Closing Bell - Closing Bell Overtime: Stocks Sell Off Into Close, S&P 500 Gives Up Key Level 3/20/26

Episode Date: March 20, 2026

Sam Stovall of CFRA and Jim Paulsen of Paulsen Perspectives assess the market outlook and debate whether recent weakness creates opportunity or reinforces the case for caution. Warren Pies of 3Fourteen Research walks through oil charts and what they signal for the next move in energy—and broader markets. Kei Okamura of Neuberger Berman outlines the outlook for Japan and where investors may find opportunity internationally. John Kolovos of Macro Risk Advisors examines the technical picture and explains why charts continue to support a cautious stance. Howard Silverblatt, formerly of S&P Dow Jones Indices breaks down changes in index dynamics and what developments involving SpaceX and OpenAI could mean for market structure. The episode also explores a new wave of ETFs designed to mimic strategies used by well known traders with Adam Patti, CEO of VistaShares. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The bell is bringing an end to the trading day at the NYSC Guardian Metal Resources ringing the bell and at the NASDAQ, Hondias Capital Management doing the honors. Welcome to closing bell overtime, live from Studio B at the NASDAQ market site. I'm Mike Santoli. Melissa Lee is off today. Stock's ending lower for the third straight day, the NASDAQ posting its worst day since January 20th, all three major averages posting their fourth straight week of declines. The Russell 2000 and NASDAQ ending in correction territory down more than 10% from their 52-week highs. The Dow briefly falling into a correction as well.

Now, for the week, materials, utilities, and staples lagged both off more than 4%. Energy and financials closing the week a bit higher. Let's turn to Christina Parts for a look at today's biggest movers. Christina. Mike, stocks, like you said, really closed out a rough week in the red as investors wrestled with fading Fed cut hopes, rising treasury yields, and inflation risk that just kept showing up in the data. And of course, the war in Iran, now in its third week, keeping oil elevated and energy markets just on edge.

The results. The S&P 500 closed below its 200-day moving average for the first time since last May this week, ending a streak of more than 200 sessions above that level. InVitya, Microsoft, Tesla, all weighed on the downside. Those three names, along with Amazon, meta, Google, Apple, Meg 7, losing roughly $470 billion in market cap just today. That's the equivalent of an entire market cap for Micron. On the individual names as well, you got super micro remaining the biggest S&P loser.

As investors rotate to Dell, we'll have more on that story at 430 Eastern. And then you've got fertilizer stocks extending their slide from recent highs after the Strait of Hormuz reopened to international shipping, excluding, of course, the U.S. Israel and its allies. Mosaic actually fell another almost 10 percent today. Bank of America downgraded the stock to neutral from buys, citing raw material inflation, from the war as a potential drag on margin expansion. And last but not least, let's talk about gold, down more than 12% this month. It's on pace for its worst monthly loss since October 2008, Newmont, Barrett Gold and other miners,

all closing in the red today. Yeah, gold and bonds. No real help against losses in equities, Christina. Thank you very much. President Trump, just making some headlines on Iran. Amon Jabbers has the details, Amen. Yeah, Mike, the president, stopping to talk to reporters. at the White House on his way out.

He's headed to Maralago for the weekend, but he stopped and took a few questions. One was about a ceasefire. I want to just read you what he said there because it's important, I think, for the market to understand sort of what his thinking is. He says, I don't want to do a ceasefire.

You know, you don't do a ceasefire when you're literally obliterating the other side. He went on to say that they don't have an army, they don't have a Navy. The president continuing to emphasize to reporters here that he believes the United States is militarily winning the war against Iran. He also says, we've knocked out their Navy and Air Force. From a

military standpoint, all they're doing is clogging up the straight. From a military standpoint, they're finished. He's emphasizing here that he believes the U.S. militarily has already won the war against Iran. So the president's signaling here, he's not ready to stop any time soon, even though he's also signaling that he thinks militarily the United States has already won. So make of what you will, Mike. Yes, as more, I guess, troops head to the region as well, Amon. Thank you very much. Well, let's get into these markets. All three major indexes posting another losing week as the Iran war enters another week. Our next guest think markets could still see a rally in the months ahead, despite all this uncertainty. CFRA's chief market strategist, Sam Stovall and Paulson

Perspectives, Jim Paulson. Join me now, and it's great to see you both. Sam, I'd love to to get your wisdom on some of the broad tendencies that we can start to think about when it comes to when a market is already in this kind of a setback. You have the S&P 500 down 7%. Does that typically spill further into a full 10% decline? I'm wondering about that. And also, today, the S&P did break its fourth quarter low. Sometimes that's viewed as potentially ominous on a forward-looking basis. So what are the things that you would sort of offer on those fronts?

