Closing Bell - Closing Bell: Stocks rally again in the final hour of trading, Cleveland-Cliffs’ CEO on the wild moves in metal prices, and FTX’s CEO on a new cryptocurrency regulation bill 3/18/22

Episode Date: March 18, 2022

Stocks rallying into the close for a third straight day to post the biggest weekly gain of the year. The CEO of steel Cleveland-Cliffs on why his company is better positioned than rivals to deal with the wild swings in metal prices. The CEO of cryptocurrency exchange FTX on a new bill that would crack down on using crypto to avoid Russian sanctions. Jefferies Michael Yee on whether Moderna’s recent bounce back is for real. And Needham’s Laura Martin on the FANG stock she thinks is most attractive.

The most important hour of trading starts now. Welcome to Closing Bell. I'm Sarah Eisen. Happy Friday. Here are your top takeaways on the biggest stories. FedEx showing that inflation can cut into growth. In the earnings report, you saw those shipping rate increases. Sales looked great as a result of 10%.

Volumes, not so much. FedEx only shipping an average 16.8 million parcels a day in the quarter, which was a decline and a disappointment. Sure, it could be partly Omicron, but also a sign that higher inflation can take a bite out of demand. What a week for ARK. A big comeback for lots of beaten down parts of the market this week. The Cathie Woods ARK Innovation ETF up 18% on the week,

still down more than 50 percent from the highs. So is it the start of a longer comeback? Matt Maley of Miller Tabak on the technicals says the level to watch here is 65. A break above that would take it above its trend line from November when it really started falling off a cliff. Could be a good sign for the momentum on this ETF going forward, if you believe the charts. And all the Fed voters are speaking out and everyone is a hawk now. Wanted to spotlight Neil Kashkari, Minneapolis Fed president, because he's famously been the most dovish at the Fed, Mr. Transitory Inflation. Well, now he's writing,

he got it wrong and is penciling in seven rate hikes this year. It just shows how far and how fast the Fed has moved on on this issue and how serious it is right now about fighting inflation. Let's get to our top story of the day. The market climbing the geopolitical wall of worry. Stocks pacing for their best week, as I mentioned, of the year. Best since 2020. But we are heading into another weekend of uncertainty surrounding the war in Ukraine. Joining us now, Jim Paulson from Luthold Group, CNBC senior White House correspondent Kayla Tausche. And Kayla, we are just getting some headlines here from the White House on a readout from that call between President Biden and Xi Jinping. What can you tell us? Well, Sarah, the readout is fairly sanguine and it comes nearly five hours after that call concluded earlier today or four hours,

rather. And it says simply that the president discussed the Russian invasion of Ukraine and that President Biden laid out the implications of China's involvement in assisting Russia if it were to do so, what some of those consequences might be. Now, we still don't know exactly what those are or to what extent China plans to participate in that assistance of Russia. We know that it's something that the administration has in recent days ramped up its warnings of. But earlier today, we got a very different readout from the Chinese side where they touted essentially this, the assurances that they received from the U.S. side that the U.S. did not seek conflict with China, did not seek a cold war, that it would not push for Taiwan's independence

and really issuing sort of a full throated statement even before the call had concluded, according to the White House, about all of the things that President Xi had secured from President Biden. Now, how heavy handed President Biden was in that call, we don't we simply don't know. And what happens from here, we also don't know. We're expecting to hear from senior administration officials later today. A little bit more detail on the call, and I'll bring you those details when I have them, Sarah. But certainly a tale of two very different versions of this conversation at a very important moment in history, Sarah. Jim, so much we still don't know. As Kayla mentioned, between the Chinese, whether they're actually helping the Russians, what secondary sanctions could look like.

They've been threatened. And of course, what happens with this war? And yet stocks had a really good week and continue to rise despite some crazy moves in commodities like what we saw with nickel today. So is the market just hoping or sniffing out some sort of resolution or looking past it or what? I think that they are sniffing out a resolution. I mean, we've been in this war now for several weeks, Sarah. And the worst thing about any crisis or anything that's new is that when it first hits out of left field, it just creates nothing but uncertainty. You have no idea what it means or where it's going to go. And you react very violently as an investor to get out of the way and things move around. But after you've had some time to vet it, I think that the market is suggesting that they're starting to

feel a little better that there's some direction of this thing. Even if the direction is a chronic war that goes on, it does seem like the economic fallout will not be near as detrimental as it may be looked at going in. And I think they're calming down about that. More to the point, though, it does seem in recent days that there's more openness to negotiation and maybe finding another way out beyond just, you know, final victory, if you will, for both sides. So I think the market is starting to discount it a little bit. And the biggest thing is just that the energy prices, crude oil prices, pulling way back to, you know, under 100 here just last earlier this week and 104 right now. And if you look at that, the energy prices, I think, are up maybe 20 percent now

