Closing Bell - Closing Bell: Stocks sink into the close, Booking Holdings’ CEO on travel demand, and CF Industries’ CEO on the fertilizer frenzy 3/31/22

Episode Date: March 31, 2022

Stocks staging a steep sell off late in the trading session. The Dow falling more than 500 points as Wall Street closed out the worst quarter for stocks in two years. SVB Private Bank Chief Investment Officer Shannon Saccocia on where she sees opportunities in this challenging investing environment and why healthcare is no longer just a defensive sector. Booking Holdings CEO Glenn Fogel on the outlook for travel demand and whether U.S. consumers are pushing back on higher prices. The CEO of fertilizer maker CF Industries discusses the spike in prices and how he’s ramping up production to meet demand. And Wells Fargo’s Sr. Energy Analyst reveals the oil stock he is most bullish on.

Stocks are near session lows and oil is sinking on this final day of the quarter. The most important hour of trading starts now. Welcome everyone to Closing Bell. I'm Sarah Eisen. Here's where we stand right now in the market, down 200 points on the Dow. Biggest drag is Home Depot, which by the way is tracking for a 30% loss on the year so far. The S&P down four-tenths of one percent. NASDAQ down three-tenths of one percent. The only groups working right now are the defensive

groups. We're talking utilities, staples, real estate and health care, all positive. Everybody else is lower. Financials the hardest hit as yields take a step back today. Small caps give back less than the S&P, about a quarter of one percent. Here's a look at the scorecard for the quarter, which is the worst quarter since back in 2020, breaks a streak of seven up quarters for the S&P 500. Lower across the board. But the month of March was an anomaly. Higher. So ending a little bit on a strong note, at least,

if you look at the monthly performance today. Here are my top takeaways on some big stories today. Look who's making new highs in this down market. Dollar Tree, Tractor Supply, Costco, Hershey. All of them at all-time highs. Walmart and Kroger are near 52-week highs. These are all consumer plays that hold up better when economic slowdowns happen. They're steady recession-proof stocks, just like utilities and REITs, which are also breaking out,

signaling investors are increasingly positioning for slower growth or even recession. And on that note, a lot of worry lately about the bond warning, as the widely watched 2-year, 10-year treasury yield curve is about to invert a classic recession signal. It doesn't necessarily mean, though, you should bail on stocks. Looking at the past four times this has happened, LPL Financial found that the S&P rallied another 17 months and gained 28 percent until the peak. It was actually quite bullish for a while. And America's job market is on fire. New data on unemployment claims along with ADP and job openings this week, all confirming the strength.

Tomorrow's the biggie, the March jobs report. Beyond the headlines, watch the labor force participation rate. It has been lacking. Not as many people coming back to work as we saw pre-pandemic. That has contributed to a labor shortage for companies and is driving up wages and prices and making supply chains worse, participation is key. If it rises, it could alleviate some of the pressure on inflation. Let's get to our top story this hour. America's oil gambit, the White House announcing it will release one million barrels of oil per day from its strategic petroleum reserve in order to tame prices and inflation. Oil and energy stocks are dropping today on the news,

but the sector is still far and away the best performer for the quarter, up 40 percent. Earlier at a news conference, President Biden called out companies profiting from high energy prices. Listen. Companies have an obligation that goes beyond just their shareholders, to their customers, their communities and their country. No American company should take advantage of a pandemic or Vladimir Putin's actions to enrich themselves at the expense of American families. Joining us to discuss Roger Reid, Wells Fargo senior analyst and Brian Sullivan, CNBC senior national correspondent. Welcome to both of you. Brian, first on this price move, certainly the Biden administration

must be happy to see oil prices tanking today. But how substantial of a move is it? One million barrels per hour. I know it's historic and they're touting it that way. But when you look at the shortfall in the market, how much does this really help? Well, it depends on how much Russian oil stops coming to our shores. I want to remind our viewers that there are still 17 oil tankers filled with Russian oil on their way here, according to Vortexa. So we have not seen the last that Russian oil. Once that hits, the last ship is scheduled to arrive about mid-April. That's about when you'd start to

