Closing Bell - Closing Bell: Stocks dip in volatile session, World Bank slashes it’s growth outlook, and Goldman Sachs’ chief economist lays out a new call on housing 4/18/22

Episode Date: April 18, 2022

Stocks ended the day lower after a seesaw session. Jason Trennert from Strategas and Jim Bianco from Bianco Research debate the impact of rising rates on the market, as yields on the 10-Year treasury note hit their highest level since 2018. The CEO of KBW gives his take on bank stocks, following a divergent performance for Bank of America and Charles Schwab on the back of results. World Bank President David Malpass explains why his organization just slashed its global growth forecast by nearly a full percentage point. And Goldman Sachs chief economist Jan Hatzius breaks down a new call on the housing market, with mortgage rates topping 5%.

Sucks. Mosley higher heading into the close after an up and down session. The most important hour of trading starts now. Welcome everyone to Closing Bell. I'm Sarah Eisen. Here's where we stand in the market. Higher as I mentioned though off the highs of the day. Dow got as high as up 167. We've lost a lot of those gains up 34 points or so. Best performers energy, financials, consumer, discretionary, technology and materials. Some of the hardest tech groups like semis and software are bouncing back today, but you've got weakness in the defensive groups like healthcare and consumer staples weighing on the overall market. The Nasdaq is flat and small caps are lower. Want to zoom in on the energy sector? Because it is the best performer today, oil prices are rising and names like Valero, Cotera Energy, Phillips 66 and Occidental are leading the charge in this market. Coming up on today's show, Goldman Sachs chief economist Jan Hatzias out with a new note today on the impact of higher mortgage rates on the hot housing market. He'll join us with his outlook for the space. Homebuilders have been wrecked this year.

Plus, the World Bank just slashed its global growth forecast this year by nearly a full percentage point. We'll ask the president, David Malpass, what's behind the downbeat projection. First up, major averages volatile in the session today. We're now trading higher despite the 10-year treasury of continuing to march to new multi-year high today, hitting its highest level since December 2018. Let's bring in Jason Trennert, chairman at Strategas, a Baird company, and Jim Bianco, president at Bianco Research. Gentlemen, good to have both of you. Jason, how are we set up for earnings season, given that treasury yields continue to rise on already high levels? Listen, I think, Sarah, at this point, it's, in my opinion,

the path of least resistance for long-term interest rates is still higher. I think it's important to remember that the Fed has only tightened 25 basis points and their preferred measure of inflation is at about five and a half percent. The CPI is about eight and a half percent. So there's a long way to go. And from our perspective, it's very important. Yeah, but the market's pricing in eight or nine hikes. Isn't that already in the market? Well, that's in the bond market. I'm convinced it's not in the stock market at this point, because I think there's a lot of, I think there are a lot of tech issues. There are a lot of stocks trading in a multiple of sales that, in my opinion, are not going to be able to withstand significantly higher interest rates. I think we're at a point now as we transition from

quantitative easing to quantitative tightening, where capital is going to be rationed. I think we had an everyone gets a trophy cost of capital for about 13 years since the last financial crisis. And I think now it's going to be a little different. Jim, what about you? You feel that rising rates are going to be a big headwind still for stocks? Oh, yeah, I think that they are. And I want to underscore what Jason just said, too. The bond market is pricing in nine or 10 rate hikes for this year, depending on how you measure it. And that's specifically the short end of the bond market, like Fed Fund futures traders, T-bill traders, repo traders. But when you move out to long-term bonds and you move out to equities, most of them think the Fed's going to go four or five times and then stop. And they're in for a surprise if that's what doesn't happen. And I

think the Fed is fully intendant on being every bit as aggressive as they say. So as rates move higher, it is going to become a bigger and bigger headwind. And what I'm just trying to say is, no, it's not priced in that we're going to have aggressively higher interest rates. So, Jason, what do you do in this environment? Because you do have some parts of the market working this year against this backdrop of rising rates. Energy keeps going higher. And then you've got some of the defensives working well, like Staples and health care. Not today, but in general. What's the playbook? Right. So I think the playbook, Sarah, it's not that different than the playbook you might have in bonds, which is to say that for stocks,

you want to be in shorter duration equities, which is just a fancy way of saying you want companies that are throwing off cash either to buy back stock or to pay dividends. The companies that aren't don't generate a lot of cash, that can't return money to shareholders in many ways, act like zero coupon bonds as long-term interest rates rise. They get killed. So in my opinion, the sectors that we like the most right now are energy, basic materials, industrials, and healthcare. I think you do have to be more selective as interest rates go higher. There may be some other industry groups in some of the other sectors like regional banks and financials. But I think you just have to tread a lot more carefully, probably hold a little bit more cash.

