Closing Bell - Closing Bell Overtime: Recession Fears Spook Investors, Stocks Slide; Delta CEO Says Policy Uncertainty Is Hurting Consumer Spending 3/10/25

Episode Date: March 10, 2025

Hennion & Walsh Asset Management President & CIO Kevin Mahn and Morgan Stanley Wealth Management Executive Director Dan Skelly on the market sell-off and brutal beatdown in tech stocks. Delta Air Lines CEO Ed Bastian gives an update on demand and why domestic uncertainty is hurting consumers. Evercore ISI Senior Managing Director Julian Emanuel on how to trade stagflation worries. D.A. Davidson’s Gil Luria on Oracle earnings and what it means for the rest of the sector. Plus, ServiceNow CEO Bill McDermott on his company’s largest-ever acquisition and AI demand. 

That bell marks the end of regulation. Mercefully maybe. PPL Corporation ringing the closing bell at the New York Stock Exchange. Silicon Labs doing the honors at the NASDAQ. Stocks closing off the lows, but it was another big sell-off to start the week, especially for big tech with the NASDAQ tanking 4%, dragged down by Tesla, Palantir, Apple, and Nvidia. The S&P 500 finishing lower by more than 2.5%. The Dow dropping just over, well, just under 900 points.

That's the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Ford. Morgan Brennan is off today, and we're gonna be all over this sell-off. The impact on your money throughout the show. What to do next? Evercore ISI's Julian Emanuel is gonna join us

with his thoughts on the sell-off, the risk of stagflation, and when to pull the trigger and buy equities during this pullback. Plus, much more on Tesla's tanking share price and a closer look at the dramatic pullback from record highs as the downturn in Elon Musk's company accelerates. And we're going to get a real-time read on tech when we get earnings from Oracle, which is trading at six-month lows, along with Asana reporting as well. Now let's get straight to this sell off. What to expect next from this volatile market.

Joining us is Henning and Walsh asset management president and CIO Kevin Mon and Morgan Stanley wealth management managing director Dan Skelly. Guys tell me something Kevin. What happened? What happened? Give me a, Kevin. Yeah. What happened? What happened? Give me a diagnosis here. Why the dramatic move today without a ton of news? And does the buying that started just before 3.15 tell you anything?

Yeah, I would start, John, by saying that March madness is upon us. However, this year it started in the stock market as opposed to on the basketball courts. As investors continue to climb that proverbial wall of worry, whether it's fears over economic slowdown, a potential recession, tariffs, overspending on AI, check any box that you like, but this has led into a pullback in increased volatility. But to me, I see encouraging signs, particularly as it relates to market leadership. If you pull out consumer discretionary and information technology, the market's actually doing quite well year to date.

I'm also seeing value outperform growth, international outperform U.S. markets. And to me, that's a reminder of the benefits of diversification. Don't overweight your portfolios as in just seven large cap technology stocks. Look into other areas of the market to give you downside protection, but also allow you to take advantage of these changes in market leadership that we see developing. Okay, maybe a little, you know,

salve bomb for the disciplined. Dan, a lot of people gave cheerful 2025 S&P targets, but said there's gonna be volatility in the first half. Well, here it is, right? Anything to change your target or assessment of the market versus weeks ago? No John, for us the key takeaway is something we emphasize with you on this program back in January,

which is that the market consensus in January around American exceptionalism had come a bit late it american exceptionalism has been an unstoppable force for many years but it's run up against the immovable object of high valuation policy uncertainty and finally starting to see some catalyst outside of the u.s. so for us the base case for a soft landing is still intact we had always favored a broader market and more differentiated leadership in 25 than 24 and 23. And we're sticking to many of those key themes.

So, Kevin, what about sentiment? Yes. This is an expensive market by historical standards. Does a move like this shift the way maybe retail investors in particular feel about the market and how long does it take for those feelings Right for the cry to to come out. It certainly does coming off of two consecutive years of 25% plus performance Investors were embraced for this type of volatility

They were expecting yet another double digit year in terms of performance of the stock market this year and that may not be realistic But that doesn't mean you abandon the stock market together or abandon your longer-term financial goals and objectives. Rather, stay true to your risk tolerance. Stay invested in the markets. Give yourself some degree of downside protection. But don't try and time the market. We all know that's an exercise in futility.