since October. And they had a 20 percent upward move a year ago at this time. So I don't think it's going to have as much economic fallout as maybe we anticipated initially, although it certainly could take a bad turn. This is more, I think, about world order going forward. Where's Russia going to be in that and what's going to happen with our relationship to China? On that note, Michael O'Hanlon also joins the conversation from Brookings Institution. Perfect question for you. How is the world order being redrafted and what do investors need to know about what that looks like in the economic alliances that we are seeing forming? Well,

thank you. I think there are two fundamental possibilities, and it's too soon to have any real sense about which one we're headed towards. One is a hardening of what was already happening, but perhaps one that could be recovered from, where certainly the Russian attack on Ukraine will be the big news of 2022 in my world of defense policy, but it may or may not still have to be the overriding big news for the rest of international relations and the global economy. That's the happy scenario. That presumes some kind of a ceasefire, let's say by no later than the month of April, with a restoration of Ukrainian sovereignty, but perhaps some kind of an agreement that it won't seek NATO membership. Russia gets to have some of the sanctions lifted.

Businesses gradually trickle back towards Russia, although the economy there suffers for a while. That's the good, happiest scenario. Nobody's going to ever think the same of Vladimir Putin again after this war regardless, but you could imagine still Russia as an economy regaining some of its previous role. And over time, perhaps, you know, may take a few years really getting back to where it was.

The less happy scenario, of course, is an ongoing war where Vladimir Putin decides he wants to conquer Ukraine, perhaps a next Ukraine, perhaps overthrow the Zelensky government, maybe even raise Ukrainian cities writ large en route to doing that, if and when he gains control, moving his own military forces into Ukraine permanently, not only to try to control that country against whatever resistance may continue, but to pose a greater threat to NATO's eastern flank. And in that case, you have really the possibility of a new Cold War if we are successful. And if we are unsuccessful, some small chance of actual conflict between NATO and Russia. So obviously, that second scenario is far worse than the first and has much greater implications for the economy as well. Investors need to weigh all of it. Jim, Kayla, Michael, thank you for joining me on a Friday.

The wild swings in metals have certainly grabbed headlines since the start of the war in Ukraine, with another giant move today for the price of nickel. Up next, we'll talk to the CEO of mining company Cleveland Cliffs about how the crisis is impacting his steel business. Steel prices have also shot up. Dow's up about 90 points. We are near session highs. Closing bell. We'll be right back. It has been a wild few weeks for the commodities markets in light of the war in Ukraine. Take nickel trading limit down again today on the London exchange after more than doubling earlier this month. Steel prices are up more than 50 percent since late February. But check out the chart of minor Cleveland Cliffs, the company managing the current environment well, and the stock is up 40 percent in the past month.

Let's bring in Cleveland Cliffs CEO Lorenzo Gonsalves. Lorenzo, it's great to have you back on the show. Talk to us about why you think you're in better shape than some of your competitors when it comes to sourcing some of these key metals in steel production. Yeah. Good afternoon, Sarah. Pleasure to be with you and your new show. Congrats on that. As a steel company and a steel company that is self-sufficient in mining, we are very pleased with the fact that we don't depend on importing nickel and importing anything. We don't import nickel. We don't import iron ore from Ukraine, let alone big iron.

We don't depend on big iron from Russia. So we are self-sufficient. I have been preparing this company as a basis of American manufacturing. And big globalization is coming, and we're ready. So it's all good here. Are you the only one in the industry that doesn't depend on pig iron, which I've read a lot about in preparation for this interview, and realize it is key in making steel and apparently most of your competitors use. Yeah, everybody that produces flat-rolled steel needs pig iron. The difference is that as an integrated company relying on blast furnaces and basic oxygen furnaces and also with the direct

reduction plant, the most modern in the world here in Toledo, Ohio, we are self-sufficient. So my competition needs pig iron, but they don't produce pig iron. They need to import pig iron. And a lot of this pig iron comes from, guess what, from Russia and from Ukraine. Ukraine, unfortunately, is being beaten down. And that's a very sad situation. Russia is the perpetrator, should not be allowed to sell a thing in the United States. So we are in good shape because we are self-sufficient, maybe in the USA.

