Closing Bell - Closing Bell: Stocks Sink Despite Nvidia’s Big Bounce 5/23/24

Episode Date: May 23, 2024

Given how far much of tech has rallied since the April bottom, should you take some profits or buy into the weakness? All-star panel featuring Trivariate’s Adam Parker, Citi’s Kristen Bitterly and Virtus’ Joe Terranova break down how they’re navigating the market right now. Plus, top tech analyst Mark Mahaney is shaking up his top picks list. He explains those moves. And, the DOJ is suing Live Nation – Ticketmaster’s parent company – over alleged antitrust violations. The company’s president and CFO Joe Berchtold gives his exclusive reaction to that. 

Hi, Cal. Thanks so much. Welcome to Closing Bell. I'm Scott Wabner, live from Post 9 here at the New York Stock Exchange. Today, this Make or Break Hour begins with this accelerating sell-off and a question about tech. Whether it is time to take some profits in that high-flying sector, especially after NVIDIA's latest launch, Hire. Well, that stock is surging today. The other big names in that space, though, well, they are not, and they're falling pretty good today. We're going to show you the mega caps as we start things off. You'll see what I'm talking about. There's Apple at the top, back 190 that's down about two percent microsoft lower alphabets lower as well we're going to ask our experts what to do given the selling we are seeing

in that space today dom mentioned move higher in interest rates kelly did too uh stronger than expected economic data certainly part of the market story today as hotter news raises the fear of even higher rates and we're going to tell you what what J.P. Morgan CEO Jamie Dimon said about all of that in just a bit. Boeing, UnitedHealth, some of the banks, well, they are the big drags on the Dow today. Take a look at that loss from Boeing, the biggest drag and the biggest drag by far. That stock alone is down some 7 percent today. Elsewhere, we're watching the continued reversal in copper and a drop for utilities. Those are two areas that have been flying high of late. There's copper down about two percent. And the utility sector with a role of its own today. It does take us to our talk of

the tape, given how far much of tech has rallied since the April bottom. Should you take some profits or buy into this weakness? I gather a lot of investors are making those decisions at this moment. Let's ask our panel. Trivariate founder and CEO Adam Parker, Kristen Bitterly of Citi Global Wealth, and Joe Terranova of Virtus Investment Partners. Joe's a CNBC contributor. It's good to have everybody here. Adam, what's this about? Is this about that hotter data this morning that jump up in rates and we're reassessing things or what? Yeah, I mean, it's hotter everywhere. It's hotter. It's 100 degrees where we're sittingessing things or what? Yeah, I mean, it's hotter everywhere. It's hotter.

It's 100 degrees where we're sitting. It's 90 degrees outside and there's a little bit hotter econ data. So I guess the, you know, people's rate path once again changed. Look, what I've been doing in my meetings this week is saying three things. And one is don't waste your time trying to make two-week market calls. Two is don't waste your time trying to make interest rate calls. And three is don't talk to me about equity or premium. None of those things have any predictive value at all,

and for fundamental PMs, it just wastes their time. So my crowd as you know is much more like picking stocks to beat the market, and I'm trying to just say get rid of that because the rate guys went from seven to two, and if you look at the economic data, it's not that much different net net four or five months later. The answer to your question is today is about that. But if I look any six,

12 months forward, I think it's more optimistic when the economy runs better. I think good news is generally good. And so, yeah, I feel better about the market today than it did yesterday just because it's down. And I think the economic news is better. What about the question I asked at the top about what's sort of to do with tech? So let's just refresh people's memories, okay? You suggested for much of the last year that people be overweight mega caps, which is the sizable weighting, but still to be overweight that area. I would say maybe three weeks ago, two, three weeks ago, you said, no, now you want to be a little more tempered.

Maybe you want to be underweight in that area. Take some chips off the table in MegaCapTech. That space continued to rally. It's the only reason we got to where we did. Well, not the only, but one of the major reasons we got off the April lows in the way we did. What do I do now? So, look, I mean, you know, I don't like, I don't know if I've ever victory lapped on your show because I don't like that. This week has been probably our best week ever because our two main calls,

basically with Microcosm, has been short Target and long NVIDIA for the last 18 months. So that has worked this week. What do I do now? My call was market weight, not underweight. I've never been underweight, the tech stuff. Oh, my bad. So market weight. You went from overweight consistently to market weight. Yeah, I like the market. I've been bullish on the market because of easy financial

conditions and margins expanding. That's been the thesis. I think two, three weeks ago when it came on halftime, I'm like, it's getting closer to 50-50 now in terms of 10% up, 10% down. That's right. And I think that's sort of where my head still is. I think the AI thing is in the early phases. So, I don't want to be a portfolio manager and say, oh, I couldn't own AI because it was too expensive. It's not about owning it. It's about lightening up. Yeah, and that was my view. The high-quality stuff has gotten high beta. It's a little rich, and I think you trim a little and you add some where people hate it.