In fact, my biggest question right now, John, does the Fed come to the rescue if, in fact, the economic slowdown does intensify? Of course, they're caught right now between a rock and a hard place. High levels of inflation, we'll learn more about this week, and a slowing economy. I think they cut rates three times this year by a total of 25 basis points,

but we'll learn more next week. I mean, rock and a hard place, Dan, or Silla and Charybdis, you've got the increasingly tough nut of higher interest rates, and you've got the questions about what these tariffs are going to really mean in the longer term. I mean, Canada doesn't seem to be bowing down as somebody might have hoped. And maybe the prospect of a protracted trade war is weighing on this market, no? Absolutely, and look, the market has correctly started to shift lower, and many Wall Street firms,

including our own, are marking down some growth estimates. But let's keep in mind, John, that we are kind of myopically focused on the moment at all the painful policy medicine that we're getting at the moment, but we still have policy candy yet to come later this year in the form of tax reform and potential benefits from deregulation. So we would agree with many of Kevin's points. We would be selectively adding today in terms of finding attractively valued financials, industrials, powering AI and AI infrastructure, selective ideas that could actually benefit

if this market finds some stable footing towards the middle and end of this year. Okay, Oracle results are out. We are going through them. We'll bring them to you as soon as we get them. Kevin, is there an increased importance, perhaps, in these Oracle results and guidance and Adobe this week, given that tech has been such a big part of the volatility?

And these are two pretty sizable names reporting off the cycle of the other sizable names. Yes, but isn't technology always important in the mindsets of investors who generally hold tech more than any other sector? What I'm encouraged by with Oracle, though though is that $100 billion Stargate initiative that they have around infrastructure with OpenAI. I like the stock because it pays an attractive dividend yield above 1% and it's trading at a reasonable multiple around 22 times forward-looking earnings.

That seems like a good place right now. I believe earnings per share estimates are around $1.48 if they come in slightly above that and provide positive forward-looking guidance. That could be good for the stock. On the other hand, if it's contrary to that, you could see another reason for tech to correct a little bit further. I like looking at both sides on the other hand. Kevin, thanks. Dan, thank you as well. Well, let's talk more about the tech turmoil and specifically Apple falling, let's see, more than 4.5% today as concerns grow about its AI strategy and maybe when its AI product fully rolls out.

Steve Kovacs got more, Steve. Yeah, John, with Apple shares down nearly 5%, that's making it its worst day since back in September 2022. By the way, that's also when we're talking about recession a lot. And it was a rough start to the year so far for Apple. It's down about 9% and down about 6%

just for the month of March. Of course, we had tariff Tuesday last week. That was a big catalyst. But there's another big catalyst today that delay of the AI upgrade for Siri, which Apple said on Friday was not gonna come until the coming year. And that's really damaging to the iPhone 16 bull case.

City analysts this morning, they lowered their iPhone sales estimates and removed Siri's AI launch from its catalyst list for the stock. Meantime, we've seen iPhone 16 sales. They were slightly down year over year for the first quarter, that December holiday quarter, which was a big surprise.

And Tim Cook telling us, partial blame for that was because there was no AI in places like China for the iPhone that led to the miss for Apple. In the meantime, you have competitors in artificial intelligence like OpenAI, Google, Amazon, with that big new Alexa Plus service. They're shipping these new AI advancements all the time. And as for what Apple's working on,

the next leg of its AI releases, we're not going to really know more until WWDC. That's that big developers conference we're expecting them to hold in June. And as for this big upgrade cycle, if you still believe that Apple intelligence is going to start moving more iPhones, that's pushed out to the iPhone 17 this fall now, John.

All right. Steve, thank you. Well, Oracle earnings are out and ready. iPhones that's pushed out to the iPhone 17 this fall now John. Alright Steve thank you. Well Oracle earnings are out and ready. Seema Modi how do they look? There's a slight miss for Oracle in the quarter John. $1.47 adjusted earning the estimate was for $1.49 revenue coming at at $14.1 billion dollars the street was looking for 14.3. Two specific categories within revenue, cloud infrastructure and services. Just a slight miss. Cloud infrastructure growing by 49% year over year.

Very impressive. But the street was looking for 50 to 51%. I'll just read you some comments here from the CEO, Safra Katz, who talks about how they have signed new cloud agreements with several world-leading technology companies. They mentioned OpenAI, XAI, Meta, NVIDIA, and AMD. And then founder and CTO, Larry Elson,

talks about data center growth. They're on schedule to double Oracle's data center capacity this calendar year, and they talk about how customer demand is at record levels. On the earnings call, John, we are going to want to see if the company provides more clarity on the return on investment of Stargate, that massive project it unveiled alongside SoftBank and OpenAI in late January. Since then, the stock has waned and that's been a point of debate on Wall Street is just

how much money Oracle will be able to make from this specific project and how much it needs to spend on more graphic processing units. We're looking at shares currently trading flat but higher here in extended trade. Yeah, back and forth. Oracle also doesn't give guidance in the release. They give that on the call. That's especially important today. I know you'll be all over that, Seema. Thanks.

