Closing Bell - Closing Bell Overtime: Stocks Plummet 5/5/22

Episode Date: May 5, 2022

Major averages plunge. The Dow fell 1,375-points at session lows. Top strategists Adam Parker from Trivariate Research, Bryn Talkington from Requisite Capital, and Rob Sechan from NewEdge Wealth break down how investors should navigate the market. Plus, Eric Johnston from Cantor Fitzgerald has accurately called the market so far this year. He explains why he sees a tactical rally in May. And, Michael Santoli’s “Last Word” is “enough.”

Welcome to Overtime. I'm Scott Wapner. You just heard the bells. We, of course, right here at Post 9 are just getting started. And in just a few minutes, I'll speak live to a man who told you stocks were poised to surge in May. So what does Cantor's Eric Johnston think now? I will ask him on a day when stocks plunged, yields jumped, and uncertainty roared. We begin, though, with our talk of the tape. This no good, awful, and terribly painful day for your money. How much worse it might get from here. Let's ask Trivari. It's Adam Parker. He is with me here at Post 9. Rather than the sky is falling, okay, let's try and help people understand what they're witnessing,

why it's occurring, and the size of the umbrella, if you will, that they might need. A golf umbrella or something smaller? What is your takeaway for, let's say, the last 24 hours from big rally to big sell-off? The last three times that I've been down here, two Fridays ago, last Friday, and today, the market's been down more than 3% all three days. So maybe it's just you and I getting together is a negative quant signal at this point. Speak for yourself. When I'm not with you, everything's fine.

I mean, I didn't see you yesterday, and it was great. In all seriousness, though, what's going on? Look, I think what's going on, if I describe more than the last 24 hours, just building into this, we had a big change in the perception of rates. We had a growth scare. We had a war. And we've had an earnings season now where people are looking for reasons why maybe the earnings trajectory could be impaired. Are corporate earnings going to hold up?

And you know there's a lot of money running pods, degrossed and grossed up. And we're seeing a degrossing. We're seeing a real fear take over. But when I take a step back, I'm more bullish now than I was last week, because the market's down meaningfully, and I think the earnings look pretty good to me. The consumer looks like it's holding up for most companies that reported. We heard that from all the banks, and we've seen that from a lot of the consumer companies in the major staples. So I'm sort of thinking, what do I think today versus yesterday versus last week? I like the stock market a little bit more, Scott, because prices are down and earnings are okay.

In terms of, before we even get to that, like the mechanics of what is happening and why the selling was so severe today. Forced selling, no doubt, right? Margin debt is at extraordinarily high levels. Options market gamma. There's some stuff happening. People are being forced to get out of some positions that they otherwise might not. That could be a role. For sure.

I'm told by somebody earlier today, within the last hour or so, that a lot of the selling today was primarily driven by $12 to $15 billion in levered ETF flows. Right. Right? Those products where you like triple levered. Right. Right. And then when products where you like triple levered, right? And then when rates shoot up like they did today, and I'm also told that it was primarily related to NASDAQ, right? These triple levered ETFs, the Qs, the TQQQ.

You take advantage of it to your advantage on the way up. But when rates shoot up, the environment changes. It's a sell and get out of risk as fast as you can. And that feels like, and I'm told, in fact, from somebody senior, that that's what we were witnessing today. That's what I mean by degrossing. It can happen either from the levered funds or it can happen from maybe a lot of people don't really appreciate that there's a lot of money being run with a huge gross exposure. Meaning, you know, you have a balance sheet of $100 million, but you're running four or five times that in gross. So there's really four or 500 million at that.

And so when you trip these kind of risk triggers, we call them, and you get, all of a sudden, you have to take the gross down to 200, 100. And so you just get a lot of forced selling, and it's often indiscriminate where higher quality names that are in the queues get sold off at the same rate the lower quality does, and then somebody like me comes in and, wait a minute, I'm excited now

because I've got real semiconductor companies trading at 15 times earnings that I know are going to be good stocks in an 18, 24, 36 month view. So if you're an investor, I think this last week is going to provide some pretty good entry points in a longer horizon. And see that, that's the most difficult thing to comprehend at a moment like this. You're, you're excited bouncing off your seat literally. And the viewer who has witnessed this feels terrible. And they're scared. And they don't know what to do because they're afraid that as bad as today was, it could get worse. And they don't see the optimism that you see. They say, wait a minute. The Fed's changing the game dramatically. Inflation is still high.

The economy is at risk. I'm not sure the spending levels are going to be what Adam Parker says, both from a corporate and a personal consumption standpoint. That's two-thirds of the economy. I should be worried now. I did a great call with a very big, large asset manager yesterday and a very senior person there. And she said, we're having a bull bear debate internally here. And she said, I'm the only person who said I would take the bull side.

So we sit here and we try to figure out where are we with sentiment, where are we with fundamentals, where are we with valuation. Let's wrap it together and make a judgment call about whether the risk-reward is starting to improve or not. Sentiment is bad. You know, people are going through that laundry list of reasons. And you know, we talked about this before, you always, always sound dumber when you're bullish. Okay, because when you're bearish, you can articulate 97 things that are wrong. But if you're bullish, you say, is the economy terrible? I don't think so.

