Closing Bell - Closing Bell: Stocks go out near the lows, Elon Musk declines Twitter seat 04/11/22

Episode Date: April 11, 2022

The major averages closed near session lows after losing steam throughout the session. Fundstrat’s Tom Lee weighs in on the pullback, and whether he thinks the market has already bottomed. Investors Kyle Bass and Mark Mobius discuss the Chinese market and opportunities abroad. And a former Twitter board member gives his take on Elon Musk’s decision to not join Twitter’s board, and why it’s a “great thing” to have Musk as an investor regardless.

Thank you, Tyler and Kelly. Always ready. Stocks are in the red. NASDAQ is falling hard, down 1.5%. The most important hour of trading starts right now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Here's where we start the week. Holiday shortened trading week, down 200 on the Dow. Not too far off the lows. The S&P down about 1%. The NASDAQ down even harder, down 1.5%. And small caps hanging in there. This comes off of a down week. The only sectors positive right now are industrials and materials. Energy is the weakest link as oil prices slide further below $100 a barrel. And check out mega cap tech names, something to watch into the close. The FAANGs are all lower. Microsoft, we're including that in FAANG, down more than 3%,

currently the worst performer in the Dow. That's why the tech heavy index is weighing on the overall stock market. Remember, the Nasdaq Composite was down 4% last week. So we are adding to those declines and it's all about higher interest rates. The 10-year yield going to 275. First time we've seen that since back in 2019. We've got a great lineup to help you navigate all this market volatility, including Tom Lee from Fundstrat, Kyle Bass from Hayman Capital Management, Mark Mobius from Mobius Capital Partners. Plus, we will talk to former Twitter board member Mike McHugh about Elon Musk's decision to now not join that company's board. Let's get straight to the market, though, as stocks fall to start the week after the major averages all logged losses last week.

Joining us now is Tom Lee of Fundstrat Advisors. And, Tom, just remind us of your position. You're not wildly bullish, but you are more bullish than the average CNBC guest that we have on lately on stocks, right? Yeah, that's correct. I think the street and our institutional investor clients have become outright bearish for understandable reasons, because there's headwinds. And I think the one key difference we have is that we think a lot of bad news is priced in. And while the risks of recession are really elevated, I think there's some leading indicators that are telling us that in some ways some of the worst of the inflation

is behind us. And then if that's true, the Fed doesn't have to be potentially as aggressive as futures markets are pricing. And yet yields continue to go up. I mentioned 275 on the 10-year. So if what you were saying is true, wouldn't we need that to stop for the NASDAQ and technology to work? Well, actually, I'd say that if the long end was actually falling, I think that would point to elevated risk of recession. So the fact that long end rates are actually rising and

the yield curve steepening in some ways is actually showing us that the narrative is probably shifting towards a growth scare, but that we're going to emerge out of this period. I don't know when we get clarity. And if that's the case, I mean, you know, even a 3% 10-year, even though it is much higher than where it was two years ago, it's still a, you know, you're paying a 33 PE to own a 10-year bond. So I think a 16 PE S&P 500 is still a pretty attractive relative value. I guess my point was that as you continue to see these rising rates and rising treasury yields, then you're going to have people worrying about valuations, especially on tech stocks, which are discounted into the future. And mega cap tech, which I think, Tom, is one of your favorite areas of the market,

is under a lot of pressure today. That's right. You know, we for the really for the past year and a half, we've been more on the energy overweight and we think it's been structured under own camp. But if we can avoid a recession scare and not have a recession, which is, again, our base case, we think from today going forward over the next six to nine months, large cap tech, you know, FANG are going to really look attractive because, number one, if you're worried about growth, these companies can grow faster than GDP. Their multiples have come in. And I think that from a margin perspective, they're less vulnerable to some of the supply chain and inflationary pressures on labor that

are actually hurting other companies. So I think they haven't been great, but we think in the next six to nine months, they could actually be relative outperformers. So it sounds like the whole view is predicated on the idea that inflation has peaked or is peaking and will come down materially? Do you think the street is just too worried about more long lasting, higher levels of inflation and what that's going to have to mean for the Fed? Yes. I mean, we are in a really uncertain transition because we're in the economies in the middle of a pretty big inflation surge. And now there's supply disruptions associated with the war. And now middle of a pretty big inflation surge, and now there's supply disruptions associated with the war, and now we have a tight labor market, and now we have a Fed that's become quite hawkish. So I understand why investors are nervous and why everyone's dialed

