Closing Bell - Closing Bell: Stocks keep sinking 5/9/22

Episode Date: May 9, 2022

The sell-off on Wall Street intensifying with the S&P 500 hitting a 1-year low. Neuberger Berman's Holly Newman Kroft, one of the top wealth advisors on Wall Street, explains how investors can diversify from stocks and bonds in this volatile environment. Jefferies' Brent Thill says tech investors should be sitting out the storm right now. Strategas Research Partners’ Jason Trennert on why today's energy sell off may be creating a buying opportunity. Trivariate Research’s Adam Parker explains why he's turning bearish on Utilities, which have been a relative safe haven this year. Plus, why he thinks semiconductor stocks are looking oversold. And Rockefeller International Chairman Ruchir Sharma explains why the era of investing in acronyms like FAANG may be over.

More pain for the major averages to kick off this new trading week. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we stand in the market in this final hour of trade. The Nasdaq down 3.5%, more selling to start the week after five straight down weeks for the S&P 500. Look at the S&P. It's down about 2.5% right now.

The only sector that is positive, consumer staples, also utilities are faring a little bit better. You've got heavy pressure today on energy, giving back a lot of recent gains, down 7.6% as a sector. Real estate and technology, that's at the bottom of the pack. Small caps, down 3.7%. Watching some ground numbers, Bitcoin falling below 32,000. There's the Nasdaq below 12,000. And the Dow down 1.3%. It's faring a little bit better. Here's a look at some of the most actively traded names here at the NYSE at this moment. NIO and Ford continue to be on the list of most actively traded for the past few sessions. EV is getting hit especially hard today. We'll talk about Rivian later in the show. There's NIO down

7.5%. And Palantir off earnings down 21.7%. We are all over this market turbulence for you throughout the show. We've got a great lineup, including Adam Parker from Trivariant Research, Jason Trennert from Strategist, Rockefeller's Rushir Sharma, Holly Newman-Croft from Neuberger, Berman, and tech analyst Brent Phil from Jefferies to help make sense of all of this and figure out what you should be doing next with your money. Let's get to the top story, though, the sell-off and your portfolio. Stocks making new lows for the year, but amid the volatility, our next guest sees some opportunities. Joining us here, Adam Parker from Trivariant Research and Jason Trenert from Strategas Research Partners. Adam, I wanted to start with you because you put a lot of new ideas out there in your note today,

including utilities. You don't like them, which is odd because they're one of the best performing stocks in the market today, this month, this year. Actually, one of the only sectors that are higher. Why is this not a good safe haven for you? Well, the note was today, right? So we were observing that it's been the second best performing sector year to date and has been acting well, even when rates rise, which is a little counterintuitive. What really struck me, Sarah, when we did our work, though, was that 80% of the utilities now have negative free cash flow. 20% can't pay their dividends. So a lot of the people I'm talking to, they're looking for short ideas, but they don't want a short stuff that's

already down 50%, 60%, 70%. This is an area of the market that a lot of people don't pay attention to. So I was just trying to throw some interesting short ideas out there where there is a lot of company-specific risk and they're not crowded. And so it was really of that ilk. But more broadly, I'd say I'm getting more constructive on buy ideas as things sell off because I see earnings growing this year and I see prices down a lot. So today's note was really just trying to find some differentiated short ideas. But more broadly, I'd say I'm getting more constructive, Sarah. Well, OK, we'll hit some of the areas where you're more constructive. But Jason, what about you?

Your investing posture, I think, has not been to buy this market and to buy on sell-off days, correct? Has anything changed for you? Not this year, Sarah. I think we've been much more constructive in the interesting. We've been relatively long-time bulls on energy for the past, I guess, 16 months. Certainly, only one day doesn't make a trend. But if you saw the markets go down in energy, so the energy stocks go down a little bit more, I think that would be very, very interesting because I think there are some structural reasons why those stocks will make a lot of sense. We think they make a lot of sense at anything over $50 a barrel. I would say that the impediments of drilling more make it difficult to see prices coming down a whole lot, in our opinion. So I think you have to be much more selective these days than you have in the past. And the questions about inflation and interest rates, I think, are going to continue to put pressure on tech stocks for a while.