Is the consumer in decent shape? I think it's pretty good. Do corporates have pricing power? A lot of them do. So unless you're going to tell me, and I thought the Fed addresses a little bit saying we don't control the supply side. I know we talked about that last week. I think they probably will be, you know, smart and they probably won't cause a massive recession and we'll end up with higher corporate earnings. I understand. But you're assuming that they can control that. They can only control what they can. And even Jay Powell said yesterday that, you know, he thinks they

can pull off a soft. And then he quickly added soft-ish landing because he's concerned. So he's concerned and rightfully so. You know, I look at the corporate earnings really carefully, right? And so what I see is generally trends are improving. I think tech companies, despite this last week in the sell-off, will probably have 10% earnings growth in 2022 versus 2021. There are a lot of businesses with pricing power. So I'm trying to take a step back and say, I think when we look back six, 12 months from now, that these entry points will be pretty good for a lot of these companies. I think part of the great unknown is whether valuations have come down enough to represent a more slowing economy than what we have now.

I think that the hardest part of all of this is not knowing whether the fundamentals really are legit at this point. Or not. And you paint a very binary picture. It's like, well, you use the word terrible. Well, the economy is not terrible. Right. So if it's not terrible, then it's okay to invest right now in stocks. Why does it have to be terrible or all or nothing? Why can't it just be if it's slowing

and maybe time to be more cautious? Most of what I do is try to figure out relative opportunities within the market. So I say, okay, I bought tech companies now that have margin expansion, positive cash flow, avoid the ones that are kind of profitless software. So that's been our call. That actually worked and generated spread today. So it all depends on how much risk you want to take. But if you're saying, are there opportunities forming within the market? Absolutely there are, because things are indiscriminate and get sold because of what you talked about, deleveraging VTFs or degrossing a big equity pot. So I like the alpha landscape in terms of picking winners from losers.

And I generally actually think we're starting to like the whole market more. I'm still recommending an underweight in growth stocks, but kind of moving up, thinking, you know what, I talked about it. I thought of it live with you on the air last Friday. I think semis are starting to look kind of interesting here because they're just oversold. And I promise you this world can't exist without a lot of these businesses in a 12, 18, 24-month field. I hear people, you know, look, I know you've liked the banks. And I hear people say that maybe this is going to be the moment for the banks. Rates are moving higher.

It's obviously stimulating to the banks for the obvious reasons. But then I go back to what I said at the very top of the show about this sort of margin debt and a large amount of it. The possibility of banks eating losses on that side of the ledger, too. Yeah, we've been kind of making a negative call on the regional banks and then owning the large ones against it because I don't like the regionals are a pure rate call and they need it to steepen, whereas the large ones we like more just because they have other business lines and their return on tangibles improved. So it's a little bit it's always going to be paired off where I think the opportunity is better. And I think the big ones look a little bit better than the regionals within the banks. Look, you've been on the street a long time, okay? And you've seen days like this

before where we do have that, and people always hear that word capitulation. And some have suggested, well, you really don't get that until you have a 90% down day, in which, as you heard Mike Santoli say in the last 20 minutes or so, that we finally had that today. Does that provide any comfort to you that maybe the worst of the selling is over? As optimistic in the longer term you are, does it feel like this has more to go? We're not done? What do you think? I mean, when you test the distribution of subsequent market returns following these kind of days. You don't really get a high conviction signal. So I can't say, hey, quantitatively, that's supported. I mean, that's like me saying me and you together is a bad market signal. I think we need a lot more data. But I

would say I'm starting to feel like, you know, I talk to four or five CIOs or portfolio managers every day in one hour meetings. That's what I do for a living. And sentiment is definitely, definitely getting negative. That's usually been a time to get more optimistic in a long-term view for equities. Look, I appreciate your optimism. It's easy to come on on a day like today and suggest it's time to run for the hills. And nobody needs to necessarily hear that after they already feel the pain that they're enduring today. You're down 20 on the NASDAQ.

You're down 50 or 60 from the highs on individual securities. Are you telling me none of these companies are going to innovate and you're not going to want to pay for their trajectory in the future? Of course not. So we're just trying to get through this panic, degrossing, deleveraging, focus on the fundamentals. And if earnings grow, you're going to look back and say, you know, I'm not surprised the market's up 15 or 20 percent from lowest. We will be there 12, 18 months from now. And I'm confident in that. Let's add some more voices to our conversation right now.