take oil out of the SPR. They're clearly trying to make up for that loss there. Here's the question, though. The market needs to know, and maybe Roger knows this. I do not. The SPR is technically able to unload about 4 million barrels a day. But according to Riestad Energy, the most it's done in the past 20 years is about 900,000 barrels a day. So we're going to use that million barrel a day release number because that's what they're saying. But there is no indication in the last 20 years that that kind of number is actually achievable. We could probably get close, Sarah. We'll find out if we can actually get to a million. But it's not that much overall. What do you think, Roger? How much of a difference does it make for the direction of prices

beyond today and for these companies? Why is this not a Band-Aid solution? Because it doesn't do anything long term to offset the supply issue. Right. Thanks. I mean, I think you want to look at it from the standpoint of it's literally 1% of global production, right? It's about 5% of U.S. consumption. So I don't want to make it sound like it's nothing, but you just are running into the issue where we may be off a lot more than just a million barrels. So it helps, but it's unlikely to solve the problem. And it doesn't do anything for the long term, as you mentioned, right? It doesn't change anything about production. It doesn't change anything about consumption. And so in the end, it's a little bit of a band-aid,

and I think a little bit of hoping to get later in the year, let OPEC catch up. Maybe Iran comes back in the market, maybe Venezuela, maybe the problems in Russia and Ukraine get resolved, right? I think it's, you know, it's an attempt. I don't know if it'll be successful. Yeah, I mean, Brian, there's also this issue of OPEC, which, why aren't they helping out more? Why can't they ramp up production and spare capacity and try to deal with some of this price challenge? Well, if you believe the group, it's because many of their members simply don't have the ability to. Under this declaration of cooperation, this deal they made about two years ago, Sarah,

they all have to raise at a certain quota. And if they all can't do it, then none of them can do it. It's the all for one, one for all. Could we see a unilateral increase by Saudis or UAE potentially? But they'd have to get OPEC approval. But I'll add this. This news broke last night. OPEC met today and just rubber stamped the increase. And if you're OPEC and you see that the U.S. is going to release a million more barrels a day and you were thinking about releasing more barrels on the market, that decision was now made for you. Why would you do it when the U.S. government is saying we're going to go around you and do it ourselves? I will say this, and Roger's the analyst, half the stocks out there in oil and

gas were higher today, Sarah. I think this is actually bullish. The president said, quote, we need more oil production. That sounded pretty bullish for the industry to me. Yeah, we're going to tax you or we're going to fine you if you have these unused leases. Roger, final word on what it means for energy stocks, which have done so well for investors. Would you be adding exposure on top of these already strong gains? I know you just had a recent upgrade this week. Yeah, we did upgrade one of the oil service companies, Baker Hughes. We think that if you look at it from the standpoint of higher oil prices will translate into higher capex, if not in the U.S., certainly on a global scale. Also with Baker Hughes, look at the LNG opportunity that they're a major

participant in. With the energy security issues picking up in Europe, you know you're going to see more need for that. So we really like Baker Hughes here. Maybe we're moving a little deeper into the cycle as we think about the names that are attractive as opposed to just trying to play a commodity price increase from a producer. Yeah, 52% already this year. Can I make a final very quick point, Sarah? Really quickly, Brian, sure. Yeah, the number of permits approved by the federal government to drill,

they keep talking about those 9,000 permits. The number of permits approved in January fell 85 percent from two years ago. So the oil and gas companies, I think, want to drill on these lands. And this tax you talked about is probably just the lease payments that they already have. It's unclear at this point, but they already pay a fee to the federal government to lease the land. Got it. It's also a way for Biden politically to say you're just you're just reaping the profits and dividends for shareholders on these high oil prices. But Brian, Roger, we'll leave it there for now.

Thank you very much. Let's hit an under-the-radar mover today. Nobody's talking about this. Check out shares of Flex, previously known as Flextronics. It's a contract electronics manufacturer and designer, and it's soaring, 8%, reaffirming guidance that it's investor day. Shares jumping. Analysts like it.