But one part of your business that is vulnerable and separates you is you are a big supplier to the auto industry. And when it comes to autos right now, they're struggling to meet demand. They're looking for parts. First it was the chips. Now it's the key metals from Russia, Ukraine, and even the Japanese earthquake. So what are you expecting in terms of auto demand for your steel? Yeah, we are seeing an improvement in comparison with last year. The biggest thing with automotive is that we are by far the largest supplier of automotive here in the United States. So these things don't go in all the car manufacturers all at the same time. So when car manufacturer one is not doing well, car manufacturer two is getting microchips, we are the biggest supplier of both of them.

And then number three comes along. We are also the biggest supplier of L1. So we are being able to play around. Another thing is that I have some maintenance scheduled for first and second quarter of this year. And when I saw the Russian movement around the borders of Ukraine, we anticipated maintenance to Q4. We shut down units last quarter, and now we are hitting in all cylinders in Q1, and it will be the same thing in Q2. So Q1 is doing well, and Q2 will be even better. So talk to me, Lorenzo, about where prices are going. Obviously, you've got pricing power right now, and you have to pass on those higher costs. But is the demand keeping up enough for you to continue to raise prices?

Oh, yeah, absolutely. Absolutely. Keep in mind, the American steel market is among all the developed markets in the entire world, the only one that produces less than we need.

So we all need imports here in the United States. Imports will always be part of the peak. So in a world that's not really able to trade steel for supply chain issues, for the war in Ukraine, for congestion imports, we are in a situation that the domestic suppliers like Cleveland Cliffs, being by far the largest supplier of flat rolled in the United States, is in a very comfortable position. And we are playing the game the way it should be played.

Lorenzo Gonsalves, thank you for joining us with the update. Thank you very much. And good luck with the new gig. Thank you. Cleveland Cliff CEO. Just going to check on the markets here. We are going strong. This has been a pattern four days in a row here.

And tracking for the best week since November 2020. The Dow up 129. Another little surge here. S&P 500 up almost a percent. The Nasdaq, the winner on the week. It has the most catching up to do up almost 2 percent. Small caps up about three quarters of one percent. Coming up is the classic 60-40 portfolio in for a rough road ahead. Mike Santoli checking the charts in his dashboard next. And later, Senator Elizabeth Warren announcing a new bill to crack down on using crypto to avoid Russian sanctions. We'll discuss with today's Closer FTX founder, Sam Bankman-Fried. We'll be right back. Not almost a 1% gain here for the S&P 500, tech and consumer leading us higher.

Goldman Sachs out with a note today saying stagflation is increasing the risk of a, quote, lost decade for traditional 60-40 portfolios. Mike Santoli here taking a look at the potential shift for the dashboard today. There has been a lot of chatter about how this is not working. Yes, and in fact, there has been chatter for years, but it has really worked up until now. Of course, it's 60 percent equities, 40 percent stocks, kind of a traditional retirement portfolio mix. Here's year to date. This Vanguard balance fund approximates the 60-40 strategy, down almost 7 percent year to date. That's an unusual number. Typically, you don't get these 5 percent multi-month drawdowns in this area. And of course, that's because bonds are down 5% and stocks are down 6.5% or 7%. You're not getting any buffer

from stocks. So the idea is if inflation stays high, bonds are going to be hard to perform, even in stock drawdowns. And obviously, equities start with a high valuation. So that's the argument. And so far, here's the question. There are pockets of the market where there's sort of high cash flow or real assets seem to be the two things. So some people say add commodities. But take a look at a couple of ETFs. This is the cows and the moo. So the cows is a cash cows portfolio.

Just like coincidence. High free cash flow stocks. Okay. It's a lot of energy in there. It's a lot of health care in there. But it's basically a bird in the hand type of a type of investment strategy. You having the getting the cash today. You don't have to worry about the future. It's not about paper wealth. It's about what you have right now.

Plus, the the moo is agribusiness. So we know agricultural commodities doing well. These are stocks geared to it. So it so happens they're moving right in sync here. And they're outperforming the S&P by like 14 percentage points. Stick with the cows. Stick with the cows or yes, at least ride with the herd to a degree. Maybe add that to your 60-40. Did you just make it just random that they both have those? Listen, what's the point of having hundreds of tickers in my head if once in a while I can't throw one of these relationships up? That is this is classic Santoli. Thank you, Mike. Up next, the CEO of cryptocurrency exchange FTX reacts to a new bill that would punish crypto companies doing business with sanctioned Russian entities.