And again, really stick with higher quality companies that are going to turn money to shareholders as a hedge against inflation. Jim, what do you think we're going to learn this earnings season? The optimists are saying companies are actually in pretty good shape. A lot of them have pricing power. The consumer's been doing fine, and it could be a positive catalyst. The pessimists say, actually, we've seen margins peak, and the outlooks are going to be pretty dire. What do you think? You know, that's a good question.

Right now, if you look at what company guidance is giving us, it's a little bit more dour that they're worried about the future. And the word inflation comes up a lot in word searches of the conference calls that we've been getting as of late. But I will tell you who's looking at it very closely, and that's the Federal Reserve. Bill Dudley wrote an op ed. He was the former New York Fed president about two weeks ago where he said if the stock market doesn't go down, the Fed might have to lower it. And he's suggesting that the policy of the Federal Reserve is going to be to try and create some kind of reverse wealth effect to help rein in inflation. So be careful if we get good earnings numbers, because that might just encourage the Fed to go 50 every meeting as opposed to 25. Oh, I absolutely buy that. I absolutely buy that.

Governor Waller was on the show and he pushed back against that, said we don't need to shock the market. The whole point of forward guidance is to lay the groundwork for higher rates, which will do the job to put pressure on demand in the economy without doing any kind of stock market shock. Well, part of the stock market shock is they have to show that they're intended in doing that. He can't just say that because the market won't believe him. Again, that gets back to that whole idea.

We got 10 RADEX priced in, but if you look at surveys like the Bank of America Global Fund Manager Survey, most of the managers don't think the Fed's going to go anywhere near that. So for Governor Waller to have the Fed do what you want to do, you got to be prepared to go 50 every meeting because it doesn't believe you are. Jason, you think the Fed has to push back against the market strength?

Not that it's been that strong. Well, listen, I think the main thing is the Fed can't worry about what the market is doing. It has to fight inflation. And so the Fed put that we've become so accustomed to really since 2008, in my opinion, is deep out of the money. I don't think the Fed has the luxury of forecasting inflation anymore. It must fight inflation. It has to play the balls. It lies. And right now it looks like the Fed's lost control. And I think the only way they get control is by being aggressive. This is also a midterm election year. And so I think that's they get control is by being aggressive. This is also a midterm election year. And so I think that's also an important moving part in this, in that inflation is out of, you know, does seem to be out of control. It is atop most of the surveys of both

businesses and consumers. And the Fed has to protect its own independence. So it's going to have to get involved if only to protect its own reputation.. Jason Trenert, we'll leave it there. Thank you, Jim Bianco. Always good to see you as well. There go the gains. S&P 500 up two points. After the break, Bank of America and Charles Schwab moving in opposite directions today after reporting results before the bell.

We'll talk to the CEO of KBW about his takeaways from bank earnings and his outlook for the sector in the second quarter. You're watching Closing Bell on CNBC. KBW about his takeaways from bank earnings and his outlook for the sector in the second quarter. You're watching Closing Val on CNBC. Dow hanging on to gains just barely up seven points. Financials having a good day today. Check out shares of Bank of America getting a boost after posting first quarter earnings this morning that beat analyst estimates. Check out Charles Schwab going the other way. That stock tanking on the back of results. The company missed estimates on both the top and bottom lines. Joining us now with his takeaway from bank earnings overall is Tommy Show, KBW president and CEO. Nice to see you, Tom. You know what? It's sort of surprising everything that we got from the banks because I

thought the brokers and the big American lender type banks, the Wells Fargo's of the world, would do the best this earnings season. And it's sort of been the opposite. Weren't they waiting and waiting for higher interest rates? What's the problem? So exactly. So the whole bull case on this group, on bank stocks, was that we were going to finally start to get revenue growth because interest rates were coming up off of zero and we're going to get a reemergence of loan growth. That, in fact, has been happening. But the change in the macro backdrop along the lines of potential for stagflation, there are some who even think recession is on the horizon. We've got a tough market for mortgage, which we knew we knew we were going to have a tough

comparison in investment banking. So banks with a broader footprint of businesses are the ones that are going to be the most challenged. So we've just had eight of the top 10 banks already report earnings kind of starting now after the close today. We're going to start to see the SMID cap, the mid cap regional banks start to report earnings. These are the companies who don't have a lot of the businesses that are facing lots of headwinds. These are the ones that are more spread dependent. And we think these results are going to start to be different. Believe me, they'll still have some headwinds, but they're going to not carry as much of the challenges, some of the companies you just mentioned that are in a lot of the bigger banks.