Requisite Capital's Bryn Talkington and New Edge Wealth's Rob Siech and both, of course, members of the Halftime Investment Committee. Bryn, I just go to you first. Your thoughts on what you're witnessing here, what you'd be telling clients, those who are concerned about what they watched today. I think what we watched today, I think there's a little bit of funny business with technicals and some forced selling. I mean, you and Adam talked about some degrossing. I think hedge funds, certain hedge funds out there which were massively levered are de-levering right now. And I think that if you looked at pull up TLT, you know, TLT, which is the 20-year, that was down like 270 today. And so, you know, the long end part of bonds continue to be a horrible, a horrible investment for individuals. And I think that's really going to continue to complicate the market. Because, you know, on the Fed, I was surprised

yesterday, Scott, when the market rallied, because I think that Jay Powell should have kept 75 on the table because it would have signaled strength, strength from the Fed. Instead, he's like, we're going to not do 75 because they know something we don't know. There are over 400 PhDs, Scott, at the Fed. And none of them went to Jay Powell the past year and a half and said, hey, maybe we should focus less on climate change and focus more on stopping QE. And so they ended up juicing the housing market. They own a third of mortgage-backed securities. And so I think you're seeing this unwind.

And I think ultimately the Fed's going to continue to raise rates and reduce the balance sheet until something breaks. And I think these days like this, when bonds do just as bad as stocks, that's when something gets closer and closer to breaking. I think fundamentally, though, you know, to all of Adam's points, the lower the market gets, the stronger, you know, the stronger future returns will be. But I definitely think the Fed is still way behind and they're not signaling that they're strong enough. And I think a lot of today also is about weakness and how we feel confident or not confident in the Fed's ability to do a soft or softish landing. Yeah. Rob, I mean, you know, Jay Powell, the chair of the Fed, he quickly defended himself and his committee yesterday when asked directly, do you feel like you have a credibility

problem? And he said directly, no. And it was quick and it was one word and it was to the point. You know, to Bryn's point, I wonder if it would have been better. And certainly people are asking themselves if they went a little too far to try and, you know, appease the markets, if you will. And then we have a reality check perhaps today. And that's why we witnessed some of what we did. What are you telling your clients? Listen, I think he picked his words very carefully. I mean, I still think he's data dependent from that standpoint. I think 75 basis points is still on the table.

He's not projecting out too far, six to nine months. He keeps reiterating that data dependence. He's invoking invoking Volcker in his courage that he had. And so I definitely think this was about the markets, despite the technicals, but the markets digesting the commentary is maybe more hawkish than initially interpreted. In terms of what we're telling clients, Scott, days like today with indiscriminate selling, to Adam's point, are the best time to update the quality of your portfolios because some of the best companies have been taken materially down and you can rotate into them.

We're also telling our investors that they shouldn't be taking huge sector bets. They should be highly diversified. And, you know, we're focused on where the risk lies. And the risk lies idiosyncratically in certain companies, those that don't have great earnings quality, those that don't have high free cash flow, those that have high earnings variability. We want to avoid those. We also want to avoid countries where we think there's great recession risk. And so you stay invested. You're active, you're active within portfolios and maybe not at a macro level, but definitely you should be taking advantage of what's happening in the market, but not getting too cute and taking too much risk.

Yeah. I mean, it's easy to buy on the way up. Right. Everybody's doing it. Market's just going straight up. Right. You just get used to the fact that it feels great to be part of the party. And then when you take, you know, all the fun away, it's awfully difficult to to sit back and say, OK, I agree with with Adam. And even if I agree with Adam and I agree with Rob and if you're a long term investor, maybe they do agree with you. It's still hard to make that bet today. Yeah, price momentum is a big factor, right? And it can influence your emotion. And I think those of us with some gray hairs in our head are just more used to trying to fight our emotion and find entry points. But I hear you loud and clear that it feels awful. And when you're losing money and running money, it feels awful. And so you've just got to think about the quality shift in the portfolio or what's dislocated.

And I find that there's a lot of opportunities. I mean, on the inflation point, because that seems to be one that everyone comes back to all the time. Well, for sure. I'm pretty confident you're going to start seeing some decline in inflation, right? You use cars. I think you're already seeing it. Hotel and airline pricing can't anniversary where they are. So you just start taking some of those bigger items. The high end consumer could problem up for a while, but ultimately that rolls over.

You start seeing more, you know, hotels, you know, get laborers to clean them and you'll start seeing prices come down as the capacity expands. Stuff like that. So I'm pretty confident as we look into 2023, we're going to be talking about lower inflation. So I keep coming on here saying, I doubt the Fed's going to keep raising 50, 75, 50, 75 when you start seeing deceleration in the inflation. So that means when we get to that point, we're going to start looking at some of these growth businesses that are oversold saying, huh, maybe I can get in there. And you know, the stocks move way before we get that news. Well, sure. Well, you're, of course, and I was going to make that point too. You're also making a bet on, you know, historically how all of this happens. Right. That things tend to overshoot both to the upside and the downside. Both sides. Right. So, you know, maybe now is

the time, Bryn, to take a look at a list that you've been accumulating and suggested, you know, hey, I like such and suggested, you know, hey, I like such and such, and maybe I'm not going to time anything perfectly, but if I'm a longer term investor with a bigger perspective than 10 seconds, maybe now is the time to do some buying. Do you have things on your list that you're looking at? Are certain things attractive to you in an environment like this? Yeah. so I think what's interesting about today with the big sell-off in the NASDAQ and just everything growth is, ironically,

as the economy actually starts to grow, you're going to then want to go pivot back to growth-type companies. And so, you know, has Microsoft changed from 340 to where, 280-ish, where it closed? No, not at all. I think Satya Nadella is an incredible leader and a visionary. So, I mean, I'm watching Microsoft.