We'll talk to him next. Session eyes for the Dow, S&P and Nasdaq, which is outperforming again today. What's Wall Street buzzing about today? Burger King wants to close its roughly 800 restaurants in Russia, but it can't. Parent company Restaurant Brands owns only 15% of its stake in a Burger King joint venture in Russia, which operates these locations. The rest is a group of investors led by Alexander Kolobov, a Russian businessman. The company's international president, David Scheer, wrote in an open letter to employees that they demanded the suspension of Burger King operations and were refused. He said they're in the process of divesting from the venture, but it will take time

and it suspended new investments and is redirecting profits to refugee charities. It's not alone. Competitor Yum Brands keeping KFCs open in Russia because the franchises are Russian owned. It does show how some companies, especially in fast food, are tied to Russia through all sorts of complex, decades-old legal deals and ownership structures. And they're trying in the meantime to manage their corporate reputations and make statements. When we come back, stocks looking at a solid 1% gain in the S&P right now. Only sectors lower, utilities and energy, though crude oil is higher on the day, lower on the week. Nasdaq's in the lead. We're building on gains.

We're up 2% going into the close. Coming up, crypto billionaire and FTX founder Sam Bankman freed on a new bill from Elizabeth Warren, the senator, to crack down on using crypto to skirt Russian sanctions. And later, we will discuss whether there's still time to take a bite out of FAANG stocks, which have had a very solid performance this week. We'll be right back. Another strong final hour of trading here. Just want to mention the Nasdaq's up 1.9 percent, almost 2 percent gain and up 8 percent for the week as a whole.

Still got a long way to go to climb back, but it has been a recovery. Senator Elizabeth Warren announcing a new bill that would allow the government to crack down on crypto companies that are conducting business with sanctioned Russian entities, tweeting, quote, we can't allow Putin and his cronies to hide their wealth and evade sanctions using cryptocurrency. Joining us now, FTX CEO Sam Bankman-Fried runs a big international crypto exchange. Sam, first of all, how easy is it for these Russian oligarchs to use crypto to hide their wealth and evade sanctions? It's a really good question. And the answer today is that it's very difficult to do so. There are a very large number of checks in place to prevent that.

Everything from their bank to the bank that they would be wiring money to that the exchange would be using, doing sanctions checks to the exchanges themselves, doing know-your-customer processes and sanctions checks on the banks involved and the people involved, doing sanctions checks on the tokens involved and on any transfers going out as well. There are a lot of processes in place to prevent this from happening. And I think they've been fairly effective at preventing it, although it is only because these processes are in place that it is difficult. A number of years ago, this was a much bigger problem for the space. Well, and I was wondering, because a U.N. report has said that North Korea,

for instance, used stolen cryptocurrency to help fund a missile program and that Iran mined Bitcoin to help try to evade sanctions. So there is a history here of bad behavior and hiding behind crypto. Yeah, I think if you rewind to 2017, 2018, the space was a lot weaker in terms of compliance in general and specifically in terms of sanctions checks. This is true basically across the board. And there were also some specific venues that were particularly exploited for this manner. Over the last four years, partially because of the work of law enforcement, partially because of the work of regulators, policymakers, and partially because of the work of the industry, a lot of that has gotten cleaned up.

So what about this new bill from Senator Elizabeth Warren? Do you think it is effective in trying to find any of that? And can you trace that? It puts it on the Treasury secretary to find some instances of Russian oligarchs, for instance, getting around sanctions through crypto. So, I mean, I'll say, you know, we've been coordinating with all the relevant search enforcement agencies, including people from treasury on our policies around this um and you know i think in general they've been extremely constructive i think we've been able to uh to effectively prevent it we've been able to trace a number of tokens you know related to financial crimes and consistently

you know stop them from being able to cash out um including some of the more high profile ones so you know i I think that this is it is an effective process, although it does take a lot of work. And it's really important that the industry does keep that up and keeps up that cooperation with law enforcement on this so that that, you know, does remain the case. Well, I know your industry has found new lobbying power. You've been a big backer of Democratic politicians, President Joe Biden. Have you backed Senator Elizabeth Warren? And why do you go to Democrats typically? Are they

friendlier toward Bitcoin regulation? So I've given to both parties, and I think there's sort of a high profile donation to Biden in the presidential election. But more recently, I have given to both sides of the aisle. And, you know, some of these are just good governance type donations looking, you know, from both parties at people who, you know, just unrelated to crypto, I think will help lead our country in a constructive, you know, direction. I think we've also found an increasingly bipartisan approach to cryptocurrencies themselves. I think that wasn't so much the case a year ago. I think there was more of a partisan split back in 2020 and 2021. But I think both