I know you've liked the regionals now now that's been your call for a little while my question Tom is one of the problems with the bigger banks has been. That that yes rising rates certainly helps profits by not if those rising rates leads to recession or or a sharp

slowdown when that be the same issue for regional banks as well. They would they would but let's talk about how much has already been priced into the stocks already. So absolutely. So the whole macro theme has changed since year end and now. Right. So the chances of inflation stronger than we all thought that you were talking earlier about the World Bank taking down growth forecasts, growth forecasts in the U.S. are starting. So all that's happening.

But let me give you something about perception. So actually, I know Bank of America is up 4% today. But the reality is, is we think the main message out of their conference call is that they reiterated guidance. They actually didn't take guidance up. That's all it took to make the stock go up 4% when the market's flat. That tells you how bearish investors have been on some of these bank earnings. I'll give you another fact. ETFs for the year peaked on February 10th in terms of AUM. The financial services ETFs have lost 10% of their AUM since February 10th. That is an incredible outflow out of this group. And as you know, Sarah, we're in a new world of passive investing. When money decides to flow out of the group, they sell all the stocks, regardless of whether they're well positioned or not for this

environment. So our view is we've done the work. We've gotten more narrow on the stocks. And so we are focusing, like I said, on SMID cap regional banks like Pinnacle Financial, which is reporting earnings after the close today. We like East West Bank, which is reporting on Thursday, like Synovus Bank. So now, granted, Sarah, if we get a recession, I don't think these stocks are telling us we're going to have a recession. These stocks will have trouble, as will the whole market. But even if we just get stagflation, I think these stocks are well positioned. The ones I just mentioned. What about J.P. Morgan? That's down almost 20 percent for the year.

Well, look, you know, now, yeah, J.P. Morgan is a terrific company. Will continue to do very well through most cycles, in my opinion. But there are headwinds everywhere. And I even think Jamie had been talking about it. You know, the thing, too, is the largest banks have to mark their their bond portfolios to market for regulatory capital. They all just took a big whack in the first quarter. It's coming again in the second quarter. And so that is going

to impact share repurchase for the nation's biggest banks. Plus, they're still going to have headwinds in other businesses. So right now, their breadth of businesses is probably working against them a little bit relative to some of these regional banks. That's as bearish as I've heard you in a while, Tom, on some of the big banks. We appreciate the commentary. So, you know, we researched 211 banks, Sarah, and we don't like them all all the time. Right now, we'd say the macro investors are taking money out of financial services, ETFs like crazy. We'd look and see where the market's already incorporated bad news, where we're pretty optimistic about the

fundamentals, and it'd be SMIDCAP regional banks that are asset sensitive. Got it. We'll start looking for those earnings. Tommy Cho, thank you from KBW. Thank you. Let's check on the markets. We just went negative on the Dow and the S&P 500. Pretty unchanged, but there you see it. We've been wavering all day long. Strength in energy, financials, consumer discretionary materials and technology, all those sectors are still up, but healthcare staples, utilities are lower. Those are the defensive, which has actually been the hot spot of the market lately. The NASDAQ down about a tenth of a percent, so nothing sharp here. Small caps taking it a little rougher, down half a percent.

Oil prices higher, treasury yields higher as well. Coming up, World Bank President David Malfast on why his organization just slashed its global growth outlook for the year all the way down to 3.2 percent. And then later, we'll talk about the impact of rising mortgage rates on the housing market when we are joined by Goldman Sachs chief economist Jan Hatsias. And as we had a break, check out some of today's top search tickers on CNBC.com. Ten-year yield right on top where it has been. Prices lower, yields higher. In fact, we're looking at the highest yield since 2018. Also on the list is Bank of America up almost 4 percent. As you just heard, reiterating guidance, better earnings. Twitter continued drama with Elon Musk up 7 percent. Tesla ahead of earnings up 2 percent. And Apple, which is down about a tenth of 1 percent.

Overall technology, though, is holding up. We'll be right back. Down 22 on the Dow. Let's check out today's stealth mover. It's Nectar Therapeutics at the bottom of the Nasdaq today after losing around a quarter of its value. The drugmaker says it has ended trials and clinical development of a key cancer treatment after it did not produce desired results. Goldman Sachs downgrading the stock to sell following that news. In fact, biotech in general is having a weak day. IBB, the ETF that tracks it, down almost 3%, lowest level since the end of 2020. The World Bank slashing its global economic growth forecast for this year today.

