Closing Bell - Closing Bell: Stocks close well off highs, Apple WWDC highlights, Marriott CEO on travel demand 6/6/22

Episode Date: June 6, 2022

Stocks failed to hold an early rally in an up-and-down session, with the Dow giving up most of its earlier 335 point gain. Julian Emanuel from Evercore ISI and Nancy Tengler from Laffer Tengler break down how they are approaching this uncertain trading environment. Meantime Apple kicked off its Worldwide Developers Conference at its California headquarters. Wedbush’s Dan Ives and Colin Gillis from Chatham Road discuss the biggest announcements, including new software and hardware products. And the CEO of Marriott weighs in on travel demand and what he’s seeing right now from his customers.

Stocks are retreating from a sizable early rally with the Dow giving up a 330-point gain. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we are right now. Dow was in negative territory just a moment ago. It's pretty much unchanged. S&P 500 doing better, up a third of 1%.

You've got consumer discretionary at the top of the market. That's what happens when Tesla and Amazon are both higher, as they are right now. But communication services is also leading the market. That's what happens when Tesla and Amazon are both higher as they are right now. But communication services is also leading the way. Some of the mega cap tech names like Alphabet, Meta, all doing well today. AT&T, T-Mobile also joining the party. The Nasdaq's up a third of 1%. And the Russell 2000 index of small caps up two-tenths of 1%. What's not working today? Energy. Crude oil giving back a little, still holding near $119 per barrel. Staples, technology, and healthcare all weaker. Check out some of the most actively traded names right now, right here at the New York Stock Exchange. Didi Global, the Chinese internet stocks are soaring today on some news

about Didi's share structure, but also fewer lockdowns in the major cities. That's been helping the China trade and overall sentiment earlier this morning. NIO continues to be among the most actively traded, higher again, up 6 percent. Snap with a little bit of a comeback from its earnings warning. Big slide that we saw in the month of May. Coming up on today's show, Evercore's Julian Emanuel out with a brand new call, breaking down the three keys to investing in a bear market. He'll join us with his thoughts on the volatility and how to play it. Plus, Marriott has been an outperformer all year long and higher again today as hotel executives meet in New York. We will talk to the CEO about his take on the state of travel. Let's get straight to the breaking news, though, on Apple,

which just kicked off its Worldwide Developers Conference. One of the main highlights is the new MacBook Pro and MacBook Air with the new M2 chip. And the company is jumping on the buy now, pay later bandwagon, unveiling its new product, Apple Pay Later. Shares of a firm, by the way, competitor falling on the back of that announcement. Joining us now, Colin Gillis from Chatham Road Partners, Dan Ives from Wedbush Securities. Dan, what's the big headline for investors? I think it's really on the chip front. I mean, that's where the efficiency and the innovation continues. They're beating Intel at the chip front. I mean, that's where the efficiency and the innovation continues. They're beating Intel at their own game. And ultimately, they're introducing new products at a time the supply chain continues to be the biggest headwind.

I think it shows them flexing their muscles as well as really doubling down on privacy. The developer community really likes this. If you look at some of the chatter out there. And I think this is really them focused software services, privacy, but still introducing products despite the headwinds in the supply chain. Is there anything you didn't get, Dan, that you were expecting to get? Maybe more on the AR, VR front out of today? Yeah, AR, VR, and we got to see how the conference plays out. I mean, that's one, you know, I think you were expecting we got to see how the conference plays out. I mean, that's one. I think you were expecting maybe them to highlight that more,

especially ahead of what we believe will be the Apple Glass release in terms of the AR, VR headset later this year, early 2023. But I think they're laying the breadcrumbs for what the strategy is going to be with developers. And that's something where they're going to keep that close to the vest until they believe it's the right place at the right time. And that's the where they're going to keep that close to the best till they believe it's the right place, the right time. That's the DNA of Cupertino. Colin, as an investor watching Apple stock down now 18 percent for the year, how much do you care about the software updates? Obviously, the hardware is really where the revenue driver is, but it's important for the ecosystem, right? Yeah, actually, I care quite a bit, you know,

because if you're a holder of Apple, what you care about is that the ecosystem remains intact. There are 30 million developers that are tuning into this conference. Apple is a build-first platform. They've paid out $260 billion to developers. So they're the platform that pays. And so you've got great hardware,

you've got innovative applications, and that's going to keep drawing consumers to the platform. Do you buy the stock at these levels? I think there was a technical iron or death cross, according to BTIG, that happened on Friday with Apple after a 4% slide. Yeah. So, you know, the iPhone revenue is going to be growing in single digits, right, for the fiscal year. And that's, you know, that is going to be growing in single digits, right, for the fiscal year. And that's going to be a problem. And there are issues with supply chain. There's going to be issues with COVID China lockdowns.