I don't like romanticizing I'm a contrarian, but I think if you want to go where people hate it, it's probably health care. People think it doesn't work in election year. They don't like services. The costs are high. And I think 2025 could set up pretty good. So I see trimming a little. I don't say it's a game over and never own Google and Meta again. No, but you said that Nvidia, like leading up to the earnings, you said that this was the biggest moment for the market by far. Nvidia's earnings, right? Okay, but now that they knocked the cover off the ball, right? Stock

is ripping. Does that give you more confidence that there's more room to go than maybe you thought in the market or not? Because if they would have disappointed, I mean, we're seeing a sell-off now, but you know what I mean? Yeah. I think it just all depends on your horizon, right? If you're investing out, you know, 6, 12, 18 months, I think the risk reward's good. if you're investing out you know six twelve eighteen months um where might think the risk reward's good if you you know to to owning uh tech to owning ai to owning the guys who have big moats and have margin expansion if you're saying tactically like i told you i'm not very good at that and i think making one month calls is hard yeah um kristin so what do we do um with with today right now Right now, as we get the final stretch underway,

five minutes in, looks far different than it did this morning. Certainly. I think, though, we shouldn't read too much into this. We're going into a long weekend, and I think a lot of it is profit-taking in terms of positioning ahead of the weekend. I do think the good economic data that we received this morning, we should treat that as good news. Just a couple of weeks ago, we were talking about stagflation. Maybe even last week, people were talking about stagflation. So if you see economic data like that, that's positive in terms of growth. So our positioning right now is playing a broadening out of the market. So to answer your question about in these large names, we certainly have exposure, but I think it's more of an S&P 500 equal weight as

opposed to the market capitalization weighted index. You know who's still talking about stagflation? People like Jamie Dimon, who spoke exclusively with CNBC Asia today. And look, I mean, he's been more cautious, I think, publicly than most. I want you to listen to what he said about where he thinks all of this, you know, is going. Do I think the rates can go up a little bit? Yes, I do. And if they do, is the world prepared for it? Not really. I look at the range of outcomes. And again, the worst outcome for all of us is what I call stagflation. Higher rates, a recession, you know, that means corporate profits will go down and we'll get through all of that. I mean,

the world will survive that. But I just think the odds are a little bit higher than other people think. Joe, that's been his consistent message. Some people say, oh, that's just Jamie being Jamie. But the Fed minutes were hawkish. They were more hawkish. Now, they were backward looking because they happened at a time where the reads on inflation had been hot for, you know, three months in a row, time of the last meeting, things felt a little more hawkish going in. Powell sort of changed that with his commentary

because he wasn't as hawkish as some feared that he might be. But this does raise the issue, though, that the market itself is not prepared for a big backup in rates again, nor is it prepared for the what to many is unthinkable. And that is a hike by the Fed. Yeah, I am listening. I'm not ready to go there on the Federal Reserve actually presenting a hike for us. I like what Kristen said just in terms of putting today in perspective. It's ahead of a summer holiday weekend. Liquidity is not as strong as it might have been, you know, six weeks or eight weeks ago. And I think what we can say about today is today officially closes

out the earnings season. Like what's what's next after NVIDIA? This is it. And I think to say that you believe that higher rate environment, economic recession and and Jamie's last thing was corporate profits to begin to contract, I think you're forgetting what we just witnessed here, a 5% gain in the S&P 500 over the last month. Why? Attributable to the resiliency of corporate profitability, in particular, in the technology sector. Mostly.

I just don't agree with that. Mostly in the tech sector. Mostly in the technology sector. I just don't agree with that. Mostly in the tech sector. Mostly in the tech sector. And I think now the visibility that you have as a portfolio manager looking at the market is, OK, what do I have in front of me? And I like what Adam said, where he said, look, we're not trying to predict the next two months and longer term. We've got a bullish thesis. I completely agree with that. Longer term, I think markets are in a great place. But now as you move into the summer, you say to yourself, OK, what next do I have to look towards for a catalyst? Is it going to be the Worldwide Developers Conference from Apple? We have already

had a significant bump up in sentiment positioning for Apple. So I'm not sure what there is to get excited about. And in that environment, we go back to this awful place where we're the Monday morning quarterback on what the economy is going to be. And I don't like being in that position. And I think that's the vulnerability of the market over the next several weeks. I think the question would be what would make the 10-year yield back up, right? If you think it's the economy is good, and I'm with Christian, I think good news will be good. If you think it's this whole, oh, bond vigilante, this is the beginning of the end of the U.S. as a real currency, then, you know, you're crazy. Right?

Or that you've been proven prepositioning for that in the past has not been a good idea. I guess I should say it that way. Right? So I don't believe the 10-year yield backs up to 5, five and a half while the economy's terrible. I don't think that's likely. I've listened for years to all these interest rate guys and all these bond guys say, oh, like supply is coming online and it's going to back up. And every single time you get afraid, the 10-year yield goes lower anyway. QE1, QE2, QE3, twist, torque, Europe. Why? Because when you're afraid, you buy the 10-year yield.