Hey, Mike, good to talk to you. Well, starting with the Q1 low undercutting the prior December low, that's actually happened, 76% of the midterm election year since World War II. And on average, the S&P has lost a little less than 4% for the entire year as a result and declined in price a little more than 60% of the time. So that sort of sets a negative tone. But when you think about how long it took, took the S&P 500 to go from the January 27th peak to the 5% decline threshold, that was more than 50 calendar days. Looking at all of the pullbacks, corrections, bear markets since World War II, none of them that took more than 40 days became bare markets. A majority stayed within the 5% to 10% range. Some did drift into the 10 to 20%, but none of them posted new bare markets when they

had this much time to think about it. It's interesting because a lot of these indicators are sort of looking at unusual circumstances based on how relatively gradually the indexes have given away or how narrow the range was to start the year. Jim, I guess at this stage, you have to kind of be in the business of trying to assess the probabilities for how things go from here. What's priced into this market at this point with regard to a potential outcome in Iran with oil prices and what that's going to mean for rates? So what's your take on all that? Well, I'm no military expert, Mike, but we all turn into what, I guess.

I like two things right now, I guess. There's a lot not to like. But I think I like the fact that we've got a very emotional week finally here in the markets, both in the stock market and the bond market. The stories are all pretty pessimistic. The war's never going to end. There's no end in sight. The stock market, as you say, is breaking down.

to new lows and a lot of corrections are occurring. There's a lot of pessimism. You know, the sentiment indicators have gone south, whether it's American Institute, individual advisors, or CNN Green and Fear. The Fed's not going to cut rates. They're only going to raise them. So I like that.

I like there's a lot of pessimism. That's often associated with a good place to buy. And then I kind of like the idea that, you know, it seems to me the U.S. has done about all they can, militarily from the air and from Navy and from missiles and bombs. And as far as taking away severely degrading the military might of Iran, whether conventionally or nuclear, and also taking out a lot of their leadership. I don't know if there's a lot more to be gained from continuing to bomb them.

As President Trump says, they're winning decisively in that battle. What more is there to do? So unless we decide to go boots on the ground, which is not, you know, in total unlikely or out of the realm. I think if we don't do that, then I think this thing's going to wind down pretty soon. I think President Trump's going to find a way to exit the war and declare victory. And I think with extreme pessimism and the chance of that occurring, I think most investors would be feel pretty good about buying in here sometime later this year. Now, Jim, I think you've already thought even before this war phase that, you know, the economy was

like it was primed or needed a little bit more help in terms of lower interest rates. Or there was room for the Fed to do more. Now, that story has changed, as you mentioned this week. We're not pricing in any cost for the rest of this year. It looks like inflation, at least cosmetically, is going to be, you know, higher. But you think that things can change enough if things de-escalate that we can actually get back toward lowering rates? I do.

I really do. I think the underlying economy grew 2 percent in last year in real GDP terms. and there's absolutely no job creation. Even the Fed earlier this week said there's no private sector job creation going on. That's an unacceptable situation here in the United States and needs some support to improve growth and job creation. I think that if the Iran conflict goes away, that I think oil prices and energy prices will come down.

The inflation fear will dissipate quite rapidly. And I think we're going to get back to where the Fed is going to be more supportive and policies turn more accommodative with consumer sentiment still in the tank, without job creation, with the housing market still in the brink, with a private credit crisis potentially brewing, I think we'll bring policy support. And if we do, boy, that's going to get back to where we were earlier, where we had these broader market plays, small caps, cyclical sectors, the equal-weighted S&P, international stocks, value stocks, leading the market higher. And I do think we're going to get back to that this year and carry the market to do highs

with greater policy support. Sam, we're still a few weeks away from first quarter earnings hitting, but I mentioned earlier S&P's back towards September levels. Earnings have gone nothing but up since then in terms of reported as well as projected. And now the S&Ps forward PEs down to 20. I say down to 20 because that's basically been the floor for this, you know, three-year period or so outside of the tariff panic for a couple of weeks last year. So I wonder if that means we've de-risked the market or should we expect earnings perhaps to disappoint from here? Well, in agreement with what Jim was saying, I think that investors are sort of taking the pulse of the market now based on these forward PE ratios as compared with their 5, 10, and 20-year

averages. S&P was trading at a 21% premium at its recent peak, but is now close. close to being equal to its 10-year average. Technology was trading at a more than 40% premium to its 10-year average PE and is now at a 10% discount. And on a five-year basis, it's at a 20% discount. So, you know, you don't tend to fall back to average, but you do go a little further. So there could still be some decline left in this overall move. But I think we're certainly getting close to a point in which investors will start nibbling.

