Closing Bell - Closing Bell Overtime: Trading the Volatility 06/10/22

Episode Date: June 10, 2022

Stocks closing deep in the red to finish the week, with the Dow ending the day down nearly 900 points. Fundstrat’s Tom Lee has previously said inflation had peaked and was betting on a big bounce for the markets… he gives us his fresh take following today’s ugly close. Plus, Pomp Investments’ Anthony Pompliano weighs in on inflation and if bitcoin could be a big hedge. And market expert Mike Santoli’s crucial “Last Word” to wrap up the week.

Welcome to Overtime, everybody, on this nasty Friday afternoon. I'm Scott Wapner. You just heard the bells. We are just getting started. In just a little bit, I will speak to Bitcoin big shot Anthony Pompliano about today's CPI, whether claims that the cryptocurrency is one of the best inflation hedges are just plain wrong. We begin, though, with our talk of the tape. Whether the Great Bear bounce back is dead and that stocks are now heading back to the lows of last month, our first guest today has consistently made the case that inflation had not only peaked,

but that the S&P 500 could rise by nearly 1,000 points by year's end. He's Tom Lee. He is Fundstrat's head of research. Joining me once again live. Tom, it's great to have you back with me. Thank you for coming on today. Yeah, Scott, good to see you. Not a great day for markets. No, no. Are you here today to defend your call or to say I was wrong?

Well, a little bit of both. The last two days have been really ugly for markets and really tough for anyone trying to defend something looking better in the second half. But that doesn't mean today's CPI report has really negated anything that is underlying supporting a better second half. I'd say it's been very disappointing. But today's probably a good example of how markets are just losing their patience. They really do want to see an improvement in inflation. But so many things that are driving goods inflation have really started to roll over. And I think in some ways, it's just that the pace of that's not happening fast enough. And of course, that means the markets are just becoming nervous.

Yeah, I mean, food, gas, rent, I could go down the list. Every metric within the CPI, Tom, was so much hotter than expected. And part of your view for the second half is predicated on the fact, as you have continually made the case on this program and others, that inflation had peaked and that it would start coming down. And in fact, it doesn't look like it has in some of the most important metrics there are. That's true, Scott. I mean, you know, the biggest contributor is the shelter, and that's going to have a lag to housing prices because it shows up

through rent. So that's going to be sticky. You know, but what might surprise folks is that if you look at sort of number two, three, four, five contributors, the next four contributors, it was cars, used cars and new cars, apparel, and travel. And these are, you know, travel, of course, is still in its revenge travel phase, but car prices are rolling over and apparel is rolling over and furnishings rolling over and new car sales are slowing, but that just is not showing up in the CPI yet. So as much as I think today was sort of a headline miss and I think, you know, a diffusion mix for people that they think inflation strengthening, a lot of things that are set to sort of be disinflationary are just not showing up yet.

So I think it'll lag and I think markets are losing patience, but I just don't think it means you got to give up on the second half. You know what? I mean, markets are one thing. I'm thinking about the Fed perhaps losing patience with how sticky inflation is, how tough their job seems to be, and how much tougher it appears today than perhaps it was yesterday and what that means for the market going forward and what the likelihood, frankly, is that the Fed has to be even more aggressive than it initially thought. You're right, Scott. You know, I think from a market's perspective, I think the market would love to see the Fed do more. I don't think that the shock to markets is that the neutral rate is, you know, three or something. It's really the pace and markets views about the trajectory. And if it means the Fed has to get tougher and sort of front-end load the hikes, I know that might sound like it's a negative development, but as you know, that might really appease

market fears. And for those who are worried that maybe this goes too far and breaks the economy, of course that's a possibility. But as you know, a big chunk of this rise is really energy prices, which as much as the Fed is going to try to control it, it really is out of their hands in the sense that now the second wave is coming from delays associated with Russia and uncertainty. So I understand why investors are nervous. It's been a tough macro environment and a really tough time to be owning stocks. But I mean, I would even say today wasn't necessarily the ugliest day in the sense that, you know, we haven't necessarily broken to new lows.

And it was a, you know, would have been a perfect excuse for us to actually break to new lows today. Well, maybe we're on the way there. This is just the beginning. Are we going to retest them? I'm still in the camp that markets are better risk-reward, and so I'd look at stocks to be bought here, but I know investors are just licking wounds, and we know positions have really gone flat, and today we didn't even see even much of a response for the VIX, and I know people might say the VIX has to go to 40,

but I think the VIX is telling us, you know, investors are pretty flat here. So it's ugly. Been a rough couple of days, but that doesn't mean this is where we are in a month. Barclays says the Fed is going to go 75 next week. The conventional thought is 50. What if there is a surprise, Tom? And maybe there needs to be. Yeah, from a market psychology, I think equity investors and even credit markets are saying they'd like to see the Fed do more,

even though everybody realizes there's a huge lag between what the Fed's doing and the pace of how those kind of come through the economy. But it really is a good moment to try to contain fears, which I don't think are runaway, but even today's consumer confidence reading, with confidence as low as it is when unemployment is at 3.6%, I looked at this since 1960. Really, the data's pretty good only since 1970. It's kind of unprecedented that consumers are this negative when unemployment rates are this low.

