not something that's immutable. So I do think it's worth questioning whether we're sort of testing these and seeing if,

you know, the pre-programmed assumed buying interest is there and if they're going to matter. As I've mentioned many times here, and I almost feel like it's gotten too well understood, there have been multiple 19 point something percent declines, peak to trough on a closing basis in history. And I think there's a fair number of bets that we're maybe going to get another one, or at least why not give it a shot that we might. I asked the professor, you know, Professor Siegel earlier. He's seen a lot of markets. Does it have to have the same taste and smell every single time? And he said, no, of course, doesn't have to. You don't have to have a VIX at 40. You don't have to have this massive capitulation event that scares the bejesus out of everybody. No, you don't have to. That whole kind of concentrated type of mass exit purge fear is something that feels more like a moment. And so given that we're less than four months into this or less than five months into this,

it would seem as if it was going to culminate over that span of time. That's the kind of thing you might expect if it's going to end in apathy. And, you know, the opposite of love is not hate. It's it's it's apathy. That's usually something that happens after a long grinding period of time. So I get that there are a lot of different ways for this to go. I also get that on the way up in 2020 into 2021, all the way through, we had a lot of never befores. The way the market went in an unending way higher, exactly how expensive some stocks got, exactly how resilient the market was.

We were pushing the limits of what history told us tends to happen on the way up. So there's nothing that says it has to conform to a script this way. What do we look for in the couple days ahead? I mean, what does this week need to figure out, if anything? Yeah, I mean, I think, as some have mentioned, you want to see the market trade less as one big block one way or the other. So some kind of differentiation happening. It's interesting the way that bonds have— No, we did. Absolutely.

There's evidence today, you know, the fact that banks have started to do okay. They've outperformed two days in a row. It's really not a huge victory, and it's not a big leadership change, but it does suggest there's something going on besides, you know, flip the switch, buy, flip the switch, sell. So those are the things you look at. I don't think you expect repair to happen quickly. I don't think V bottoms, when you've had this type of environment happen quickly. The day-to-day volatility is the kind of thing you only see in very agitated markets, very low liquidity.

Everyone on the institutional market is talking about how there's very, very thin markets. Sure. Index futures and things like that. That's a function of the ongoing level of jumpiness in the tape. The Nasdaq still remains the most unsteady, doesn't it? It's certainly the most unsteady, but also arguably the one that's already gone the furthest in kind of reconciling what needs to be dealt with here. You know, down 30 percent. You know, we'll see. Obviously, some of the mega caps in the Nasdaq all of a sudden look like they're reasonably valued.

Even if a snap down 85 percent from its high, you know, the numbers still don't seem to work that well. So respect. It's even more unsettling. It's still come down so much and it still feels so unsteady. I appreciate it. All right. That's Mike Santoli with his last word. I'll see you tomorrow. Fast money begins now.