Up next, President David Malpass on whether the war in Ukraine and spiking food and energy prices could spark a recession. The World Bank today slashing its global growth forecast this year to 3.2 percent. That was down big from its previous estimate of 4.1 percent as countries deal with headwinds ranging from the war in Ukraine to inflation and the pandemic. Joining us now, today's closer is World Bank President David Malpass. President Malpass, it's good to have you back on. Given all of these factors coming together, what is the risk of a global recession? Hi, Sarah. That's not our baseline forecast. So we're lowering the growth, recognizing that inflation, when higher prices hit people, they can't spend as much on other things. So that's getting factored in. Also, the very sharp recession in Russia.

More than that, you know, the decline there. And also China, you know, is slowing some because of the COVID shutdowns. So that all just adds into a slower outlook for this part of the recovery. The big issue, and I'm very concerned about it, is the differential impact on developing countries and especially the poorest. Inflation hits the poor the hardest. I think the solution is supply, more supply, but that's not materializing at this point. No, I mean, food insecurity is a huge problem. And this crisis that we are seeing as a result of lower exports of everything, right, from grains to oils to fertilizers from Russia and Ukraine. How do we divert a potential epic hunger crisis,

President Malpass, and unrest that typically follows these periods in history. Those all connect from energy into fertilizer into better yields for crops, and those are faltering right now. I think the world response, it's important to both supply resources for the poorest countries. We can do that from our own programs. We're planning a big surge from World Bank commitments, $170 billion over this 15-month period, recognizing the severity of the crisis on the poor and on developing countries. So we can help some, and I think the world can help some. One thing advanced economies could do is open their markets more than they have been. I saw corn was above $8 a bushel today,

yet the U.S. is putting a big chunk of the corn crop into ethanol to substitute for gasoline. So it drives, you know, one of the biggest things that advanced economies could do is have pro-supply policies in their own policies to begin to grapple with inflation. Yeah, maybe they should be

shipping it off maybe instead. You know, I wanted to ask you about China because Wall Street is very focused on the China growth question. We did get GDP out today, I believe 4.8 percent. It was more than expected, even though retail spending is weak. Investment has been weak. Shanghai has been sealed off for weeks now. They're still dealing with a debt crisis in their property market. What is the outlook there?

China's economy has strengths. You know, the world has been quite dependent on the supply chains from China, so they have a lot of exports. The U.S. has been adding to demand, both through the fiscal spending and through monetary policy that's been stimulative of demand. And so from China's standpoint, it's been an OK world economy and a recovery from COVID. I do think that they face a lot of challenges within their economy of allowing transition. Also, demographics are a challenge. We work with them a lot. They're a big shareholder. We're working with them also on debt transparency in order to try to have a better environment for the developing countries, which have taken on a lot of debt

from China in order to try to move forward themselves. But they're not recovering from COVID. They're going backwards. I don't understand how this zero COVID policy is going to play out. Are they just going to remain in lockdown? Didn't we learn here in this part of the world that you cannot suppress this virus? Yeah, the lockdowns are a challenge to figure out what are they going to help and how is it going to work? I was putting more emphasis on China's economy is built on currency stability, on prices moving some. And they've had a lot of demand from the rest of the world. So that's helped them a lot. As we think about the effect of COVID, one of the most dramatic areas is on education. We're just seeing

the numbers in the World Bank. We have big education programs around the developing world, and the data is clear that when kids are out of school, they not only don't learn, but they go backward. And so as they now come into school again, they're at a lower level. And that's a big challenge for the curriculum in the schools. And it means a lot of kids are not reading at their age levels. And that sets them back. You know, we talk about it for a decade, a decade of setbacks for the children in the developing world. I'm really concerned about that.