Adam, do you like that? Buy energy? We've got a down day today. It's still a sector that's up 38 percent this year. Is it too late to get in here? You know, I don't want to insult Jason, but he and I are of the same ilk. We've both been around the block. We're roughly the same age. So maybe we're thinking alike. We've been around the block. It's been my top sector choice since we launched our business a year ago. For me, it's the triple crown, right? It's got upward revisions, positive momentum, and cheap valuation versus history. And I think demand growth will exceed supply growth for a long time so sure i'm going to get risk off days and sure um we could get you know some some set you know things on sale but things have structurally changed there and i want to be buying these dips in net long energy for for quite

some time so he and i agree there for sure um and in terms of you know kind of growth stock we're still recommending kind of an underweight position in growth stocks generally you can only buy the ones that have gross margin expansion and positive free cash flow, the ones you're sure have pricing power. But if I look at this earnings season, you know, I think it was actually better than these prices indicate. So what's in the price now is a huge deceleration in earnings. And I think ultimately that'll prove to be pretty good entry points. In particular, Sarah, I'm looking at semiconductors um 25 30 down this year um you know the world needs these things and as you're starting to get them at discounts to the broader market i think that'll prove to be a better idea than buying you know clorox or whatever's up three four percent today for no reason so i'm probably getting a

little more optimistic on semis you just think too much damage has been done in that group because, you know, it's very cyclical. I don't have to tell you. Weren't you a semiconductor analyst in your prior life? I sure was, Sarah, back when we met a long time ago. Yeah. So, look, I mean, I just look at these businesses and think the world can't exist without them, right? I mean, whether it's semi caps or semis, a lot of them have pricing power. The challenge is that they're over-earning and rolling over but what's in the price is probably the next trough array so if you're willing to be patient say i'm an investor i buy things for you know 12 18 month horizon i have no idea what things would bring in the next three months but i know if i buy these things in here and wait one or two years i'm going to sell them at way higher prices so i what do you think i'm

curious jason what you think because i don't think you're touching anything in technology, are you, at this point? I want to be really careful, Sarah. I mean, it all comes down to quality. It comes down to balance sheets and cash flow, as Adam talked about, because in my opinion, I'm not particularly worried right now about the earnings for the market as a whole. I'm worried about the multiple. And I'm worried about the multiple because real rates are still extraordinarily negative and low. And the Fed has just begun to fight. And so you can have a situation where the economy does okay, earnings still get better, but you have a lot of competition from other assets that you haven't had in a while. So I think you have to be very selective in tech. We have a market weight on tech at our company. We're very, very nervous on some of the software, high flyers. Some of the firms that Adam's talking about, particularly in semiconductors,

obviously those are very, very strong companies. I agree with them. They're interesting. But again, I still think for the market as a whole, you have to be careful here. Yeah, Adam, you mentioned that you think earnings aren't as bad as maybe the market fears. But one of the bear cases on this market is that earnings expectations really haven't come down that much and they need to come down. And that will reset the whole multiple of the market. Yeah, I mean, I could have got guests that disagree more than Jason and I do. I think we agree a lot. And as you know, I sometimes don't agree with

the other people I'm on with. But I'd say, look, I don't really think it matters if earnings have downward revisions, Sarah. I think it matters as long as absolute earnings are going to be off. What's in the price now is that 23 earnings are below 22, I think. If people think we have a recession that's a little bit, you know, severe and that that starts to cripple earnings. So, you know, what I try to recommend to my clients is, you know, areas where I think relative estimate achievability is better than others. So, you know, you know, for me, industrials look like they have very high estimates. They've come down, but they hockey stick in the second half. They are more cautious on machinery and capital rates. But energy and materials select health care services.

I think the estimates look more achievable. So it's always about finding the relative opportunity. But I think earnings will grow. And I think ultimately the multiple for equities will expand over the next 12, 18 months, only because other asset classes, including bonds, look even worse. Bonds, Bitcoin, everything getting hit. Jason, Adam, we'll leave it there. Thank you both. Good to see you. Bye, Jason. Thank you. Very simpatico, those two. Coming up, FANG stocks are definitely getting caught up in today's sell-off. The group is sharply lower from its peak at this point. Rockefeller's Ruchir Sharma says the whole concept of acronym investing is falling apart. He'll join us to explain what that means.

You're watching Closing Bell on CNBC. Dow's down about 425 points right now. Check out today's stealth mover. It's Beatrice, the company formerly known as Mylan Labs, one of the best performing stocks in the S&P right now, after reporting a big earnings beat and strong cash flow, although it did slightly miss revenue estimates. The stock is up 6.4%. The FANG names, though, getting crushed in this rising rate environment. Facebook, Amazon, down more than 40% from their highs. Netflix is feeling the most pain. It's down nearly 75% now from its peak. Rockefeller International Chairman Rushir Sharma writing in an op-ed in the FT today titled, Thanks But No Fangs, The Folly of Investing in Acronyms. And he joins us now to discuss. Rushir, you compare it to the BRICS. We remember what happened with that,