Also want to mention Asana earnings are out. That stock is tanking here in overtime. We'll take a look at that shortly perhaps. Well, Tesla meantime, finishing at the bottom of the S&P 500. Worst session since 2020 as it faces protests across the country, competition abroad. As analysts from UBS and Redburn Atlantic

reiterate sell ratings on the stock. Mike Santoli's got more on Tesla's rapid plunge, Mike. Yeah, John, really about more than halving of the stock in the last few months, yet it brings it back to what is something close to the average price for the last five years. And I like to look at this frame because in December of 2020 is when Tesla went

into the S&P 500 for the first time. That was this kind of wild run right there coming off that September 2020 correction. We've actually finished below the level at which it went into the S&P 500 for the first time. It was a bit over $231 per share. So it shows you, first of all, and I said it at the time, I never saw as much of wild anticipation of a stock going into the S&P Which happens multiple times a year to multiple stocks as being so decisive And obviously it has not been great for a long time index holders of the S&P 500 since that point the overall S&P is up

50% so clearly that was front loading a lot of good news at that point now related dynamic in this market is the absolute unloading a lot of good news at that point now related dynamic in this market is the absolute stampede out of One-time high momentum stocks and of course momentum is not just an adjective. It's also a strategy It's sort of owning the stuff that's performed the best and sometimes shorting the worst performing. That's been a complete turnabout This is an ETF that more or less tracks the long only side of that strategy and you see how steep that descent has been or less tracks the long only side of that strategy. And you see how steep that descent has been, especially compared to the low volatility parts of the market, kind of the tortoise strategy of the boring names in the index.

And you see on a one year basis, they're really just converging here. So the big question is whether that activity that really forced repositioning out of the high momentum names has largely run its course at this point. You can squint and say maybe that is part of what was going on late today. repositioning out of the high momentum names has largely won its course at this point. You can squint and say maybe that is part

of what was going on late today. Mike, there's Tesla, the company and its results and what it actually makes. There's Tesla, the idea, the sorts of things that Elon Musk projects. It's gonna be about things like robots. And then there's Tesla, the security, right? There's Tesla, the stock.

What does Tesla, the stock mean at a moment like this? Because we talk about growth, we talk about momentum. It's unlike Nvidia, it's unlike an asset like Bitcoin, but it's like some other thing. So what else is moving, perhaps in a way that Tesla is, what does this move in Tesla represent? I think at the extremes, when it really starts to just fly

and it has the entire kind of, you know, the true believers really driving things higher, it becomes something like a meme stock, which is it's almost self-fulfilling and Tesla goes up because Tesla goes up because that point of view that they're gonna own some version of the future becomes ascendant.

And we've essentially just round tripped on that from the late last year in the race higher and unwound it. But if you wanna just look at the car company and the actual earnings power right now, the estimates for 2026, I was looking at this earlier, at the beginning of last year were like $7 a share. They're now maybe like a little over half that at this point.

So whatever you thought it was worth per dollar of earnings while back, it should be worth, even if it's still worth the same thing, the stock should be cut in half. So the actual core business today is a relatively small percentage of the market cap even after the current decline. Mike Santoli, thank you for that perspective.

We'll get some more for you a little bit later. I mentioned Asana earnings just moments ago. Sea Modi now got those numbers too, Sima. Asana, this is the MidCap Software name reporting earnings break even, the street was looking for a loss of one cent, so it's a beat on its bottom line, John, and then if you look at revenue coming in line with sweet expectations at a hundred and eighty eight million dollars, why the stock may be down is first quarter earnings guidance lower than the street had anticipated.

Also some changes in leadership. CEO and founder, Duskin Moskowitz, stepping down. He will transition to chair. A successor has yet to be named. The search will commence, the company says. We're looking at the stock down about 18% right now, John. Yeah, that's a big move. Seema, thank you.

Well, back now to the broader market. Stock's facing serious pressure to start the week as investors grow increasingly concerned about recession and stagflation Possibilities let's bring in Julian Emanuel senior managing director at Evercore ISI Julian good to see you. You worried about stagflation. I It is definitely a concept and in fact if you think about it the market has already begun to trade it. Typically what you see in a stagflationary environment is an index level that averages, call it down ten, a year over year basis. Clearly the last several weeks tell you that the market is thinking in those terms.