down their constructive views. And I think one of the things that we have to keep in mind is that the market is doing a lot of the work for the Fed. As you point out, rates have already risen. When we look at wealth effect, if you just look at the four largest holdings for U.S. households, they're down somewhere between 8% and 15%. That's about $15 trillion of lost household equity. That's already going to slow the economy. We're already seeing gasoline, higher prices affect credit card spending data. So I think in some ways, the Fed, who's talking tough, the market's already doing a lot of work for the Fed. And if that's true, then we can be a little half full, meaning the Fed may not have to do nine hikes this year. So would you buy the cyclical groups as well, Tom, that have really corrected on this notion

that the economy is going to slow down, everything from autos to airlines to transports? Or would you stick with the just big tech? Our recommended strategy is beef, which is, you know, Bitcoin and Bitcoin equities, energy and resources, which has been a standout, and then FANG, which is large cap tech. I think the cyclicals have gotten pretty reasonably priced because they've been under pressure, a lot of them since for more than a year now. And if the supply chain issues are easing, and once China gets through its zero COVID lockdown, which we're not there yet, it is a case for a growth resilience coming. So I think in the first half, it's still a treacherous period. I just would

caution any of the viewers not to get too structurally bearish because at the moment, consensus thinks, you know, we're going to have a recession. In fact, we did a Twitter survey and I think 53 percent thought the market was going to be down 10 percent or crash over the next six months. So so well, we did just see the yield curve invert. I know it's un-inverted, but that is a classic tell. Yes. Yeah, you don't want to ignore the sign from an inverted yield curve. I mean, it just shows you there's stress,

whether it's building in the credit markets or future credit tightening or economic weakness. It's something we have to respect. But fortunately, the curve is steepening again. So, it's a short-lived growth scare hopefully. Tom Lee we thank you for coming on and sharing your your perspective it's a little different Tom Lee from Bunstrat. After the break Musk declines to take a seat the world's richest man changing his tune on Twitter deciding now not to join the board after he became the company's

largest shareholder last week. Up next we will speak with former Twitter board member Mike McHugh about that news and the rollercoaster week for the company and its shareholders. You're watching Closing Bell on CNBC. Just took another little leg lower. We're down 251 on the Dow. Welcome back. Check out today's stealth mover, pharma company Viru, surging as much as 200% in the session today.

A drug maker saying phase three trials of its oral COVID-19 treatment showed a, quote, statistically significant 55 percent reduction in deaths for moderate to severe hospitalized patients. The company says it does plan to meet with the FDA to discuss emergency use authorization. And just like that, a billion dollar company was born. Let's turn to the big corporate drama of the day. Elon Musk, again, this time no longer joining Twitter's board. Musk's appointment was supposed to become official this past Saturday. But according to CEO Parag Agrawal, Musk declined to join that same morning.

Twitter slid on the back of the announcement, but has since recovered and is actually now outperforming the market. It's up almost 3 percent. Joining us now, Mike McHugh, Flipboard CEO and former Twitter board member and CNBC's own Julia Boorstin, who covers the company. Mike, I know you haven't been on the Twitter board for about 10 years or so, but as a former insider here,

I'm curious how you perceive Musk's move now to not join the board and whether that's actually worse for Twitter. Well, thanks for having me, Sarah. You know, I would say that this is still a great thing for Twitter. You know, it's I mean, having your largest shareholder be one of your very best users, that's a very healthy thing. It's a great thing for Twitter still. You know, whether he's on the board or not, he's still going to have just as much of an impact on both Twitter as well as the product. It's a great thing for Twitter, Julia. What do you think?

His tweets are not so friendly about Twitter. Well, look, I think we have to acknowledge something that the CEO said in the tweet when he announced the news that Musk was not going to be joining the board, which is that they have to be aware of distractions and they have to be able to keep working despite those many distractions. There is no doubt that what is going on right now is a major distraction, not only for the people working at the company, but also potentially for investors. I mean, you have to look at this company as one that has undergone so many changes. They have lost the CEO of Jack Dorsey. They have this new CEO who investors really are unfamiliar with. And they have a company that's trying to dramatically diversify its revenue streams and expand,

not only adding more users, but also adding different ways to make money. So there is a lot going on right now. It's already battled with Elliott as an activist investor. And now they're looking at a potential other activist investor in Elon Musk, who is in his tweets kind of directing the conversation about the company right now. So I do think there is this major risk of distraction. Mike, what is the problem at Twitter? Because in some ways it's facing the same issues that it did back when you were on the board, which is an issue of monetization and growing users. What is the issue there? Well, you know, I think it's important to put things in perspective. I mean, I completely agree with Julia. You know, the point about avoiding distractions is very