There's going to be issues with the iPhone 14 having more expensive components and being priced a little higher than people may expect. There are issues with the broader economy slowing down, right? But if you're a believer in the services story, right, which is growing in a high teens, right, you've already got close to 2 billion iOS devices out there, and that services revenue is going to just keep layering on and on. So if you have a longer term look, Apple is a very healthy ecosystem. There's nothing wrong with the platform or the demand, but it's going to be a bumpy road for a few quarters. You agree, Dan? You're pretty bullish on this company. You agree that there are bumps, though, in the near term? Look, I think the bumps are well known in terms of what we've seen with the zero COVID in China, some of the demand issues. I think street looks past after the June quarter. It's all about the drum motor iPhone 14 and what's a pent up demand cycle. A quarter of the billion iPhones out there still have not upgraded.

And I think a lot of this is priced into the stock where buyers say this is a rock or Gibraltar tech stock that, in my opinion, is oversold here. Can we just have one minute more on the chip, the M2, because you said that was the big announcement, Dan. What does that allow Apple to do in the middle of a global chip shortage and a really

competitive market? Who does it hurt? And what does it actually mean for Apple product? Well, I think you saw it today because they're flexing their muscles. They have more control over their ecosystem. It's no longer just waiting for Intel to see if they pick up the phone. They're beating Intel at their own game. The negative for Intel, I think it's another gut punch that ultimately what they're being, from an innovation perspective in terms of the M2 chip, and I think it's giving them more, not just control, but also on the margin perspective. That's another talent.

That's why this is so important. Remember, the haters that say innovation is in the rearview mirror. Look at M2. They're beating chip companies at their own game. Intel's barely moving. This news was announced, I should say. We knew that Apple beating chip companies their own game. Intel's barely moving. This news was announced, I should say. We knew that Apple was working on its own chip. We knew Intel's already been hit on the news, Colin.

But is it a game changer in your view as far as how investors should be looking at the products that come from Apple? It certainly was a game changer, right? It's a big part of that silky smooth Apple experience, snappy UI. But at some point, thinner, lighter, faster is not going to be enough of a selling point. What we're going to want is we want new. So we're looking for new products to come from Apple, build those new revenue streams. That's going to help them in the long term. Can I tell you what I'm most excited about that neither of you have mentioned?

Dan, I feel like this is a big deal. Maybe not like in terms of selling product, but the ability to retract and edit text messages and iMessage. It's something we've been waiting for an edit button on Twitter. We got a surprise one out of Apple, especially the retracting one. If someone hasn't read it, I feel like that can save a lot of, I don't know, problematic moments. Dan, what do you think? I think it's important. And I think maybe Musk is listening on Twitter in terms of that ad. I don't know what Musk, maybe since we have you, we can ask what you think is happening there, because you've covered Tesla and Musk, not Twitter. But now he's really threatening through a filing to pull out of this deal because they haven't provided the bot information. I know you're not a lawyer. I'm not a lawyer. It seems

like he signed without having to do this due diligence. What do you think is going to happen? I mean, our view is he's trying to walk away from the deal. I mean, he got cold feet. Now, ultimately, this bot issue, I think, is really cascading to a whole other issue in terms of them trying to play it out. But I think he's trying cascading to, you know, a whole other issue in terms of them trying to play it out. But I think he's trying to either walk away or talk down a much lower price deal. That's what the stock's telling you. But clearly, this is going to be a UFC battle in court between Twitter and Musk if they go down that path. $39.50 is Twitter shares right now. Long way off from that $54.20. Dan, Colin, thank you both for joining me.

Off Apple today, which dipped lower after the developers conference and is now higher. The Dow down about 25 points right now. Earlier today, I spoke with the CEO of Hilton, who gave a very rosy outlook for summer travel. Listen. We've seen leisure business, you know, continue to be very strong. I think we'll have the biggest summer we've ever seen in our 103-year history this summer. Up next, we'll get the view on travel from the CEO of Marriott. We'll see if his outlook matches his competitor.

You're watching Closing Bell on CNBC. Dow down right now about 15 points. Check out today's stealth mover. It's DoorDash up almost three percent big winner on wall street today raymond james initiating coverage of the delivery company with a market perform rating the analyst there is optimistic about doordash's revenue and margin growth prospects but believes the stock's risk reward outlook is balanced at current levels turning now to travel marriott stock outperforming the market and its competitors this year. It's up about 7%. Today, the company joined other hotel operators at NYU's Hospitality

Conference. I got to moderate a great panel of CEOs, including our next guest. Joining me here first on CNBC at the New York Stock Exchange is Marriott CEO Tony Capuano. Right. An Americanized version of the Italian name. There you go. Exactly. It's great to have you here. Chris Nesetta of Hilton said it was one of the best summers he's ever seen, and he's been in the hotel business a long time.