So if people want to go out there and say, I'm positioning my equity right now for a three to six-month move that the 10-year yield is going to back up a ton while the economy deteriorates, you go for it. But I don't like that. I don't think that's correct. And I think you'll lose money if you make that call. And the other thing I would say is, I think the question is about, or the comment is about, are people prepared for that?

Are they positioned for that? Are they positioned for that? And I would agree with that. I don't think anyone's positioned in terms of rates, nor should they be, based on. And I think if you are someone who is worried, and you're worried about that we could see a decline in the equity market, the most interesting thing right now is volatility is so muted. Yes, we saw the VIX pick up a little bit today, but nothing meaningful, which means hedging your portfolio is actually relatively cheap. So if you are someone worried about that, that is a possibility. Geopolitics, elections, there are ways of actually taking that risk off the table without going out of the market.

Let's talk about some specific places in the market where maybe it's a little more acute today in terms of the selling. But the banks, for example, Goldman's a drag today. Stock's been around a new high almost every day. We've been documenting that on this program and others. JP Morgan, too. Let's just show you the performance of some of the banks, because there was a story. There you go. Not huge selling, but nonetheless. I mean, there was a story, Joe, circulating today about CMBS buyers, okay? 1740 Broadway. A single property in Manhattan.

Yep. Okay, we're talking about one property, okay? But the idea was that the bondholders, even on the AAA loans, okay, the best of the best, the top of the stack, are seeing losses for the first time since the financial crisis, which tells you just how bad some parts of commercial real estate actually are. Obviously, the question then becomes, what's next? Is there another property and then another property? And then to what degree do the banks hold this stuff on their balance sheets? Do we need to think about that a little more seriously than we have been? I think we have been thinking

about it. Not that much. We have been thinking about it. Has the market been responding to it? No, I'm not so sure that it has. A few of the commercial mortgage-backed traders that I talked to have said this will not be the last one. There will be more in the future, in the coming months, and the market is going to have to deal with that overall. I also think it's important to remember that financials have been a popular place to be outside of technology. So positioning is rather full in some of the names that you cited in the financial sector overall. And thinking about the price action of today, the environment as Adam and Kristen and myself have defined it, I think the question comes down to, OK, do you stay with that

broadening out thesis, which appeared to be over the last six weeks, gaining some validity, seeing areas of the market that were going to work or do you go back to the port of storm which is your shelter right your your mag 4 or your mag 5 however you want to define them those really quality names that could care the less where interest rates go we knew that at some point in this particular cycle given now this is maybe the area where the long and variable lags of interest rates being as high as they've been relative to where they were for the last 10 years was going to have the most dramatic impact. It was just like a slow moving train wreck. Are these the first sort of bigger signs that we need to keep our eyes open for?

I mean, look, every bank's analyst I know has long since been, you know, trying to figure out the CRE exposure of every single regional bank. They're trying to figure out which ones mismatched assets and liabilities from the 18 months. Like these guys are all over. I think they were up because the economy was stronger. I think Goldman CEO, you CEO, people like that thesis that only 6%, 7% of all private equity is monetized and there could be a ton of deal flow coming through that could help these guys. So that's why the big guys were up.

So I think there were reasons. When I talk to my guys who are bank stock experts, I think they're confused about what interest rate environment they're actually rooting for at the current moment. We've had kind of an inverted curve for a while, and I think they're just confused about what's going to cause a pretty good book growth. I don't think they're very good investments. I wouldn't be really overweight to financials myself.

And I think part of the reason they also are up is, it's funny because Jamie Dimon did a really good job of listing 10, 12 reasons JP Morgan could benefit on AI over a five or 10 year stretch, maybe, what was it, 10 days ago or something. My own view is it's going to take way, way longer for the banks to benefit from AI productivity than other parts of the market because you have to run everything in parallel. And obviously, those industries compete on pricing more than anything else. So as you've seen, I'm sure all of us have a bank, whichever one you use, what has their productivity investment meant for you?

Increasingly inferior service for you, and they competed away on pricing. So I'm not sure it's great for the stocks long-term. So I think you sell some of this. I agree with this, Saul. If it makes more sense to me than maybe... In the banks. Yeah. Because look, let's not forget either, Kristen. The other day, we joked, oh, maybe Diamond called the top in his own stock. And the other is when he said, well, these levels, I think it was their investor day. We're not going to be buying back a lot of stock at these levels. Sort of made you sit back and say, you know what? Things have run a lot. Maybe it's time to reassess a lot. And then NVIDIA goes

up 100 bucks on the backside of its earnings. And you're like, you know what? Wow. A lot of those stocks have gone up a lot since the April lows. I think a lot of it going back to the banks and in terms of what they're sensitive to, Adam brought up a good point. Like, what are you rooting for in terms of the rate environment? And I think the short end of the curve, when if we think rates are going to be higher for longer, if we think there's a delay in terms of the first rate cut, that makes T-bills really attractive. And so you see flows out of deposits and into T-bills, into money market funds. And so that's always a consideration for profitability. But if you're going to go long the banks, I do think the preferred market is a really good place

to be. When you look at the well-capitalized large G-SIB banks and the preferred issuances, you're talking about high single-digit yields there that many of them qualify for qualified dividend tax treatment as well. So that's an expression of getting involved, but really looking at the strong balance sheets. I'm looking at another headline right here, Bloomberg headline, Starwood Reap Tightens Redemption Limits to Preserve Liquidity. May I just bring this up? Because we were kind of fixated on commercial real estate for a while. We were. And then we kind of took our foot off that gas for a bit because it was like, well,

you know, aside from the regional banks and some issues here and there, it's not a big deal right now. Market rallies back. Everybody focuses back towards AI and they forget about the issues of the past. Well, I think the next move from the Fed is a cut. All's going to be good. You don't have the visibility into the asset class unless you're specifically focused on it. You either own the properties or you're trading around it.