important. And it's always been the case at Twitter. At Twitter's constantly, there's always somebody around who thinks that they, you know, have a great idea for what Twitter should do next. And, you know, Twitter is able to roll with that. And, you know, I think that Twitter is more relevant now than it has been in another year, a year ago or 10 years ago. Elon tweeted out that, you know, hey, Justin Bieber hasn't tweeted anything recently. Is Twitter dead? Actually, I think right now it's a great signal that, you know, people find turn to Twitter every single day to find out what's going on in Ukraine. Zelensky is tweeting while he's being attacked. I mean, that's fundamentally better than it was just 10 years ago when Justin beat crime, you know, thing that people were coming to Twitter for. So I think as long as Twitter

stays focused on the fundamentals, continues to, you know, become this, you know, quality place where people can find out what's going on right now, people are conversing in this town square in a healthy, vibrant, non-toxic way, then I think Twitter is going to be in great shape and will continue to grow. Well, it's not healthy. It's very toxic toxic i don't know what the third thing you said is but but there's a lot of negativity and trolls and and fake users and everything mike but i i actually wanted to get your thoughts specifically on jack dorsey and and what his what where this puts him right now he's founder former ceo on the board and an elon musk? Is he going to come in between the CEO and the company's now largest shareholder? Well, you know, I don't know what Jack and Elon are talking about. I mean,

Jack is very first principles based guy. He's trying to create this town square can talk. I think he's done a lot of great work to reduce the trolls and the toxicity. But I agree with you. That is the existential threat to Twitter or any platform like Twitter is the trolls and the toxicity. And that, you know, I think is where there's going to need to continue to focus by Twitter on making sure that that environment for those conversations is a healthy one. And that means that sometimes people are going to get kicked off of Twitter. And that's a good thing. That's an OK thing. So I think it's really important that that the

company stays focused on its core mission and continues to execute independent of all of the drama swirling around it, which, you know, there's always drama swirling around Twitter. New distractions. So, Julia, would this company company better off in private hands? A lot of people are wondering if Elon Musk would just take it private right now or hostile takeover because now he's not committed to the cap on how many shares he can own. Does that solve anything? What are you hearing? Well, it depends what the outcome is, right, Sarah? So yes, there is speculation now that now that Elon Musk can buy as many shares as he wants, he's no longer capped at 14.9% that he could either team up with a private equity partner or he could really force the sale or taking private of this company.

I mean, I think what really distinguishes Twitter from the likes of a Facebook or a Snap is the fact that it is not a controlled company. You do not have a founder in charge who controls enough shares to be able to determine what happens with the company. So I do think that there will be a lot of speculation about whether we can see a sale of this company. And we're going to be very closely watching just how many shares Elon Musk buys and whether or not he teams up with any like-minded players. we cannot forget what Elliott did in terms of putting pressure and forcing change at this company. But activist investors usually want to join the board. That's why this is all so strange. Mike, Julia, we've got to leave it there.

Thank you. Mike McHugh, former Twitter board member. Julia Borsten. Twitter shares are up more than 3%. They're outperforming all of tech. They're up 23 and almost a half percent for the month so far. Let's show you what's happening with the broader market right now, because we are in sell-off mode and those losses are picking up some steam here into the close.

Up 265, down 265 on the Dow. S&P down one and a quarter percent right now. The only sector that remains in positive territory, industrials. Materials and financials just went red. Energy is the biggest loser. Technology also down 2 percent. Coming up much more on the rough start to the week when we are joined by Hayman Capital Management founder, Kyle Bass.

And then after the break, NVIDIA shares are slumping today, now down 20% in just the past week. Mike Santoli will be here to look at the long-term levels to watch and the street sentiment in today's dashboard. We'll be right back. Take a look at NVIDIA plunging today after getting a downgrade from bared to neutral. The firm's saying it believes cancellations for NVIDIA's graphic processing units are beginning to pick up, driven in part by a slowdown in consumer demand.

Mike Santoli here with a closer look at NVIDIA for his dashboard today, which has been hit pretty hard lately. It has, Sarah. In fact, this downgrade really is kind of riding along on this pullback, down by more than a third. But this chart shows over the last five years just how important NVIDIA has been as a contributor to the semiconductor's performance. It's still above half a trillion dollars in market cap, even down 40 percent from its peak. AMD, that stock looks almost exactly like NVIDIA here. So those two stocks really responsible for almost all the upside in this group. And they're both together by 15% of the sector, or at least of this ETF. Now, take a look at how the street is set up. Even

after this downgrade today, more than 80% of analysts still recommending this stock. So it's kind of a stubborn, bullish consensus right here. What I would also point out is the target price, well above 300, around 320, shows about 50% upside to the current price. That's usually kind of vulnerable to downgrade. It shows you that the target prices have not really adjusted to where the stock has gone. And again, all we're doing is handing back some of the massive outperformance of Nvidia. Here's where the valuation sets up right now, like an awful lot of growth names. What's gone on is it's about 40 times forward earnings, and it's essentially given back some of the extra premium it had built up through the pandemic. That takes you back to the pandemic. This is where the rest of Semi's trade, because there's so many cheap ones out there,