All right, guys, I really appreciate you breaking it down after a big week. Sam Stolval, CFRA and Jim Paulson from Paulson perspectives. Talk to you again soon. Let's now turn to the oil market as WTI continues to hover around $100 a barrel. Pippa Stevens has a wrap-up of the wild moves this week. Pippa. Hey, Mike. So oil is moving higher here in extended trading with Brenner, around 113, closing in on the post-war high of 11950.

Production outages have now reached 10.7 million barrels per day. That's according to Kepler, for a total, loss of 133 million barrels since the war began. The firm forecasts that number hitting 250 million by the end of March and 400 million by mid-April. The IEA is FITIA's FITIROL telling the FD that this is, quote, the greatest global energy security threatened history. And there are growing fears that some production will never return to pre-war levels.

Now, President Trump has frequently said the U.S. is the world's largest oil producer, but there is little indication will see a meaningful optic in production. The curve has moved up, but January WTI still about $20 below the front month, and there are also infrastructure limitations. Bryce-Sat energy noting the duck availability or drilled but uncompleted wells, which are the fastest avenue for heightened production, is limited. In an accelerated drawdown of excess ducks, the firm estimates 111,000 barrels per day of supply could come online in the next few months, but Mike, they said that that remains highly unlikely

with all of the oil price volatility. Yeah, that, I guess, is that higher for long? scenario, kind of threatening here. Pippa, you've pointed out a lot, the real keys, the refined products, various ones, various regional markets for that. You know, we're hearing about kind of rationing of diesel fuel in parts of Asia and elsewhere. I just wonder kind of how critical it is as the clock ticks here in terms of a real break on the overall global economy. I mean, it is very critical because there is simply no substitution for all of the diesel that's And of course, diesel is always considered a tax from the consumer, given it powers trucks and trains,

which is how we get all of our goods. And we did see China earlier in the war curb their fuel exports, put a ban on that. We're seeing other countries follow suit, given how important it is. And the other thing is that all of these systems have developed with a global sense in mind. And so a lot of refiners are developed to process certain types of crude, even along the U.S. as Gulf Coast. Those are set up for heavy crude. We get some of that from Canada as well as places like Venezuela now.

And we also do import some heavy crude from the Middle East into the Gulf Coast. And those refiners are set up for that specific mix. And while maybe you can change your output within 5% or so, you can't meaningfully shift from producing, say, gasoline to diesel. And so as more and more of these barrels are shut in, forcing refiners to reduce their operations, then the markets for these products do become increasingly tight, which is why we've seen such a big jump in heating oil futures and gas. soil over in Europe. Yeah, I mean, so many dislocations. Pippa, thanks so much. We're going to stay with energy for now. Our next guest says, even if the Strait of Ormoos open soon, the new base for

oil is likely to stay at least $10 higher a barrel than it was pre-war. Well, this is Warren Pye's founder of 314 research. Warren, so great to have you. Talk a little bit about how you're viewing this. I know you're also very cognizant of how, you know, as we get, as the weeks go on, the window closes for this being a contained situation. So with regard to crude, the starting point with, you know, oversupplied markets and where we are now. Yeah, thanks for having me. I think a lot of the numbers that PIPA just laid out are very close to what we've done, some of our back of the envelope calculation. So I think that we're looking at basically a 10 million barrel a day whole that is blown open in the global crude market. And so we did come into the crisis, into the war,

with a pretty big overhang in inventory. So if you combine onshore and floating storage coming into the crisis, I think there was maybe 300 million excess barrels. That's our calculation. So very simply, if we run this, if we keep this war going through March, it whittles away all of that excess inventory through the end of March. And so that's phase one. Phase two, though, is even if you had the Strait of Hormuz open today,

There's now increasingly crude that's shut in around production in the Middle East. And then you have refiners that have also closed. Those things would take at least two months. Those two factors would take at least two months to gradually come back. So you wouldn't fill that deficit right away, even if we open the straight-door moves again. And the final factor is VLCCs. It takes 70 VLCCs to go in and load and then transit to Asia every week. That's out of a, you know, basically, if you ex out the shadow fleet for sanctioned tankers,

that's, you know, it's a 550 VLCs in the world that are operational. So it's going to be really hard as these VLCCs scatter to find oil during this crisis to get 70 VLCCs per week into the Strait of Hormuz. So that's, that disruption is going to be with us for three months. So when you add all that together, I think you're looking at a, even if it opened today, you're looking at a world where Brent needs to be priced more like $80 to clear. And you've pointed out, too, I mean, we still have this situation where near-term, you know, spot market and near-term futures are at a huge premium to the out months.