also fell apart. Is this the end of FANG forever, do you think, or just until we get to a better environment in the market? No, I think that this is something more fundamentally going on, because if you look at most of the FANG stocks, they are part of the top 10 companies in the world by market value. That's where they were, in fact, even at the end of the decade. And one of the analysis that I did here was that if you go back many decades, what you find is that once stocks make it to the top 10 by market value in the world in a particular decade, the odds that they will be there in the subsequent decade in the top 10 by market value are very low, possibly less than, you know, 10 or 20 percent. So I think that from such an elevated pedestal, these stocks are generally destined to underperform the market significantly and even fall in absolute terms. So as a portfolio manager, I would not be allocating any capital to these

stocks. Now, there will be one or two winners. Historically, Microsoft's been a company that has consistently outperformed. There have even been companies like GE. But generally, the odds are against these companies once they reach such an elevated level of valuation and ownership. Do you think it's because of the size or because they just got so sort of trendy and meme-y when it came to marketing on Wall Street, different kind of products like ETFs?

Well, both those things go hand in hand, right? Because something succeeds and then once something succeeds, people make them into an investment fad. Acronyms are investment fads. So these are very good companies. They did extremely well, were multi-baggers. They compounded at an extremely high rate. But then once investors are all over these stocks, then you know that both the valuations and earnings estimates are too high. And simultaneously, the risks are increasing, whether it's the regulatory risks, the competitive environment is changing, and rising interest rates obviously

have an effect on multiples. So I think it's a combination of these factors. We have seen this pattern happen decade after decade. If you look at the leading horsemen, so to speak, of the 1990s bull market, once again, the top companies there underperformed dramatically in the subsequent decade. BRICS is another example of that. We lived through that. As an emerging market investor, I saw that, that how those BRICS got overhyped. And after that, people started to scramble to come up with new acronyms for new countries to capture that investment mania in emerging markets. So something similar went on in the tech sector. And I think that this trend is now mature and turning and a major regime shift is underway in the markets. Yeah.

So where do you look next? It's your job to come up with investment ideas and to figure out who the next share leaders are going to be and the next dominant companies. What sort of industries or types of companies do you see? Yeah, so I think that, you know, like in terms of region, I'm looking at, you know, outside the United States, because I think that the share of the United States in the global stock market cap that we've discussed today is extraordinarily high. So it's in some of the emerging markets. And even in some of these tech companies, I'm looking at places where the penetration levels are much lower in places like Southeast

Asia and places like India. And then I know that your previous guests have been speaking a lot about the commodity sector. And I'm in agreement with that. I think that the commodity area is where there's been a significant amount of underinvestment, the mirror image of what's happened in technology, and that's where you're likely to see the winners emerge from. So countries, industries, I think it's going to be mainly outside the United States now and the U.S. is potentially destined for a similar decade to the 2000s where the s p could end the entire decade giving virtually zero returns uh so uh it is time to look outside and that's what happens in the u.s the u.s is a great stock market and a great compounder over 100 years or so but after every great decade that the U.S. has, you typically end up getting a

nowhere decade, like the 1970s, like the 2000s. And so I think that's where we're headed. And the leading candidates of that bull market are also the big underperformers of the subsequent flat to down market. Rishir, thanks for your perspective. Always good to talk to you. Interesting piece today. Rishir Sharma from your perspective. Always good to talk to you. Interesting piece today. Rishir Sharma from Rockefeller. Let's check in on the markets right now. We still got a pretty sharp decline,

down 2.4% on the S&P 500. Staples and utilities, the only positive sectors, utilities are wavering. It's energy, real estate, and technology that are getting hit the hardest today. Energy stocks down 7.5%, though, of course, outperforming for the past year or so

of 44%. After the break, it's been a grim few weeks for the bulls, but Mike Santoli is looking at one under-the-radar indicator that could provide some hope. He'll explain in his dashboard next. And later, check out shares of Uber getting crushed as the company hosts its annual shareholder meeting. We'll talk to an analyst who has a buy rating on that stock about what could turn the company's fortunes around and what the company is telling Wall Street today. It's down almost 10 percent. We'll be right back. Stock selling off again with the S&P 500 now trading about 17 percent from its all time high. Mike Santoli is here to take a look at how a bearish setup could actually, Mike, spell future gains for global stocks. What are you watching?