So so for us, we need the headline for the market to react to it. And that's what you're getting today. But I feel pretty confident the Federal Reserve is well aware of the challenges that continue from the spring of 2023 through today and will continue through 2025. This isn't going away. I think the public equities, which is, if you're guilty of just focusing on that, Joe Spanat, guys get that. They've underperformed a ton. The public ones also have like trophy properties that make things better. If you look at, you know, Vernado, Essel Green, they've got some amazing buildings. But anyone I know who's like a family office guy who can look at bigger buildings,

20s, 50s, 100 million, it's a mess. And they all know it. Buildings that were on sale for 200 million in San Francisco or New York a year ago are now 50, I mean, 50 million. Like the degradation of pricing has been massive. I think it's a eight to 10 year long thing, not a six month one.

And you got it, the banks guys know which ones are exposed. So I think the public equity guys are all over it, but I agree with Joe, you gotta be in that market, in the private market to really know about it. Here's another one for you. How long until, cause it's happened like every time, right? And even as stocks were selling off into the April low, Joe, how long until just buyers come in and buy a mega cap tech on the sell off?

Right. I mean, you see, NVIDIA, by the way, is holding almost all of its gains. OK, it was up, I think, 100 bucks or so at the at the at the high today. It's still up 76, 76 bucks. So the way I think about a day like today is I don't look at it and say, OK, is this an inflection point? Is this the moment where the market topped out? We're about to have a 10% to 15% correction. The first thing I think about is, is the personality of the market changing? Is the personality of the market going from what was a real sunny disposition, which was treating everything, not just technology, treating everything, the do-it-yourself stocks, the crypto universe, all of it really well. Now, does it go to an environment where it gets a

little bit more cloudy, a little bit more moody? And I think the answer to that is yes. In one day? I do. Because in the days leading up to today, we were talking about, when you say everything, we were talking about the everything rally. It was the everything rally. Tech was rallying. Small caps were rallying. Gold was rallying. Copper was rallying. Bitcoin was rallying. It was literally everywhere. Right. But I'll go back to my opening remarks. What happened today? You had closure on the earnings season. That's it.

You're not getting any more really, really impactful earnings where the market's going to react until the end of July. I got a question for you. You're definitely better at this than me. How do you know when the vacuum of data is bearish or bullish? Because I've heard arguments in the past, I maybe even made one of these, where like, oh, the good news is there's nothing that matters for a month, so the bias is positive. Is it just seasonally or the today's? Like, what makes you say, because I'm listening, I'm like, I might be right, that this vacuum of data is now going to be bearish for a month? I don't know. See, that's, no, no, no. See, I don't know. You don't know. OK, so the problem is the uncertainty.

How do we know what's coming in the next six weeks? How do you know when there's good news is actually good or bad news? And Adam, what is there to push against it? Yeah. If the eco data doesn't align itself with the market, do we have inverted earnings? Do we have Apple buying back in stock? No, we don't. I think good news will be good and bad news will be bad in this band we're in now.

If it gets much worse, then the bad news will be good because people will be back on until like multiple. And it goes back to the cash on the sidelines in terms of when we think of a floor to the equity market. You had a relatively resilient earnings season. You've seen a broadening out of earnings. And so anyone who has not been involved in equities and has been sitting on the sidelines, that creates a bit of a floor. Whether that's down 5% or more, you will see people stepping in to participate. It's a good crew. It's the A-team. I enjoyed it. I enjoyed it. Adam, Kristen, and Joe, thank you very much. Let's send it to Christina Partsenevelos for a look at the key stocks that she is watching as we head towards this close. Christina. Get that Manson AC.

More Boeing woes. This time it's cash flow problems. The plane maker expects to burn through another $4 billion this current quarter and be cash flow negative for the year as it deals with supply chain issues and production issues. And this is according to the company's CFO. Shares are down 7.5%, one of the worst S&P 500 performers right now. Consumers may be cautious, but they aren't cutting out their beauty products from Elf. The company posted its first billion-dollar year with sales up 77%. The company is a hit with

younger customers, and that's why you're seeing this stock double today, even with the markets dropping up over 15%. Forecast forecasts were a little lighter than anticipated. But else CFO suggesting that the guide is conservative. Market likes it. That's why the stock's up. Good stuff. Christina, thank you. Christina Partsenevelos. We are just getting started here. Coming up, StarTech analyst Mark Mahaney. He is shaking up his top picks for his sector in the tech sector.