You know, we own the Qs. We've been underweight the Qs since December of 2021. I look at that because to me, the Qs is where you're going to see, I think, ultimately, probably the second half of the year, more people return to. So, definitely watching individual names. You know, Google's interesting, Microsoft, definitely the growth names are as the economy slows where you're going to want to be, but not to sound like a broken record, like I say it every time, you still want to be in energy. That to me is still one of the best risk returns over the next few years for investors to be in those high quality, high dividend, high dividend,

high cash flow companies, much cheaper than the S&P that have consistent earnings. So I would say growth in the second half of the year, but keep that energy position or add to it if you don't own any. The conviction you have is perfectly fine. Adam Parker, for example, shares it with you. Is it your favorite sector still? Favorite sector basically every week for the last year and I'm confident that demand growth will exceed supply growth and for me you know we do quantitative stuff. I'm not in Texas so maybe but I'll agree with her. I feel at this point I'm a Texan. I mean I got positive revisions, positive momentum, cheap valuation versus history, negative sentiment and demand growth exceeding supply growth. If you could find any other parts of market with all five of those, go crazy. Rob, before I let you run, I'd like you to share the

same thought that Bryn thought about for us. And that is, look, I mean, you've been on the list of the top financial advisors in this country for a number of years. Now you have your own firm. So you think about dislocations that provide opportunity. Where do those opportunities lie today, if anywhere? And if it is nowhere, then that's fine, too. I don't want to force anything into the conversation here, but I'm curious because I know the way that you think big picture about markets. Thank you. So we agree with my other two guests here that energy is a place to be. It was our favorite sector coming into the year. But more surgically, I'm going to go back to the theme that I talked about at the beginning of the show, which is updating quality. year and that's names like Pfizer Microsoft Coke CNQ EOG Apple Google I'm regenerate on I autozone these are all

fantastic companies that exhibit those characteristics that I talked about so when you're an investor you have to hold through a period like this is a little bit like beachfront real estate you don't sell it during the downturns you just wanna make sure that the things you own are things you like and you know them. I would not spend any time, waste any time on broken turnaround stocks. You know that stocks like Microsoft came into the quarter and they delivered and their prospects are tremendous. Why do you have to own something else when you can concentrate your bets in something like that amd a name that i bought for my personal account today

down meaningfully right so i think you can buy names that are delivering they're super super high quality and that's how you wait through this and by the way you might have to wait a while we think this is a bear market this is a, you know, any of the negatives that are on our dashboard, Scott, that get taken off, the market's going to rip. And you don't want to be sitting there watching it happen. So you've got to be invested. Rob Seaton, I appreciate that so much. Bryn Talkington, my same sentiments to you. And I know I'll see you guys soon. I always like when you come down here and sit next to me, AP. It's good for the conversation. Anytime.

That's Adam Parker, Trivariate, joining us now. Let's do our Twitter question of the day now. We're asking, what is the best safety play right now? Is it cash? Is it bonds? The dollar? What about defensive stocks that have done so very well? Is it still time to go into those stocks like Staples, utilities and the like?

You can vote in our Twitter poll at CNBC Overtime and we'll have the results a little bit later on in the show. It was another brutal day for stocks. You know that by now. Our next guest, he has a pulse on the so-called smart money. Tony Pasquarello is the global head of hedge fund coverage at Goldman Sachs. He's here at Post9 with me. I'm going to pivot this way since you're over this way. It's good to have you here. Thank you for coming on. Thanks, Scott. Good to be here. Good to be back on the floor of the NYSE. So your read on a day like today is what? An extraordinary couple of days in the market for sure. Outside of a crisis, some of the most volatility and velocity that I can recall in my 23 years in the markets. I'd say two things.

Go back to yesterday, from 230 to 430, we saw very significant short covering through our franchise. In the parts of the market that had been under the most pressure, kind of the lower quality parts of the market. You walk in a day, a complete absence, no follow through. That cover bid was nowhere to be found. There was also an absence of kind of the higher quality real money bid. And it kind of opens a little bit of a question around the retail investor who had been so strong, so huge throughout 21 and the first quarter of this year, an open question about whether they've kind of spit the bit, if you will. There's a second piece, which is clearly the Fed. And so I think the initial read yesterday, the market latched onto was Powell taking 75 basis points off the table. That had some