But more importantly what you see is leadership from the more defensive sectors, healthcare and consumer staples. Now, from our point of view, obviously the rhetoric that we've heard and the amount of change that's out there and sort of the dislocation has caused this activity. But when you step away, in our view,

the hard economic data in no way matches the downturn in the soft economic data. And our econ team is still looking at 2% GDP growth for this year. And your S&P target, correct me if I'm wrong here, is up about 20% from where we are right now on the S&P now? So it is. And look, when we came in to 2025, part of our thesis was this idea of three steps forward, two steps back in a very volatile environment.

After two years of literally straight up stock market returns, year three, despite our view that it's going to be positive, was something that was always going to be volatile, all the more so because of the policy mix that the new Trump administration has put forward. But again, when you think about what kills bull markets, we don't think there's a recession out there in the cards. We don't think valuations. Valuations of anything have gone from very expensive, which is not necessarily in itself enough to kill the bull market, to just expensive on this

pullback, which is actually better. The Fed is going to be cutting. And frankly, again, when we look at all of that, the bond vigilantes are telling you, if anything, yields are going to work in favor of stocks at this point. Now your bear case though is on the S&P is still lower from here, 5200. What would it take? What would happen to start to convince you that things are trending toward your bear case?

That's really the stagflation scenario, John. So basically a little more than down 10 in an environment where growth expectations would be overtly marked down. And part of it, look, we have to be upfront to this. Part of it is the policy unfolding and the policy response. What we saw from the first trade war back in 2018 and 2019 was as the market sold off, policy, tariff rhetoric would ease. That had been the case until the last several days. Let's see what happens over the next week or two. There's a lot of data points in front

of us. Do you still expect that President Trump might ease up on this, or are you becoming convinced that he's serious about these tariffs, and perhaps that our allies who are facing these tariffs are serious about responding? Well, and that's part of the dislocation is that essentially, you know, whether it's tariffs or the whole dynamic around Ukraine and Russia, you know, our allies are taking matters into their own hands. We have no doubt that the president is serious, but finding an off-ramp to a mutually, you

know, sort of negotiable type dynamic is where we think this is headed, as opposed to anything that looks like smooth-holly of the 1930s. Okay, day by day we'll figure it out. Julian Emanuel, thanks for helping us out. Thank you. After the break, ServiceNow CEO Bill McDermott joins us to talk about the sharp downturn for software stocks, how he's navigating the uncertainty, and the company's just announced multi-billion dollar deal. And later, we'll talk much more about Tesla, now down more than 50% from its

52-week highs, with a look at the changing global sentiment toward the brand and its CEO. Be right back. Welcome back to Overtime. ServiceNow, a big mover today, down nearly 8% on a rough day for growth in AI stocks. I spoke with CEO Bill McDermott about why he's doubling down on AI with ServiceNow's biggest acquisition to date, MoveWorks, for $2.85 billion in cash and stock

and how he intends to challenge Salesforce in customer relationship management software. Well, the MoveWork acquisition, John, accelerates and extends ServiceNow's leadership in agentic AI, and we are redefining the AI world of work within the enterprise. So now think about every single employee being able to search all the data sources in these highly complex enterprises and get the same consumer grade experience as you and I get when we use chat GPT on a living room couch on the weekend. So this is a total game changer and it takes our fast-moving

agentic AI business to a whole new level. We already own the middle and the back office of these enterprises but if you take CRM, for example, the category we intend to be the market leader in for sure, think about sales and lead to loyalty. All customer prompts for salespeople so they can follow up on their account opportunities. It could be an upsell. It could be a cross-sell. It could be a renewal.

It could be taking a pipelinesell, it could be a renewal, it could be taking a pipeline and moving it into a sale. Think about customer service, providing on the spot customer information on order history and open support items. Think about finance, you know, resolving common tasks like updating direct deposit, checking on payroll stubs, taking care of various timesheet entries for frontline workers. ServiceNow's government business has been one of its growth engines.