So clearly inflation is obviously... Right. That, I wonder, is in part what sort of throws the conventional wisdom, the looks back at history, to the wind. That this time, in fact, is different. You have a variety of dynamics that have made this situation different. And the Fed is going to have to figure it out as it goes. And that's going to be a much more tricky scenario for markets to deal with, which makes your scenario, it seems to me, a little more tricky to reach,

even in the best of times. You're right, Scott. I mean, there's a lot of reasons today's different. You know, there is a lot of moving parts in the macro picture, including war and supply chains and, of course, the size of financial markets relative to the economy. And I think another moving part that we're not seeing visibly right now is it's what's happening in the private markets, both in venture and private equity. They've been hit much harder by tightening financial conditions because the reference

rate there is really, first of all, cost of money is much higher there, but it's really the high yield market, which is widened dramatically. So I do think there are things that we're going to start to see that could slow the economy that are not going to be apparent from blue chip companies doing pre-announcements. And I think that's what's going to help, I think, ultimately next couple of weeks, sort of ease investors' minds. I think a lot of the Fed tightening is actually already taking place. The market's done a lot of work for them. High yield going up is really slowing private credit formation as well. I just wonder, you know, I've been thinking about this in preparing for this conversation.

And what happens next week if Powell, who doesn't live in a cave, right? He doesn't get everything right, obviously. He's made tremendously big mistakes, and he's admitted as such. But what if he feels like he has to correct the record, if you will? And the big takeaway from the prior Fed meeting was this notion that 75 basis points was, in fact, off the table. What if he shows up next week, makes a concerted effort to say, you know what, it's not only on the table, but it might be more likely in the coming weeks, if not months. What is the reaction then by the market,

do you think, Tom? Well, I think investors do respect the Fed and Powell especially as being quite methodical and data dependent. But as you know, when it comes to how stocks react, sometimes investors want to get the pre-announcement out of the way. So in that sense, if the Fed were to front load the hikes and say, look, even the suggestion of 100 basis points, which would be a surprise and a negative shock, that would probably help investors be convinced that we're at the beginning of the end from a macro perspective. So they'd be less dependent on seeing the data consistently improve because they think the Fed's ahead of the curve on that. I don't know. I mean, there are people who say we're already in a recession. We just don't know it yet. How do you respond to them? Because, you know, they're reputable people who are making

those claims and they don't care what the, you know, the textbook definition would suggest. There are enough underlying issues that they're witnessing and seeing for themselves to say we're in a recession. We just don't know it yet. Yeah. Well, you know, Scott, maybe it's an environmental question. Like you said, it's different times. But in the past, a recession was when a neighbor lost a job

and a depression was when someone lost their own job. But today, I think people have jobs. Maybe a recession is really inflation. And, you know, if someone else is having trouble making ends meet, that's a recession. And if they're having trouble making ends meet themselves, it's depression. I don't know. It's a great question. I think there's still a lot of vitality in the economy and a lot of pent-up demand. And actually, a lot of sort of positive things are emerging in the next couple of years. You know, again, like I said, the China COVID-free policy is really pushing companies to reshore back to America. That's very positive for the U.S.

Energy security is an important theme. That's inflationary, though. That's inflationary, isn't it. That's inflationary, though. That's inflationary, isn't it? That's inflationary. It's both inflationary and reflationary because the U.S. is really better positioned in the future. Actually, and then if there's inflation, as you know, you have to meet it through automation. That's demand for U.S. tech. So I think coming out of this period is going to be great opportunities for the U.S. tech. So I think coming out of this period is going to be great opportunities for

the U.S., but it's tough today because inflation is really the single most important metric on, I think, investors and consumer minds. And maybe that's why, like to your point, that's why it feels like a recession, because now if everyone's feeling inflation, it's a recession. Yes, that is my point, right? To the average consumer out there, they're probably thinking, how could a recession feel any worse than what is already happening now when I go to the gas pump or the grocery store or I try and rent an apartment or find a car or do countless other things in my life that have increased so dramatically that I'm finding it hard to make ends meet and I'm living paycheck to paycheck. And even if I make a decent living salary wise, I'm still struggling to make ends meet. So this might as well be what a recession is supposed to feel like. So I'm going to hunker down because I can't afford to live in this environment. But let's broaden the conversation out with CIC Wealth's Malcolm Etheridge, who's with us now, too. Malcolm, it's good to see you again. I hope that you've listened to this conversation that I've had with Tom, and I'd like your response to it. Yeah, I mean, you guys covered a lot, man. I was I was ready to jump in there. But