He will break down those moves next. And later, Live Nation is sinking today on news that DOJ is suing that company. We're going to hear from the company's president and CFO. It's an exclusive interview. There's big news today. You need to hear from that person right there and you will. And you're only going to hear it on Closing Bell. We're back. Dow is down 607 points. we're back with stocks falling near session lows after hitting record highs earlier today nvidia's earnings rally trying to offset declines from the rest of the mega cap tech space our next guest still sees more upside

in there and is shaking up his top picks. Joining us now is Mark Mahaney. He's the head of internet research at Evercore ISI. It's good to see you. Welcome. Hey, Scott. I'm going to get to the specifics in a minute, but just give me your thoughts on this reversal that we've seen in the NASDAQ, which has been trading around record highs just about every day now. I don't know if I've got a lot to add to what your prior guests have said. You know, I get it. Interest rate concerns are always an issue for tech stocks, for long duration assets where so much of the earnings power, at least for some of the sectors, those that trade on the EV to sales basis, that those long duration assets are always at risk when there's interest rate concerns. But that said, I think the fundamentals of the group that I look at, which is internet stocks, you know, I look at the demand trends that we've seen so far

year to date, the margin trends, the fact that these companies are actually now paying dividends finally and buying back a lot of stock. And then I see this AI engine is really a growth driver for a digital first sector. So I like the fundamental trends. Now, valuations have really come up a lot up until today's sell-off, but it's just one day. But valuations have come up a lot, so we're more compound constructive rather than aggressive buyers across the board. But still, there's a couple of names in here we really like. You have an interesting perspective, obviously, for doing what you do and the fact that you don't cover NVIDIA. But it matters so much to some of the stocks that you do cover.

I mean, did you go into the report feeling like it had to be great to validate the move that, let's say, an Amazon has had or an Alphabet has had and then confirm to you that those stocks could continue to go up? I'm going to go the other way on your question, Scott. I cover three of the biggest customers of NVIDIA. I cover Google, Meta, and Amazon. And I see just told me, what you just learned is that NVIDIA's four of their biggest customers are those four companies that have massive balance sheets, very profitable, and they're pretty smart tech investors, those four companies are. So when you see them really lean in, that was probably a pretty good leaning indicator for NVIDIA. That's how I thought about it. Interesting. Okay. I like that perspective that you give. You moved Alphabet, by the way, in terms of your top picks list, you moved it up to number three, right? And you replaced DoorDash with Uber. But tell me why you moved Alphabet up.

Why did you feel the need to do that? Well, this is mostly bringing Dash down. Look, we made Google one of our topics earlier this year when it just got dislocated for AI reasons in the wake of some of the product challenges they had when they first rolled out Gemini. But I just thought those were small little challenges. I thought the call that Google will somehow AI roadkill, Gen AI roadkill, was way misplaced. And I think the company's proven that, by the way, in the last week. I think their I.O. conference and then what they showed from Google Marketing Live two days ago, this company, I think, is a major beneficiary of AI. It's not just one. There's going to be three or four or five major winners off this. I think Google's one of them. And then I still like Google going forwards. And I prefer it over Meta because it's just a matter of product

cycles and comps. You know, Meta had these great product cycles last year. And I think those product cycles now belong with Google. Like they're the that's where the most interesting incremental product cycles are. And I think their ad revenue growth isn't going to decelerate in a way that Meta's will near term. So I like Google as one of our top picks. And valuation is still very reasonable. Well, forgive me for jumping there. You said this was really about bringing DoorDash down. Why did you feel the need to do that? It's had a really nice performance here today that's outperformed. And so, you know, I kind of went back and forth earlier this year or late last year. Uber was one of our top picks and had a great run, kind of took it down a little bit in our pecking order, pecking list and brought up DoorDash. And then DoorDash has outperformed.

I'm also looking for what I call false flag issues or wrong reasons for stocks to trade off. Here's one on Uber. The stock's traded off. Why? Because of these concerns over robo-taxis. I think that's, I don't agree with that. I may be wrong, but I don't think that's going to be an issue for Uber. I think if robo-taxis or autonomous vehicles are really going to gain mass market adoption, it's going to come through ride share networks or transportation networks like Uber. That's the way it's going to get critical mass. And we're still so far away from that being material to the market. I actually think Uber is going to be a winner off of autonomous vehicles.

So if the market wants to sell off Uber on that thesis, I'm going to bump it up. All right. I appreciate it. Mark, it's good to talk to you. We'll see you soon. That's Mark Mahaney. Thank you, Scott. Up next, a big breakup is on the horizon. Maybe the DOJ is suing to split up Ticketmaster's parent company, Live Nation, over alleged antitrust violations. We hear from Live Nation's president and CFO exclusively right after this break. I have more news regarding that Starwood story we mentioned a little bit earlier. Our Diana Olick has that for us. Diana, what are we learning here?