I asked whether the Department of Government Efficiency has changed the conversation in federal. It has, and I think it's great. What DOJ is doing and what the leaders in our government are doing now is they want to give the American citizen, the taxpayer, a better service for their hard-earned capital. And I think getting efficiency, getting effective,

getting productive is hugely important, and we're here to help. The other thing that you have to deal with, if you're going to have the same or even more work with a lot less people, you have to have the technology really fortify the strength of the people that you have. So now, instead of looking through reams of reports and putting people on 800 number hold for up to an hour and a half at a time, we just gave you an instantaneous, instantaneous agentic AI system to give every employee that's

coming back to those federal, state, and local offices the answer to any question that they have to solve for a citizen. Finally, I asked what impact tariffs will have on demand for ServiceNow software. It'll increase the demand for our products and our services quite dramatically. Because as supply chains change, as regulatory governance, compliance, taxation, all of these material shifts in the enterprise accommodate public policy. These systems today are so archaic, they've been there in many cases for more than a half a century, they do not have the capability to change on the fly. Today, I gave you a perfect example of extracting data from any source, reorienting in an automated workflow a new business process led by a Gentic AI,

working with the customer's data from any source so you can reconvene a natural language process on the fly. Think about an engineer writing a new piece of code to make sure that we can accommodate the new tariff laws. McDermott telling me with the market turbulence, ServiceNow is controlling what it can, focusing on the customer and as he put it, executing beautifully as it relates to the macro. Well time now for a CNBC News Update with Bertha Coombs. Bertha. John, the U.S. and China have started talks for a potential summit in June, according

to the Wall Street Journal, which says summit discussions are still in the early stages. The potential summit could help lead the way to formal trade talks as tensions mount over tariffs. Defense Secretary Pete Hegseth is expected to announce a plan to cut up to 10% of all general and flag or senior officers. Two US officials tell NBC News as part of the plan which hasn't been made public, most of the generals or admirals whose jobs are being cut or downgraded would be eligible for retirement. The move is part of an effort to cut costs at the Pentagon.

The Department of Defense has yet to comment. And Pope Francis is no longer in imminent danger after spending nearly a month in a Rome hospital suffering from double pneumonia. But he will remain hospitalized for at least a few more days to receive treatment. The Vatican announced this afternoon that doctors for the 88-year-old Pontiff lifted his prognosis after he responded well to drug treatments. We wish him well and a speedy recovery. Back over to you. Indeed.

Bertha Coombs, thank you. Well, we've got breaking news on Delta. Phil LeBeau has that. Phil. John, take a look at shares of Delta like all the airlines down today today and this is going to add to some of the pressure post-market. The company warning about its Q1 results cutting its earnings per share guidance. It was previously expecting to earn between 70 a cents and one dollar a share. Now expects to earn between 30 cents and 50 cents a share with revenue growing three to four percent versus the previous guidance of growth of seven to nine percent.

What's behind the lower guidance for the first quarter? Basically, they're seeing softness in domestic demand, the main cabin, and that deals with near-end consumer and corporate bookings. We're going to be talking with Delta CEO Ed Bastion in just a couple of minutes. We'll talk about this guidance and what he's seeing in the market right now. Is he concerned that this might last longer than the first quarter? We should point out, John, they are not changing their full year guidance at this point. Okay. That's a big interview. We'll see you with that in just a few minutes. Also ahead, much more on the sell off in big tech. We'll talk to an analyst about two Mag-7 names to consider after the pullback.

And check out the action in Bitcoin, sinking below $80,000 with serious pain for crypto-related stocks like Strategy and Coinbase. We'll be right back. Welcome back. Shares of Delta falling in overtime. News breaking moments ago that the airline is lowering its first quarter guidance after seeing softness in domestic demand. Joining us now on set is Delta Air CEO Ed Bastion and our own Phil LeBeau.

Phil. John, thank you very much. Ed, thank you for being here. It's good to see you. Good to see you, Phil. I think the main question that I think a lot of people have is softness in domestic demand. That sounds pretty generic. What does that mean?

Where are you actually seeing the weakness? Well, we'll be here tomorrow in New York at an investor conference. So we'll be presenting and get into a lot more detail. In fact, I think I'll be speaking at 7.30 in the morning. So I'll have a chance to get through that. But at a high level, first, you know the first quarter is always the seasonally

most difficult quarter of the year for our industry and historically somewhat tough to project. You couple that with the fact that we entered the quarter with high growth expectations. We finished the year strong. We were up in the fourth quarter, meaningful amount. We anticipated an 8% growth rate in terms of top line. We're going to come in on a 4% growth rate. So it hasn't, it's not going backwards, but it's not growing as fast as we were anticipating. We know that GDP is one of the most important factors that our industry is correlated to. We saw in February a pretty significant shift in GDP sentiment and the output and the confidence signals that we monitor.