Are you seeing the same kind of strength? We are. The forward bookings look extraordinary. Really everywhere but greater China. I just came back from a couple weeks in Europe. I was in Davos, and I was looking at our forward bookings for Europe. Over the last couple of weeks, they're 50 percent ahead of where we were same period in 2019. Within Europe? Yes. Europe travel. I don't know.

Why do we have to test to come back to the United States or get into the United States from abroad? It's a great question. I mean, what's so interesting is so many of the markets that were locked down so forcefully, Australia, New Zealand, Cayman Islands, they've all reopened and we continue to have this requirement. We've been very engaged with the administration. I've met with Secretary Raimondo a couple of times. I know it's high on her priority list. And to her credit, she really recognizes the power of travel and tourism. And in fact, today the administration announced some new numbers, which are encouraging. I think the recent spikes we've seen in infection rates have maybe given the administration a bit of pause. But we think that will unlock a huge volume of inbound international travel. So just to put a pin in it, the fact that you have to test before coming to the United States and you have to. It's complicated. You have to do sort of a video test if you're going to do an antigen test. Do you think that's actually holding back international visitation? I think for many folks that are experienced travelers, it's just one more necessary step.

But for folks that maybe are not particularly experienced international travelers, it's one more thing that gives them pause. The administration announced 90 million visitors is the goal over the next five years to come to the U.S. Is that something achievable in your view? I certainly hope so. I mean, I think it's one of the most desired destinations in the world. As I have the opportunity to travel to countries all around the world, people talk with great enthusiasm about seeing some of the great cities here, New York, Los Angeles, Chicago. And I think we've just got to do what we can to make travel more and more seamless. The problem is it's getting more and more expensive.

So how much are prices up and how much will they continue to go up? So if you look at Memorial Day weekend, for instance, our revenue per available room, which is the metric we focus on, we were up about 25 percent over where we were Memorial Day weekend, for instance, our revenue per available room, which is the metric we focus on, we were up about 25 percent over where we were Memorial Day weekend in 19. Our recovery is being led by our luxury portfolio. In the first quarter, we were up about almost 30 percent in rate. You ask the right question. And I think as long as we're delivering on service, which can be challenged in markets where labor is difficult, we continue to see really remarkable pricing. People are just paying these higher prices. You're not seeing any pushback from the consumer. No, I mean, it varies

by market in leisure destinations, coastal destinations. We continue to see exceedingly strong rate potential. Middle of the country, some of the urban markets, which have not come back as quickly, maybe a little softer pricing. The Fed is raising interest rates. Everybody's raising interest rates around the globe. And there are real worries about a global and U.S. recession. Are you seeing any kind of slowdown or any impact of that? We really aren't in the data. And it's interesting. There are all sorts of factors, whether it be fear of recession, increasing fuel prices, rising interest rates. But when we look at our forward bookings, the volume of pent up demand that's out there, the two plus trillion dollars of savings here in the U.S. is driving volumes of demand that that really to date have

not been impacted by some of those headwinds. What about business? Because that hasn't recovered as strongly. How far away are we from pre-COVID levels there? So at the end of last year, we were down about 30 percent on business travel. At the end of the first quarter, we were down more like 10 to 15 percent. But again, one of the things that's going to make it a little harder to answer those questions going forward is this blending of trip purpose. If you check in on a Thursday, Friday, Saturday, we're not interrogating you at the desk and saying is this a business trip, is this a leisure trip? So what we feel more and more confident about overall travel is not permanently impacted. It may be a

little more difficult for me to tell you a year from now, business transients all the way back, because we're seeing it in our booking patterns. Thursday and Sunday, which used to be the shoulder days, are among the days of the week that have recovered most quickly. Shoulder days are weak. Right. It used to be Friday, Saturday was leisure, Monday, Tuesday, Wednesday, business. Monday, Tuesday, Wednesday are still on their path to recovery. But Thursday and Sunday are almost fully recovered, which would suggest folks are combining business and leisure travel. What is the other biggest change as a result of the pandemic? I think adoption of technology.

We had a lot of the tools, whether it be mobile check-in, mobile key, text functionality. But initially, by necessity, when folks were worried about social distancing, we saw our guests adopting use of that technology. And I think that'll continue even beyond that. What about free breakfast? Is that gone? Not necessarily. It'll be in certain brands. I do think food and beverage will be a little different, though. And it'll vary by quality tier and by market. And finally, really quickly, you do have this new initiative on diversity. It's been a big focus for you and the whole industry when it comes to ownership of hotels.