Stiefel reiterating a buy on the stock today, raising its forward estimates, citing the company's bullish comments around specifically autos, health care and cloud. The CDC just lifted its travel warning for cruises, and those stocks are jumping today. Up next, we'll talk about what the easing of COVID restrictions means for the rest of the travel space when we are joined by the CEO of Booking Holdings. You're watching Closing Bell on CNBC, down 182 on the Dow. More signs of a return to normal in the travel industry. The CDC today dropping its COVID travel notice for cruise ships. Those stocks seeing a big boost, top of the S&P today. Separately, business travel is ticking up as well, according to new data from SAP Concur.

Bookings Holdings CEO Glenn Fogle joins us now. Bookings, remember, owns also Priceline.com, Kayak, Cheap Flights, Open Table and more. Glenn, it's good to have you here. Do you think the CDC lifting its warning on cruises makes a big difference. Were people paying attention to the warning? I think there's always help from any place where the restrictions are being lifted. That's always good for the travel industry. And I wish that certain other restrictions would be lifted, too. The idea that people have to pre-test before they come to the U.S., I really think that maybe it was good at a time, but it's no longer needed. I really wish the administration it was good at a time, but it's no longer needed. I really wish

the administration would drop that, too. What would that do for international travel? And where is international travel right now? Well, it depends on what part of the world you're talking about. Certainly, we are all so hopeful for a strong summer, and I think we still are very hopeful for it. There are different parts, though. Asia not coming back nearly as fast as, say, Western Europe is, which is something that we've seen for quite a while. There's also, of course, the tragedy of the war in Ukraine, which has definitely impacted Eastern Europe somewhat. We do hope, of course, that will be resolved and we do hope peace comes and then that will start getting Eastern European travel back to where it was on track for before, too.

Obviously, nothing we can do about that, though. No, you put out a release in, I think, early March saying that room rates were down about 10 percent from where they were in 2019 because of Eastern Europe. But what else have you seen as a result of the war and potential spillover, especially on Europe, the rest of Europe? Yeah, so we did put out a public release. We talked about that on a Booker basis, the Eastern European area was about a high single-digit number for our toll-gross booking. So not that big a significance, but it's important.

Certainly for us, the first thing, though, is safety for our people in Ukraine. And our employees there, right away, the first thing that we thought about how can we help them and we have been helping them the next thing that we really had to think about is how can we get how can we help we created a platform that enables refugees to get a place to stay by getting our partner accommodations the hotels and the homes we have on our platform to provide free or greatly discounted rooms for refugees in Eastern Europe and a couple of Western European countries. We have over 1,600 partners who've already joined, offered up their properties for people who need a place to stay. We're getting thousands of refugees to a place to stay. It's good to hear. Good to see those kind of efforts. We've seen it

also from Airbnb and others in the travel industry. Glenn, what about domestic? We've heard from all the airlines that demand is off the charts. Spring break is hot. Bookings are high. Summer bookings are high. But prices are also going up. Have you seen any pushback from consumers domestically to higher prices or is demand super strong? Not yet. You know, not yet. When you have two years of people not traveling the way they want to travel and you have a lot of savings built up during that same time period, prices can be really high. And people say, I don't care. I just want to travel. I want to go somewhere. So we've been very fortunate in being in the spot where we have inventory and people are buying it.

One of the things I tell people is buy now if you're planning to take a summer trip. Right now, prices are going up, as you say, and I don't think it's going to turn around at all. So I really would recommend people, if you want to get the place that you want, the destination you want, don't wait. Book now. What about COVID? How do you think about it in the long term? As you mentioned, you're seeing weakness in Asia right now. We're seeing shutdowns and cases rise, cases ticking up a little bit here. Who knows what the winter holds

as this virus stays with us? How do you factor that into your long-term forecasts? It is difficult, but I think we all have to recognize that COVID is not going away and we're just going to have to live with it. And certainly there are going to be times when it's going to have a higher rate of infection and people may be more cautious and they may travel less when there are high periods of inflation just like when there's a flu you know flu's going around people's concerned about that so i think that it's okay to feel a little bit concerned but take precautions if you're really concerned you can wear a mask i don't think in the long run though it's going to affect the desire to travel. People want to travel and they're going to.