Consumer confidence is coming down a little bit as we all know that's why the market is in the challenge it is. And as a result of that, we saw companies start to pull back in terms of corporate spending started to stall, consumer spending started to stall, largely domestic, largely in the close in, but it was also exacerbated as the uncertainty that's out there and consumers in a discretionary business do not like uncertainty and while we do believe

this will be a period of time that we pass through, it is also something that we need to understand and get to calmer waters. Let's split these two from the consumer and the corporate CEO. And I want to talk first about corporate CEOs. You were just with a number of CEOs this last weekend. Who are the industries or what are the industries, A, that you're noticing the biggest pullback in demand

right now in terms of bookings? And what are they saying about their concern about the macro environment and the uncertainty that's out there right now? Because the policies in Washington, we know in a broad sense what the president wants to do but we're a long ways from seeing these things put in place. If they'd be the industries you'd anticipate, it'd be aerospace and defense. It would be autos.

It would be media, entertainment and tech space. Where there are places where people just aren't quite sure what's going to happen, companies are pulling back. But we also, at the same time, it's not just corporates. At the same time, we also had the impact of the aircraft accident that American experienced at the end of January. And then we had our own Toronto incident that was also happening all around the same time. So, these events somewhat exacerbated the impact on us.

So it's not just corporate and consumer, it was also a question about safety in our industry. We do know it's safe to fly and we do see that starting to dissipate. All these factors had a compounding effect that led to the size of the impact, which we're talking about is about a $500 million impact in the quarter.

Given the fact that government spending is being slashed in Washington, is that impacting your bookings right now? You know, I'd say to a modest degree. The government contractors, the aerospace and defense business, certainly the employees that feel threatened as to whether they're going to have a job are not out there spending money traveling. That said, we're looking at this is the weakest time season of the year.

We're starting to head into spring. We're starting to head into the summer. I think we'll have a much better handle on this. I think a lot of the impact we saw in the quarter is transitory that we'll push through. The other thing that we had is our inventory systems were booked and anticipating that we would start to see a strong close in demand, higher pricing yield. That never showed. So we had to recalibrate our systems all during the quarter.

All these factors we're working through. So the $500 million, I feel optimistic that at least half of that is transitory as we start to go into the second quarter. And then you look at the other side of it, oil prices are also down by $10 a barrel. Which certainly benefits you. Which is why we're not changing our full year forecast.

And across the industry, there had been this reliance I think on premium on you know beyond main cabin consumers were spending more. Has that changed also with what you're seeing in this trend? No there are several green shoots here. Premium has held up and continues it's on plan. The base, the co-brand spending that we have with AmeriExpress, I was with Mr. Squiry over the weekend. That's running at a double digit clip for us in the first and second month of the year. That's held up.

We see international, particularly transatlantic and transpacific, holding up in our unit revenues growing into the through the winter and into the spring and summer. So we really do believe this is a domestic issue. We'll find out you know of course as the weeks go and policies start to get decided upon but I think we have plenty of green shoots out there to give us some room of optimism that we're going to be able to continue moving through this period of time and we'll still be

profitable this one or would our profit level is gonna be consistent with where it was a year ago. So even with all these challenges in the quarter we just talked about, we're still delivering the same level of profit. So it's not growing, but it hasn't gone backwards. And what about that biz leisure trend of people extending business trips

and maybe bringing their families along? Does that continue or are people pulling back? I think, John, that's overstated candidly. I think that's overstated candidly. I think that's dissipated over the last couple of years, the return to offices mandates that you have. People have learned to travel in different ways. And yes, you have hybrid travel is a bigger part than ever, but

not nearly as much as it was in the early years of COVID. Ed, you've been through more than a few economic cycles in your career. You hear a lot of people right now talking about potentially a recession in this country later this year. Do you get that feeling? You've seen this, you know what a recession feels like and you see it in terms of bookings. Do you get the feeling that we potentially are headed towards a recession? I don't feel it. When you, it just said we're growing four percent, not eight percent. If I was a recession, we'd be down ten percent, right? So you

don't see it. I think there's a lot of uncertainty, but I still think there's cautious optimism that as the uncertainty starts to clear, then businesses are going to be ready and poised to start to grow. Alright. Ed Bastion, CEO of Delta. Thank you. And our own Phil LeBeau as well. I know you're going to unpack all of that at the investment conference tomorrow, but

thanks for doing it first with us here on CNBC. Well, high bond yields have been a bright spot in the market this year. Up next, Mike Santoli looks at why corporate bond investors have been playing it cool even as stocks sell off. And later, as Tesla shares post the biggest loss since September 2020, we look at the very different views consumers in the US and China have towards CEO Elon Musk. We'll be right back. Welcome back.