yeah, I would say I hope this number coming in today higher and breaking another record puts a lid on the peak inflation debate. I think it's it's overdue. Right. I don't understand what the peak inflation people are even basing this on at this point. To your point, if meat and dairy prices have increased something like 12 to 15% year over year and they're still climbing, fuel prices are up over 50% year over year and still climbing, almost $8 a gallon out on the West Coast. How do we know we're at the peak of anything? So this could also make it that much easier to make the statement that you just laid out there that we are in the middle of a recession and just don't realize it yet. Because to your point, if a third of U.S. households over making over two hundred and fifty thousand dollars a year are reporting living check the check, then what the heck is happening to the people making one hundred hundred and150,000 in household income. And that's a much larger percentage of the population. And also, those are the people that are more likely to be spending every dollar that's coming

in trying to keep up with inflationary pressures. So if those groups of people with that level of income are telling us that it's a recession, they're not shopping at Target, sales are down. They're not shopping at TJ Maxx, sales are down. They're not shopping at Walmart. Sales are down. That's the Main Street indicator that tells me we're already in a recession. We just don't want to admit it to ourselves yet. Want the party to keep going on. What does it mean? Forgive me for stepping on your toe there, Malcolm. What does it mean for where stocks ultimately go from here? Because, I mean, that is the that is the question of the moment.

Everybody is thinking about the same question. What does it mean for my stocks? I'm thinking about longer term investments, college savings plans, retirement plans. We're all in the same boat. We're all worried about sort of what the environment is is heading into, what it means for the stock market. What do you tell people? Yeah, I would say if you're a person who is actually expecting to need to tap into the savings that you have that are in the market today, maybe this trading range we find ourselves in of $4,000 on the S&P up to, what, $4,300 or so. We've been meandering in this trading range for like three, maybe four-ish weeks. Maybe this is the range where you start to look at that exit ramp and say,

you know, I need this money sooner than I thought I would. This might be a place to get out even though it doesn't feel good. If you're a person who's thinking more long-term, the next 12 months or so, you have to worry about tapping into that savings, then this doesn't really matter because we start to get positive earnings toward the back end of the year.

We start to see, you know, companies focus more on profits and, you know, surge our way back out of this. And you're fine. But it's the folks who have a more short-term time horizon actually need to be tapping into those dollars that they have invested that should be reassessing that time horizon and deciding whether they should not be in this market right now and heading for the exits. It's hard to feel good about even the long term, Tom. I think you can understand that even though you think that the second half of

the year is going to be better than a lot of other people think. If you are looking at a storm developing on the horizon, you're assuming it's coming your way. Now, it may blow over. It may come over the mountains and break up. We just don't know. So it's awfully difficult for people to get their arms around this idea that the second half of the year can bring us to a point where we can go up 900 to 1,000 S&P points if we've got all these issues in front of us, Tom? Oh, that's right, Scott. I mean, bottoming processes are very difficult for people because

in people's mind, the math is, you know, if you're already down 50% and you go down, you're down 55%, you've just lost another 10%. And that's why markets feel so choppy right now. But from another perspective, I just think that we've got a lot of positioning, cautiously positioned for investors. And if things are improving, I would say you're right. It's choppy. I think it's actually constructed that we didn't make new lows. Technicals are really important. And our technical strategist, Mark Newton, has done a really good job helping clients tactically here. But again, what I would just caution investors is not to just give up on equities

because at the end of the day, the best performing asset class in an inflationary environment is actually going to be stocks because nominal earnings will grow. I know there's going to be a lot of questions about companies having to cut earnings, but at the moment, I would just say you have to keep in mind if companies are able to pass on price, which is why we are seeing CPI, they're not the ones that are going to have the earnings problems. It's ultimately where we start to exhaust demand. And so far, that is not, you know, the entire economy. It's more showing up in things like cars and housing. And those are the things actually the Fed wants to see start to slow down. Yeah. Well, speaking of the Fed is

how are they going to, Malcolm, and we'll make this the last word. How are they going to be able to engineer this slowdown that Tom is talking about in some of the areas that have experienced the hottest of inflationary reads? I was speaking with Jeffrey Gundlach, who, by the way, is going to be on with us on Fed Day next week, as usual, to react instantly to what the Fed has done and said. And I just exchanged an email with him. And I want to read you what he said to me when I asked him, what does all of this today mean for the Fed? Trying to get a thought from him leading into the meeting, since we'll speak with him on the way out. He says from its low on May 4th Fed Day, the two year U.S. Treasury yield is up 47 basis points.