Yes. Why is this so important right now? What do the numbers look like? Well, I think across all the constituents we serve, our associates, our guests, our investors, we've always had a great track record on diversity. If you look at our ownership diversity numbers in aggregate, they look terrific. But there are certain underserved groups, black ownership, Latin ownership, Native American ownership, female ownership are lagging. And we think this initiative is a great catalyst to try and drive those numbers. Yeah, getting access to capital and to the lenders.

Tony, thank you for coming by. Really good to get in. My pleasure. Thanks for having me. CEO of Marriott. Let's give you a check on where we are in the markets. The Dow sort of underperforming today. It's down about 24 points.

S&P still going strong, though. It's up two tenths of a percent. Consumer discretionary and communication services are your positive sectors. Energy and staples are lagging, and the Nasdaq's up two-tenths. A lot of the mega cap tech is working today. Tesla, Apple, Meta, all higher today. And Apple has turned around, is now up as well. The Chinese internet names are flying. After the break, the world's biggest cancer research conference is underway, and a number of pharma and biotech stocks are on the move. We'll bring you up to speed on the developments you need to know about next. And as we head to break, check out some of today's top search tickers on CNBC.com. Amazon in the top spot after its 20 for one stock split

takes effect and the stock is up 2%. It ran up all of last week too into this, followed by the 10-year note yield. We're seeing the 10-year yield back above 3%. So some telling of treasuries. Maybe that's why the pressure on the markets in the late day here. Tesla up, Didi much higher, and Apple again turning lower. We'll be right back. Big developments in the fight against cancer being unveiled today during the world's largest cancer research conference. And the news is moving some of those stocks, as you can see. Our Meg Terrell here with the highlights. Meg. Hey, Sarah, we were just showing AstraZeneca and Gilead. Those were two of the biggest stories coming out of the weekend of the conference. Both had updates in breast cancer, the most common type of this disease that was advanced and metastatic. And

you can see that today they were both down, even though both were ostensibly positive updates. Gilead's was described as more modest, but AstraZeneca's update got a standing ovation from the oncologists and researchers and folks at this conference over the weekend, something that doesn't happen that much and really signals that something is going to make a big difference for a disease, potentially expanding the number of people who could benefit from this therapy called N-HER2. Then, of course, there's always the immunotherapy conversation happening around companies like Merck and Bristol-Myers. Merck, of course, with Keytruda having some more data in melanoma at the conference.

But also there's been a big question from investors in Merck about just the diversity of the company's pipeline, the fact that 35 percent of this company's revenue comes from Keytruda as of last year. We spoke with their chief medical officer, Dr. Eliav Bar, about Keytruda and the future of the pipeline in terms of diversifying into other types of cancer drugs. Here's what he said. Keytruda itself will continue to expand over the course of the years, but we also have over 20 different mechanisms of action just in oncology that we're really excited about. And so having Keytruda as the foundation for so many different kinds of cancers enables

us to leverage that for future clinical trials with newer agents. And Sarah, another thing Dr. Barr told us, really something we heard from everybody at the conference this weekend, is just that this is the first time they're back in person in two years. And that really changes the nature of the conversations they can have about new cancer treatments and how to better improve treatment for this disease. Sarah? Well, that's good. That's optimistic. Meg, thank you. Meg Terrell. Up next, Evercore ISI's Julian Emanuel on today's market reversal and his playbook for protecting your portfolio in this volatile environment. Dow's down about 34 points. S&P and Nasdaq, though, staying strong. We'll be right back. S&P up about two-tenths of a percent. Welcome back. Solar stocks are a big bright spot in the market today. Check out the TAN ETF. It's

up 4% or so. Some big moves under the surface for names like Sunrun and Array Technologies. The rally was spiked by news that the Biden administration is declaring a two-year tariff exemption for solar products imported from some Southeast Asian countries. Last week, I talked to Sanova CEO John Berger about the impact of those tariffs on the industry. Tariffs have never worked in any government in any time in human history, but we seem to keep trying them, including the previous administration, of course, and it's been a continuation with the Biden administration on this. They're a complete failure. They're not working at all, and we need to get away from them, and we need to get the policies put in place so that consumers can choose.

He and the industry definitely happy today with that response. Take a look at that stock. One of the big winners on the news, the White House also announcing the use of the Defense Production Act to promote domestic solar production, helping out as well. These moves come as the world, of course, deals with rising energy prices stemming from the war in Ukraine. Volatility, valuation and value. Those are the keys to investing in the current market, according to our next guest. Some of the top picks that fit the mold include Facebook, Bank of America and Morgan Stanley. Joining us now, Julian Emanuel. He leads Evercore ISI's equity derivatives and quantitative strategy team. So talk to us about how you are scanning for these winners in this bear market. So you have to understand in this kind of environment in which you rightly stated volatility, valuation and value are keys to navigating the