And we're hoping, we're encouraging countries to bring the kids back to school and keep them in school. Sounds like a message there for China and one that we know all too well. Thank you for sounding the alarm on that. President David Malpass, we appreciate it, of the World Bank. Thanks, sir. Good to see you. Kicking off the IMF World Bank meetings. And on that note, we will be talking much more about headwinds facing the world this week. I'm hosting the IMF's debate on the global economy on Thursday at 1 p.m. Panelists include the head of the IMF, the head of the Federal Reserve, Jay Powell,

ECB President Christine Lagarde, and more. You can watch it on CNBC, and it'll be streaming on CNBC.com, on YouTube, Twitter, and Facebook. Head of the Fed, ECB, and IMF. It doesn't get much better than that. Here's where we stand right now in the markets. Losses picking up steam. Dow's down now about 93 points or so, so heading back toward the lows. The S&P down about a quarter of 1%. Looks worse because we had been gaining up until about 3 o'clock. Energy and financials are strong, but health care staples, utilities, weak industrials, and communication services dipping into the red. NASDAQ down four-tenths of 1%. Up next,

a look at which companies could be big winners and the losers as well. Off the back of rising interest rates, 10-year yield continues to move up 285. We hit past 290 today. We'll be right back. Today in The Big Picture, we're looking at the impact of rising rates with a 10-year approaching 2.9 percent on consumer stocks. Rising rates will hurt the consumer. Who wins in that environment? Companies with exposure to lower income consumers, for one, as people trade down and cut their household budgets. And those that cater to wealthy consumers who are more immune to rising rates. That's according to Randy Koenig of Jefferies. That's why he likes Planet Fitness and Five Below.

They're both value plays with mostly U.S. businesses. Because another problem with rising rates is the rising dollar, which hurts multinational earnings. Who loses? The middle income consumer companies. Think Gap or department stores. There's also the yield story. Consumer staple stocks especially have decent, steady dividends, which are less attractive when rates rise because bonds are the alternative. They pay higher yields. That's why the highest dividend payers work best. Kraft with nearly 4% yield.

Conagra, 3.5%. Campbell Soup. They're all low growth companies with high cash flow and extra high dividend payers. Those stocks are working really well right now, according to Ken Goldman of JP Morgan, for those reasons. The market isn't paying up for growth, which is why a lot of the steady staples are appealing. Hershey is another example. It's been soaring. Very domestic. So again, no worries about global growth and the stronger dollar, as opposed to a Mondelez, which is more exposed to emerging markets and Europe and is underperforming. When we come back, Goldman Sachs chief economist Jan Hatzius on how rising interest rates will impact another area of our economy, the housing market, that story, plus the latest on the Twitter saga and the plunge in Chinese Internet stocks.

When we take you inside the Market Zone. Session lows. We are now in the closing bell Market Zone, breaking down these crucial moments of the trading day. Today, we've got Goldman Sachs' Jan Hatzias, chief economist, on the impact of rising interest rates, specifically on housing. Leslie Picker on another big day for bank earnings. Bank of America, 4%. And Christina Partsenevelos on a rough day for Chinese Internet stocks. Just want to point out the Dow is down 160 points or so. So we have lost all the gains and then some. We're looking at some pretty broad weakness. The only sectors right now in the S&P 500 that remain positive, energy, oil prices are jumping and financials on that reaction to Bank of America and some strength in the regionals, utilities, industri industrials, health care all moving south.

Staples as well, the defensive names. And even technology has dipped into the red. The Nasdaq 100 down a third of 1%. Take a look at housing stocks under pressure again today as new data shows homebuilder sentiment dropped to a seven-month low as those higher mortgage rates keep going up. But Goldman Sachs is out with a note today saying that while a significant increase in mortgage rates has historically weighed substantially on housing, the extreme supply demand imbalance in today's market will likely dampen the hit on housing activity. Joining us now, Jan Hatsias, Goldman Sachs chief economist.

So, Jan, what do you expect as far as the housing market outlook over the next year? We are expecting basically a sideways move in residential investment because, as you said, as you summarized, the supply-demand imbalance is so extreme that we think there is only going to be a relatively modest hit to activity in the housing market. We did, however, downgrade our expectations for home price growth. This year should still be pretty strong, still have cumulatively 10 percent, partly because there's just so much momentum there, but then have a slowdown to sort of low single digits mid next year. So is this going to be a challenge for the Fed because of the supply issues? And housing is one of the primary mechanisms they weaken demand in the overall economy by raising interest rates. Yeah, I mean, I think it is a challenge in the sense that you're going to get less of an impact through that channel.

I do think there are some other factors that will probably bring growth down pretty significantly. I mean, the fiscal drag in particular, you need to take into account in addition to whatever monetary drag you see. But yes, housing taken by itself, I think it's going to be less responsive than normal. So what do you expect broadly then for the consumer, Jan, as we go out through the remainder of the year? If housing demand holds up a little bit better this time, what does that say overall? Well, I think consumer spending, again, slow growth. I think we will still see positive numbers, but trend or somewhere around trend and sort of the high ones with obviously some ups and downs. We've been seeing a rebound in services basically because of the rebound from Omicron.