What is that telling you? What does the market's current setup tell us about just kind of how long those prices are going to stay elevated? Yeah, so one of the keys, whenever you have one of these spikes and you're trying to find, you know, without looking at the fundamentals, you're trying to find when is oil bottom. Usually what you get, whenever you have a spike, all the actions in the front month, front part of the curve. That's same with a collapse, like in COVID, the front part of the curve collapses and then the curve ships.

And the best way to interpret the curve is, when there's backwardation where the front months are higher than back months, that's calling crude oil out of storage onto the prompt market. It's the market's way of telling everybody, the curve's way of telling everybody, there's a shortage. We need all the oil, empty your storage tanks. Conversely, if it's Contango where the front months are down and the back months are up,

it's opening up the storage options and calling crude off an oversupplied market into storage. So that's the first thing is that the curve is screaming out for new barrels. But what we're seeing in this time is very unusual. We're seeing the back months rise faster than the front months to alleviate some of the backgradation. And the way I interpret that is the curve in the crude oil market in general is starting to embed the risk premium that we thought. lot was going to be a very temporary phenomenon farther out. And that's a very concerning for market participants. I do want to get you on your overall kind of investment posture when

it comes to stocks as well, because you did reduce exposure. I know you've considered it. Maybe the trend is at risk here and did not necessarily go to like an underweight in stocks. What is today's action? What does the overall move tell you right now the risk reward looks like? Well, it's all going to come down to the taco. I think you've got maybe. another week, maybe 10 days, like we said, we get to the end of March to run down the excess inventory. It's not going to be a pretty picture where there's still a window for Trump to capitulate or find an off ramp here. But if we get into April and the betting market say this is going to go through April. If we went through April, the S&P 500 is going to go below 6,000.

I mean, we're going to go into a bare market. That's, to me, that's very clear. I don't want to be too alarmist, but I think from this point forward, every week we don't have a very clear move towards an off ramp, the S&P 500 is going to go lower. That's what I think. And if you're going to stay exposed, then you're betting on a taco. Right. Interesting. Yeah, I mean, circumstances different, but that kind of feels 2022-ish in terms of the cadence and trajectory of things worn. Really appreciate catching up with you. Thanks so much. Thank you for having me. All right. The S&P 500, 45% since the Warren-Iron started. But the once red-hot Japanese Niki has been hit much harder. Up next, Top portfolio manager tells us that he sees a buying opportunity in Japan's market.

Plus, super micro shares plunging after its co-founder was arrested in a smuggling scheme that sounds like the plot of a spy movie. Details on that coming up. You're watching Closing Bell Overtime, live from the NASDAQ market set. Welcome back to Overtime. International markets have fared far worse than the U.S. since the start of the Iran War. The NICA has fallen more than 9% in the past three weeks. Its central bank held rate steady this week, but said inflation risks. have risen due to the war. However, prior to that, the Niki was up nearly 17% for the year,

far outpacing the S&P. So is this providing a buying opportunity in a market that was red hot? Joining us now is Kay Okamora. He's portfolio manager of Japanese equities at Newberger Berman. Great to see you, Kay. Thanks very much for having me. So, I mean, there's a lot to love in the Japanese market, I think, just sort of fundamentally, structurally, a lot of things sort of changing after a long period of malaise. Where do we stand right now after this market gut check? Yeah, so up until this moment, I think a lot of global investors were looking at Japan very excited about the economic prospects. The last decades are coming to an end.

We got inflation stabilizing. And then on top of that, you've got the structural reforms and the balancing reforms. Now, with this situation in the Middle East, what's created, the pullback that you mentioned, is actually providing to be an interesting opportunity for many global investors that wanted to have a good entry point into this market. So this week and next week, I'm on Roadshow here in the United States. and a lot of the conversations are very positive, and they're just trying to figure out, you know, when is the right time to get in?

Presumably, I mean, one part of the pullback, aside from the fact that pretty much everything that did really well for the first couple months this year came in the hardest, is that, of course, Japan, a net importer of oil and exposed to whatever pressures might come with that, how do you quantify or characterize that risk? Yeah, the risk is definitely there.