Stocks selling off big today, but one part of the market still pretty chill. Mike Santoli is back to explain. Mike? Yeah John the credit markets in general though they did start to notice the weakness in equities have remained relatively calm. We'll take a look at that in a second but look at the publicly

traded private equity and private credit stocks. This is emblematic of the entire group that's Apollo, KKR, Blackstone this is Blue Owl. And for all the reasons that investors were optimistic about this. Industry in the latter part of

last year look at the leverage play on strong equity values. You know more deregulation a lot of IPOs a lot of M. and A. just a general sense of capital markets confidence that's what these guys capitalize on and that's gum in reverse it almost

looks like kind of Newtonian mechanics like equal and opposite reaction. Back down toward the flat line. And what these guys capitalize on and that's gum in reverse it almost looks like kind of Newtonian mechanics like equal and opposite reaction back down toward the flat line on a one-year basis however the actual pure reading on high yield credit spreads therefore the risk compensation that people are demanding on on the lower quality loans it really doesn't look like much right higher spread means more demanded compensation meaning that's when the markets are very unsettled down it's these lows it's very confident now this is like day old data uh so it has perked up a little bit since then it's kind of

got up out of this very low range but it is still suggesting that really not a lot of macro stress has made its way into the public credit markets. One reason some think that might be is that private credit is taking on a lot more of the riskier loans that don't make their way into the public high yield index, John. So the private credit piece of this, we've talked a lot about this over the past few months to the point where it was making me a little uneasy how much everybody seemed to be talking about private credit Is that reflected what's happening to private credit in that first chart that you showed?

To a degree. Yes. I mean blue owl for example is very active in that area And it's not so much that I think the market is saying All those loans are gonna go bad and we're gonna have a recession and there's gonna be massive default Crisis and things like that, but they're just saying it's just not as ripe an opportunity set as we thought it was going to be. Clearly there hasn't been an IPO boom, going to be tough for private equity to make those exits. And then private credit, I mean, arguably, while they're getting very, very high yields for the loans that they make, you know, in a downturn, those companies are not going to

have it particularly easy. If you redefine private credit, at least in part, as corporate subprime, you know, maybe people would feel a little bit less happy about what that means. Yeah, it doesn't sound as good. Mike Santoli, thank you. Well, Tesla having its worst day in nearly five years, and Elon Musk's political actions could be a headwind for the stock, but the way he's viewed in China, much different.

Details straight ahead. And later, two mega cap tech names to consider. Talk about that with an analyst where he's looking to buy the dips in the tech wreck when overtime comes right back. Welcome back to overtime. Tesla tanking today, the worst performer in the S&P 500, now down more than 40% since President Trump took office. And an increasingly negative view of Elon Musk in the US over his moves to slash government

spending could be a factor in the stock slump. But as our Eunice Yoon points out in this week's China Lens, he's viewed much differently in that country. I'm on my way to Tesla's Gigafactory here in Shanghai. It's the company's first production center outside of the United States and critical to Elon Musk's fortunes. In China, it's hard not to be reminded of Elon Musk's success. Tesla has been credited with helping China create the electric vehicle industry it has today.

And it all started here. That is Tesla's main factory. It's a $2 billion investment that produces about 1 million cars a year. One out of every two Teslas in the world are made there. By last June, the EV maker had 520 stores in the country. Tesla sold more than 650,000 cars last year, roughly a third of global sales, thanks to stores like the one behind me.

The Shanghai store is Tesla's largest in China. It spans one and a half football fields. Tesla's latest Model Y, code named Juniper, is on display. As a testament to the importance of the China market, this new Model Y was launched here before the US. One of the key features is the screen in the back seat. Porsche owner Peter Zhang is here to test drive the new Tesla.

Zhang has heard of the controversy over Musk's foray into politics in the U.S. as well as Europe and the impact on sales. That hasn't yet affected his own plans to buy one. I saw the data and Europe isn't doing well. I want to know why that's happening. But I find out that the new Model Y is actually competitive. Not only does the Shanghai factory produce for the Chinese market, but it exports to other parts of Asia and Europe

using this port. We're only about 20 minutes away from the Tesla factory. This neighborhood is nicknamed the Tesla Dormitory. Many of the workers at Musk's factory rent homes here. This Tesla worker, who didn't want to be identified out of fear of reprisal said with Musk now in US politics he worries about his own job. As a businessman he should focus on the business the worker says. After all

government affairs should be handled by the professionals. Despite the workers concerns Musk is generally viewed here as pro-China and practical as a businessman. In fact, John, today here online people were talking about a video of Musk carrying the handbag of Suzy Wiles and saying that he's just very good at managing to the right people. Eunice, this was great. I had never really gotten that perspective on how big an employer, how big a presence Tesla is there in China.