Yeah, Sarah, in this case, it's what companies are doing in terms of offering new shares or not offering them. And so this is from Bernstein Research, and it shows you over time net equity issuance globally. When this blue line is down here, it means there's negative net equity issuance, which means companies are buying back more stock or companies are getting bought out faster than they're issuing new shares. So supply demand gets improved. It means the markets have been tough. That was the global financial crisis. This orange line is subsequent forward returns for one year for global stocks, but it's inverted. So basically that is a huge gain in stocks, which comes after. Also happened in 2020, of course, massively negative net equity issuance.

That's over here as a percentage of market cap. And then you've got great returns. So here we are as the IPO markets closed. Obviously, we're not seeing a lot of secondary offerings. And so you do still have the buyback story. So we'll see. It's not an immediate catalyst. It doesn't mean we bounce today, tomorrow or next week. But it does suggest that the slower moving supply demand story is getting more favorable. And also people are just getting so and companies are getting so negative. Everyone is just so negative on this market. Are you capitulation phase yet or no? It's getting there. I mean, I think a lot of enough things have lined up. It still feels a little bit too

orderly and relentless as opposed to get me out at any price. But today it's really looking like another 90 percent downside day. It's somewhat washout. But we're sitting here, you know, hovering above 4000. And it seems like there's somebody or some machines out there want 4000 to hold for now. Mike, we'll see you in the market zone. Thank you. Up next, Holly Newman Croft, who is one of the highest ranked financial advisors in the United States on her advice for investors looking to diversify from stocks and bonds in this volatile environment for both of them. We'll be right back on Closing Bell. Dow's down about 500 points. Markets getting slammed today, extending last week's decline. The S&P is now down

for a fifth straight week. Consumer staples, though, a bright spot in today's sector. Consumer discretionary, information technology, and energy getting hardest hit right now. Joining me here at the New York Stock Exchange is Holly Newman Croft managing director and wealth advisor at Neuberger Berman she oversees four billion dollars in assets is consistently ranked among the highest in wealth advisors from Barron's good to have you on the show thanks for having especially at a time like today because I know you manage a lot of very wealthy people's

money but about our viewers want to know what you're telling them to do in this volatile environment. What are these client conversations like right now? Well, they're not as much fun as they were a year ago, I can tell you that. But also, volatility is not necessarily bad, and it's certainly not unexpected. We've got a lot going on in the world right now, a lot going on in the market. So we've been positioning our portfolios more defensively for the last little while to try and protect for our clients against the volatility. What is defensive? Because usually you might think bonds are a good safe haven,

that's not working too well. Yeah, so it means different things in different asset classes. In the fixed income sector, you mentioned bonds. We're seeing very, very short duration because you can get a one-year muni bond today yielding 2%. And we think a year from now it might be higher, but it's certainly better than cash. We also like floating rate bond strategies that protect against inflation. In the equity sector, we prefer value over growth. Your last guest just talked about the death of fang, perhaps. We've been tilting away from growth into value. We also at Neuberger Berman, we like companies that provide income and return money to their shareholders. So we like dividends. We like

dividends and we like companies that have proven to be able to grow their dividends. We're finding those in the consumer staples. We're finding those in utilities, you find those in real estate, and our managers rely on fundamental analysis to find the companies that will buffer the volatility and still be able to grow in time. Is it too late though now to get into some of those strategies where some of these these groups like staples and utilities are near the highs. You know, Sarah, it's never too late. It's proven if you look back to the history of the market from the beginning, the market goes up 80% of the time. Sure, market timing would be great if you could time it perfectly getting in and getting out. But you've heard the famous saying

that the hall of fame of market timers is an empty room. So it's never too late. What's really important is asset allocation and diversification. We don't like to position any of our clients or any of their portfolios to be able to be disproportionately hurt by a single stock, a single sector, a single asset class. We're also today moving money out of equities and into alternatives. We like some liquid hedge strategies that are providing some buffer to the inflation. And we like private equity and private debt because that's where we're seeing larger returns. What about commodities? Are you allocating more in this area given the environment we're in and some of these supply issues? We are. Commodities has been a bit of a hard sell because you haven't made money in commodities the

last 10 years, but you've seen it's done tremendously well. And we are still allocating to commodities with inflation, rising rates, the war. Stick with it. What about technology? It doesn't sound like you're there, but at this point, I do wonder if you're having conversations with people that are interested in value with some of these valuations at this point. These stocks are looking like value plays. Are we there yet? No, we're still tilting more towards value and away from growth. I mean, remember, these companies drove the market for 10 years. They grew disproportionately. So we're not so surprised that they're getting hurt disproportionately. Also, with higher rates, growth companies suffer more.