Well, Scott, in an SEC filing with a letter to stockholders, Barry Sternlich's $10 billion SREIT says it is going to limit redemptions. They had $1.3 billion worth of redemption requests in Q1. They were only able to satisfy about five hundred million dollars worth of that, according to filings. But now they're saying while redemption requests are down from their peak in January 2023, they have remained above the share repurchase plans monthly and quarterly limits for the past year and a half to meet the continued level redemptions. Real estate property sales became increasingly necessary to execute SREIT's ongoing liquidity strategy. That is, according to this report, that beginning with repurchases in May 2024,

we will limit share repurchases to 0.33% of net asset value per month. In addition, beginning on July 1, we will limit share repurchases to 1% of NAV per quarter, which is described in greater detail later. Using April 30th, 2024 NAV, these new limits equate to approximately $33 million of available liquidity per month, $100 million per quarter or $400 million per year. Now, obviously, these REITs are bleeding cash because of valuations on commercial real estate, not just office, but the whole book. Because of higher interest rates, it's more difficult to refinance these loans, make deals, and because the values are coming down, that's the issue. Now, I would say that I've spoken to some experts about this over the last couple of days, that this is a private REIT problem with SREIT and BREIT and those redemptions.

It's not, well, public REITs do have issues, obviously, with valuations and higher interest rates. They're repriced basically every day because they're public, and that goes into the stock price and their liquidity. These private REITs are not nearly as liquid as the public REITs, and so that's why we see these redemptions having to be curtailed. Scott. Diane, I appreciate the update very much. Thank you. That's Diane Oleg. Shares of Live Nation falling in today's session as the Justice Department announces it is suing the Ticketmaster parent over alleged antitrust violations. Joe Burke told his Live Nation's president and CFO he's with us now exclusively, along with our own Julia Boorstin. Julia. Thanks, Scott. And Joe, thanks so much for joining us

here today. On the heels of this big news. I want to start off with the allegations that the DOJ and the state's attorneys general are filing that Live Nation Ticketmaster has engaged in anti-competitive conduct by, among other things, threatening and retaliating against venues that work with rivals and restricting artists' access to venues. How do you respond to that? Thanks, Julia. At its core, I think what the DOJ has accused us of is being drivers of higher ticket prices, higher service fees for fans when they go to shows. That's the core of it. And the facts just don't sustain that. If you look at the business results of our ticketing business, of our promotion business. The take rate of Ticketmaster is around 5%.

Promotion side, it's around 2%. It's simply not enough profitability to sustain any real monopoly or control of the industry in the way they assert it. But Joe, so much of this suit is specifically about Live Nation using its size to squash competitors, including by acquiring companies that could become rivals in the future. I understand your point that this seems to be based on concerns about ticket prices, but how do you address some of those allegations? Yeah, we fundamentally disagree with all of these allegations.

If you look at the history of the acquisitions we've made these tend to be very small local promoters often buying festivals or establishing a presence in a market that we're not in these are not promoters that realistically were ever going to be major touring promoters so we absolutely disagree with the characterization that they've made today and the DOJ does say that Ticketmaster controls about 80% of primary ticketing. Obviously, that's a big number. Is that accurate? Yeah. No, it's absolutely not accurate. We've been through this many times with the DOJ and with others. They're using an extremely narrow definition of just the top arenas or top arenas

and stadiums in the country. That's not a market definition in any legal sense. It's a very narrow definition to the types of venues that Ticketmaster has developed its software to be particularly effective in. If you look at any level of broader, the top couple hundred buildings in the United States that are easily substitutes for where an artist can tour are market shares in the 50 to 60 percent range. So they've cherry picked to get to a higher number. It's not relevant. Hey, Joe, this is Scott Wapner. I'm glad to have you on our program today. I just want to ask you a fundamental question, I suppose, a simple one, too, I think in the minds of many, is to why the largest concert promoter, one that also manages more than 400 artists directly, should also control such a large portion of the ticketing to those shows that your artists put on?

And how does that not drive ticket prices higher? Well, there is no basis for saying that the ticket prices are higher because of any of our conduct. What the DOJ has done is they've taken a variety of random data points and put it together to create a thesis that we're somehow creating higher ticket prices. The ticket prices are driven in the marketplace by what the artist needs given today's production costs, given what they see in the secondary as the value artist needs given today's production costs, given what they see in the secondary as the value of their show, what a fair price will be.

Our margins on that and ticketing is 1.7% last year. So if you took out our entire margin, all the money we made, that would reduce prices by 1.7%. It's just not what's driving the pricing in the marketplace. I understand, but I mean, you don't think there's any potential conflict of interest in the the idea that you're the largest promoter. You directly manage the artists and then you set the ticket prices as well. And especially when it's a, you know, obviously a high demand show, you have the power to set the ticket prices ostensibly as high as as you would like. But we're not setting the ticket price. The artist is setting the ticket price for what the artist needs to make at the show. And we're then working with the artist to market the show, to sell the tickets, to get

the fans in, and on the ticketing side to operate the platform. We went into ticketing because there was not an effective ticketing platform to sell concert tickets 15 years ago. We've invested hundreds of millions of dollars in Ticketmaster to make it unequivocally the best ticketing platform to sell concert tickets. Rival promoters regularly publicly have stated that Ticketmaster is the best platform

to sell their tickets. We have a lot of data, data that we shared directly with the DOJ that demonstrated that shows sold on Ticketmaster empirically perform much better than shows that are sold on other platforms so no we don't see that it's a conflict we see it as mutually reinforcing pieces that deliver the best outcome for the artists and the venues that we work with now Joe just to bring it back to the stock price which we do have up on the screen right now, down about 8 percent.