Sarah. There's Intel, there's Qualcomm, there's Broadcom. They all are very much value names, Micron. And it's really just AMD and NVIDIA that are the risk appetite leaders. So we'll see where they settle out. It seems like maybe the street is slowly trying to adjust its targets. They're the growthiest of the growth. And by the way, still 25 percent earnings growth this year, maybe 18 percent next year. You can argue it's worth this multiple. Well, that's what I was going to ask, because earnings season is coming up. And this is the setup suggests if they if they really are growing at those kind of levels that it may be a good buy.

Yes. As long as they don't show this sort of real downshift in consumer demand. And if the big picture story does not really have any holes in it when they do report. Mike, thank you. We'll see in the market zone. Up next, Hayman Capital Management founder Kyle Bass on whether he thinks the recession is on the horizon and how to protect your portfolio in this volatile environment. We'll be right back. Session lows, Dow's down now 300 points or so. The Nasdaq, again, getting hit the hardest as the tech heavy index down about 1.8 percent. Tech also weighing on the S&P 500, which is down 1.4 percent.

But every sector is red now except for industrials, energy and tech at the bottom of the pile, but weakening into the close as we keep an eye on rates, which continue to move higher. And fears of recession are making their way through Wall Street as well. Economists say there's a 25 percent chance of recession this year, rising to a 40 percent chance over the next 24 months. That's according to a new poll from Reuters. Let's bring in Kyle Bass, Hayman Capital Management founder. Kyle, how do you think the market is processing all of these shocks and tightening risks? And where do you think it goes? You know, Sarah, I don't believe that we're going to be able to see the tightening cycle that I think is being telegraphed by the Fed.

I think that when you look at the amount of on-balance sheet obligations we have as a sovereign and in the corporate sector, I don't think that the delta, the rate of change from the lows to where people, let's say Wall Street economists are saying the neutral rate is, I don't think we get there. As you've already seen, the forward market's already priced this in and we already have an inverted curve. So I think that the chance of a shallow recession for the U.S. in the next 12 months is pretty high, but I don't expect it to be too deep given all the inputs today. So then would you be a buyer of stocks on that view? You know, I think not yet. I think that you're going to see things go from bad to worse

in the Ukraine with Putin. And I think you're going to see China move on Taiwan or invade Taiwan in the next 18 months. So I would just sit on the sidelines for a while. Or, you know, I guess

if what I'm looking to do is protect my portfolio, I sell all the Chinese stocks. If I was institutionally allocated, I would if what I'm looking to do is protect my portfolio, I sell all the Chinese stocks. If I was institutionally allocated, I would I would remove all of my investments from China. What Putin just taught us is that entire countries should be avoided if they're being run by despotic autocrats. But that's not new for you. You felt that way for a long time and you've even bet against china in your in your years in hedge fund world right against the currency against the hong kong dollar so you've had this view for a really long time some people think china's even appealing now because it's going

to have to ease a lot given it's dealing with this coveted lockdown sure i bet those same people were long russia before putin invaded i think it's important to note that the global norms and the quote, some peoples of the world were institutionally allocated regardless of, let's say, the underlying factors of each investment. So I would say that that if everyone institutional investors, investments in Russia just got taken to zero, now they're kind of on the knife's edge with China. So while I've shared that, I've had that view for a long time. I think that in the end, we're going to end up being right about this. You think the U.S. will go through sanctions in a way that it has done for Russia with China if it invades Taiwan? It's a much bigger economy. We're much closer linked.