bear market. The first thing is to understand that this is in fact a bear market. And it's our view that actually, if you think about it, it is more than likely to be a non-recession bear market. And from that perspective, we think you're potentially closer to the end than the beginning, given that we traded down over 20 percent at the low at May 20th. But when you think about what kind of stocks you want to own, you want them to dampen volatility, a very, very high free cash flow and very, very robust return to shareholders, either in the form of dividends or, most importantly, in this environment, buybacks, as well as thinking about valuations. A lot of these names that you mentioned really have had enormous markdowns

in an environment that has seen large markdowns to valuation in the first place, but even more than their peers. And then of course, lastly, in terms of value, and value is really clearly one of these things that's in the eye of the beholder, because I think if I had told you six months ago or a year ago that the world's largest social network was about to be reclassified as a value stock, you'd have laughed. But all of a sudden, there you have the characteristics, great free cash flow, great return to shareholders and depressed valuation that make this particular stock and

others valued so met as a value play and and and some of the banks meant that i mentioned also value plays are they non-recession plays higher rate plays well so it's a combination what's interesting is if you look at financials, obviously in a difficult year, the financials broadly have outperformed. But that's been mostly driven by the insurance names. It's our view that with rates staying where they are, perhaps creeping higher, we do see a little bit of upside. And obviously the market is pricing somewhere on the order of two and a half to two and three quarters by the Fed at year end. Those names are likely to continue to benefit. But the key is avoiding a recession. Those stocks have been hurt on the basis that the economic slowdown was significant enough to turn

us to recession. We don't think that's the case. Why are you so confident as to base your picks around that when the market does appear to be increasingly worried about a recession? Well, look, I think first and foremost the employment picture remains very, very strong. You don't see readings in terms of unemployment or wage gains in this kind of environment really being something that imminently leads to a recession. The other thing that we point out, two other things, actually. First of all, there's going to be benefit from China reopening, which is ongoing right now.

And then lastly, the credit markets, which have led most economic downturns over the last 20 years, their tune is certainly different. Credit spreads actually have been tightening in recent weeks. I'm curious why, given that thesis, why you have Pulte Group and Lennar. You have two homebuilders on this screening of the 3B stock list that you like. Given what's happening in housing, what the Fed is trying to do to housing, what's happening on mortgage rates, are they just two good values to pass up? Essentially, that's the case, Sarah.

You know, we all know that markets tend to discount conditions six and 12 months in advance. And these stocks continue to be very, very good earners, continue to return money, cash to shareholders, and are trading at valuations that already price in that degree of slowdown, a non-recessionary slowdown. Flat today. Julian Emanuel, thank you for joining us with some individual picks there and some strategy from Evercore. Thank you. Take a look at where we stand right now in the markets, down 47 or so points on the Dow. The pressure today is on staples, technology and health care, but it really isn't all of technology because the Nasdaq is doing well thanks to Chinese Internet names, thanks to some of those solar stocks. The mega

cap tech stocks are doing well. You've got some of the chip names under pressure, Texas Instruments, Broadcom, for instance, HP, Salesforce giving some back. S&P is up about a tenth of 1%, so we're losing our gains. Wall Street's buzzing about Carl Icahn backing down from his proxy fight with Kroger. After losing a similar battle with McDonald's last month, we'll share the details straight ahead. And throughout the month of June, we are celebrating Pride Month. Here is Francesca's CEO, Andrew Clark.

It's more important than ever to celebrate Pride Month. Pride is the moment for us to stand up and represent our community while standing alongside other minorities in a celebration of the defense of diversity and equality in this country. Pride is happy. Pride is positive. But pride is serious and pride is necessary. What is Wall Street buzzing about today? Carl Icahn dropping his proxy fight at Kroger. Icahn launched the battle back in late March, nominating two candidates to Kroger's board, citing concerns about the poor treatment of pigs

in the pork supply chain. And he also complained about the wage gap between the average worker at Kroger and those at the executive level. I spoke to CEO of Kroger, Rodney McMillan, last month and asked him what he expected to come from Icahn's proxy fight. Listen to what he said.

I have no idea. And you know, when you talk to people, you get all kinds of different speculations. So we really don't know. And we're super proud of the things that our board has done over the years around animal welfare and pigs. And we will continue to be so. Remember, ICON waged a similar battle at McDonald's, nominating two directors to that board, citing animal welfare concerns.

Icahn officially losing that fight over a week ago, not just losing. He got 1% of the vote against 99% for McDonald's. Shareholders clearly rejecting his board nominees. In a statement today, Icahn cited the McDonald's outcome as a reason for dropping his Kroger proxy fight, saying he believed the results would be the same. So Icahn is 0 for 2 in his animal welfare proxy fights, not quite the track record of some of his famous financial battles during the corporate raider days. But it did make an impact. It brought more attention to the treatment of pregnant pigs and gestational crates. As Icahn pointed out

himself in his letter today, recently General Mills said it's going to phase them out for all pork and it's in the U.S. supply chain by 2023. Pregnant pigs got a lot of airtime, so not a total loss for Mr. Icahn. CrowdStrike, a big winner after a bullish analyst call. We'll discuss whether that's good news for the enterprise tech spending space.