value, okay, because now we know the upper boundary of a clip is 75 bps. You see that. I think when you go back through the statement and you think to yourself, well, they went 50 yesterday. We think Goldman Sachs thinks they're going to go 50 again in June, 50 in July. Possibly they go 50 in September. And the reality is the distance between the funds rate and the headline CPI is three quarters of basis point up to eight and a half percent. So the Fed has a lot of ground to cover. And I think that sensation set back in today. You put something provocative forward here, and that is the state of the retail investor. And frankly, whether the retail investor,

which plowed into the market during the pandemic, has yet to move out in any meaningful way. And we haven't necessarily seen that yet. What do you think of that? A quick step back. In 2021, the retail investor put more money into the market than they had in the prior 25 years combined. And like I said, that strength carried through to Q1, $200 billion of inflows into equity, mutual funds, and ETFs in the first quarter. And then April just kind of got weird. Now, there's always a tax date funding. There's always a tax seasonal to be aware of. But it's continued. We've continued to see a pattern of outflow ever since then. And so when the biggest sponsor of the market is perhaps

neutral or net seller, because versus 12 months ago, you're now underwater on most of the stocks you bought. There's again, this open question as to whether that sponsorship is there. Can it be replaced? And if anyone could replace it, my bet would be on the U.S. corporate through buybacks. And look, the fact of the matter is that a large part of that cohort that you just mentioned, they don't know what this feels like. They've only seen a market that's gone, for the most part, straight up. And they don't understand that markets work both ways. And sometimes when they work the other way, the more painful way, it can feel a hell of a lot more painful in the initial period of the downturn than it ultimately ends up being. And it's a hard pill to swallow when you're in the thick of it. And the place to go on the back of that comment

is NASDAQ and tech stocks. So think about this. From 2009 through 2021, in total returns, the NASDAQ never had a down year. I'd argue it was the best asset class on planet Earth. You flash forward to today, NASDAQ traded down 13% in the month of April, 13% in 19 trading days, and is down 21% or more on the year. So there's a stress test that's being applied to investors that we haven't felt in a long, long time. Look, I talked earlier about trying to get my arms around

what we were all witnessing today, and I was told by somebody in the know that you had a lot of money, $12 to $15 billion, if not more, coming out of levered ETFs, primarily NASDAQ, right? I mean, those types of products that drew so much attention because it seemed like such easy money for a long time. That was the place to be. And when that money unwinds, it feels painful. Let's talk about institutions. You guys do a proprietary survey of more than 1,000 institutional investors. What's your view on risky assets? Two-thirds are bearish. I'm not surprised. It has been the time to be more bearish than bullish.

In a way, I think it helps us understand, again, the price action today, which is you came into this period with institutional investors. To your point, two-thirds, Scott, identified as being bearish on risky assets for the near term. Another two-thirds said they expect a recession between now and the end of next year. And I think the big, the $64,000 question and the biggest variable, the $64 trillion question, the big variable is inflation, right? That is issue number one. And this open question again, how is the Fed going to get the tiger back in the cage without provoking either an asset bust or perhaps pulling the rug out from under the labor market?

Now, to be honest with you, I thought the most interesting response was to, do you think the tech stock sell off will bottom around current levels? Fourteen percent, five percent lower, 20 percent, two thirds suggested either 10 percent lower or more than 10 percent. That's right. And here we are at the sort of epicenter of the Nasdaq, you know, selling. I mean, it's been horrible. You nailed it. Two thirds of our clients identified as thinking tech stocks trade down at least another 10 percent or more. I think only 14 percent thought the sell off would stop here. I think there's again, there's two pieces to this. One is 09 through 21 at times and really 09 through 19 in the kind of post-Lehman secular stagnation

era, at times it felt like tech stocks may have been the only game in town, right? So we know a lot of capital went there. We know it compounded for all the right reasons. And as we discussed before, now you're subjecting that to a real stress test. I think the other component is a lot of these companies were the major beneficiaries of stay at home during the worst moments of COVID. And I have a client who's been around a long time who says when you're trying to understand the backside of a demand curve, it's very difficult when you've had an enormous demand pull forward. And so I think this is kind of reckoning of post-COVID demand around a lot of these companies. And we're just trying to find where the equilibrium is. That's a very fair point. The hardest question has been coming out of the pandemic is to figure out the true value of what

was pulled forward during the pandemic. And you don't find out, unfortunately, until earnings come out. You look at a lot of the online retail names, even today, that get splattered because they missed their number and you're like, oh, I guess they really pulled a lot forward during the pandemic. Let me ask you before I let you go. Treasury yields, the 10-year on May 31st, not that long from now, 52% say higher, 32% say range bound, 15% say lower. The prevailing view, is it yours as well, that rates are likely going higher? I think so. Again, I think the direction of travel is higher. Just going back to, I think the Fed has a lot of work to do. Again, I think the direction of travel is higher. Just going back to I think the Fed has a lot of a lot of work to do. Again, here's another way to frame it. The Fed is at their measure for full employment. Three point six percent, essentially the lowest in 50 years. We'll get a fresh number tomorrow.