It seems a lot more complicated to do. Yeah, I don't think that the size of the economy dictates the response for, let's just say, a merciless killings in another country. So yes, I think that the unthinkable has become at least a mainstream thought. And if you're a fiduciary, you better be worried about your allocation, given all of the inputs today. I think it's indefensible to be long anything in China. But we didn't even do sanctions. U.S. didn't even do secondary sanctions on China for dealing with Russia and still buying its oil and protecting its financial system, essentially. Yeah, you're right. I mean, every day we don't sanction Russia's energy sector. We give Putin at least $800 million a day. So the West continues to fund the Russian killing machine. And at some

point in time, Wall Street's going to at least put its greed aside and realize that there are better national security decisions to be made. And maybe that requires leadership at the top of the West. But I think at some point in time, we've got to cut the blood flow off to the tumor. So you hate China. And as a portfolio, do you want it out of the portfolio? Kyle, I also wanted to ask you about another one of your areas of expertise, actually, where you took your start turn, which was during the financial crisis, betting against the mortgage, right, of all the subprime mortgages. And you made a lot of money and you called it correctly ahead of everyone else, the housing crash. And I was just wondering if you see something

that rhymes here. Affordability rates are going very much. The wrong way mortgage rates are back above five percent prices are skyrocketing I know I know supply is a little different than it was then but I'm curious. Whether you see parallels. Yeah I think there

are a few things that are similar but I don't I don't think the same crisis is out there I think that- you're you made that you made the comment about supply. I think this is basically an asset this is basically an asset. This is an asset price surge that's generated by, you know, kind of the Fed taking its balance sheet

from four and a half trillion to almost nine trillion. We basically printed 40 percent more money than was in the system just two and a half years ago. So I'm a monetarist at heart. I believe we all know prices have moved up a lot more than the cpi says they have if you know in your own life uh so i think that uh this this lack of affordability is going to change many of the dynamics in the u.s as far as a population growth uh birth rate things like that that china has seen uh let's say far ahead of of what the u.s has seen but i what i think here uh is we're going to have a i think we'll have a shallow recession again given all the inputs today uh and

i think europe's gonna have a deeper recession and uh again i think china's uninvestable i'd like to leave my money in the us today got it we we appreciate the perspective thank you for joining me thanks as always Sarah. As always. Here's where we stand right now in the markets heading into the close. Still looking at a big sell-off in the market, down 367, so it's only picked up speed. S&P now down 1.5%, and the Nasdaq approaching a 2% decline. This is on top of the Nasdaq's 4% decline last week. Small caps also joined the sell-off, down a third of 1%. J.P. Morgan Chief Global Market Strategist Marko Kalanovic issuing a bullish call on emerging markets.

Coming up, investor Mark Mobius on the two parts of the world he thinks will outperform. Welcome back. We want to extend a big welcome to the newest member of the Closing Bell family, our producer Laura Hinchey, giving birth to a beautiful baby girl Friday evening. The name, Brooke Melanie Hinchy. Big congratulations to Laura and her husband, Michael, who apparently made it to the hospital just in time. Brooke was in a big rush to meet everybody. Came out fast.

And perhaps most excited by Brooke's arrival is big brother, James. So sweet. And, of course, we are all excited to meet her one day as well. Laura usually produces this segment of the show, so hopefully she is watching right now. Laura, we miss you. Congratulations. Love you and see you soon. When we come back, banks outperforming the broader market ahead of this week's earnings.

JP Morgan out tomorrow. Up next in the market zone, a top analyst on which names investors should be betting on ahead of these results. As we head to break, check out some of today names investors should be betting on ahead of these results. As we head to break, check out some of today's top search tickers on CNBC.com. Ten-year yield right on top, surging again, presenting a headwind to stocks right now. Dow is down 375. Also in the top five, AT&T, which is surging post-spinoff of those media assets.

Twitter, which is outperforming NVIDIA and Tesla. And coming in at number six is Warner Brothers Discovery, dipping lower in the first day of trading following the merger of the two media giants. We'll be right back on Closing Bell. Near the lows of the day, we are now in the Closing Bell markets. And welcome, everyone. CNBC Senior Markets Commentator Mike Santoli here, as always, to break down these crucial moments of the trading day. Plus, investor Mark Mobius is here on which emerging market he is most bullish on right now.

And CNBC.com's Laura Kolodny on Tesla, which is falling hard today. Overall, stocks are selling off into the close and we are near session lows. The Nasdaq's down around 2 percent or so. Mike, higher interest rates, is that the prevailing why we're seeing such a sharp decline that's deteriorated through this hour? Yeah, I mean, new highs in the long end of the Treasury curve, definitely a pressure point. That's been for the while. There's some apprehension ahead of tomorrow's inflation data, of course. It's related to the yield move.

And in this case, I feel like the S&P 500 did not do enough to sort of prove that it got escape velocity. Now we're at another one of these short-term make-or-break levels. As we speak, the index kind of breaking the 50-day average. That being said, for a day when the NASDAQ 100 is down 2%, semis are down around 2%, the energy sector down 2%, the average stock is kind of hanging in there. So this is one of those days where under the surface, it's slightly less negative than at the index level. But if you're trading the S&P, maybe it doesn't help you that much. Mike, I do think we should hit oil because it's below $95 for WTI.