What about you and Booking's own growth? Is the goal to get back to 2019 levels? It seems like e-travel is a fairly mature business, fairly saturated business for those that use it. How do you turn up? What's your plan to turn up the growth notch beyond those 2019 levels? Yeah, I don't think it's that mature, actually. I think a lot of people still do not buy travel in the digital sense, but even more so is we're coming through with new innovations that we think is really going to drive people to use our services. And we talk about this connected trip vision that I have, which is, as I think we all know, it's still difficult to do travel. It takes a lot of time.

It's confusing. It's annoying that you have to use different vendors. Maybe you're using an airline for one, a hotel for another, a car rental for another. I really believe this should all be integrated very tightly and be as convenient as all the other things we do electronically. Look, we just put a little button on an app and we get a car to come to us with Uber. Well, I want travel in general to be

like that where it doesn't take hours and hours of frustration. I want it so it's frictionless and seamless. And if anything goes wrong, it can be fixed by one person. You don't have to be on hold for so many different vendors at the same time. That does sound nice. Glenn Fogle, thank you for joining us. Good to see you. Thank you very much. CEO of Bookings. Give you a check on the markets. Dow down about 200 points. That's where we've been sitting for the last 15 minutes or so. Home Depot, the biggest drag. S&P 500 is off by about half a percent. What's helping the S&P is staples and utilities. What's hurting are banks and consumer discretionary, communication services, tech.

The Nasdaq's down about four-tenths. Up next, Mike Santoli is back, and he's going to take a look at an important shift in investor sentiment in today's dashboard. As we head to break, check out shares of robotic software firm UiPath getting slammed on pace for their worst day ever, in fact. The company beating on the top and bottom lines, but the street is focused on guidance, including a weak outlook for the first quarter. We'll be right back. Stocks tracking for their biggest quarterly decline in two years. But lately, we've seen a comeback. S&P is actually, believe it or not, now trading less than 5 percent from its all time highs.

Mike Santoli is here to take a look at how recent market swings, Mike, have affected investor sentiment for the dashboard. It had gotten really, really ugly. Has it recovered? Absolutely, Sarah. Yeah, we were at these very pessimistic extremes for investor sentiment based on almost all measures. If you look at the AAII, American Association of Individual Investors,

bear versus bull ratio, we highlighted this at the time. It was at multi-year lows for bullishness, therefore multi-year highs for bearishness. And, you know, the takeaway from that is the market usually does not have a further downside to go, at least not significant downside immediately when that's the case. You could go back to instances 2016, late 2018, where you saw similar declines in optimistic sentiment. And then once it's gotten back to the flat line, which is roughly where we are right now, it has not necessarily meant the end of a rally. Now, things moderate.

Maybe they chop around a little bit. But usually, once you've gotten that pessimistic, you can sort of feed off that in the market for a little while beyond that. So it seems a net positive. It's no longer as much of a tailwind. Sentiment isn't as it was a little while beyond that. So it seems a net positive. It's no longer as much of a tailwind sentiment isn't as it was a few weeks ago. What is interesting, though, Sarah, is the reason that you've seen this ratio go up is because people are no longer saying that they're bearish. They're more saying they're neutral. It's the highest neutral rating that we've seen in something

like since the early 2020, which shows you that, you know, there's a lot of cross-conference. People don't know how to figure it out. Well, it's also hard to be bearish when you've seen such a strong and powerful upswing like we've seen in the month of March. Nothing fixes sentiment like price. Mike, thank you. Mike Santoli, we'll see you in just a bit for the Market Zone. Shares of fertilizer maker CF Industries soaring 40 percent since Russia invaded Ukraine more than a month ago and all these supply chain disruption fears.

Up next, the company's CEO on how those concerns could impact food costs around the world. We'll be right back. Take a look at the fertilizer stocks, one of the hottest part of the market, just up there with energy. They have soared since the start of Russia's invasion of Ukraine. Russia is the world's top exporter of fertilizers, such as ammonia, urea, and potash. And earlier this month, the Russian Ministry of Industry and Trade recommended suspending the exports of fertilizers, causing concerns about the world food supply. Joining us now is Tony Will, CEO and president of fertilizer manufacturer CF Industries,