And yet inflation is running three times their target. So like I said, the Fed has a lot of wood to chop. It's unclear what the consequences of all that chopping are. But I do think the direction of travel is higher. Again, we're subjecting investors to something they haven't seen in a long time. The bull market in bonds began in 1982. It probably ended in 2020. It's been the worst start to the year for bonds on record on the ag index. A lot of wood to chop. We're trying to see the forest through the trees, so we'll carry that. It's good to see you. Thank you, Scott. Thank you very much for being here. That's Tony Pasquarello again from Goldman Sachs. We're trying to see the forest through the trees. So we'll carry that. It's good to see you. Thank you, Scott. Thank you very much for being here. That's Tony Pasquarello again from Goldman Tax. We'll see you again soon. It is time for a CNBC News Update now with Shepard Smith. Hi, Shep. Hi, Scott. Thanks. From the news on CNBC, here's what's happening. Heavy fighting again today at

the steel plant in the Ukrainian city of Mariupol. A Ukrainian commander there telling the Associated Press Russian troops broke their pledge and did not allow civilians to leave. And wounded Ukrainian soldiers are still dying there in agony, he says. The U.N. reports another convoy to evacuate civilians is scheduled to arrive tomorrow. President Biden declaring a major disaster in New Mexico. It unlocks federal money to fight seven wildfires burning now. More than 225,000 acres already burned. And the man who attacked Dave Chappelle on stage on Tuesday will not face felony charges,

even though police say he was carrying a replica gun with a real knife attached to it. The L.A. Times quotes cops as saying the suspect avoided assault with a deadly weapon charge because he didn't brandish the weapon when he tackled Chappelle on stage. Tonight, inside the world's richest sport, Formula One arrives in Miami, plus continuing CNBC analysis on the market sell-off on the news. Right after Jim Cramer, 7 Eastern, CNBC. Scott, back to you. All right, Chef, I appreciate that. We'll see you then. Speaking of that sell-off, just to recap exactly the pain that all of us, frankly, felt today.

You can look at the Dow Jones Industrial Average today, finished down by more than 1,000 points. It was off the worst levels of the session, but nonetheless, you finished right below 33,000 for the Dow. 32,997 is where the industrials finish up today. 41,46. It's a loss of 3.5% for the S&P 500. A decline of some 150-plus points. There's the Nasdaq, too.

That's where the brunt of the pain was felt today. You know that by now. 12,317. A loss of nearly some six hundred and fifty points. Five percent. Kenner Fitzgerald's Eric Johnston. He called for yesterday's rally and a lot more than that. So what does he have to say now? He joins us after the break. Overtime is right back. We are back in overtime following that major sell off on Wall Street today. Now to a man who told you stocks were poised to surge in May.

He was right for a day or so. What does he think now, though? Let's bring in Eric Johnston from Cantor Fitzgerald. Eric, it's good to have you back. Thanks for coming back on. Thanks, Scott. Appreciate it. You felt like the man of the hour yesterday.

Now you were thrown out of the party today. So what do you see now? What do you make of it? So I would say a couple of things. So today was wholesale liquidation across asset classes, across crowded trades that are in the market. As you know, there are a lot of investors, both in equities and outside of equities, that suffered a lot of pain this year. And they are on their heels. And so when you're on your heels, you have to make decisions that may not be what you think is

going to happen, but what your P&L is really telling you that you have to do in terms of de-risking or volatility causing you to de-risk. So today was a sort of classic risk off, sell every asset. So you get everything from bonds were down sharply. We know stocks were down sharply. Crowded hedge fund longs were hit very hard. The flattener trade that was in bonds went the wrong way. Crypto sold off. And typically, when you see these all out liquidations across asset classes that are somewhat indiscriminate, that typically comes more towards the end of a short-term of a sell-off rather than the beginning.

Because from the beginning, different asset classes are getting hit, people are trading. But when you get this, this is telling you that it's being driven by P&L and people being stopped out. So today's move, I think, is it kind of increases the sentiment that we were talking about and the sort of investors being on their heels and why we think people are very skittish and it can go the other way very quickly. The second point that I would make that we learned. Sure. Go ahead. No, go ahead. I'll let you go. Go ahead. OK, so is around the Fed meeting. And I know that there are all sorts of interpretations,

people looking at price action and what that's telling you about the Fed. And I think reading too much into the price action kind of goes a little bit too far. My view is very simple, that we now know that the next Fed meeting is going to be uneventful. They're going to go 50 pips. It's not going to be 25.

It's not going to be 75. They're going to go 50 pips next meeting. So you have much more certainty and the market ultimately likes certainty. I know it didn't feel like that today, but I think when all the dust settles, the bottom line is, is that we have a lot more certainty around what the Fed is going to do for the next two months. And that's very, very important for markets. And look, frankly, one of the reasons we wanted to have you on is because on the Twitter feed, people were like, get Johnston back on. We want to hear from him and what he has to say, not only when the sky is full of bright sun, but when it starts pouring outside.