Brent is below $100. Energy stocks, as you say, are lower. China appears to be a big factor here, a slowdown continuing to be priced in as the Shanghai cases go up. The indefinite lockdown, what that's going to do to the economy. Does that ripple over into U.S. stocks? Well, that is what's rippling over, certainly a little bit into the energy stocks. And I agree, you know, all these reports of, you know, oil sitting idle on ships off of China and all that type of thing is definitely weighing on sentiment for the commodity. What's interesting about the stocks is they never got the full upside benefit of the

Russian crude to the recent highs. So maybe there's a little more firmness under the surface in the stocks with a little pullback here. But yeah, I do think the general story of potential slowdown and disruption in China and this idea that it's just going to be maybe one thing that gets pulled out of the bull case. Sure, I see that. Although, on the other hand, you are talking about maybe that's the one area of the market where there's going to be some easing of policy happening. And again, today, Tesla down, Microsoft down on some analyst calls or some company specific events, as well as the NVIDIA downgrade. To me, that's the bigger weight than it is a macro story. Sure. Tesla, Microsoft, NVIDIA, so heavy in the major averages. There's the performance all getting down, getting hit 4 or 5 percent. Emerging markets to that point

have outperformed, underperformed the U.S. so far in 2022. J.P. Morgan's market strategist says it's time to switch focus away from U.S. stocks and towards EM, citing the firm's expectation that China will be easing monetary policy as soon as this month while the U.S. is raising interest rates. Joining us now is emerging markets investor Mark Mobius, founding partner at Mobius Capital Partners. Mark, always good to have you here. Is it bullish or bearish what's happening in China right now? Because they're going to have to ease to fight the slowdown or just this uncertainty over how long it lasts? I would say, generally speaking, it's bullish because the government is determined to push the market up. As you know, some of the high government officials have made positive comments about the market.

And that's usually a big signal for other investors in China to come in. But more importantly, they're pushing interest rates down in order to support the economy. So I would say we're in a relatively bullish situation. But there's so many other factors that are weighing on the market, such as the crackdown on the large cap stocks, you know, the big tech stocks, and also the whole situation about fears with Russia, collaboration of Chinese and Russian arms controls people. So I think that those are other things that are weighing on the market that's going to be a problem. Yeah, I mean, we saw 3 percent declines in Chinese stocks overnight

and Hong Kong as well. Mark, what about what we just heard percent declines in Chinese stocks overnight and Hong Kong as well. Mark, what about what we just heard from Kyle Bass, who thinks there's a geopolitical risk for investors if they own Chinese stocks or China exposure? Because if China invades Taiwan in the next 18 months, as he says, and now he's granted a longtime China hawk, that that could be dangerous, given what we've just seen play out in Russia. I think Kyle's got a very good point. From a long-term point of view, if China continues to

move towards a more authoritarian state, it's very difficult to justify putting a lot of money into the market. But that may not happen. The situation that we see now may change. But very important is Taiwan, of course. I don't see China invading Taiwan within the next year or so. But of course, anything can happen. But this, I just don't see that happening because you've got Taiwan being very, very important to the U.S., to Japan, to Korea. And so it's very, very difficult to justify that happening. Should you be switching out of the U.S. and into emerging markets, Mark, given the underperformance so far in emerging markets this year? Do you see anything changing there? I wouldn't switch out of U.S. stocks that have a global footprint, particularly in emerging markets,

because a lot of U.S. stocks could be considered emerging market stocks because of the big sales they have in places like India, China, South Africa, South America and so forth. But I would say the most important areas which are interesting to us, at least, are Brazil, India and Taiwan. Those are the three areas that have the best bargains, as far as we're concerned, and have the best prospects for growth.

Brazil, India, and Taiwan. India, even though it's an energy importer and it gets hurt by these high oil prices? You must remember, the largest part of the Indian energy market is coal, unfortunately, polluting coal. But that is about 70, 80 percent of their power. So they're not that dependent upon imported oil.