We're not quite ready to tilt back from value to growth. If you have a new client coming to you tomorrow and asking, what kind of return should I expect in the coming years? What would you say? What's your asset allocation? What's your appetite to risk? How much volatility can you stand and still sleep at night? My job is to provide risk-adjusted returns that still allow my clients to sleep at night. How much risk should you have in your portfolio right now? Look, more risk, more return. It depends on are you your age? Are you retired?

Are you spending your money? Are you not spending your money? I think in our expectations for equity returns certainly aren't as high for the next 10 years as they've been for the last 10 years. But I think it's reasonable to build a moderate portfolio with a target return of 6%, 6% to 7%. And we'll have years that we outperform. And unfortunately, there'll be years where the market doesn't help us as much. So clearly what's driving a lot of this pain right now and the lower returns of the Fed is raising interest rates aggressively for the first time that we've seen in decades,

really, to fight multi-decade high inflation. Are you guys thinking this is going to drive the environment for what, five years, one year? Look, I think inflation, if it's not at the top, it's very near the top. We're seeing sign that inflation is starting to come down. The market is also predicting more hikes this year than the Fed is suggesting. So I think a lot of the hikes have been priced into the market. We'll use whatever monetary policy we can to help slow inflation, but we're already seeing signs of that in the market today. And you like dividends.

I just wanted to follow up on this one because it's interesting because there is an alternative now for stocks. You've got bonds paying yields that we have not seen in years. That's right. If you remember a one-year muni bond paying 2%, you know, if you consider the tax savings, that's close to a 4% return. It's a pretty safe place to park your money. And it's certainly better than cash, which is still earning nothing. But why dividend stocks? If you look at the long-term return of the equity markets,

40 to 50% of the returns have come from dividend reinvestments. It also provides a buffer to the volatility and to inflation. So it's not only dividend stocks, but it's companies, it's high value companies that we like dividends and they have been proven to grow their dividends so they can protect in these rising rates and high inflation times. Holly Neumann-Croft, thank you for joining me. Thank you, Sarah. On the show from Neuberger Berman. Just want to show you where we stand right now in the markets as we speak.

Taking a leg lower, the Dow's down 575 points right now. S&P 500 is below that 4,000 mark. We just went below there. We'll see if we close. It's down 3%. And the Nasdaq also fell off, picking up steam down a little more than 4 percent. Bitcoin also with some round numbers breaking down, hitting the lowest level since July. Coming up, we'll discuss why analysts see more pain ahead for the cryptocurrency.

We'll be right back on Closing Bell. Welcome back. Stocks are near recession lows as we head into the close. Take a look at the Nasdaq down 4 percent and the S&P, which is flirting with that 4,000 level, we briefly breached it just a moment ago. We'll keep an eye on it. Round numbers into the close. Check out some of today's top search tickers on CNBC.com. Ten-year yield getting the most interest again. We see the ten-year yield about 3%.

There's actually buying today with a little bit lower yields, which has reversed the trend. Rivian down 20 percent. Our own David Faber reporting Ford is going to be selling shares along with another unnamed buyer or owner of Rivian. That's killing that stock. NASDAQ down 4 percent. The S&P, it's the big averages because that is where you're seeing the pain today, which is down 3 percent. And Palantir, an earnings loser, down 21 percent. Again, if you look at the market, it's energy, it's real estate, and technology. Those are the worst performers, though every sector is red except for consumer discretionary. We're going to talk tech because it's tumbling

again. And Jeffrey Brentville will be here on whether he's starting to see a buying opportunity in the beaten down sector and where you want to be if we see some sort of turnaround. That story plus what is behind the plunging price of Bitcoin now down 10% when we take you inside the Market Zone. Heading back toward the lows of the session, we are now in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli is here to break down these crucial moments of the trading day.

Plus, Kay Rooney on Bitcoin's breakdown and Jeffries Brentville on the ongoing tech wreck. We'll kick it off with the broader market because stocks are sharply lower for the third day in a row. This is now the worst three-day losing streak for the major averages since September 2020. Mike, it feels like one day we're worrying about inflation and higher interest rates from the Fed. And another day we're worrying about growth, which is a bad combo. Today, it feels a little like the growth concerns because commodities are all down a lot. And we haven't necessarily seen that, including oil. Absolutely. Yeah. Today and also you have a little bit of a bid in Treasury. So it does seem as if today the concerns maybe a little more are on the growth side. But it has, to your point,