And both that and his presence as an entrepreneur, he's also got SpaceX, some other companies, and there's word out there of wealthy Chinese investing more in those. What's his reputation like among the elite? Oh, his reputation is really, really good. A lot of people see him as an icon of technology. There's questions now though, as to whether or not that would change because of his relationship with the Trump administration.

But as you said, there has been talk that wealthy Chinese have been, at least as was in FT, had said that wealthy Chinese are possibly privately taking stakes in some of his unlisted companies such as SpaceX. We don't know if this is true, but if it is indeed, then that could be yet another potential conflict of interest for Musk and his financial interest in China, as well as a potential national security concern in Washington. All right, Eunice, you in a perspective, only you can bring us. Appreciate it.

Well, we've got breaking news on the IPO front. Leslie Picker has the details. Leslie. Hey, John. Yeah, it may be surprising to see an S1 on a market day like today, but Hinge Health has filed to go public in the US. The company has hired Morgan Stanley Barclays and B of A to go public. This is a company that does digital physical therapy. It allows, it essentially partners with corporations. It says it counts about half of the Fortune 500 500, or Fortune 100 as its customer base.

And they allow for people to essentially use this software through their phones, through the front lens of the camera to do physical therapy that is then based on the software they have evaluated to make sure that people are doing the exercises right, because they determined that there was a market essentially of people who didn't want to go into physical therapy offices.

They wanted to do things from home. So they created this software that can solve for that. In terms of growth, pretty substantial growth here. They say that their last 12 months calculated billings was about half a billion dollars and up 42% year over year. Revenue, which by the way that they kind of account for revenue when it's actually marked in their books,

that's 390 million and that was up 33% year over year. Also cashflow positive, which is important of course, in this market environment. And Hinge Health also counts some pretty well-known backers here, Co2, Tiger Global, just to name a few. So this is definitely one to watch, guys. Yeah, and it's a name Overtime viewers will remember from a timeout segment with CEO Daniel Perez just at the end of last year. Leslie, thanks.

Well, the Nasdaq just had its worst day since 2022. Up next, we'll talk to an analyst about the names that are starting to look attractive on these dips. And let's get another check on Delta, falling sharply in overtime, down 13% now after cutting guidance. CEO Ed Bastion just telling us domestic, corporate, and consumer spending has started to stall. We'll be right back. Welcome back to overtime tech getting slammed again today with the Nasdaq having its worst session since September of 2022. Let's bring in D.A. Davidson managing director Gil Luria. Gil and I'm talking to you as Oracle is bouncing about three and a half percent here in overtime

after reporting results making up most of the loss of the day. But the guidance there is going to be key, even though it doesn't trade on the NASDAQ anymore. It's a New York Stock Exchange. How does Oracle fit into the overall tech landscape and what we saw happen on the NASDAQ today? So it's a tale of two businesses, really.

They have the regular business selling to enterprise technology and that business is flat to declining. It's most of the business but they have that very fast growing Oracle cloud business. It's still less than 20% but it's growing 50% and in that business they're competing with those hyperscalers and in fact they've become the overflow. As the hyperscalers have struggled to ramp up fast enough, Oracle has excess capacity and they've taken that on, which is why they could provide good guidance into next fiscal year of growing 15%, which is more than consensus was expecting. So the good news is their guidance was good, especially for next year.

The current business missed even the lower end of the guidance, so not doing as well, which is why the stock is only up a little bit. Does that make them a bit of a canary in the coal mine on the cloud though, because they're taking that overflow business? It will. When Amazon, Microsoft and Google have enough capacity, there won't be overflow anymore, and the first place we're going to find out about that is Oracle. That's not happening yet. Right now there's a lot of overflow but if we start seeing Oracle slow down that'll tell us that capacity

is starting to get reached in terms of AI rentals of GPUs. Alright, Gil Luria, again got that call coming up. Thank you. And speaking of software, make sure to tune in to overtime tomorrow when I'll speak exclusively with IBM Chairman and CEO, Arvind Krishna. I'll be live from South by Southwest in Austin, Texas. And once again, what a day for the markets. Believe it or not, it could have been worse.

The Dow down a little less than 900 points at one point. It was down close to 1200 points, but there's a lot more trading to do this week. That'll do it for overtime today. Fast Money starts now.