which is one of the best performing stocks of the year. Tony, it's good to have you here. How bad is the global shortage of fertilizer right now? Sarah, great to be here. Thanks for having me. It is a huge problem. The globe is very tight fertilizer. It's a confluence of factors, unprecedented demand, coupled with a huge fall off in supply availability, only just exacerbated by the war in Ukraine and what's going on with exports coming out of Russia and Ukraine. What are you doing about it? How do you ramp up to help meet that demand? So nitrogen production is very much large refineries, chemical plants. We run those plants 24-7, 365. There are very few incremental tons that we can make. We have pushed out some maintenance activities. We have added some

logistics capabilities, some vessels and rail cars. But there's no new tons to make. It's just a matter of trying to get them as quickly as we can into the marketplace. As I understand, it takes natural gas to produce fertilizer, something that you have access to, unlike some of your international competitors, pretty cheaply. So how much of an edge is that for you? So being a North American producer is huge for us. We pay somewhere in the neighborhood of $5 to $6 per mm BTU of natural gas. Europe is currently paying about $35 to $38 per mm BTU.

And that's multiplied by 35 just to get to one ton of ammonia, multiplied by 10 million tons, which is what we produce annual. So that is the huge spread between low cost production and high cost. And that's one of the reasons why fertilizer price is what it is. It's not only a lack of availability, but the high cost producers are very high cost. So what's going to happen, Tony, with global food supply? There are worries about shortages, about famines and a real crisis. What's your perspective? We are absolutely facing a problem of catastrophic proportion here. Not only is the issue lack of availability and affordability

of nutrients and inputs, but also Russia and Ukraine have historically exported about 30 percent of global wheat trade and 20 percent of global corn trade. And there are stocks that are not getting out of the market because the Black Sea is closed. And we do not expect Ukraine to plant a normal crop next year due to damage of fuel depots, infrastructure, farm equipment and dislocation of people. So take a very tight food situation and just multiply it tenfold by a lack of production coming out of the world. This is a problem of epic proportion. Do you have any solutions? Is there anything government can do?

We saw them make a move, for instance, to try to lower oil prices and gas prices today, releasing the Strategic Petroleum Reserve. What can be done with this issue? Well, we need to bring about a peaceful ceasefire as quickly as possible and try to get farmers back into the fields in the Ukraine and make that growing region productive. Additionally, we're doing all that we can, not only in terms of logistics assets here domestically, but in close contact with a number of our customers in Latin America. And we're going to begin exporting on a humanitarian basis just to get nutrients down there in a region that's a very rich growing area,

but also starved for nutrients right now. So I think that that is really what we need to do, which is point tons that are available in the regions that are most in need of them. Tony, well, thank you for joining us of CF Industries. They're raising some real alarm there. Here's where we stand in the markets. We've just taken a leg lower on all the major averages. S&P is now down about three quarters of one percent. So is the Nasdaq. The Dow is down about 306 points. So we are looking at session lows. If you look at the weakness in tech, it's AMD on that Barclays call. We'll get to Microsoft, Apple, Amazon, Facebook, giving back some of the recent gains that we've

seen in the month of March. I just spoke with the Kohl CEO, Michelle Goss, about the battle for the retailer's board and the multiple takeover offers on the table. There's some news there today. A new shareholder letter from Kohl's. We'll share the details when we come back. Losses really picking up some steam here in this final hour of trade. The Dow is down about 311 points. S&P now down a solid three quarters of one percent. Financials are the biggest drag on the S&P, or at least the worst performing sector. Communication services, consumer discretionary, also right down at the bottom of the market. Utilities and staples, the defensive plays holding up a little bit better. And as for the Dow, biggest drag, Home Depot,

UnitedHealth, JP Morgan and Nike. Biggest outperformers, Amgen and Visa. What is Wall Street buzzing about today? Kohl's again. The retailer sending a letter to shareholders today, pushing back on activist investor McCallum's campaign to elect new members to its board. In the letter, Kohl's says McCallum's criticisms of the retailer are ill-informed and that it's just pushing for the sale of Kohl's at any price. Earlier this month, remember, Kohl's confirmed it had received multiple preliminary offers from parties interested in buying the company. I did just speak with Michelle Goss, the CEO of Kohl's, about all of this. My big takeaway, the company is really serious about exploring these buyout offers.