Since the Fed follows the two year, the Fed is now just as far behind the curve as it was before the 50 basis point hike of last month. Malcolm, the implication here for Mr. Gundlach is clearly that they are going to have to be super aggressive going forward because of how far behind the curve they remain. Yeah, I took your point about how the Fed consistently gets it wrong, has gotten it wrong, has admitted that they've gotten it wrong. But I don't see really any attitude toward meaningful change. Like, I think realistically, we'd have to jump over 75. 75 shouldn't even be part of the conversation anymore. going to 100 basis points at this point in June to signal to the markets that the Fed is dead

serious about putting a lid on these inflationary numbers that we just got through talking about. And I think it's very unlikely that they do anything but stick to the 50-50-50 June, July, and September that they've already forecasted because they don't like deviating from the course too often. And so I don't think the Fed is ready and planning to do the hard thing, which is to slam on the brakes so hard that we hit the windshield. But I do think that that's realistically what it would take to get a handle on things like autos and homes and those kind of things that Tom just mentioned. Well, you and Mr. Kramer should have a mezcal together because you guys clearly agree on what needs to happen from the Federal Reserve, as does, way jeremy siegel the professor from the wharton school who was on

the halftime report and said as such guys it's great to see you good company thanks so much for coming on i really appreciate it i know our viewers do as well that's tom lee malcolm etheridge joining us there to our twitter question of the day now we want to know how many basis points should the fed hike at wednesday's meeting is it 50 75 or 100 or 100? You can vote at CNBC Overtime. We'll give you the results coming up at the end of the show. We do have breaking news regarding Tesla. Our Phil LeBeau has details for us. Phil?

Hey, Scott. Tesla filing with the SEC that it plans to do a 3-for-1 stock split. Now, this is not a surprise. The company indicated earlier this year that there would be a stock split coming at some point this year. And most expected that we would probably see it relatively close to the summertime. So what we have is Tesla doing a three-for-one stock split, and this is something they have forecasted for some time that they planned on doing. So again, Tesla, three-for-one split. We'll get more details in a little bit here in terms of when the split is effective. Scott?

We've been wondering since the Amazon split went into effect earlier this week, who is going to be next? What do you make of the timing, Phil? I know you alluded to the fact that I think you said something to the effect of we thought it would come in the early summertime. Why now? What does it mean that they're doing it now? No insight into why they're doing it right now. There is a strategic reason to do it now as opposed to waiting another month or two. So there's no way of saying exactly why they're doing it right now. But it was widely anticipated. In fact, if you talk with analysts, I mean, more than a few said

to me, look, I wouldn't be surprised if we see this happen sometime before July or August. Yeah, I mean, and the stock's obviously come down a long way as well, Phil, right? I mean, we're talking north of $1,000. Oh, absolutely. You got the whole Twitter overhang, and there's been a lot of hangover on the stock regarding that whole drama, I suppose you'd call it. So the stock's already come down a lot. It has. And the curious thing will be, how much will this lessen volatility with Tesla shares?

Remember after the last split, everybody said, oh, you're going to see a lot less volatility. Well, I think we can go back and say we may have seen a little bit less than what we might have expected, but it was still there dramatically over the last year, year and a half. I can't remember the exact timing of the last split. So I will be curious to see what impact this has once it actually goes into effect. There's no doubt that the sell-off is due to the fact that people are saying, look, tech stocks, higher interest rates are going to have an impact. But keep this in mind, Scott.

This is a company that right now it is dominating the EV market here in the United States. It'll ramp up in China. A lot of people look at this company and say they are primed to really grow if we do not see a major recession because the rotation into EVs, it is accelerating. Phil, I appreciate it so much. Thanks for the breaking news regarding Tesla and that stock split. We'll talk to you soon. That's Phil LeBeau.

Well, the DocuSign debacle, yet another reminder of just how fragile the tech trade remains, especially for those companies that did incredibly well during the pandemic, but now have to adjust to getting back to normal. And that includes watching their valuations get smashed. For more on what lies ahead, let's bring in Requisite Capital's Bryn Talkington, who's also a member of the Halftime Investment Committee. Lo Tony, founding managing partner of Plexo Capital. It's great to have you on.

Lo, welcome to Overtime for the first time. It's great to see you as well. Thanks for having me. What do we take, Lo, from this DocuSign report and then the big stock slide. I mean, to me, it says that so many of these companies that did so very well during the pandemic aren't even close to adjusting to the other side or having their valuations be adjusted to what the other side looks like. Without question. And we know that for these stocks in particular that are very dependent on their growth and future growth, we really value them based on that macro environment. So when we have these inflationary pressures, when interest rates rise, when we have the Fed reacting, when the outlook begins to decline for growth, you know, that really punishes these stocks.