parties have been, in general, pretty constructive on it. And I think that's been reflected in what you see with the executive order. I think it's been reflected in the chatter that you see coming out of Congress, in some of the bills around stablecoin regulation that you see with the executive order. I think it's been reflected in the chatter that you see coming out of Congress in some of the bills around stable plan regulation that you see being drafted, all of which I think would help move the space forward. They'd help bring more of the activity back on short, creating a licensing pathway while also giving more regulatory oversight and customer protection to the agencies. What about Senator Warren in particular? Have you given to her? I don't know that I have. I could look up exactly who I have, and I can't tell you for sure off the top of my head. We couldn't find it either. Yeah. She's extremely sharp and extremely well-informed

on a number of things. I think a lot of the points that she brings up are pretty valid around there needs to be a conversation around sanctions and there needs to be strong enforcement on that. I think, as it turns out, this is something that has happened sort of over the last years with the industry. And I think, you know, we'd love to talk with her about that and about what is in place today and what she would like to see in a place that isn't there today. But I do think it's a super important point to bring up. No, I know you welcome the regulation, Sam. I want to ask you about how Bitcoin has performed. It hasn't done a whole lot.

The Fed did raise interest rates for the first time since 2018, signaled more on the way. It's acted a little more like a high tech stock than it has as an inflation hedge or a hedge against geopolitical uncertainty or even around what's going on with Russia. Are you disappointed in that? So I think there's a few things going on there. One, I mean, you saw right when, you know, when the war broke out, that Bitcoin got hit along with, you know, tech stocks. And, you know, it sort of was very much acting as a tech stock, which it has, frankly, over the last few years, because, you know, this has been a market where I, you know, sort of monetary policy has been driving moves. And that had similar impact on both crypto and on stocks. So that's been a piece of this. However, you know, after it sort of started getting hit, you know, on the beginning of this, it's actually substantially outperformed a number of tech stocks, you know, over the latter month or so.

Because I think that fundamentally it has reacted differently to the Ukraine crisis than tech stocks have, acting as more of an international hedge. I think there's sort of confusing factors going both ways, which have led to it not losing value net during this, although there was sort of a temporary drop. I also think that, you know, when you look at sort of the inflation numbers that are coming out, those are just reflections of things that have been true for a while. And so I think that that was sort of already reflected in Bitcoin's price appreciation over the last year or two, even if it took a while to trickle through to CPI. Well, CPI has gotten worse. And Sam, just for transparency, so are you doing business in Russia? Because some of your competitors,

like Coinbase, have said that they will continue to serve the Russian people. They're not going to pull out like a lot of the other Western countries. So what do you do about that? So, you know, before there even were any formal sanctions, we cut off all contact with all Russian banks and financial institutions. We do not do any payment transfers in or out of Russia anymore. And, you know, as sanctions came out, obviously some of the banks were hit with those. But we don't service, you know, transfers from any Russian banks, whether or not they're sanctioned, because we don't want to be in a position where there's some transfer that started from a bank that was sanctioned, went through a bank that wasn't, and ultimately ended up, you know, on our platform. So we proactively took that step there. We obviously also, you know, don't allow

any sanctioned parties or institutions or countries to access the platform. And we do know your customer checks and sanctioned checks, you know, on all the assets and people who use the platform. Got it. Sam Bankman-Fried, thank you for joining us, CEO of FTX. Moderna has been on an absolute tear this week. Now it's seeking approval from the FDA for a second booster shot for adults. Top analyst weighs in when we take you inside the market zone. And remember, you can listen to Closing Bell on the go by following the Closing Bell podcast on your favorite podcast app. Dow is up 190.

CRM, Salesforce, adding the most to the Dow right now. We'll be right back. 18 minutes left of trading session highs. We are now in the closing bell market zone. CNBC senior markets commentator Mike Santoli here to break down these crucial moments of the trading day. Plus Needham's Laura Martin here on the recent FANG stock rally. Boy, what a comeback. Jeffrey's Michael Yee on the big week for vaccine stocks as well. Welcome, everybody. It has been a strong week for stocks. The Dow, S&P and Nasdaq are all on track for their best weekly performances since back in November 2020.

And Mike, we wiped out a 200-point loss earlier today. It looked like the rally was going to take a pause. It has not. And this final hour in particular, it's been a pattern, a very strong performance into the close. What does that tell you? It's a sign, certainly, of a market where people were under-positioned for a good rally. And essentially, after a 12 percent, 10 week decline in the S&P 500,

very depressed positioning and sentiment. I think there was a we need to get back in. There's also a few tests that I think the market has been in the process of passing this week. One Fed rate hike clearly seems like it was priced in over the course of four months as investors braced for an aggressive tightening cycle. At least right now, that seems to be the case. You had some bond deals pulled. You least right now, that seems to be the case. You had some bond deals pulled. You had all these excuses for the market to make further lows, and it didn't do that. All that being said, we've rushed right back up to these levels. A lot of these systematic traders that I follow, people who follow these rules about tactical positioning,