Stocks up 4%. That story plus Apple taking on buy now, pay later companies. And the latest drama between Elon Musk and Twitter when we take you inside the Market Zone. We are now in the closing bell Market Zone. Lapler Tangler CEO Nancy Tangler here to break down these crucial moments of the trading day, plus Steve Kovach on Apple's developer conference, Julia Borsten on the latest drama between Twitter and Elon Musk. First up on the market, stocks are pulling back from early gains. The Dow near the flat line after being up as much as 336 points at session highs. You've got Salesforce, Amgen, and Microsoft as the big drags. Nancy, playing the part today of Mike Santoli,

where do you think we are? We're 15 percent off the highs on the S&P 500, about 26 percent off the highs in the Nasdaq. How much work is done as far as the correction, in your view? I mean, Sarah, I think the majority of the work is done, but that doesn't mean that we're going to go up from here straight away. I think we're going to chop around for the remainder of the summer until we start to get new earnings reports. But there's really no catalyst in the near term, except some of these upgrades we're seeing from Wall Street analysts. But other than that, we're just we're kind of dealing with the daily headlines and you get one bit of news and it's the sell everything market. And then you get another bit of news and it's the buy. So I think you just have to be prepared to hunker down.

This is what a bear market feels like. And it's never, it never feels good. Well, I think the news today and lack of sort of fundamental news is the 10-year treasury yield is back above 3%. I don't know if you're watching these German yields, the Italian yields, they are all trading at multi-year highs.

We've gone away from negative interest rates. And I think overall, Nancy, stocks are taking it pretty well today, at least compared to where they would have been a few months ago, seeing these kind of yields. I agree, Sarah, and especially the NASDAQ, right? I mean, that's held up very nicely in recent market trades. It's been, you know, sort of more resilient, which is good news. But I think also, you know, we're starting to warm up to bonds. We said in August of 2020 that bonds were riskier than stocks. And since then, the TLT is down like 30 percent. And even with this correction, stocks are up 21. But now at these yield levels, there's an entry point for some investors.

And so I think you're going to start to see money shift somewhat. And we saw it last week and last month. But that doesn't mean investors are going to stay away from equities because there's a lot of cash still remaining on the sidelines. Big day for corporate deals as well in the bond market. Let's talk Apple, though, officially kicking off its worldwide developer conference. The company announcing a number of new developments this afternoon, including a buy now, pay later service, which sends shares of a firm into the red. Steve Kovach joins us from Apple's headquarters in Cupertino, California. Steve, some of some of these products or software announcements like buy now, pay later and the chip were were expected. Right. So what anything come as a surprise to you and others following this today?

Yeah, the buy now, pay later thing was, you know, reported on earlier and was expected. But it's what was unexpected was this was more of a fintech event than it was. You know, a lot of hopes were coming into this were about augmented reality and headsets. But if you look at what they're doing in the wallet and the fintech side, there's this buy now, pay later thing we've been talking about all day. There's the ability to tap your iPhones together to do peer-to-peer payments with your friends or a small business. And then they really stated their goal, Sarah, saying, hey, we want to get rid of everything in your wallet and put it on your iPhone. And they're making slow progress towards that on some things like certain states with their driver's license and other car makers

with their wireless keys. But that really stuck out to me is just how the wallet on your phone is really coming close to replacing the wallet in your pocket. So you think that is a bigger strategic focus maybe for Apple now than previously appreciated by investors? And if so, what does that mean? Because it kind of comes, Steve, at a time where fintech has been melting down on the changes in the credit cycle. Yeah, exactly. But you've got to keep in mind, every time Sarah Apple adds something like this to an iPhone, it's not so it can become a massively profitable business. It's just to keep you selling more iPhones and make it easier to use the iPhone.