Japan is a net importer of everything pretty much. Yeah, right. But the Japanese government has said that it has more than 250 days of stockpile for crude. And the idea here is that if crude does average above $100 for a prolonged, you know, two, three months time period, that could have an impact on the economy. But I think most people are the view that things will start to calm down. And that I think will probably mean that's a good entry point for this market. You know, I think it's almost a kind of a novelty to see things like Japanese bond yields where they are after that long period of time.

at this point, is that still telling a positive story about, as you say, the end of deflation and maybe faster growth? Or is that at some point become a little bit of a hazard? You're right to point out about the fiscal situation. I'm not making light of it. You know, our debt to GDP is north of 200%. But Japan is actually one of the only G7 countries in the last five years to actually see its fiscal situation improved from 250% to now 210%. And the current administration led by Prime Minister Saniaita Takaa H, it was been in town. She's quite clear that the fiscal policies that she's pursuing is going to be

budgeted by both government spending, but more importantly by private sector funding that she's going to push companies to pay for going forward. And I think this is actually one of the things that equity investors like us, we're very excited about because it's going to open up growth opportunities in this market. What sorts of companies or themes are most interesting? I mean, is there leverage to global AI investing? Is it more about kind of the old line companies operating at a higher metabolism. Yeah, so earlier you spoke about the NECA 225, and there are a couple of key companies like Adventists

that's training at 30 times PE plus, very expensive. But on the other hand, the types of companies that we like are riding the same megatrans, but at like 10, 11, 12 times FE, that's because they're construction companies, they're building the factories for the semiconductor production equipment or they're riding the defense plays, but in Japan, defense isn't just about missiles or bullets. actually about seaports and fortifying the military bases. So they're riding the same waves

and the megatrends, but much, much cheaper. And now the re-rating is starting to happen. And wow, the stock price appreciation has been absolutely phenomenal. It sounds like that kind of real asset play on AI as a lot of people are excited about. Okay, great to see you. Thank you. Thank you. Appreciate it. All right up next, we will break down the charts to see whether any market rally right now should be trusted or viewed with skepticism. And later, does it make sense to invest like billionaires by mimicking their portfolios. Over time, we'll be right back. Markets closing out the day with a sell-off as investors continue to grapple with the fallout

from Iran as these losses mount. Our next guy says, there's little in the market that warrants stepping away from a cautious stance. Joining me now is John Kolovis. He is chief technical market strategist at macro risk advisors. John, so your caution predates Iran. Yes. Right? So this market, you know, risk appetites seem to peak in October, right? Bitcoin. NASDAQ, MAG-7, small caps. What has the market been grappling with here? And I guess how would you handicap it now that we've broken some of these key threshold levels? Yeah, so one thing I've been telling clients is this.

You know, bull markets look like bull markets and bear markets look like bare markets. This doesn't necessarily look like a bull market, and it's starting to look more and more like a bear market. So it's really the sequence of things, right? We already have this initial decline lower, coming down to support. I think we're probably going to get close to an exhaustive move, maybe at some point, next week, maybe, sucker rally, and then put in that lower low. So remember, corrections unfold in three stages. Initial move lower, which is we have.

We haven't had that oversold bounce yet, and then we'll get that final swoosh lower. And that may be around 6,300, if not 61. Okay, so, yeah, we're 6,500 thereabouts right now. There was a lot of excitement about the so-called broadening of the market. The Eco-Wate S&P was outperforming by a ton. It's now in-off ties more, but maybe, I don't know, does a trend look any better for the equal weight? No, no. If anything, and it's something we've talked about a lot, is like, I wasn't a buyer of this broadening thesis. It was a bad broadening thesis. If anything, things

maybe are getting a little bit better in terms of a deep oversold when it comes for the average stock. However, now we have too many stocks below their key moving averages, be it's 50-day moving average or it's 200-day moving average, and now my models are giving me a sell signal from a trend's perspective. So what that tells me is that I cannot trust rallies anymore until the data improved. So I need to see, like, at least 60% of stocks back above their 50 day and 60% back above their 200 day. We're way off from that.

So now we're flipping into proper correction territory. Most stocks are now in a bare market. So, like I said, rallies are very suspicious here on forward until the trend start to improve. It's interesting you say you want to see those measures get back up to obviously assert that maybe the bottom is in. Because a lot of what folks have been telling me is we're not seeing enough weakness on those. In other words, there hadn't been this kind of climactic move lower with the vast majority of stocks, you know, at new lows. You've got to be careful of what you ask for, right?

I think this is a bad oversold condition, and you can have those, right? So it's almost like valuation or things are cheap. Well, maybe it's cheap for a reason. Maybe things are oversold for a reason. So, yeah, okay, the quickest way out of this is a proper capitulation move. I don't think we've had that yet. Right. And maybe we get lucky and it happens.

But, again, this has been happening for a long time, right? Let's just say, hypothetically, there's a truce next week. Okay? Probably not. What does that do about financials? The charts are terrible there. I was actually going to ask you about that because, I mean, look, it's one day, but the banks outperformed today. You didn't have a lot of carnage in the private equity exposed names and private debt. Is that just telling us that the selling is done there, or it's a break? It probably is a break. I mean, optimistically, you create like a FIFO bottom, first in first out.