will say, well, this is now where you sell the market. After, on an expiration day, we blew through some of those obvious levels where all of a sudden the hedgers had to chase the market higher a little bit. Growth stocks have certainly made a comeback this week, despite the Fed hiking interest rates. The beaten down FANG stocks were no exception. All up significantly, led by Meta, which is up nearly 15 percent for the week. Let's bring in Needham's senior internet and media analyst, Laura Martin. Laura, would you be telling your clients to add, build positions here after some of these mega cap growth stocks got beaten up so hard? So the answer is I would pay attention to the fact that the divergence

in the fangs is getting more extreme. So over the last week, You saw Alphabet down 6 percent, Netflix up 13 percent. And over the last month, you had stocks with a 10 percent range. So I think Meta is catching up a little bit. I would not be a buyer of Meta here. But I do like the idea of Amazon because it's and I'd be cautious about Apple also because of the China risk, because of what's going on in Ukraine with Russia. You didn't mention Netflix. You've never liked Netflix. I know it's been one of your big misses over the years, but you've continued to do some new research and have looked at this idea that people are more focused on the news right now, given the war in Ukraine, than entertainment. Do you see that as a lasting phenomenon and issue for Netflix?

I do. I think Netflix, I think we're in the seventh inning of the streaming wars. It's clear you just read my most recent piece. And Netflix is losing. It's losing to competitors with bundles. It's losing to competitors with cheaper price ad-like tiers. And it's not doing anything innovative. It created a business 12 years ago. They deserve kudos for that.

And it has done nothing innovative since. So I think it's losing the streaming wars. We're back to the price where we downgraded in the fourth quarter of 19. I would call that an OK call, even though I missed a couple of years during COVID of awesome Netflix results. They're still the first mover. They're still the dominant player. And they've still got a lot of international growth. And these are the arguments the Bulls use. I'm sure you've heard that. I have. I have. I just think they need to be more reactive to their competition because now we're in maturity. Now it's about targeting audiences and having it's not just about having better entertainment content. You need sports and you need news and you need a cheaper tier that's five

dollars, not the premium price point of seventeen dollars, which is where Netflix is. Mike, what happened this week to the mantra that the Fed is raising interest rates, they're going to keep hiking to fight inflation, and that makes long-duration risk assets like tech stocks vulnerable? It totally flipped this week after we got that message from the Fed. It just was priced in? Well, first of all, if you buy into that being the key driver, and you know I haven't really bought it. And I think that's an element of what's going on. What most matters is longer term rates. If you're talking about duration, then you look at the longer term yields.

They have not been really where the where the upside has been this week. You have the 10 year kind of stalled out just above two. And, you know, it's in a manageable range. And when you have the overall Nasdaq 100 losing 20 percent of its value in two and a half months, you know, then you're talking about things matter a lot more than a few basis points on the 10-year yield. And arguably, it's sort of a mean reversion relative value trade just to get back into some of those big index stocks as opposed to really trading tick for tick with bonds. NASDAQ composite up 2 percent, 8 percent for the week. Laura Martin, Laura, thank you.

Moderna shares also having a very strong week and building on those gains right now, up more than 25% as COVID cases and lockdowns climb in Hong Kong and in China. The company also asking for approval for a second booster for adults. Joining us is Jeffries equity analyst, Michael Yee. You've always been skeptical on this name, Moderna, and this idea that it's sort of a one hit wonder when it comes to the COVID vaccine.

Have you changed the view at all, given some of the momentum that we've seen in the stock and the optimism around potentially vaccinated China? It's great to be here. It's a great question. Good to see you, Sarah. Look, I think you're absolutely right. We've watched this go from 450, 350, 250, 150, and we see a little bit of a bounce here. You know, I think the key here is we're going to have these little spurts of concerns about another wave, China, Hong Kong, et cetera, a stock down 70% off the high is going to have some moves like that. But I'm going to continue to say, at least in the near and medium term, that Wall Street and biotech investors are still really skittish to come back to a COVID name. And I would think you might agree that the street seems to be moving beyond COVID and we're going to have to start getting used to

it. But is that the right call already? We're tracking this new variant, BA2. What we hear from the medical experts is that this is going to be with us now, certainly in the wintertime, and that, you know, we might have to get boosted. And so this could be a very long recurring revenue stream, could it not? Look, I think we might get a boost here. Again, it's down 30 percent year to date. It doesn't surprise me that we're going to have some bumps up, some little rallies here as people, I think, as Mike Santoli said, were off sides on some of these positions. I think you saw some short covering. I think you have people jumping in to buy stock down 30% year to date, 70% off the highs. And I do think we are going to have a fall boosting season. I do predict there will be people boosting. I think what people are still worried about is 23