That's going to fade. We're seeing, you know, some increases in infections again. I don't think there's going to be a large impact on activity, but generally I think it's going to be a pretty sluggish environment. You don't expect a recession this year. And I think I've been increasing the odds that it happens next year. Are we still in the 30 percent or so range? Yeah. I mean, our probability, you know, this is a judgmental probability, is, you know, 35 percent cumulatively of a recession starting over the next couple of years, which is higher than the unconditional, just average frequency of recessions. But I think there is still

a narrow path to a soft landing. It's going to be hard to do because history says once the labor market is overheated, it gets harder for the Fed to pull off a soft landing. But as the economy slows, I think that would improve the probability. I mean, slower growth now would actually be good, I think, for the prospects that we don't have a recession. So ultimately, when it comes to the Fed and the market's big question, which way does the Fed have the bigger potential to surprise? On the hawkish side or on the dovish side, given the market is now positioning for so many interest rate increases and shrinking the balance sheet? I mean, I do think there are upside and downside risks. I think the next couple of meetings,

you know, very likely we're going to get 50 basis point hikes. Beyond that, we do have a slowdown in the pace of hikes later in the year. I think that's basically because at that point, I think inflation is going to be somewhat lower. We're going to get a benefit in the good sector, at least in terms of year on year changes. Growth, I think, is going to get a benefit in the good sector, at least in terms of year-on-year changes. Growth, I think, is going to be slower. But it's certainly possible that they go in 50 basis point steps for longer. But you have to balance that against the risk of a sharper slowdown. And there is a meaningful risk that you do see a recession, even though that's not our baseline case. Jan Hatsias, thank you for your latest thoughts and for joining us here in the Market Zone of Goldman Sachs.

It was a tale of two financial stocks today. Bank of America, one of the best performers in the S&P after beating Wall Street's earnings estimates. A strong consumer lending was an offset to a 35 percent drop in investment banking fees there. Meanwhile, Charles Schwab is the biggest decliner in the benchmark index. Look at it, down now 10.5%. The brokerage missing on both the top and bottom lines due to a slowdown in trading activity. Leslie Picker joining us. Leslie, why is it that volatility from Q1 was largely a positive for the big banks, not so much for Schwab or the brokerages? This is a big surprise.

Yeah, Schwab suffering tremendously today, largely due to the fact that retail trading has abated over the quarter, especially, remember back to a year ago, that was the whole meme stock frenzy. That was GameStop and other things that really took retail trading by storm. So when you look at kind of the comparables from a year ago, Schwab saw a 22% decline in average trades during the quarter. It also happened to miss analyst estimates, which caused the stock to slump. On the other hand, this isn't so much the case for Bank of America, which generates the largest proportion of its revenue from consumer. However, for some of these more

Wall Street-oriented bank institutional investors that transact with these banks did remain active in the quarter, at least more so than analysts expected them to. That was especially true within FIC, which is fixed income currencies and commodities, at firms like Goldman Sachs and equities at places like Morgan Stanley. But it seems like overall, now that we've had most of the big banks reporting, Leslie, the message is one of uncertainty, right, when it comes to the outlook on the economy and what that's going to do to their business. That's absolutely right.

I think some of the big moves today are largely in response to what you're seeing with treasuries today and the move higher there. That's been a tailwind for Bank of America, which did produce some pretty strong results today relative to some of their peers. But they are also helped by some macro factors as well. All of the big banks are in the red for the year. And that is largely due to the uncertainty that you're pointing to,

this idea that historically they have been helped in a rising interest rate environment. It's more profitable for kind of the bread and butter of their business. However, there's this concern, and you and Jan were just talking about this, this concern that a recession potentially looms, and that would be bad for banking as a whole. All the diversity within their businesses, a recession would be a net negative for them. Yeah, be careful what you wish for on those higher rates for bank investors, I guess.

Although today they're working. JPM, American Express, and Goldman adding the most to the Dow. Leslie, thank you. I want to hit Twitter as well. Big winner today after the social media company's board unanimously adopted a poison pill plan on Friday to help stymie Elon Musk's $43 billion takeover offer. The stock is up almost 7 percent. Musk firing back, of course, over the weekend, tweeting when former CEO and co-founder Jack Dorsey's term expires next month, the Twitter board collectively owns almost no shares. Objectively, their economic interests are simply not aligned with shareholders. Julia Borsten joins us now. And then there was Julia, the tease of the tender offer.