And it sounds to me like your level of conviction on your call, which I believe was on Monday, hasn't wavered one bit. That's correct. So we went bullish, to be very clear. Monday morning, the S&P was 4,100. It rallied 5 percent, and then it's reverted, and we're now up about 1 percent since we made the call. This price action today, if you had asked me yesterday, was today going to happen, I would have told you no. The magnitude of today's sell-off was surprising to me. But to be clear, this doesn't decrease my conviction at all, because like I said, this type of action today typically happens towards the bottom. The two times where we've seen bonds or TLT sell off 3% and the S&P sell off more than 3%. One was in March of 2020, which was basically at the lows. And the other was October of 08, before we got a sharp,

sharp short-term rally. And so it's only a sample set of two, so you can't read too much into it. But I think it goes to something that I've certainly observed over my time, which is this again happens towards the tail end. The other thing I would say is that when you look at the catalyst calendar going forward, we know we've got payrolls tomorrow and these Fed speakers. People are nervous about the Fed speakers. And then we have CPI on Wednesday. After that, the catalyst calendar after next Wednesday for the rest of May is very light.

Earnings season's over. There's very little macro. And I think that could be a time where you have a dullish market, volatility comes down, and based on positioning, that could allow for this rally that I'm speaking about. Yeah. A short-term one. Just to be clear, for those who weren't with us the other day, this is not a call that we're ripping back to the highs or anything like that. It was simply a short term call, maybe eight to 10 percent, all happening in May. Just to put a button on that. That's that's the point we need to make. It's maybe the most important one, too, for those who didn't hear your call just a few days ago.

Yes, it's exactly right. I think we're in a bear market. You know, we have this broad view. We made it a beginning of this year. We were not bullish until 4,100 just five days ago. So this is a short-term call. And I do think it's going to happen, like I said, in the month of May. And then we'll see where we go from there. I appreciate the clarity. I really do. I know our viewers do as well. Eric, thank you. That's Eric Johnston joining us today from Canberra Fitzgerald. We'll talk to you again soon. Up next, earnings coming fast and furious in the OT. Christina Partsenevelis is digging through them. She'll give us the biggest movers. What's on deck? Oh, well, for those

looking to buy a new home, that's going to cost you a little bit more. How about tickets to your favorite concert? Same problem. What about a trip to space? You bet that's going to cost you. I'll have details on all those price upswings, the earnings reports, and the market movers right after this break. Tracking some big stock moves in the OT. Let's get back to Christina Partsenevelos, who has a rundown of all of those. Christina. We are seeing block shares, formerly known as Square, moving higher, up 1% right now. This is because the earnings or the stock, I should say, missed on the top and bottom lines. There was a lot of movement just in the after hours. Block says Q1 Bitcoin revenues came in at $1.7 billion.

Sounds like a lot, but that's down 51% year over year. And that's triggering some of the movement that we're seeing. Bitcoin, by the way, dropped down 8% just today alone. Switching gears, shares of Live Nation surging in the OT, posting revenues of 1.8 billion. That was a miss and a loss of 39 cents per share, which was not as bad as expected. The company has already sold 70 million tickets for concerts this year, much like what we saw with first class tickets on flights. Live Nation says demand for best, more expensive seating pretty much helped drive ticket pricing up higher. So Live Nation up 4% in the OT.

Virgin Galactic also out with their earnings. The stock right now plunging 3%. Revenue was a beat, but earnings missed by about 4 cents. The CEO is stating, quote, against a backdrop of escalating supply chain and labor constraints, our teams are containing the majority of these issues to minimize impacts on schedules. Hopefully those schedules stay in place. The company said demand for tickets remains strong. Tickets, that means to space, with approximately 800 future astronaut reservations. And then last but not least, Zillow beat on the

top and bottom line, but its Q2 revenue guidance came in much lower than anticipated. That number was, or the estimate was 1.81 billion. Adjusting EBITDA outlook also below estimates. The company did point out the housing market may be choppy in the near term. Rental revenues decreased 5% year over year, and it looks like we're not browsing as much either for our dream home. Zillow's traffic to the mobile app and website also down 5% year over year, Scott. High prices, high prices taking a toll. Higher mortgage rates. That's my theme for today. In terms of housing. Christina, thank you. That's Christina Partsenevelis with the rundown of the stocks that are moving in the OT. Up next, more on protecting your portfolio. Halftime committee member John Najarian is here to break down what's happening with the volatility index.