Your stock was also down yesterday in anticipation of this news. What's your message to shareholders who are clearly concerned about this? And if the company were to be broken up, which is what the DOJ would like to see, how much would those separated entities suffer by the lack of synergies that you currently have? Yeah, we believe that the Department of Justice has spent the last two years trying to figure out how to come to their predefined decision that they wanted to sue to break us up. That all they've accomplished over the past two years is find a handful of unrelated conduct that is very specific business practices to individual businesses that does not establish any basis for overturning the merger that has been multiple times approved by the Department

of Justice as a valid merger. So we don't think that they have a case that is valid. We don't think they have a case that can win. And all of our focus right now is on publicly getting the facts out, range of facts that we've shared with the Department of Justice that I personally have shared with them over the past month. It shows how Ticketmaster and Live Nation have both been declining profitability, declining take rates over the last decade.

It shows the competition is working in both industries, transferring more value to the artist and more value to the venue. They chose to ignore that today in all of their press conference, but we'll continue to get the facts out, and we're confident that those will win out at the end. Well, we'll see how this lawsuit pans out, but we appreciate you joining us, Joe Burttold,

on the heels of this big news and Live Nation's stock move lower today on the heels of that DOJ suit. Thanks so much for joining us. Thanks, Julia. Scott, back over to you. All right, Julia, I appreciate you very much bringing that interview to us. Julia Boorstin coming up.

Stocks are sinking as we head towards the bells today. NVIDIA's post-earnings bounce failing to lift the broader market. Did initially, but certainly not now. Maryland Bank of America, private banks, Chris Heisey's back with us. Tell us how he's navigating this turbulent market swing. He'll join us next. All right, welcome back to Closing Bell. The S&P 500 and NASDAQ sliding today after hitting all-time highs earlier in the session.

Dow's down a lot as well. NVIDIA's post-earnings rally failing to give the overall market a bigger lift. Let's bring in Chris Heisey now. He's the CIO of Maryland Bank of America Private Bank. He's here with us again at Post 9. It's good to have you. Thanks, Scott. I mean, NVIDIA, you know, blows the doors off. And then here we are in the midst of a big sell-off. What's up? Well, I think it's a little bit of get ahead of tomorrow type of situation with the three-day holiday itself. I can't really use that as the full excuse, but any little headline that pops up where someone might not want to go into tomorrow fully loaded,

you might see some of that. But also, you know, pop-up in yields. That's the big story here, but that's the story of the day, not the trend. How do you know that? Well, you actually don't, but you could actually look at all the data and say, okay, the consumer is getting tired. They're getting selective. They're using base effects now.

You're starting to see some of the retailers discount prices. Small data point right now, but we expect some of that to continue. So we expect yields to kind of crest once again, come back down, and provide that invitation once again to buy on weakness. What if Jamie Dimon's right? People are dramatically underestimating the broader effects of everything that's been done by the Fed. It's not a foregone conclusion in any way that we're going to have a so-called soft

landing. And we need to be more aware of it than perhaps the market would suggest we are. I think that's right. I think at the end of the day, forget about the landing for a second. We all talk about soft, hard, or no landing. I mean, it's going to come back and forth like a ping pong match. What about this concept of a bridge cycle, which is we are just trying to normalize. We got way ahead of ourselves with all the stimulus and now we're normalizing. And I would say that we might be in this bridge cycle

for quite a few years, not necessarily always waiting for either a recession or waiting for the last mile of inflation to come down. It's simply we're normalizing. What if we're normalizing an environment in which inflation is going to remain more elevated than we're used to for a longer period of time? That could be part of the normalization process, too. And then we need to reassess sort of what the multiple of the market should be, what earnings are really going to be. Right. I think that's right. But if that happens, you actually have a little bit more of an acceleration or at least a little bit better

base for profits to rise because you get better nominal growth. As long as it's not a sharp increase once again in inflation, you get that consistency level. Well, there's nothing wrong with 3%. I mean, when you're talking about market measure-based inflation, it's tough for those who are struggling, for sure. But when you're talking about corporate profits, a 3% inflation rate actually worked really well in the 1990s. What about areas of the market you want to lean into and ones you want to avoid? I mean, we bring it full circle to where we started 50 minutes ago. We asked the question, like, do you lean in? Does NVIDIA give you confidence to lean in to tech, or does it make you rethink and lean out a little bit?