What are Musk's options at this point? Well, look, Musk has many options. He also has the option of deciding that with a poison pill, all of this is just too much of a hassle and he could just sell his shares and walk away, though based on his tweets over the weekend and today, that does seem unlikely. So he has three major options. The first one, and it seems like the most obvious one, would be to line up a financing partner and to lay out his plan in conjunction with a financing partner to the board. The second major option would be to leverage his stakes in Tesla and SpaceX. So potentially collateralize some of those stakes in order, some of that stock in order to put together a financial plan to continue this buyout. And then, of course,

he can challenge the poison pill in court sarah what about jack dorsey so so he's stepping off the board he's the co-founder and it sounds like he i mean he's criticizing the board as well on this point could could we see he him teaming up with elon musk to buy this company where where does where does that put him yet another wild card in this very complex situation, Sarah. So Jack Dorsey did send a tweet that indicated that on some of these issues, he does agree with Elon Musk. And he explained in one of these tweets what went down, why he doesn't control the company. And he pointed out that when he was fired in 2008 and made share, the board took most of my shares away.

He says, I gave 1% of the company back to the employee pool in 2015. So he's explaining why he doesn't have controlling, a controlling vote in this company, but also sort of pointing fingers at the board for preventing him from owning more of Twitter. So it'll be interesting to see as they tweet at each other, this, this drama is of course, all playing out on Twitter, how he supports Musk's argument. But in the meantime, Sarah, you can bet that the board is looking for another buyer to pay more for Twitter. Absolutely. Julia, keep us posted. Thank you. Shares of Didi plunging after the Chinese ride hailing company reported a nearly 13 percent drop in fourth quarter revenue and announced shareholders will vote next month on whether to delist from the New York Stock Exchange. The news putting pressure on the rest of Chinese Internet stocks today.

Christina Partsenevelis joins us. Didi, Christina, plans to delist in the U.S. before applying for home listing. What does that tell us about management? This was always the fear for U.S. investors. Yeah, especially shareholders that own Didi right now. So Didi has gone ahead. They're going to have this meeting. They're going to delist from the United States.

That's the goal. And then they're going to wait it out during a dark period before even listing in Hong Kong. And so that's the concerning part. Why are they doing this so quickly? It shows that the relationship is still fraught with regulators in China, that they failed to comply or reach an agreement, I should say, going forward. And DED is not actually the only company to do this. Just about four days ago, Sohu.com, which is a Chinese Internet provider,

they too said that they're delisting from the Nasdaq. They've been on the Nasdaq since early 2000, I think actually 2000. So you can see the share price dropping over 4%. And this has weighed negatively on the sector as a whole. Take, for example, K-Web. That's another popular one down eight out of the last nine sessions. And Bilibili, that stock is on a six month losing streak. It's worst losing streak since it listed in 2018 here in the United States. Christina, thank you. Christina Portanello, it's been a rough ride. We are seeing some new 52-week highs right now. I would just point out Dollar General, the dollar stores continue to ride high. Kinder Morgan as well as oil prices continue to shoot up

and energy remains the top performing sector. Rivian's rough ride continues today. Shares of the EV maker down sharply and plunged more than 50% now since going public back in November. The company's CEO is hoping to restore investor confidence by opening up the doors at its plant to reporters. Phil LaVoe joins us. And Phil, what is the biggest issue weighing on this stock right now? There was so much hope that this would be the next Tesla. Remember when it went public?

Sure. And a lot of analysts still believe that this could be the one company that could ultimately challenge Tesla as an EV automaker. But the problem here, Sarah, is this is a show-me stock. What do I mean by that? They have got to show that they have got the production challenges behind them. Now, in Q1, they built just over 2,500 vehicles, a noticeable increase from the fourth quarter. And the build rate is increasing.

We saw that for ourselves when we went to the plant in central Illinois last week. And they've begun ramping up production of the R1S SUV. But here's the problem. We won't know exactly where they are in terms of their production at least until the end of the quarter or until they report their Q1 results, which is going to be much later in May, late May, early June. So to a certain extent, this is a case where the company is improving its production. And we saw and we talked with RJ Scaringe, the CEO. He said, we're improving. But until you can give actual numbers, I think you're going to have a number of investors who are going to say, I'm on the sidelines for a while. Like so many EV stocks, Phil, that's what I'm wondering is where where Rivian stacks up with that group, which clearly the market is in no mood for for future profits.