Now, I would like to point out, however, if we really look at the fundamentals, especially the sentiment among CTOs, CIOs, and what their spin looks like, not much has changed there. that provide infrastructure, other services for enterprises, actually could see spend by IT managers increase as they look to be able to reduce cost from people cost, people's salary cost, and increase efficiency for these people. So that's the irony, is that a lot of the fundamentals are still very positive for these stocks, but because of the way they're valued, they've been punished. Bryn, it remains remarkable to me just how many of these companies, as I said, that did so well during the pandemic, Peloton, et cetera. You could find other other names as well, just completely misjudged their businesses and the pull forward that they had,

the spend that they made as a result because of what they thought the other side was going to look like. It's really astounding, frankly, that you're finding so many of these stories repeating themselves. Yeah, I think with DocuSign, especially on the call, I think, you know, management told us that they thought they were going to continue to grow at that same rate. And so they still have 1.24, I think, million users of which about 15% are corporations, but management themselves misjudged that. And so I just think, I do think that's a bit astounding not to be able to look outside of the world and say, hey, you know what? So many people adopted

that rate of growth is not going to continue. I will say, though, Scott, it's so important. Liquidity is so bad in this market. And so whether your doc you sign, whether your target, which has nothing to do with technology, if you miss or your guidance is off, the market's going to take you down 25 percent. And so I do think investors need to really understand how poor positioning is. And you're going to get, whether you're DocuSign or Target or Netflix or Facebook, 25% of your market cap is coming off if you under deliver. And so I think it's just a really difficult market, especially for DocuSign, which right now doesn't have an E, right? They

have good growth, but there's no E. And so there's another excuse to even not be able to value it and sell it down. I will say though, okay, because I do think it's important. A lot of what's happening today is positioning. And so whereas we like to say, well, these high growth stocks, their earnings, they can't grow into their earnings for so many years. You know, to me, the consumer staples continues to like confound me. I was looking at, you know, Clorox, Colgate and P&G have a 2020 PE between 25 and 34. And so that's what's interesting about positioning right now. People want to own those names, but you know what? They have low earnings growth and high PEs and people just don't want to own tech. And so until this changes, this is going to be that market, which will bring opportunity for investors,

but it's certainly not today to be trying to catch the falling knife in some of these names. Lo, lastly, and quickly to you, where you make your bread and butter, Venture. Has there already been the comeuppance in valuations or is it still ongoing? So it's beginning to trickle down because for those later stage companies that have been raising growth rounds, they were raising at multiples that in some cases even surpassed what we saw in the public markets. We've already started to see a correction in valuations trending down. Now, that said, I think it's going to take a few more quarters for it to play out and trickle down all the way to the earlier stage because many of these companies are so incredibly well capitalized because of the fundraising environment over the

past 12 to 24 months that they don't have to go out into the market and test it. Now, that said, I think what we are going to see is we're going to see a lot of entrepreneurs surprised that even if they've been able to 4x their revenues they still might face raising flat or even at a down valuation or with some structure in it to give some investors downside protection at the earliest stages precede seed there's not too much wiggle room there. So we don't see too much compression. What we do see is we don't see those outliers anymore, those rounds that are in excess of 50 times, for example. I'm sure there's some hard conversations being had. Lo, I appreciate your time. Bryn, you as well. Great weekend to you both, and I'll see you soon. Thank you. Up next,

you're going to hear from one market pro who has been on the sidelines all week. That is until today. We'll tell you about the big money movie just made over time. It's back right after this. All right. It's time for a CNBC News update with Shepard Smith. Hi, Shep. Hi, Scott. From the news on CNBC, here's what's happening. International travelers rejoice. Airline passengers coming into the U.S. will no longer be required to test negative for COVID before they board a flight. A senior administration official telling NBC News that the CDC will lift the restriction beginning this Sunday and that the agency says it'll reassess the change in 90 days. The Washington Commanders head football coach, Ron Rivera,

fining the defensive coordinator there, Jack Del Rio, $100,000. It comes after Del Rio referred to the insurrection at the Capitol as just a dust-up. Coach Del Rio apologized for his comments earlier this week. Rivera says the fine will be donated to the Capitol Police Memorial Fund. And NASA is going to start investigating UFOs. The space agency launching its own probe after last month's congressional hearing when Pentagon officials testified about the sightings. NASA says it wants to bring a scientific approach and that it'll release a report to the public after a nine-month study. Tonight, Sarah Eisen joins us to talk about the awful inflation, the embattled school police chief in Uvalde, Texas, breaks his silence,

and a plan to tax assault rifles 1,000 percent. On the news, right after Jim Cramer, 7 Eastern, CNBC. Scott, back to you. We will be there. Shep Smith, thank you. We'll see you then. This five-star active manager just made his first trade of the week, and he says next week could bring about even more opportunity. Let's bring in capital wealth planning CIO and founder Kevin Simpson, who's back with us today.