Maybe that's what's happening a little today is some profit taking is just in order because the stocks have gone up a lot. Yeah, that's natural. That's healthy. We should be seeing that from time to time because when they do get overextended, it's nice to pull back some of your exposure. But the trend is still very early in CapEx, very early in this mismatch between supply and demand, whether that's assets or simply just generative, you know, artificial intelligence. I think the last time you were on, I try to remember exactly how you put it, was something to the effect of we're in the early stages of a

decade-long bull market or something like that. Yeah. But do I represent that okay? I think you're right. Is that your view? That's the view. You know, it's, again, we said it back then, we'll say it again. It's easy to say that when things are going up.

And it's easy to say that perhaps on a day like today, because we're living in the moment and we're projecting forward. But if you just think of wealth transfer, you think of supply, the economy is asset light. People need assets to grow well. The supply of assets are low. The demand for assets are high. That begets climbing the wall of worry for a longer extended period of time than people want to believe. How much more upside do you think we can legitimately do between now and the end of the year for the S&P? We're at 5,300 today.

5,300 today. The bull case would tell you we can rise 6%, 7% from here. The bull case. The base case is literally just about 100 points higher from here. But the key is not necessarily what the market can give us. It's what the market internals can give us. And there's a lot of opportunities. We said this before. We all talk about that narrow segment of the market. Yes, it's still helping lead the

market. But there's 180 plus companies that have outperformed the S&P through the first week of May. Chris Heisey, thanks for being here. Thanks, Scott. Good to see you. All right, coming up, Workday. They're reporting an OT. We're going to run you through the numbers to look out for ahead of that print, that and much more when we take you inside the Market Zone next. All right, we're now in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, Contessa Brewer looking ahead to workday results. They're coming in overtime as well.

All right, why don't you drop some knowledge on us? It's a pretty good little rinse. I mean, 85% downside volume in the New York Stock Exchange. You have this slightly ugly setup where you do have this push higher into an intraday record high, and then you lose it. That being said, it doesn't seem like it's really disturbed that much underneath the surface. I think there's a high sensitivity to these relatively modest moves in treasury yields because we once again came into the week at this very comfortable spot where we thought we had the benign economic conditions in place.

And just a little bit of a wavering from that view. Nvidia is well above its opening price, which was like 1020, 1020. That means that's getting the correct follow through. And I think it's almost oddly a good thing that we didn't get some kind of broad melt up based on one company's earnings. What's working is what's supposed to work based on Nvidia. I thought the risk, honestly, early this morning was that we were going to get a boiling over of excited sentiment. And then that would kind of make the market vulnerable, as it is right now. We've got to reset. And the S&P is trading higher than it has in the history of time, except for the last week and a half.

I do think it's interesting. You know, I figured you were going to get a pretty good jump in the other mega cap names. And as we, you know, end this session here, you're not. They tried it. Any of them. Even Supermicro is negative on the day. So obviously, there was some sort of pent up selling. People were in there figuring, why am I going to sell into what could be one of the best earnings reports of any company in history? That being said, we'll see if there's anything more to it. I do think we're still a

little bit twitchy about the macro stuff in terms of consumer weakening at a time when inflation may be not obviously doing what it's supposed to. All right. Contessa Brewer, tell us about Workday. What to expect? Well, the analysts are expecting this to the revenue to grow about 17 percent year on year in line with what we saw last quarter. But the focus on this, Scott, is really going to be on that subscription revenue, which the guidance for the quarter was estimated about $1.8 billion. So we'll see whether they come in line. The total consensus estimate is $1.97 billion in estimate and earnings per share of $1.58. The stock over the last 12 months, Scott, is up 35 percent, but down 5 percent year to date. Contessa, thank you. That's Contessa Brewer. We'll look out for those earnings in OT. Good one to watch. I mean, just another cloud software stock. A lot of these things have gotten a halo

effect, deservedly or not. And we'll see. They have. It's a really direct, you know, kind of business OPEX proxy as well. So absolutely worth seeing. Also, by the way, one of the bigger market cap companies not in the S&P 500 workday is. So what are we watching? I was watching all day for the S&P 5250. That's where there was this kind of gap on the 14th of May. People thought it was an obvious place. Let's go test that out.

We hovered above it. The Dow looks worse, obviously. The Dow's down, you know, almost a thousand points. It's a thousand points, right? Forty thousand. Now, of course, that's only two and a half percent these days. We got to account for the denominator, but it's somewhat significant that we did get to a little bit of a mission accomplished moment. VIX at multi-year lows, people getting pretty, you know, calm about things. And I don't think that that's wrong, obviously, assuming that the economy hangs in. But, you know, calm about things. And I don't think that that's wrong, obviously, assuming that the economy hangs in. But, you know, we're going to be in for some

relatively catalyst-free days. So we'll see how the market holds up on its own steam. We'll just, you know, react to data points and see if there's real sellers and bonds or if it's just knitting around the edges here. All right. Good stuff, Mike Centro. We will see you back here tomorrow. All of you as well. Bell is going to ring, but it's an ugly one on the street, really across the board despite that blowout from NVIDIA. I'll send it into overtime with Morgan and John.