When I was looking at the financial sector today, it was really the insurance sector that was leading. and what is that? Defensive. Okay. But optimistically, yeah, maybe they are, but I don't think so, right? The risk here is if the private credit ETF, right, the PSP, for instance, I use that as a benchmark for it. If that would break its November lows, this is the risk, another 25% lower from that point, okay? And that's going to scare a lot of people.

And not only are those credits spreads going up, but also the traditional credit spreads are going up. My models are very close to giving it a sale signal there. So there's this contagion risk that is building, and the market needs to be. debate that. And I just don't see it yet on the charts. You know, there was, given that you and I both were sort of like a, be careful what you wish for with the broadening thesis, has Mag 7 retrenched enough? Has the mega caps? Can they act as defense again anytime soon? I don't, I don't think so. I think actually during COVID, they were relative performers and they're pretty good. Now they're taking the tape down.

And this is why, and one of the reason why I was cautious going into this year is is that, stay with me here. It has to do with factor trends. Low beta was very oversold. Right. Two standard aviation oversoles, right? That's inverse related to momentum. Momentum was equivalently overbought. What is momentum correlated to the S&P 500? So that all needs to unwind itself. So in 24, the momentum factor was a three standard deviation overbought. It was the gift that kept on giving. It was a technician's dream to have that. That hasn't fully reset yet. So that's my fear. We need to get that wash out in those names. Make people feel like, oh, Microsoft's going to go out of business. They're not.

Right, right. People start thinking that, and then that would be a great buying. Yeah, I mean, today they were just like for sale more than the market all day on no news. Yeah, sir. Hey, John. Great to have you. Thanks so much. Nice, Mike. Good stuff.

All right, time for a CBC News Update with Julia Boreston. Julia. Hi, Mike. The British government today authorized the U.S. to use military bases in England to launch strikes on Iranian missile sites that are attacking ships in the Strait of Hormuz. Prime Minister Akir Starmor originally rejected the request for the Iran strikes. President Trump called it a very late response. Federal prosecutors asked a judge today to dismiss charges against two former Louisville police officers

who were accused of falsifying the warrant that led police to raid Brianna Taylor's apartment the night she was killed six years ago. Judges had twice reduced the charges to misdemeanors saying there wasn't a direct link between the false information and Taylor's death. And ABC faces a $30 million loss of its canceled season 22 of The Bachelorette never airs. That's according to the Hollywood reporter. The network pulled the show ahead of its Sunday premiere after a video surfaced of Bachelorette Taylor Frankie, Paul, fighting her ex-boyfriend, allegedly hitting her five-year-old daughter accidentally during the altercation.

The network says its focus now is on supporting the family. Back over to you. Julie, thank you. Fake paperwork, dummy servers, and smuggling accusation. Sounds like a Hollywood plot, but it is all too real for a co-founder, of Super Micro, who was just arrested. Details and the impact on the stock are up there. Plus, we'll discuss why highly anticipated IPOs like SpaceX and OpenAI could be fast-tracked into the S&P 500 and other indexes and the potential impact on the market. Welcome back to overtime,

Super Micro, by far the worst performing stock in the S&P 500 today after one of its co-founders was arrested for allegedly smuggling Nvidia chips into China. Christina Partsenevarez is here with the details. You had Super Micro, and this is the co-founder. Under arrest, Wally Leah, I should say, along with two other company associates charged last night with running a raisin scheme to smuggle billions of dollars in servers to China using fake paperwork, a Southeast Asian shell middleman, and a blow dryer, literally to swap serial numbers on box servers ahead of possible government audits. The DOJ releasing surveillance images of defendants caught in the acts surrounded by dummy servers, blow dryer in hand. the one in the red that you're seeing on the right-hand side. Two and a half billion dollars in servers allegedly funneled to China since 2024. About 510 million specifically just happened in a single six-week stretch just last spring.

Super Micro is not named as a defendant, but that may not be enough to contain the damage. Bernstein is already asking whether InVideo will feel the need to distance itself from Super Micro entirely. Add in that the company did have an accounting scandal back in 2018. It was delisted. And then EY, walking out as auditor back in... in 2024. And the compliance questions here just go well beyond just three individuals. The market is definitely making its verdict pretty clear today. Super Micro closing 33% lower. Dell, a direct competitor in AI servers, managed to close in the green despite the sell-off into the close.

I was fascinated by that move with Dell. First of all, almost nothing was up today. Dell's up half a percent on this. Assuming, I mean, we don't know what's going to happen with Super Micro, but given its place in the industry, it's a capacity-constrained business, I assume, right, hosting these data centers and things like that. Can the industry afford if they, you know, kind of are sidelined? I mean, who fills the gap? Well, the reason why Dell is up and not, let's say, HPE is that it's about the relationship with NVIDIA.