become this kind of shuttle where there's no escape from this idea that the Fed could make a mistake in either direction, too much or too little tightening. Inflation, I think investors are very impatient to see confirmation that this idea of a peak has some credence to it. And then beyond that, it's really just now hunting for the most wounded parts of the market and the most wounded players. So if you look at the huge tech stocks that have massive concentrated or had massive concentrated hedge fund ownership, they're massively underperforming today. The Tiger Global lost, everyone was talking about last year. If you look at their top holdings, they're down a lot more than the market. They're down a lot more than the Nasdaq. So whether it's liquidation for real or it's just people selling in expectation

or perhaps hope of liquidation. That's the phase we're in right now. And it's a pretty comprehensive flush lower. You're talking about this idea of forced selling where, you know, we have hedge funds, some of the macro hedge funds, the combination of stocks and bonds and also Bitcoin, where people have allocated in the last few years, all selling off together is pretty vicious. Yes. And whether it's truly forced selling or it's just a sense of risk management, when everything is going down

in concert, you've had losses in one part of the portfolio. It makes you less able to absorb exposures in other parts of the portfolio. And so that's why I think people have been leaning on all assets. We'll see if we get any relief. As I said, yields are coming in at least today. And even though the market's down a lot and it's cracked below 4000 in the S&P, it still feels like it's relatively contained. It's determined and relentless selling, but it doesn't seem really all that outright panicky. Down below 4000, as you say, as we speak. We'll see where that goes. Speaking of Bitcoin, the weekend sell-off carrying into today the cryptocurrency falling below 31,000 to hit its lowest level since back in July. And analysts say there could be more downside ahead.

Our Kate Rooney joins us. Kate, who are the sellers here? Is there a certain cohort that's moving out of Bitcoin more aggressively? Can you tell? Yeah, Sarah. So that's the interesting thing about covering Bitcoin. You can actually see the sort of the back end technology where a lot of the buying and selling is going on. They call it on chain data, but it's really been selling across the board. So data firm Glassnode looked at this. It's both the larger wallets, which they sometimes call whales, and then the smaller investors.

But in this case, they're calling them shrimps. But both of those buying cohorts have been selling in the past week and especially over the weekend. It's interesting. Some of the smaller buyers have actually been the more active market participants, at least in February and in March. They don't seem to be stepping in and buying the dip here. I think there's a lot of questions about where the bottom is right now. It looks like Bitcoin under 31,000, 30,000 is a key level to watch. But a lot of investors out there have gotten burned. Glassnode also had some data on the percentage of the market that's now underwater. That's about 40 percent of investors are holding Bitcoin at a loss right now, or at least an unrealized loss. And then for the shorter term buyers, those who have gotten in in the past four or five months, the cost basis is even higher. It's around $47,000, with Bitcoin trading at around $30,000. There's a lot of people that have lost money, so Bitcoin is really struggling to attract that new group of buyers. Yeah, I mean, your numbers are pretty staggering on who's underwater. So, Kate,

what are you hearing from some of the smart investors you're talking to in Bitcoin about what could turn it around? Does the Nasdaq have to bottom, or is it a leader in itself? What do we need to see here? So the big thing that people talk about and big investors I end up talking to are the idea that Bitcoin has just been coupled and trading alongside with the Nasdaq and the QQQ in particular. It's one of the side effects of Bitcoin becoming a little bit more mainstream. And with some of those bigger and longer term investors getting out, they say it needs to be sort of a shakeout here. Those investors that see it as sort of as a risk asset, as they leave the market, they've really been setting the price in the past six months or so. If they all get sort

of flushed out of the market, the only people that are left are likely the long term holders that see it as a store of value. So that transition needs to take place in order for Bitcoin to decouple and stop really trading like a risk asset. That clearly hasn't happened yet, but that's what they're holding on to hope for. And then the Bitcoin bulls would say, if you zoom out and look at the one-year chart or the 10-year chart, at least that's where they see the value. They say it's a long-term investment, but it has been painful for a lot of people in the near term. No question about it. Kate Rooney. Kate, thanks. Mike, how do you see the Bitcoin correlation with the markets and correlation with the speculative trades that dominated over the past few years? It got grouped in there with with the SPACs and the meme stocks. And a lot of those trades are cooling down, cooling off. You could say that they're bubbles. They were in bubble

like territory. How far does Bitcoin go? Well, first of all, there's cross-ownership, no doubt, among all those things. And therefore, again, pressure in one place creates pressure in another. But also, it comes from the similar psychology of the great new thing that has amazing price momentum. And that works a lot on the upside. You're going back, you know, really only a little more than a year in price when it comes to Bitcoin. And, you know,