So it's just an added bonus feature on top of all this stuff. And, again, there's other cool whiz-bang stuff that we're expecting later in the year, the augmented reality features, maybe that headset that, which could be unveiled if I had to guess next fall with the iPhone. Uh, but yeah, it's, this is all about software today. We had some new hardware announcements though, uh, that new M2 chip that's going to be powering max going forward and the new MacBook air, which I actually just got to take a look at. and I saw Tim Cook taking a look at it, too. It looks really nice. Okay, good. Glad you're there to take a first look at some of this cool stuff. Steve Kovach, Steve, thank you. Nancy, what do you do with the Apple stock, which is down, I don't know, almost 20% for the year? By the way,

the Affirm sell-off deepening down 6% now off that news. I think the takeaway from this is that Tim Cook, you know, despite his detractors when he took over, has been a really measured and responsible and adult kind of corporate CEO. This stock is all about the ecosystem, and that's what we believed when we got into it almost 10 years ago. So you want to pay attention when they're making these subtle changes because they will become dominant in each space that they focus on. I love the buy now, pay later. I love the whole fintech aspect of what they're doing. Even now? Yeah. Even in this point in time? I do. You hope they buy Square? I hope they do. Why Square? Just because I think Square is the industry leader in terms of innovation and, you know, just the broad range of their products. And they really, I mean,

their investor day was quite encouraging, but it hasn't shown up in the stock. And I think what you're seeing in this market is if you're in a certain space, whether you're the industry leader or not, you're getting sort of painted with the same brush. So I would, you know, we had held back, we trimmed back very aggressively on Apple because we had, you know, we've had it for a long time. But I think now that it's settled in here, investors who are not in the stock can use this as an opportunity, this recent decline, as an opportunity to own a company that you just want in your portfolio. I call it a stock to own for a lifetime. No, like Kramer, own it, don't trade it, always says on Apple.

Well, the drama between Elon Musk and Twitter is heating up. In a letter to Twitter's chief legal officer, Musk's attorney writing that the social media company is refusing to hand over the data necessary to determine that number of fake accounts, which gives Musk the right not to complete his $44 billion deal for the company. But Twitter responding, quote, Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement. We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement at the agreed price and terms. Julia Borsten joins us. Julia, what should we make at the agreed price and terms. Julia Borsten joins us. Julia, what should we make of the latest back and forth? Well, Sarah, it looks a lot like Elon

Musk is looking for a potential out for this deal, or at least at the price that he committed to pay. I mean, we can't talk about this deal without looking how much lower Twitter shares are right now than they were when Elon Musk agreed to buy them at $54.20 per share. So the stock trading at a meaningful discount to that right now. So it looks like Musk is looking for an out, but also the company is making it very clear they are not going to give him an out. They do not want to renegotiate the terms. And I think that we could see this go to court, Sarah, if he does try to get out of the deal. Just want to point out Twitter shares trading at thirty nine fifty right now. So there is a one billion dollar breakup fee. But it's essential to remember that Elon Musk waived the right to do due diligence,

which a buyer would typically do if they were acquiring a company. So this could very well go to court. So anything I know he doesn't talk to us. He doesn't talk to sort of normal media outlets. But does is there any sense of why he wants to back out of this, Julia? Because I thought fixing the fake bots was one of the reason he wanted to buy the company. Yes, and he has said that he believes that the amount of fake bots is as much as five times as high. He thinks it could be 20 percent of the activity on Twitter. Twitter has said it's less than 5 percent. So he sees something that's dramatically more than what Twitter has disclosed.

But I think you just have to wonder, look at what has happened to all of the tech stocks and Twitter in particular. Since he originally made this deal, he probably feels like he is paying way too much based on what's happened with the tech sector since since he committed to 5420. Right. It's got to be Nancy about the price, right? It's thirty nine fifty three. And you've seen a complete meltdown in some of these names like snap warning on earnings and meta and Twitter itself out with results. Yeah, I think the space has been disappointing, obviously, for the reasons that many of us understand. But here again, you've got a snap that maybe is not an industry leader disappointing, and then you get a sell-off in Facebook. But Twitter's its own problem. It's been poorly managed for a long time. We've been out of the stock for years. And I just find Musk

fascinating. I mean, he certainly is frustrating, but I find this whole, just the way he's approached this and the way he's sort of combating management and the board, I think it's going to be very interesting. And I think Julia's right. We probably will end up in court, but it's not without a lot of fireworks before then. And I think it's kind of fun to watch from the sidelines. Right. Clearly you are not an investor in Twitter, correct, Nancy? Not touching it. We're not. I wouldn't be enjoying it as much. Julia Borson. Julia, thank you. That's true. CrowdStrike is outperforming the tech sector. Morgan Stanley upgrading that stock to overweight from equal weight raised its price target to 215 from 195. The firm believing the cybersecurity company is a good defensive play in the uncertain economic environment because protecting against cyber threats remains a top priority for the corporate world.