It's good to see you. What's this move you made? Well, Scott, you know, it's been an ugly week. And for the most part, we sat on our hands all week just waiting for this CPI report that we thought would be pretty dismal. I didn't think that every single segment was going to be higher, which it was, all of them. So the market sold off Thursday. It sold off big today. When we were putting our notes together, we thought, hey, we went the whole week without doing a trade. But then right before the show, right before the bell, we rolled an Apple call. And it's funny, Scott, because this was a trade we put on just last Friday, right before the show, right before the bell, we rolled an Apple call. And it's funny, Scott, because this was a trade we put on just last Friday right before the show.

We had sold a covered call for almost $2. We were able to buy it back today for about $0.20 and rolled another one for $2. So for the month, well, actually since May 1st, we brought in $7.50 just writing covered calls on Apple. Now, granted, you like it better when the stock market goes up, but it's nice to get paid a little bit while we wait. Yeah, no doubt about that. What about the market itself now, right? You waited all week because you were waiting on the CPI. Now it was a shocker, right? And the market's Dow finished down 880. What does it mean for next week? Well, I think the markets are going to need to digest

it. I don't know how much of a shocker it was because with the eyeball test, and you've talked about it so eloquently on the show today, it feels like a recession. Whether we're in it or not, whether the textbook definition is going to tell us we were or we weren't, it really feels like it. So when we're thinking about trades next week, we're going to look for opportunities. And that's the hardest thing about this. And what I love most about your program really as a viewer, you introduce everyone to how professional portfolio managers think. And it's not like we're flipping a coin or making an all or none trade. It's trying to navigate with essence the way that these markets have been flow. Sometimes they have been flow violently. But I think next week, you can look at financials as

an opportunity. Their fortress balance sheets, their multiples are good. They pay great dividends. If we do go into a recession, it won't be like the last time. They haven't made multiple loans to every subprime borrower that's come in and could sign their name. So I think if you look for places to hide in weakness, you add to financials and big tech, you know, there's opportunities that are happening. People are always going to pay up a little bit for growth and these names are getting cheap and there's dividends to be had out there. It's not closet index, it's active management, but it's definitely doing it with nuance and careful thought processes. Is part of your financial thesis predicated on the Fed talking more hawkish on Wednesday and thus rates continuing that rise back towards that 325,

at least on the 10-year level? Yeah, absolutely, because they can make some decent margins with higher rates. It'd be ideal if the Fed would just come out and do 100 basis points and let's get it over with. And you've talked about that earlier. And I agree with everyone that's kind of in that camp. They're not going to back off. Even at 75 basis points, they kind of look like they have a little egg on their face if Chairman Powell does that. But maybe a great compromise is he says, okay, we're going to go 50 basis points next week, but 75 and 100 are back on the table for July and for the fall. And I think that can have some impact on helping to get this market realizing that the Fed is serious about doing

whatever they can to get inflation under wraps. And it's not going to be an easy job. Even if they raise rates 100 basis points next week, we're not magically going to work our way out of this thing. Yeah, we'll see. Have a good weekend. It's good having you. Thanks for the kind words about the program as well. I know we'll see you soon. That's Kevin Simpson joining us today. All right. Up next, Kate Rooney is standing by with a rapid recap. What's on deck? Hey, Scott, the major averages, all negative for the week. We'll bring you the winners.

We'll bring you the losers and the banks that are hitting two-year lows. But it's not all doom and gloom. We'll bring you some green shoots and reveal the one down name in the green today. We'll tell you what that is next. Stocks finishing out the week in the red and a very ugly finish, we should add. Kate Rooney here with our rapid recap. Kate. Hey, Scott.

The major averages all negative for the week. The Nasdaq was the worst performer, losing 5.7% since Monday. S&P was down 5%. The Dow was the relative outperformer of that group, but still down about 4.5%. This was a pretty broad-based sell-off with nearly every Dow stock in the red today, declining stocks in the New York Stock Exchange, outnumbered advancing ones by 9 to 1. Tech companies and banks were some of the worst performers this week, both information technology and financials losing 6% since Monday.