It's important, but not that important. Mark Mobius, always good to check in with you and get your thoughts. Thank you for joining me. Thank you. In the market zone today, shares of Tesla under pressure after the Chinese electric vehicle maker NIO warned over the weekend that it is suspending production because covid restrictions in China are hurting its supply chain. NIO also raising prices for its SUVs because of soaring raw materials costs. That news spooking Tesla investors as well, since the company generates a large percentage of its

revenue from China and makes a lot of cars there. CNBC.com's Laura Kolodny joins us now. Laura, how seriously are the COVID restrictions impacting Tesla? Thanks for having me. I really appreciate it. Well, Tesla's production in Shanghai has been suspended for 14 days and counting. JL Warren Capital had a base case of another couple weeks of these kind of restrictive COVID measures in the area. And on top of that, you know, this could have sort of ripple effects throughout Tesla's business, because in some cases, you know, if one factory like in Fremont, California, is missing some parts and they need them,

they can have them shipped from Shanghai. We have yet to see exactly what the impact will be. We know it's serious. Last year, about half of Tesla's production of electric vehicles came out of China. So clearly a big impact there. Do you think it's something the street appreciates or understands, given some of the notes that you've seen lately? I think the understanding is becoming clearer as more news comes from Shanghai. You know, we're seeing people hollering out of their windows, you know, waiting for permission to get out and get groceries. It's pretty hard to ignore at this point.

Do you think that he's serious that he's going to get into the mining business, Elon, when it comes to the scarcity of some of these raw materials like lithium? Well, I have no reason to doubt that he wants to. But even if Tesla embarks on, you know, getting deeper into the extractive industries chain than it has been or has tried to be already, it's going to take four or five years before that makes a difference to their supply. They do like to be as vertically integrated as possible, but it's not always possible. Laura, good to check in with you.

Tesla's down almost 5% right now. Laura Kolodny from CNBC.com. NASDAQ down about 2% as we go into the close. Nine minutes to go. One tech name in the green, though, is Twitter. Speaking of Tesla, shares recovering after its CEO announced that Elon Musk will no longer be joining its board after becoming its top shareholder. Joining us now, Brent Thill from Jefferies. Brent, you weren't that excited about Elon joining the board.

You weren't excited about Twitter, that is. I would guess you're not that excited about the company now that he is not joining the board, although maybe you think an activist investor is what's needed here. What do you think? I actually think it's great for investors that he's not on the board. You know, when you look at the last weekend, he tweeted over 20 times about Twitter and converting their headquarters to a homeless shelter in San Francisco. I mean, some of this can be distracting and overwhelming for a board. And it's probably, you know, not what you would want as a board for a board member to do. So ultimately, now you have a situation where he can bring his stake higher. We don't know if he will, but we think he could

bring his stake higher. And secondarily, he can voice his opinion. And there's a lot of great things that he's saying that they should do. I don't think they should convert the headquarters. But when you look at ultimately what he can say and help provide that influence, I think that's actually a positive sign. And that's why the stock's up. I think investors are perceiving this to be more positive that he's in his position than actually an active board member. So I think it was even more last week. Brent Brent last week was one of the best weeks in history for Twitter when he was supposedly joining the board. Well, I think the stock moved on mainly on his investment. It didn't move on his board seat.

So it moved after that and it obviously helped. But I think this investment obviously helped catalyze the shares. So I think, look, in my opinion, I think it's better to have him outside the boardroom for a lot of reasons. And ultimately, I think they're going to make the right decision as a team with him involved. And look, you've got a new CEO in. There's cast for change. I mentioned this last week. The advertisers we speak with have seen little innovation on Twitter in the last decade.

So when you see the innovation that's happening at Snap and other platforms we cover, they have to pick up the pace. And ultimately, I think ultimately what he's saying is you got to pick up the pace, let's get going, and they're capable of doing more. So I think it's a good outcome. And, you know, again, I think it's, and we haven't seen it fundamentally yet. This is all talk, right? This is all about the future game plan. Nothing to do with the current state of business. Well, to that point, Mike, just what is being priced in here? How do you look at the new re-rating for Twitter? It's difficult really to parse it out because, first of all, this is a stock that traded in the last two years as high as 77 and as low as 25 pre-Elon Musk's investment. At the eve of us

knowing about that investment, it was just under 40. So this kind of moves based on is Twitter going in the right direction or wrong direction on user growth and monetization? It's been the long-term story for Twitter. I think there's a wide range of outcomes, one being that he'll just be kind of a self-interested gadfly wanting to try and pressure the company. Yes, he has a 9% stake, but does he really care if he maximizes shareholder value of that from this price onward? I'm not sure about that. Getting him on the board, the upside case for that seemed to be one of those, you know, keep your friends close and your enemies closer. He might have been constrained on the board and he couldn't buy that much.