Frank Holland joins us. Frank, we've seen other cloud stocks hit. Why does Morgan Stanley believe a stock like CrowdStrike is immune and maybe some of the other cyber names as well? Hey, Sarah. Hey there, Sarah. You know, not totally immune, but certainly we're starting to see a trend of cybersecurity becoming increasingly inelastic. Now, take a look at this. These are recent reports from CrowdStrike, Okta, and Splunk. And in all three, you see beats

on cash from operations and from free cash flow. These companies generating a lot of cash and just doing a lot better than at least the estimates believe they would. And then also, when you see that Morgan Stanley note, they cite increasing spend, at least they believe, from the federal government, certainly not subject to that same pressure from currency. And then also from international customers, a very different story than we're hearing from a lot of cloud names, including cloud giant Salesforce, as well as Box. Both of them said their customers are simply spending less because of the stronger dollar. Now, just a short time ago, you mentioned the rising yield on the 10-year, now above 3%. But when you look at the last two weeks especially, as that 10-year yield

has risen along with the dollar, well, cloud stocks, they've underperformed cybersecurity stocks. Cybersecurity actually doing basically twice as well over that same time period. And then you also have this issue right here that doesn't get talked about a lot. The Biden administration put out data a few, I believe a few weeks ago, maybe about two months ago, that almost, excuse me, more than a third of cybersecurity jobs here in the US are unfilled. About 38% of those jobs are unfilled right now.

I spoke to one cybersecurity CEO. He believes that number is even higher than that. And he says a lot of customers are calling. They wanna redo their cybersecurity. They wanna be aware of any potential threats because a lot of people in the corporate world are aware that the hackers in Ukraine and Russia, they had a lot of infighting, but hacking is an entrepreneurial pursuit and they believe a lot of them are going to get back to

hacking, ransomware, et cetera, in the very near future. Brian Collin, really interesting. Thank you. Nancy, it makes sense that these cyber stocks would buck an overall IT spend pullback or some kind of softness in the market and the economy better than some of the other cloud peers. How do the valuations look in these names? Well, we've owned them for a long time, but we've been invested through Palo Alto Networks and Fortinet. Crowd is still trading at 135 times next year's earnings, but it is kicking off tremendous amounts of cash flow and it's the fastest growing company in the space. These are exactly the kind of companies you want to own, Sarah, when

growth is slowing. These are reliable growers that are going to put up the numbers. And yeah, in this case, the valuation feels a little lofty for me, though I appreciate the essence of the upgrade. I would just be exposed where we are and some of the names that are still expensive in a normal PE environment, but not so compared to crowd. So Palo Alto, Fortinet, these are names that you can also get exposed to in space. But it makes absolute sense. And CIOs have said security is the least likely area they're going to cut in their budgets. Well, they can't afford to, right? They can't.

You're right. Right. And we saw that in Palo Alto's quarter, by the afford to, right? They can't. You're right. Right. And we saw that in Palo Alto's quarter, by the way, on earnings a few weeks ago. Just want to hit the broader market because we are building actually on some gains here as we head into the close. We're off the session highs. We've got some strength today in consumer discretionary. We've got strength in materials, communication services, all 1% gains, industrials, utilities. Quickly, Nancy, what is the best sector

to be in, in this kind of slowing environment where we may or may not be going into recession, but we know we are going into a lot more Fed hiking? Oh boy, that's a tough one. Let me just say that I think if you own some of the large cap tech names that are growing their dividends, and you sort of marry that with large pharmaceutical names that are also growing their dividends and you sprinkle in a little bit of industrials, I think you'll be happy three to five years from now that you've taken, that you've added some risk to your portfolio at these levels for the next three to five years. There you go. I mean, yeah, that makes sense. Nancy, thank you. As we head into the close, Nancy Tangler, by the way, thank you for being with me.

Mike Santoli would be very proud. ARK Innovation Fund is doing quite well. It's actually up about half a percent here into the close, and it's actually had a pretty nice rebound off the lows. It's still down really sharply, about 54 percent for the year, but it's higher again today. There's the Dow. It's kind of unchanged right now. You've got strength in some of the names, like the financial names, like the United Healthcare, Traveler, Goldman Sachs, IBM. That's what's leading the Dow. Amgen, Salesforce, and Microsoft are the drags. S&P 500 higher. We got with consumer discretionary in the lead up more than 1%. Tesla is doing well. Etsy, some of the internet names, Wynn Resorts, and of course,

Amazon.com off that 20 for 1 stock split is higher today by about 2%. It's now just below $125 a share. As far as what's weaker today, energy, you've got oil prices a little bit lower and real estate, which is down a third of 1%. The other big talker of the day is the 10-year treasury yield going back above 3%. So pretty sharp sell-off to start the week for bonds. And it is not just in the U.S. It's treasuries, it's Germany, it's Italy. It's a lot of these sovereign debt, which is falling, yields rising. Something to watch's treasuries. It's Germany. It's Italy. It's a lot of these these sovereign debt, which is falling, yields rising, something to watch as a risk factor. There's the bell. The S&P going out with a gain of about a third of one percent. NASDAQ rallies half a percent, doing a little

bit better. Small caps also up less than half a percent. That does it for me on Closing Bell. Have a good evening.