So both Super Micro and Dell are very close with NVIDIA. So they get access to the more advanced chips so they can build the servers and then send them off to cloud customers and enterprise customers. Even just a few days ago, there's a picture of the CEO of Super Micro and Jensen Wong at GTC, hugging it out, right? They're that close. Dell benefits. HPE is more exposed to networking now,

so that's possibly why we're not seeing as much of a switchover. There's also Wistron, which is an Asian company too. Dell is probably the best positioned, and I think with this type of news, you can see companies perhaps like Corweave. Right? Corweave is a super microcustomer, pivoting because of the fear of like,

what else is next? What compliance do we have to go through? Is it going to take a lot longer? Are you going to have issues with all of your employees building this now? People are worried that nothing is true. Yeah. And Invidia, you know, they've said they obviously are not implicated here, didn't know about this. But have they said anything about the future relationship with Supermiker?

No, they haven't, and you're correct, they haven't. They say that there's no fault against Invidia at all. But unfortunately, often at the center of a lot of these smuggling cases is Invidia chips. And so the issue is how do you track it going forward? And Invidia does offer an open source health tracker, which eventually could tell you the location. But this is still a working process. I was going to say, right, the whole idea. is it's part of this, you know, software ecosystem. It's sort of somewhat...

But then that plays into the argument why China doesn't want certain chips because there's the backdoor aspect of it. Sure. Christina, thank you. Thank you. Fascinating stuff. Well, expected IPOs from companies like SpaceX and OpenAI with market values approaching a trillion dollars are pushing index providers to rethink the rules. S&P is reportedly considering faster entry into its indices for newly public companies. The goals to get some of the market's largest and most influential companies into the index sooner. But critics warn that could force index funds to buy before prices are fully established. S&P telling us, quote, S&P Dow Jones indices does not comment on speculation regarding potential

index or methodology changes. Any material changes to the index or its methodology involve a public consultation process. The NASDAQ has already asked for public comment on potential changes. Joining us now for more is Howard Silverblatt. He is the former senior index analyst for S&P Dow Jones indices. And Howard, first of all, congratulations on your much-deserved recent retirement from back in January. It's great to talk to you. Thank you.

It's good to be here. So how do we weigh the interest here? I mean, obviously, if these companies come public at anything close to the contemplated market caps, you need to have some representation eventually before too long for the indexes to remain relevant, but then getting them in all at once, maybe before they meet profit. standards or before they're seasoned, you know, could jeopardize existing index holders. So how do you think about the issue? Well, I break down to two groups.

First of all, you've got to decide on methodology if you're changing. Do you need 12 months for the IPO? Do you need to change the flow to them, profitability? The second component is that you need efficient trading. You need indexes to be able to purchase the stock and not for it to impact the day-to-day action or the sector representation in there. You don't want a surge in demand with limited shares out there,

especially with the post-restriction period and the lock-up times. I mean, basically, for the S&P 500, 17% of that stock has to be purchased by licensed indexes. So that's a lot in there. So at some point, if S&P decides to move forward, similar to the way NASDAQ is,

they will put out a comment. They'll put out, what is your opinion? This is what we're thinking about. This is what we're looking to do. So you would get some notice. Typically, at least 30 days for comments. Then it goes back on there. But you need to find a way to do the traders.

And that's why they go out into the market. It's how do you execute these trades and prevent enormous spreads one way or another. Remember when a fund buys an issue, they don't have the money lying around. They've got to go sell the other 490. United issues. It's a lot of cost on there. There's a lot of tracking errors. So you want to do it efficiently and you don't want swings

up and down. So what you put it in and how you do it, that's the important part. I recall, I mean, I think it goes back to the early 2000s. There was a lot of new market cap out there, Goldman Sachs and UPS and Prudential, a lot of companies

and, you know, it could be maybe tough to get them into the index funds efficiently. I don't know if it was related, but S&P decided to eject non-U.S.-based companies, and maybe it was related to that. I just wondered to what degree you would want to have companies that are not yet have a public track record of profitability and all the rest of it to kind of get into the index in a hurry. Yeah, you definitely have the methodology you've got to consider on there. The profitability is major.

The idea is to have stable issues in the index. You don't want a lot of turnover on there. Companies have to represent the sectors on there. So again, you need to first determine do you want these issues in there because they are so large and it represents such a large portion of the economy and that's what you're attempting to emulate. Do you want them in there? Is the one year a good time period or less? And then once you determine on those items, you have to figure out how do you build it? How do you trade it?

And that's what outside consultants really need to do. When the commentaries come, if they put out and ask for it, how do we trade this to make it efficient in the market? Because if it's not efficient, it's not a good index. Yeah, for sure. A lot of mechanical considerations to sort out. Howard, great to talk to you. Really appreciate you coming on today.