There's been some skepticism from investors on this point about Kohl's was really exploring a sale or just going through the motions, but the process, I'm told, is rigorous and moving along. It's now at the stage where the bidding parties have been asked to improve their overall bids, whether on price or financing. I'm told that the bidders do have access to management and to data from the company. So it is definitely happening behind the scenes. The finance committee of the board, which does, by the way, have one of McKellen's own nominees on it from its last fight,

is doing the work, comparing deals with the strategy already in place at Kohl's. As for who's in the running, well, one of the names that had put in a bid, we know, was Starboard-backed Acacia. I spoke with Starboard CEO Jeff Smith just this week about it. Here's what he said. Kohl's is an underappreciated business that has terrific cash flow. And it's a company that we really would love to own. No word on timing of this overall process. Shares of Kohl's are lower by about one and a half percent. And we should note McKellen has not yet responded to CNBC's request for comment on this new shareholder letter today. Up next, AMD sinking on a downgrade, taking the chip sector with it and Walgreens falling despite posting an earnings beat.

Those stories and the final moments of the first quarter of the year when we take you straight inside the Market Zone. Down 337 right now on the Dow. We are now in the closing bell market zone. Welcome, everyone. CNBC Senior Markets Commentator Mike Santoli here to break down these crucial moments of the trading day. Plus, Rashir Sharma on Chinese tech stocks and Shannon Sekosha on the sell-off. We are looking at session lows right now, and we've been losing steam throughout the final hour of trading. On this last day of the first quarter, major averages higher for the month of March,

but on track for their worst quarter in about two years. Mike, a spill into the close coming off of an extraordinary run of March. How does that set us up for April, which is historically a pretty positive month for stocks? Yes, it usually is positive on balance, although once you've had a down quarter in the first quarter, it isn't necessarily the greatest setup for the remainder of the year. I don't think that we're really trading that right now. What we're doing today is cooling off after that very, very hot rally into Tuesday. Also, undoing that Tuesday rally, which honestly seemed a little bit of a chase on some of the flimsier de-escalation headlines in the Ukraine.

We're right back to those levels we were talking about for a long time, the February highs and the S&P 500. The other feature of it right now, I don't think the overall index is in a real dangerous spot right here. You have a cushion underneath it. We've had this nice rally. It seems like there's some buffer there, but it is a defensive leadership story. Utilities doing well, health care leading, banks very conspicuously weak. So I think you have to worry if those are telling you something about the macro picture as opposed to just rotation. Well, and as I said earlier, the highs are all in the consumer staple

stocks. Costco at an all time high dollar dollar general at an all time high. I think a lot also, Mike, depends on what happens with bonds. We're seeing a bid for bonds right now, but that has been the opposite of what we've pretty much seen all quarter. In fact, this is what this is one of the worst quarter for treasuries in recent memory. If we continue to see rates march higher as the Fed is adjusting to this very high inflationary world, what does that mean for stocks? You know, I don't know where the pain point is on absolute level of yields. I think we front loaded an awful lot of angst about the flattening and the potential inversion of the yield curve and what it means for the recessionary call at this point. At this point, I do think it's interesting that you've seen a little bit of this bit. It could be quarter and rebalancing, but stocks have now still outperformed bonds on a year to date basis.

So arguably, there might still be more to go in this rally. But what you obviously don't want to see if you're an equity investor is the idea that rates are screaming higher only because of inflationary expectations getting more entrenched. Session lows down a little bit, about 340 points. Want to hit some movers. AMD, the worst performer in the S&P right now. After Barclays downgraded the chipmaker from overweight to equal weight, slashed its price target on the stock to 115, which is a $33 reduction from the previous target. The analysts there believing AMD's growth story needs a pause and warns of cyclical risks in the PC and gaming markets. That is dragging down the rest of the semi stocks. Christina Partsenevelos joins us now. Christina, does Wall Street agree with Barclays' position on AMD here? I'm going to go out and say

that Jim Cramer probably does not agree with the AMD call. What about everyone else? So I'm not going to talk about what Jim Cramer, but already there was another note that came out specifically from Rosenblatt just targeting Barclays. So of course, we know that this sentiment is echoed across the board. Taiwan semiconductors on Wednesday said that they do believe PC sales will start to slow down. You had analysts at Morgan Stanley downgrade PC makers HP and Dell just today. So, yes, this sentiment is shared. But the big question is, why isn't Intel and ARM also included in this prediction from Barclays, given they also have exposure in the PC market. And so Rosenblatt today targeted the Barclays note saying that this is a buying opportunity.