and 24. And quite honestly, I think structurally, Sarah, people want to see something beyond the COVID vaccine. I think we'll get that stuff. I just think it's going to take time to play that out. And so I think the right call here is it's going to be rained down. What do you like better, Michael? Because biotech actually has had a pretty good week and a lot of the biotech analysts have waited for this for a long time. Well, it has been extremely tough for biotech over the last 12 months, and I expect it will continue to be a tough year this year. I think a lot of the structural problems in the group are about too many IPOs, too many bad negative news, too many challenging things, and certainly

Moderna going down is not helping. We do like Vertex. I think that is the call. It's actually been a good performer year to date. We added that to the franchise picks list back in December. They have one of the few companies with a multitude of positive events that read out huge number this year for cystic fibrosis business. I think they'll raise guidance. And I think that's a stock you continue to want to own in a challenging environment and a good chart and a recovery stop on that, which we like Vertex. Michael Yee, thank you for joining us. Vertex down a little bit today, but outperforming, as he noted. E-commerce stocks, check these out. They've been big winners this week as well. The online retail ETF up 16 percent since Monday, actually tracking for its best week since April 2020, helped in part by Chinese Internet stocks like

JD.com, which have seen big rallies this week as China stepped in with support. Jeffries initiating on some of these Internet retailers naming Rent the Runway, The Real Real and ThredUp with buy ratings. The firm conducting a survey finding that most respondents continue to shop for apparel online more than in person and that there's growing interest in secondhand and rental offerings. That has been the story for a while, Mike. And it's not like people beat up on the fundamentals of these businesses, just the environment changed so much where a lot of these names, which aren't quite profitable yet and are newly listed public companies,

have not done well. Has anything really changed? Well, no, but I think the other side of that is there was a lot of excitement out of the gate for these businesses, And therefore, the stocks got inflated, like a lot of other e-commerce and software companies. The chart of that online ETF, the one-year chart, it looks exactly like the cloud ETF. It looks exactly like ARK, which basically means it's been cut in half and has now had a furious rally back up to, you know, that sort of line that defines its longer-term trend. So I think that that is the issue. It is macro.

It is investor appetites for this stuff. Rent, I still think there's questions about, you know, the scalability and the business model there. But other kind of, you know, online thrift stores, so to speak, or exchanges, it seems to make a lot of sense. You know I have, I guess I would call it secondhand experience here. My teenage daughters seem to shop exclusively. Depop is a big one, which is privately held. But in other words, it's still the mode right now. It's kind of, you know, the status comes in finding, you know, a great undiscovered piece of clothing as opposed to a label. They

would be so proud that you cited them as a stock indicator. They would cringe, basically. By the way, it's not just the new IPOs. Etsy is up 22% this week. The major averages on track for their best weekly performance since November 2020, led by consumer discretionary and technology stocks. Let's bring in Charlie Berbrinskoy, Ariel Investments, head of investment group. Charlie,

great to have you back on. Do you trust what we've seen this week as a more, as a longer, sustainable move higher for the markets, or is it just a bounce? So, you know, we're long-term investors. Ariel's motto is slow and steady wins the race. So we're not going to pay a lot of attention to one week, but we do think the market was oversold. People were very pessimistic. I'm sure you've seen some of the polls showing some of the highest pessimism among investors in the last 10 years. And so and we do think that was overdone. Look, a major war in Europe is the kind of thing that should produce a little bit of caution. But fundamentally, we think the four factors that we talked to you about are still very much in place, one of which is a very strong economy, one of which is very attractive value stocks.

And so those things haven't changed. We've always asked you for your favorite stock picks. And back in December, you mentioned Apache. That has been a very good call. Charlie, are you sticking with it after a big move higher? Absolutely. Not only did I mention it, I called it out as my favorite. And it has.

It was, I think, 23 the day you asked me, and I think it's in the high 30s today. But it's just fundamentally, it was trading at about seven times earnings then. And even with this explosion higher in the price, it's still only trading at about seven times. Why? Because the earnings expectations have gone up so much. I mean, the market is acting as if these commodity names are having a once in a lifetime opportunity and it's going to go away. And I don't believe that. I think it's going to be very hard for the world to produce the kind of oil and natural gas, it's both, that this company produces. And you're getting a free option on their findings off the

coast of South America. They have had some very nice indications of some extremely large possible wells down in South America that could turn this into even more of a home run. So I still absolutely like Apache at these levels. Energy and utilities are underperforming today. Charlie, you've also liked the fertilizers, which have done quite well as Russia is a producer. It's banned the exports. And now we've got a shortage, along with a lot of other key commodities. Do you see this as a longer term issue for stocks like this? And would you would you be adding to positions? I think you have Mosaic and others.