Energy was the best performer but still negative for the week. Goldman Sachs and Key Corp hitting their lowest level since February of last year. Wells Fargo, meanwhile, its lowest level since April 2021. And State Street seeing its lowest prices since November of 2020. Some green shoots, though. We had Newmont mining up 3.5 percent today, leading the S&P and Walmart. That was the only Dow constituent today in the green. Scott, back to you. All right. I appreciate it, Kay Rooney. Thank you. Up next, the big debate over Bitcoin. Is it really

an inflation hedge? Bitcoin bull Anthony Pompliano. Pomp joins us to make his case next. We are back. Today's inflation read blowing up the notion that inflation has peaked. The question now is when will it? And as long as it remains hot, where can you find opportunities? With us now is Pomp Investments founder Anthony Pompliano, better known to many of you as Pomp. Welcome to our new program. It's good to see you on this venue. Good to see you, Scott. How are you?

I'm good, thanks. You know, your tweets today caught my attention first and foremost. And obviously, I want to discuss crypto and Bitcoin with you during this interview. But let's start with these tweets you had. Undisciplined monetary and fiscal policy doesn't work was one of them. You can't print trillions of dollars and manipulate markets without consequences. Were you surprised by the CPI print as much as others? Listen, Scott, if you go back to January 1st, 2020, and you look at asset prices since then, Bitcoin is up 400 percent since that point. The S&P is up about 22 percent.

Nasdaq's up 36. Gold is up about 10. The dollar has basically fallen off a cliff. Median home prices are up 30%. And I think what we're watching is that undisciplined monetary and fiscal policy has turned the stock market and other asset into a casino. It's created incredible short-term thinking among investors. But over the long run, there is one thing that continues to act exactly as it's designed, which is Bitcoin. And the people who have continued to dollar cost average into that asset, 65.5% of all Bitcoin hasn't moved in a year, regardless of the volatility. And it continues to serve as the one thing that no one can manipulate and no one can

change that programmatic monetary policy. And in light of the undisciplined monetary and fiscal policy, it tends to be the sanity in an insane world. So there's a lot in there of what of what obviously you just said. And you've maintained for a long time, certainly as long as I can remember, that Bitcoin is an inflation hedge. You tweeted I'm looking at one from August of 2021, where you cite the return over the last 12 months of gold versus Bitcoin. And you say, quote, Bitcoin is the true inflation hedge. If that is the case, why has Bitcoin been cut in half and why doesn't it go up if the inflation read was so hot? Yeah, I think there's two things that are important to understand. First, assets that are inflation hedges, they move before the inflation comes. So if you remember in 2020,

Paul Tudor Jones, Stanley Druckenmiller, many other sophisticated investors came out and said, listen, I think inflation is coming and I am going to move my assets now in anticipation. And that's where you saw Bitcoin go from about $10,000 all the way up to $64,000 in March of 2021. We started to get the over 5% inflation prints in June, July of the summer of 2021. And so inflation hedge assets moved before. Now, that's why if you go back from before the pandemic to today, Bitcoin being up 400%. I always say to people, if you could go back and rewind time with the benefit of hindsight, you wouldn't buy stocks, you wouldn't buy bonds, you wouldn't buy real estate, you would have bought Bitcoin. It has been the best performer and it has served as that inflation hedge.

Now, the second thing to understand also is that right now we're in this slow bleed of some sort of liquidity crisis. If you go back to 2008, 2009, there was a liquidity crisis over the summer of 08 and gold went down 30%. The government stepped in with tons of stimulus and gold over the next two years rallied and hit an all time high. My thesis in 2020 was exactly that. On March 12th, I wrote and I said, we're in a liquidity crisis and the government's going to have to step in. When they step in, people will run towards these safe haven assets that have sound money principles. Bitcoin is digital sound money. And so right now in 2022, what we're watching is that Bitcoin is going down and correlations are going towards one across all assets. So Bitcoin is going down, but so are stocks, bonds, real estate, et cetera. And the Fed's in control and they're crashing asset prices.

But what ends up occurring is that once we get out of these higher correlation periods, Bitcoin will continue to outperform over a long period of time. And the reason is you have a finite asset that simply has a programmatic monetary pulse. Humans are horrible at predicting the future. And so if you go and you look at the macroeconomic issues that we face right now, wealth inequality has never been worse in America. And the reason is because 45 percent of Americans have no investable assets. They are getting punished by this high inflation. Food prices at home is 12 percent. But let me let me ask you this. Did something that you just said I want to react to. Maybe some would say Bitcoin didn't move ahead of inflation because that's the way that it's supposed to work. And that proves that it's a huge hedge against inflation. It moved because we were in a raging bull market and there were a lot of different kinds of

investors in the market. There were a lot of younger investors who were captivated by crypto, how you could make a fortune in five minutes. And that helped fuel the rise in Bitcoin and other cryptos as much as anything else, if not more than this idea that it was this great inflation hedge. How do you respond to that? I think that you could go back to the tape in 2020 and look at what I was saying, what Paul Tudor Jones was saying, what Stanley Druckenmiller was saying. And the reason why most of the sophisticated investors were going ahead and buying the asset was because they saw inflation coming. They said that you cannot print trillions of dollars without consequence,