Right. Or to pay up for growth companies. Where does Rivian fit in with some of with some of those other companies? Because it was always considered sort of a premium bet for investors because it has the Amazon back. Right. Sure. And that's a nice backstop in terms of having 100,000 orders for an electric delivery van. By the way, we saw some of those on the assembly line when we were at the plant in central Illinois. So they are making those vehicles and they're going to start deliveries there. But if you're comparing them with Lucid or with Fisker, some of the other EV startups, they've got 83,000 reservations. So they have a much bigger reservation pool, if you will, order bank, than Lucid, than Fisker. The problem is they've got a lot of demand. They just got to get the

ramp up in production. Phil LeBeau. Phil, thank you on the Rivian story. Take a look at the major averages. We've been losing steam pretty much all hour into the close. We're just off session lows, got down to as low as 170 or so on the Dow, down about 120. Dragged by the Nasdaq right now as Treasury yields continue to climb down 84. So we're actually making back a little bit of ground. Let's bring in Peter Bookvar, Bleakley Advisory Group chief investment officer. As long as rates are rising, Peter, is there a path higher for stocks? I think it's a tough one. I think when you look at what the Fed wants to do and what the bond market on the short end is priced in, combined with a rather aggressive path with their balance sheet, the Fed is literally slamming on the brakes.

I don't think they've ever tightened this aggressively in such a short period of time. So not only is that going to have implications for multiples, but it's obviously going to have an economic impact and what that means for earnings. So I think it's a tough road for investors while the Fed is going through this. But you do always wonder of how much is already priced in. I'm looking at an NVIDIA, which is strong today. It's almost down 40 percent from the high. So is that the right price for one of these high growth, but also sort of mega cap technology stocks in this rising rate environment? How do you know when it's enough enough is enough? It's a great question, and it's really tough to answer. If we look at 2000 to 2002 as a guide, and I'm not talking about the junkie stocks that went down 90 percent. Even the Microsoft's,

the Cisco's, the Intel's, they went down more than 50 percent or 60 percent. So if we're in this bear market that has been triggered by the REIT move and monetary policy, there's still more pain to be had. And we also have to put in the context of how well a lot of these stocks have already done over the past ten years. You've also liked gold which actually has had a pretty strong run even with the U. S. dollar rising what what why is this a why is

this a good environment for gold. Well amazingly I thought twenty twenty one was going to be a great environment for gold- with the rise in inflation and it was not. Because people thought that the fed would be able to contain

inflation. This year it's apparent that they can't. And even in the face of. A dollar that is rallied against some currencies. And also- the dollar the real rates that have that have shrunk. Gold trades great. And I think that has also a lot to do with sort of a safe haven status. And also in response to what the sanctions on the Bank of Russia did, because it could mean diversification out of U.S. Treasuries from a central bank perspective and owning more gold as it's no one's liability and it can't be confiscated. I know you are watching that theme and you watch the Treasury capital data, the inflows there, which we will. Peter, thank you. We'll leave it there completely. Peter Buchvar. As we head into the close, we're looking at the fourth down day

in the last five for the Dow. Couldn't hold on to the gains earlier in the session. You still got strength in the financials. Goldman Sachs is the biggest positive contributor to the Dow. Home Depot is the biggest drag right now. Housing getting hurt again on the back of weak home builder sentiment. The S&P 500 is lower. Most sectors are lower, though you do have positive areas in the market. In some of those growthier parts of the market, semiconductors are holding on to their gains here into the close. I mentioned NVIDIA, but the whole group is actually doing OK. And information technology just popped into the green. You've got some strength, as I mentioned, in the semis and in some of the other tech names

as well, the mega caps. Consumer discretionary also doing OK, thanks in large part to Tesla, which is up about 2 percent. But some strength in the hotel names and the automakers as well. Financials and energy are your other two positive sectors right now. Energy stocks doing well, continuing to make new highs here on the back of rising crude oil prices. Everyone in the energy sector is higher except for Williams Companies. Valero is up 9.4 percent, one of the biggest winners in that group today. Health care is a loser. So are staples, utilities. But again, that's been sort of the center of the action. Just in the last few moments or so, the Nasdaq 100 ticking into positive territory. Some buying here into the close and the Dow comes way off its lows. We've seen a dramatic swing just in

the last, I don't know, 10 minutes or so. Down only 51 points here on the Dow. Still going out with a decline, but look at the S&P hugging the flat line. So we had a sharp sell-off and then a nice little rally there into the close. Nothing extreme, but that's sort of how it's been. Indecision kind of day with the path of least resistance

going down. That does it for me.