it's true. If you want to look at a five or 10 year chart, you could say this has done great over the long term. The other way of saying that is it may be a long way down until we figure out exactly what the right level is, because all the way up, it was all about more adoption, more adoption, adoption for what? Well, we'll figure it out. And so I think that's why there's not like, it's not like gold where you can say at some level, industrial and jewelry demand can cover a lot of the price here. It's not the case. Speaking of going down, Rivian want to hit that crush today on David Faber's reporting that Ford is selling 8 million shares of the electric vehicle maker and another unknown seller

is unloading as many as 15 million shares. The sales come after Rivian's stock lockup period expired Sunday following its IPO, remember, back in November. The stock is now down more than 70% this year. Our Phil LeBeau joins us. Phil, was it a big surprise that Ford and other early investors are selling Rivian shares? The market is taking it like that. It shouldn't be a surprise, Sarah. We reported back on the day of the IPO, and many people have reported since that those early investors were likely to sell at least a portion of their stake in Rivian once the lockup expired. Now, when Rivian was trading at $175 a share, people said, wow, this is great. Look at all the money that Ford is sitting on. Far different story now. And when you look at Rivian, you've got three things that are really

weighing on the stock right now. One, they have a couple of times now lowered their production forecasts in part because of supply chain issues. They're also dealing with higher costs. And then also the question is, will they be profitable in 2025, which is what many analysts expect from this company? And if you do believe that, Sarah, that's a long time to wait to say, OK, I want to see a payoff here. So we'll find out more on Wednesday afternoon when Rivian reports its Q1 results. Well, the other thing, Phil, that could be playing into the sell off today is that EV stocks across the board are getting slammed. Tesla's down almost 10 percent right now, which is hurting the major averages. This group just continues to get hammered.

What are you hearing about the pain? They're getting hammered and they will continue to get hammered, Sarah, because especially the smaller ones. Forget about Tesla. Tesla is cash flow positive. It has the money to support its growth in the future. I'm talking about the small EV startups, many of which went public through SPACs. Do they have the capital to make it to the point of production and sizable production? If they don't, they're going to have to go back to the capital markets.

And as you and Mike have talked about, this is not a good time to be going to the capital markets, especially when you're talking about building EVs for down the road. Phil LeBeau, Phil, thank you. Dow is now down 761 points, so losing more momentum here into the close. S&P below that key level of 4,000, and the only positive sector, consumer staples, just turned red. So you've got all 11 sectors now lower. Staples and utilities hold up the best, but again, both negative. NASDAQ 100 down 4.4%.

Look at the travel stocks. They're also getting hit especially hard today, underperforming the broader market. Seema Modi joins us. Look at the travel stocks. They're also getting hit especially hard today, underperforming the broader market. Seema Modi joins us. Seema, travel companies reported strong earnings and the stocks are getting punished. What's the concern? Well, Sarah, there's two competing narratives here, the macro economic fears and the very bullish outlook we did receive from the travel companies over the last week. And right now, those macro concerns are pushing these stocks lower despite Merit and Hilton turning a profit, reinstating their dividend, pointing to strong summer bookings. Booking holdings was a standout over the last week. The stock was up 10 percent on Friday. You'll see now reversing some of those gains,

despite saying that summer gross bookings will be 15 percent above 2019 levels. So you could say right now what we're seeing is indiscriminate selling. I've looked back at prior economic recessions, Sarah, to see how travelers responded. And as expected, Americans have cut back on their travel budgets when the economy slows. But executives, I speak to say that this time will be different because we're coming out of a pandemic where the desire, that pent up demand for travel is so strong. Are you going to cancel a flight to see your family because the economy is slowing? First time seeing them in two years? Maybe not this time around. So we'll see.

But maybe it pushes back the whole international. Today definitely has a global growth fears kind of sell-off feel to it. Seema, thank you. And we know that the travel stocks get hit hardest. The Chinese currency was allowed to drop 1% today. That's a big move. So a lot of concerns about China. Want to zero in on technology because it is one of the worst performing sectors again today.

NASDAQ down more than 4.5%. Brent Phil joins us, senior analyst at Jefferies. I'll ask you a question, Brent, that you don't know the answer to, but I'm sure you're having very interesting conversations about with clients, which is when does tech bottom? What does it need to see. I think we have to have companies fundamentally cut numbers and

acknowledge the macro headwinds are in. None of the companies have done that thought to a big extent. So most of our clients are waiting. For them to make the cut in most of those cuts would come through the next earnings cycle in into

potentially the summer. So stocks are obviously well ahead of fundamentals. We have had valuations come down. Now we need the fundamentals to be reset. And companies have to come out and acknowledge what has happened and give us a

sense of where that's at. So until they do that I don't think our investors want to get in front of it. Our advice is to sit up the storm. There's no hurry. And this has taken on more negativity than we ever could imagine. We have no buyers on our desk. There's max pain. And it's darker than I've seen in the last decade in covering many of these names.