Yeah, Mosaic is my second largest position behind Apache. And absolutely, the long term outlook here is very good As the world economy, as people eat more meat, which they do when economies get stronger, chickens and hogs and cattle all consume a lot more agricultural products in terms of calories than if you just have those calories straight from the field. And so there's going to be more need, more demand for agricultural products. Fertilizers are very effective means of increasing those yields. And Mosaic has extremely well positioned mines outside of the turbulent Middle East, very close to the North American and Brazilian activity. I mean, you're clearly still, Charlie, sticking with the invest around inflation as a key theme

and pick companies that have pricing power in this environment and are going to be scarce. But the Fed has started raising rates and they've totally changed their tune when it comes to the fight on inflation. They've come around to the Charlie Bobrinskoy point of view that it is a problem and that they are going to have to be aggressive when it comes to fighting it. So does that make stocks like this that tend to do well in inflationary environments not as appealing because you are fighting the Fed? It's nice of you to put it that way. I wouldn't say they've come all the way around to my point of view. Still, as of last month, they were still pumping $30 billion into the market with quantitative easing. Now they finally stopped throwing gas onto the fire.

They're nowhere near where they need to be in terms of interest rates. The Fed funds rate should be 2%, not 25 to 50 basis points. So they've got a long way to go until you get to my level of concern about inflation. I still think in their heads, they think this is temporary. Mike, I'm just looking at the market here. We're holding the highs here,

going into the close on a Friday. Consumer discretionary technology lead NVIDIA is popping. We've got two new additional highs here in the S&P dollar tree and quanta services, along with a few other highs sort of spanning all sorts of industrials to farm equipment, like Deere trading at all-time highs, Chubb, the insurance company. Which groups, Mike, would you be watching that will signal that this kind of rally will continue? Is it the ones that have been beaten down the most? Yeah, I mean, I think that's one element that you have to keep in mind just in order to gauge

whether most of what we're seeing here is just kind of a catch-up and just kind of things that were beaten down too much that have been picked up right now. You know, I do think it's worth keeping in mind the S&P 500 right now in four days has essentially regained half of what was lost in total from January 3rd through Monday in terms of up to high to low, about a 12 percent move. And that sort of tells you that, you know, we're at a point where it looks like it's real. We have multiple one percent days to the upside in a row. That's not to be dismissed. But it doesn't mean that it's going to be a V back to the highs. And so some of those areas that might be charged with being just a bounce, you might want to look at

that to see if it's going to be a durable move or not. Ten seconds, Charlie. Have you added any new positions that we should know about so we can track them? We're buying more and more Madison Square Garden entertainment. In an inflationary environment, great real estate like Madison Square Garden becomes even more valuable. We've been buying that. All right. It has been an underperformer.

Charlie Berbinskoy, thank you for joining us as always. Just under two minutes to go here on the trading day. Mike, what do you see in the internals? Yeah, it's pretty strong under the hood, Sarah. It started off kind of mixed, but if you look at the volume split for the New York Stock Exchange, it really powered higher. Now we're looking at almost a 3-to-1 advancing to declining volumes. Of course, overall volumes elevated by that triple-witching index rebalancing also going on alongside that. High-beta stocks, more aggressive, jumpier, more volatile stocks have started to outperform.

Take a look year-to-date, the high-beta S&P ETF against the low volatility one. Of course, low volatility had had some time in the sun. And now you have high beta slightly edging it out right now. The volatility index continues its decline. They're 24 now. So it shows you that this is an indication we have more stability in the market. We had a clenching up of anxiety. It's now released. Those spikes generally are positive, though. You want to see it really stretch down toward 20 to say that there might be more of a chance, Sarah, of it being an all-clear. We've got triple witching as well, expiration of options and index fund options, increasing potential volatility here. As we go into the close, though, we are holding near the best levels of the session. It's been a pattern we have seen for the last few sessions.

The Dow up about 250 points right now, three times, three quarters of 1%. Salesforce is the biggest contributor. Visa, Microsoft also going strong right now. The S&P 500, good for a gain of about 1.17%, adding to its gains for the week. It has been a strong week. In fact, the best week of the year.

Consumer discretionary and technology lead. That's pretty much been the story. A lot of the beaten down names getting some love this week. That's going to do it for us here on Closing Bell. Now I will send it into overtime with Scott Wapner.