Howard Silver. Thank you. All right. Well, they say imitation is a sincerest form of flattery. But up next, we'll discuss whether imitating the strategies of some of the world's most successful investors is truly a road to riches. Welcome back to Overtime. We spoke earlier about how new IPOs could temporarily distort the major indices.

Another trend gaining traction are ETFs aiming to track star investors. Vista shares is among the most well-known to offer these products. They include the legends income ETF products mimicking the top holdings of famous investors, such as Bill Ackman, Warren Buffett, Stan Drucker Miller, and David Tepper. Joining us now is Vista Share's CEO, Adam, Patty. It's good to catch up with you on this. I'm going to say outright that when I saw these structure, these funds, I know they're also based on income.

You sell options for income on top of these portfolios. It seemed kind of cynical and sort of opportunistic. And in other words, what's the virtue of having this portfolio of stocks as a basis and then trying to juice it for income? Hey, well, thanks for having me. So, hey, look, we've been in a momentum-driven market for several years at this point, right? mostly driven by MAG7 returns. We believe we've moved into more of a, obviously, a more volatile regime right now,

which is more of a stock pickers market. So we all know that most mutual fund managers underperform their indexes. So what do you do? What's an investor to do? We tried to identify who are the best stock pickers out there, the ones that have high conviction, highly concentrated positions, and long holding periods. And we go into the public markets.

We look at the data. and we package that into an ETF for investors to gain access to the brilliance of these legendary managers. Well, you have the, I guess, somewhat delayed reporting of what these investors own, and you kind of use, you know, have their names in the products. But what's the point of, I assume, selling call options to get income on very high rates of yield off of that, which is sort of caps you out. So you're no longer kind of letting your winners run, are you? Well, we have the ability to launch on versions without the options income, but our research

showed that a lot of investors were, in fact, looking for the income. They're looking for steady, stable income monthly, particularly in a volatile market. It's a great way to hedge, right? I mean, as long as you're getting that income, you know what you're getting on a monthly basis. So, yeah, I mean, typically any kind of options income strategy is going to give you around 75% of the upside and around 85% of the downside with the 15% overlay. all of our products are designed to give 15% annual income paid monthly, 1.25% per month,

to give that consistent income on a monthly basis. And if I'm just looking at like the Tepper Fund, it's Alibaba, Amazon, NVIDIA, Taiwan, semi-alphab. I mean, that seems like kind of a generic growth fund, but you're able to kind of put Tepper's name on. How quickly is that going to turn over? Well, his turnover, he takes highly concentrated positions. So on a quarterly basis, you will, in fact, see some turnover.

which is important, and we're in active funds. We can actually move on positions, you know, when they're announced. We don't need to wait to the end of the quarter. But if we do wait to the end of the quarter, there's an average of a 45-day delay when the 13-F filings come out. So, you know, he's got to go down further into the portfolio. It's the top 20 holdings. He is concentrated in some big names there.

But he's unique in that he does have some China exposure. He also has companies like Corning, which is, you know, the leading and fiber optic cables for data centers, which is. an interesting holding as well. All right. Just quickly, when markets are volatile like this, you're starting to see the options, premiums get juice. What does that mean for you? Is it easier or is it get more kind of dangerous to be selling? It's actually easier. The more volatility, the easier it is to hit our number. But we'll never pay out more than that 125. So we're not looking to maximize income. We don't

want to see NAV decay in our products. We're looking for that 125 per month, 1.25%. If we make more, we're rolling that back into the NAS. So volatility in this case is our friend. Yes, the net asset value right there, the NAV. Adam, thanks very much. Appreciate you giving your side. Thanks for having me. Business shares.

All right, up next, a potential under the radar winner from all the pain you've been feeling at the gas pump lately. And no, it is not an energy stock. Closing bell overtime live from the NASDAQ market site. Be right back. Welcome back to overtime. The pain you're feeling at the gas pump is showing no signs of coming to an end. according to a AAA, the national average for regular unleaded gasoline is now $3.91.

That's up nearly 30 cents from a week ago and up roughly a dollar from this time last year. Meanwhile, analysts at Gordon Haskett see it under the radar way to play higher gas prices. Costco. As you can see, from this picture taken today at a Costco in Wayne, New Jersey, lines are wrapping around the block. The firm points out foot traffic at Costco's gas stations is up sharply this month since prices at the Warehouse Club tend to be around 24 cents per gallon cheaper than state averages and because the cross shop between fuel customers and the warehouse customers, roughly about 50%, more members filling up their cars with both gasoline and groceries. That's going to do it for overtime this week.