and they wanted to move to something. And Paul Tudor Jones specifically had the famous quote where he said, it will be the fastest horse of the inflation hedge assets. And so I think what ends up happening is your point around kind of the gamification or the casino that's been created across assets is very true. But that is because there's this fiat mindset that has permeated throughout assets and markets. And it's ultimately because there is manipulation of the market. We do not have free markets anymore. The Fed is in control. It's all one trade. And so if you want to get to some sort of safe haven, if you want to get to the sanity in an insane world, you have to look to a place where humans do not have the ability

to screw it up. And Bitcoin's programmatic monetary policy, there's 150 million people around the world who are beginning to go ahead and hold that. And I think that it's only going to become more popular over time. But don't you think that, I mean, the correlation seems to be pretty clear that Bitcoin tracked the performance

of the NASDAQ 100 quite almost perfectly. So isn't that just a measure of where risk was in the market at that particular time? People were willing to pay up for the perceived growth in the future of, I don't know, ridiculously highly valued assets. And maybe Bitcoin should be considered in that basket. All assets became inflation hedge when they go ahead and they print trillions of dollars. The stock market was an inflation hedge. Real estate was an inflation hedge. Pretty much anything but cash became a safe haven because they were devaluing the dollar at a historic rate. And that's the part of the conversation. Again, we ended up turning these assets and markets into a casino right now in America.

But stocks, though, but but stocks, though, are still are still valued on the the future value of what earnings are going to be. That's what you pay today for in your expectations of what tomorrow is going to bring. What is what is Bitcoin valued on? What's the underlying fundamental thing? Scarcity? No, listen, if you were to ask me, what is Bitcoin backed by? Right. Bitcoin is backed by the single most valuable commodity in the world, which is computing power. It is the most secure computer network in the world. There are millions of miners around the world that are paid to secure that network. And what we are watching is that there is now a monetary policy that does not respond to changes in demand. Good times or bad times, it stays the same.

Geopolitical uncertainty, it doesn't change. No matter what happens, this is the sanity in an insane world. And as we continue to see what people are willing to value it, I actually think that more and more people around the world are starting to denominate their wealth in Bitcoin. When I think about everything in my life, if I held dollars over the last two years, everything around me got more expensive. If I denominate my life in Bitcoin, everything around me in the last two years got cheaper. And as people realize that, you are going to watch an absolute resurgence in financial education in the last two years got cheaper. And as people realize that, you are going to watch an absolute resurgence in financial education in the United States and globally. And people are going to realize

that there is a manipulated currency. And if you hold that currency, you are going to lose. In our country, you can no longer save your way to financial security. I gotta go, and I really do. And I need your answer to be really quick. There are a lot of people who follow you. OK, a lot of people follow you on Twitter and a lot of people, I hope, are watching this now and listening to you as, you know, the gospel on on Bitcoin. What is your recommendation on the percentage of net worth that should be put in

Bitcoin? Because it seems like the conventional thought you hear from pretty smart investors is put one percent of your net worth in Bitcoin. That's fine. What's your what's your number and why? And again, I need it to be brief, Anthony. I don't make any recommendations. I think that the best way that people can think about it is dollar cost averaging into great assets, taking timeless investing principles by great assets, hold them forever, tends to work in Bitcoin just as it does in any other market. All right. I'll talk to you soon. I really appreciate your time today. All right. That's Anthony Pompliano. All right. We'll see you again, Pom. Up next, it's Santoli's last word. Santoli's here for his last word. By the way, 100 basis points won the Twitter poll,

which kind of surprises me. But nonetheless, what do you got? Only 100? Look, retest. I don't know if anybody was asking for it. The S&P 500 seems to be in that mode right now. We closed at 3,900. 3,900 even. Wow. And 3,900 even was the closing low previously three weeks ago. Now, the intraday, about 2% below this. Not clear to me that you have the ingredients to say that somehow we've done it

and this is going to be resilient at this level. Not really much of a flush. It's been continuously this kind of slow bleed of a decline, relentless pressure, but not intense, concentrated fear. Do we need to reintroduce the idea of a Fed surprise? Potentially. I don't know how that would play at this point. I understand the impatience. I understand people wanting to tear the Band-Aid off. But I think from the Fed's point of view, this is what we want. We want financial conditions to ratchet higher. We want to see this process play out. 50-50-50 is less likely to break things,

maybe, in their minds than a more sudden move. In 94, they went 75, but only after they had already been several hikes in with a couple of 50s. We're going to see where it all goes next week. It's going to be a biggie. Have a great weekend. You too. Thanks. And thanks for being here. That's Mike Santoli, of course, with his last word. I'll see you on Monday. Fast monies now.