And now that's closer. He might have been constrained on the board and he couldn't buy that much. And now that's gone. So it's very difficult to say exactly what people are thinking. You know, sort of the wisdom of Krause move on this, except that, you know, as I said, this stock has has traded way above and way below this, even absent his influence. Yeah, there's the opposite take. We got to leave it there. We got to go. We've got a big sell off here. Brent, thank you. Brent Phil, as we see the Dow down 432 points, it's been an ugly final hour of trading here. Microsoft is the biggest weight, taking 76 points off the Dow. UnitedHealth, which has been a star lately, taking 57 points. Only four Dow stocks remain positive. In fact, Travelers, Verizon, 3M, and Dow.

So even some of the safe defensive names are getting thrown out today. We're talking about Staples and health care that had been outperforming. Everything is lower right now, every sector in the S&P. Coming up next hour on overtime, don't miss Walter Isaacson, who is currently writing a biography on Elon Musk, has some insight into perhaps Musk's thinking here on Twitter. Now that we are looking ahead to bank earning season, let's talk about winners and losers, because that kicks off tomorrow. There's the KBW Bank Index. It's been about winners and losers because that kicks off tomorrow. There's the KBW bank index. It's been losing steam, but broadly outperforming the market on the back of higher treasury yields today. CFRA Director of Equity Research, Ken Leon,

joins us now. Ken, what do we need to know heading into bank results, the setup, and what are you looking to hear? Well, that's right. And there's a wall of worry right now. There's a real debate whether the Fed actions were higher rates, but also quantitative easing, the quantitative tightening. Does that hurt the economy before banks enjoy the ride of a steepening yield curve? That means for banks, higher net interest income and higher earnings. So before you can go to the factors of a bull case for bank stocks, which have sold off so much, you have to ask the question whether in the second half of this year or next year, are we going into recession or any level of stagflation that hurts

the consumer? That is top of mind, I think, what we want to hear from bank management this week and what analysts are thinking. Having said that, with that sort of big wild card out there, what do you make of valuations? Where do you think the biggest opportunities are? Which names? We think the opportunities is still more in the traditional banking area. And that would be Bank of America and Wells Fargo for the larger banks. For the regional banks, PNC and Truist are names we like. Unfortunately, for names we still have buys like Goldman Sachs or Morgan Stanley, capital markets, as we all know, is going to be down significantly in the first quarter year over year. And unless we have any change in the geopolitical climate, it's unlikely that we're going to see that pipeline of investment banking really hit and take off in the second quarter.

So I think the practical place to go is more the traditional banks. You know, Wells Fargo and Bank of America, these are enormous machines of generating higher net interest income. And part of that is higher loan volume. What do you expect very quickly, Ken, to hear on capital markets? Is there any sign that things could turn? We know IPOs have fallen off a cliff. M&A is down. It's been a tough start to the year.

What will you be listening for on that front? Well, first of all, I think some of these banks might have some one-time gains from private equity investments. But when you look at equity underwriting in M&A, there's going to be confidence about the outlook for doing transactions. But as we've seen, the announce to close transactions has come down steeply from a great year. Unfortunately, that was 2021. Ken Leon, we'll leave it there. Thank you. Head of the bank earnings tomorrow, less than two minutes to go in the trading day.

A deterioration all hour long, down 422 on the Dow. Mike, what do you see in the internals? You know, they're weak, Sarah, but not as weak again as the indexes might give you the idea here. You have 2.1 billion shares of declining volume, but 1.5 billion advancing volume. Again, Microsoft down 4%. It's costing the Dow 75% 75 points on its own. That's been the story. It's mega cap weakness today, along with energy.

In fact, take a look at the equal weighted S&P today relative to the market cap weighted S&P. You see massive outperformance of that equal weighted basket there by three quarters of a percentage point just today. The volatility index now popping back up up 24. It's still in this little uptrend, well short of those kind of macro panic levels and arguably is underreacting to the magnitude of the index losses just because we've been here before so recently. And again, there's a lot of divergence below the surface there. Ten-year yield 277 here into the close, and that has been a headwind for big cap technology. That's a lot of divergence below the surface there. Ten-year yield, 277 here into the close. And that has been a headwind for big cap technology. That's the story of the day.

You're seeing in sell-offs and some of those popular big names that weigh on the indexes, like Mike just said, Microsoft, Apple, Tesla, NVIDIA, Amazon, Alphabet, Facebook, all lower today. As far as what is holding up a little bit better, industrials and materials, I guess, are the best performers in the S&P, although everything is down right now. The sector is getting hit the hardest, energy with oil, WTI back below $95 a barrel, and technology hit very hard, including the chips, the software names, NVIDIA and Microsoft at the bottom of that pile. Small caps also joining in the sell-off, down three quarters of 1%. And the S&P goes out with a decline of 1.7%. That does it for me on Closing Bell.