And it's been all over the place this week. Overtime is back after this. Another sell off today on Wall Street, as you see there, the Dow finished the day down by more than 1000 points. Horrible day, obviously, but off the worst levels nonetheless. Let's bring in MarketRebellion.com co-founder John Najarian. And John, what I really wanted to do with you was use your knowledge of volatility to help people understand what is either happening now or what might happen next. And it has been quite a week for Vol, right? You got up to 35, and we'll show you a day by day here. And we dropped down yesterday, obviously, I think to

29 maybe was the lower level. And then we ripped right back higher today to 31, you know, 22% or so. But what do you see here, John? Yeah, it actually dropped into the 25s yesterday, Scott, on that huge upside move post Fed. So that's dramatic. And then you see it just explode today, which you did a great job explaining there. There are a lot of people that are caught here. I think Eric did a nice job from Cantor talking about exactly this, that there are a lot of people who are caught here. I think Eric did a nice job from Cantor talking about exactly this, that there are a lot of people who didn't expect this. And even though they were happy in that relief rally yesterday, they certainly weren't happy today and they were being liquidated and raising money where they could. As they always say, Scott, selling stuff that was up

as much as stuff that was down. So they were basically liquidating positions in Apple and in Microsoft. The tech sector and Internet in particular were the biggest volumes. So you and I always look for, OK, where is there a washout and are we finally getting to it? Well, broad market, no, we didn't get to that today. But in the techs, we may have. Because, you know, listen to some of these numbers, Scott. Facebook, 300% normal volume today.

Amazon, 350% normal volume. Uber, over 11 times normal volume. And then you get into some of these bond ETFs, like the HYG, which is corporates or TLT, which is the 20 year bond tracker. And those volumes were also through the roof. So in those sectors, we did see what I think is a capitulatory move. But broadly, we haven't. And a lot of people are still looking broadly for that protection. They were grabbing UVXY in a big way today, Scott. Some of those calls, that's the volatility futures.

That's an ETN on the volatility futures just exploding to the upside, you know, up eight and ten times some of those calls. So that's where they were finding the protection, Scott. Doc, I appreciate it very much. A little forensic look really inside the market, what's taking place. We'll talk to you soon. That's John Najarian joining us there. Again, MarketRebellion.com co-founder. We do have a news alert to tell you about regarding Peloton. Shares are slipping a bit in the OT. You see down by about three and a third percent. The company is seeking now a minority investment of around 15 to 20 percent from private equity and other industry players. That is according to a report from Dow Jones. We have reached out to Peloton.

We'll let you know when we do hear more. But this has been one of those stocks, really a so-called stay at home name that has given an awful lot back over the last six to 12 months. We'll keep our eyes on that. Up next, it's Santoli's last word. And coming up at the top of the hour, the Fast team is ready to find opportunity in today's carnage. Overtime is back right after this. Coming up, ugly day on Wall Street. Santoli gives us his last word just after the break.

And don't miss the CNBC special, Markets in Turmoil, tonight, 8 p.m. Eastern time. Overtime is right back. To the results of our Twitter question of the day, we asked you, what is the best safety play right now? Cash winning out, more than half. 54% of you voted for cash. Defensive stocks in second place with 28%. Let's get to Mike Santoli for Santoli's last word. I'd love your opinion on that, but what is your last word?

Well, I'd add the 11% in the dollar to cash because that's pretty much how you're going to hold the dollar. So that's a lot of people who feel like they just want safety and are forgetting about the return side. Look, the last word is enough. Is it enough already in terms of this downside action? A lot of the things you go out with the clipboard, survey the record, see what you can check off. Yes, enough lopsided, comprehensive downside volume, 95 percent of the volume of the New York Stock Exchange is a downside. We've been waiting

for that. It's been the highest volume today traded on the Nasdaq 100 QQQ ETF since January 24th. That was a short-term low as well. OK, so that's a little bit of a straw in the wind as well. We dipped on the S&P under 18 times earnings. Nothing magic about that number, but that's where the buyers have kind of showed up in the last couple of times. And I think we're only talking about a bounce here. We're not saying some kind of climactic bottom, because if that's what you're looking for, I don't see it. The market's not mega over. So we didn't even close on the lows. Well, that's true. We were down by more than twelve hundred points and we closed where we did. And even the ones who were trying to sound bullish in the near term

stress, it's near term. Yes. It's hard to make a longer term call. You just have no idea really what's going to happen with inflation. You have absolutely no idea how earnings are going to be impacted or anything else for that matter from a geopolitical standpoint or anything else. The market feels capped. That's what four months of failed rallies and no net progress is going to do when you're basically in a downtrend. And the biggest stocks in the market are the ones that are being sold the hardest. I mean, it's hard to escape that. So I don't quibble with the idea that this is, at best, a trading range for a while. It's got to rebuild.

Rallies are probably suspect until they prove something. On the other hand, that's also part of the reckoning process. When everyone decides, you know, guess what? I guess it's bear market rules apply. You know, maybe we're pretty far along the way of getting through it. Less than 30 seconds left. The NASDAQ, as you said. Technology, it's hard to look at that screen. What does it make me feel about tomorrow? of getting through it. Less than 30 seconds left. The NASDAQ, as you said, technology,

it's hard to look at that screen. What does it make me feel about tomorrow? I think it's all about just they're the most expensive, most crowded stocks, and that's why the more money is to come out of them than any others. So I don't know that we've hit rock bottom. You know, jobs number, if we get clear of it, there's no inflation scare embedded in it. Who knows if we can get some relief.

Yet another thing to watch tomorrow morning. Appreciate it, as always. That's Mike Santoli with his last word. I'll see you tomorrow.