Who needs to lower numbers? Because Apple made a pretty big warning about supply chain and China. Netflix, you know, seeing its user growth slow to the point of a decline. Meta, it doesn't feel like these companies are particularly optimistic right now. I think for software companies, they're delayed. So my coverage is in software and internet. If you look at software, many of the reports were okay. I think you ultimately have the settling in effect of what happens in 23. Do we see a recession? And so many of the companies have said, hey, things are fine. We're pandemic beneficiary. This continues fundamentals are this summer and then come back to these names. I can tell you with high conviction that the biggest names on Wall Street right now are sitting out this and waiting. And we did not see that volume at this point on our desk.

It doesn't mean it's not happening anywhere else. But certainly right now, the conversations we have are those investors want to win. No buyers. No buyers. There's a massive buyer strike right now, the conversations we have are those investors want to win. So I think, no buyers. There's a massive buyer strike right now. So Brent, what do you tell them where they should be, where they want to be when a turn, if a turn happens? And it could be, we could be waiting a long time for it, but just as you look at these valuations get crushed, what are you telling them? What looks best right now? You know, rotating to the highest quality stories that have good growth and cash flow and profitability you know companies like microsoft intuit palo alto networks and cyber security

uh a great story cyber spend is going to continue regardless of what happens the environment of palo alto is is in a great position there if you you look at Amazon right now, Wall Street's effectively, you're getting the retail business for free because if you look at Amazon's AWS and ad business that effectively in our sum of the parts equals the market cap today. So Amazon at some point, they'll get the retail business fixed,

but they'll come back. Google still remains in a great position. So right now, I think many of our clients are long these big bell other names, short, all high growth software and internet. That's worked phenomenally well. At some point that comes unwound and everyone will want to come back to the snowflakes, the data dogs, the high multiple names, CrowdStrike, but they don't want to come back to those names. And you're continuing to see those names go down 5% to 10% every single day, consecutive days in a row. And, again, I don't think we're at the bottom yet for software valuations yet. Well, I think that it's confusing because what we heard from Microsoft and even IBM was that, you know, this time around, the CEOs,

the companies are not looking for companies to cut their IT spending and their IT budgets like we've seen in previous slowdowns and that the pipeline still looks really strong and that that's a priority for companies to cut their IT spending and their IT budgets like we've seen in previous slowdowns and that the pipeline still looks really strong and that that's a priority for companies. So it's hard to figure out ultimately what that means for some of these software names. It's a priority, Sarah, but don't be confused with what these management teams are saying. They have been huge beneficiaries because of the pandemic. The comps are hard. The multiples are tough. If you really believe that why would microsoft ceo sell as much stock as he did in the fourth quarter why would

the ceo and cfo snowflake be selling stock they'd be buying stock are they buying stock right now no they're selling they sold in q4 so i think you go back to like there's a there's a counter you know it's a counter to to what they're saying which is they're saying one thing, but they're doing something else with their own stock. And so, look, I have huge admiration for these management teams, but I think you have to basically say they're saying this because they haven't seen it yet. Because these pipelines and software are six, nine months. The deals that they were working on last year, they're closing now. The pipeline they build right now is a certainty. Yeah, it's a lag. And what's the fall in early 2023 going to look like?

And that's the concern. No one knows, but ultimately that's the concern, I would say. No, we've got to leave it there. We're a minute to the bells. But Brent, thank you. Really interesting, especially on what the managements do and not what they say. Brent Thill for joining us from Jefferies. Two minutes to go, less than that. Mike, what do you see in the internals? Very, very negative, Sarah. Another 90 percent downside volume day in the New York Stock Exchange. It's like either the second or third in the last few days. You see these in clusters. It does show you very, very heavy liquidation. Eventually it burns itself out, but also means there's some dislocations out there, most likely. New lows versus new highs, also extremely lopsided. You don't usually see more than 300 common stocks making new lows in the New York Stock Exchange against 25 new highs.

That's what we have. Volatility index, it's up around 35, but it's not racing to new highs for this move, even though the S&P is lower. It shows you people are hedged up, and it's been a relatively orderly move down for now, Sarah. A tricky market. Here we go. Down 2% into the close. Mike, thank you. The Dow is down 656 points.

S&P 500 down 3.2%. It is below that 4,000 mark. And the only sector that's positive are staples. Just barely. Energy, real estate, discretionary hardest hit. NASDAQ going out with a loss of 4.3%. The selling continues. That's it for me on Closing Bell.