AMD is a data center play. And, you know, small little swings in the PC market really will be offset by an upgrade in or I should say an increase in market share for data centers. And so they're keeping their price target at $200 versus Barclays, $115. So the chips have been under pressure this year, as the NASDAQ has been under pressure, as rates have moved higher. Has anything fundamentally, Christina, changed with the companies, as far as what you're hearing and what you're seeing, and whether they're seeing strength still in the demand market?

Yeah, it depends on which side of the board you are with Intel. You could say that they're slowly turning themselves around. They're launching all kinds of new products, a gaming chip that's coming out and it's going to be incredibly fast. Everybody's really focusing on the data center. So I think that's going to be a big shift in the market going forward. Who's going to be best positioned for that going forward? That's the big question, not one I can answer just yet. But I think that's the focus going forward for a lot of these companies, hence why that note focused on AMD and its position with data centers. Well, certainly having an impact today. AMD lower at the bottom of the triple Q's, along with Microsoft and Apple. Christina, thank you. Walgreens also a big

loser today. The drugstore chain beating Wall Street earnings estimates thanks to strong demand for COVID vaccines and rapid tests. But investors were upset the company didn't raise its full year guidance. Bertha Coombs joins us now. Bertha, disappointment. How much of a tailwind was COVID for Walgreens and what happens next? It's certainly a tailwind for all of the drugstores, Sarah, when it comes to pharmacy and for Walgreens.

You know, they did nearly 12 million vaccinations during the quarter, more than six and a half million tests. They say they're actually starting to see people come back in now. We'll see what happens with this new Omicron variant. They weren't expecting to see that kind of demand in the quarter originally, but then we had the spike. The other thing that's happening, Sarah, is that they are reinvesting a lot, particularly in the second half, in expanding their new fulfillment centers and also expanding their co-located village MD stores. So that is going to be a headwind for earnings. But in the same way that Amazon years ago would do that and reinvest to build capacity for the future,

that's what they are trying to tell investors they are doing. It's going to pay off longer term. Walgreens down about 13.5% year-to-date, Bertha. It's also still down over the last year. I know you've been talking to Roz Brewer, the CEO, a fairly new-ish CEO. What is her strategy for getting Walgreens back up? It should be doing better in this environment where a Costco and a Kroger and all these sort of safer staple stocks are doing well. It's really about pivoting more towards health. Walgreens Health is going to be

the big driver. So that is includes the village MD clinics, primary care, so that people don't just come in for an occasional urgent care thing. They come in, they have a relationship with the doctors. Then they can go next door to the pharmacist. They're doing all that fulfillment by robots offsite so the pharmacists have more time to spend with patients. So that's what they're trying to build in, essentially being this kind of corner health system where they can be your health team and work with hospitals for when people get discharged in the hospitals. So it's a longer-term shift to really, really digging in to health care, not just retail. Like CVS, its competitor.

Bertha, thank you. Bertha Coombs. Want to hit Chinese tech stocks sinking again today after the SEC added search engine giant Baidu to a growing list of Chinese firms that could get kicked off of American stock exchanges unless they update their auditing practices. Overall, though, it's been a pretty weak quarter for Chinese tech stocks and Chinese stocks in general. The K-Web ETF down more than 20 percent since the start of January. With us, Rushir Sharma, Rockefeller International chairman, focuses on emerging

markets. And Rushir, Chinese stocks are among the world's worst performers during the first quarter of this year, despite the fact that China's been in there trying to ease policy. What is the growth story right now? Exactly. I think what you're pointing to suggests to me that this may be the start of the Japanification of China. What that really means is that the authorities, they try and boost the economy through liquidity measures, and you just don't get the bang for the buck anymore. So that's a risk I see in China.

And you spoke about the tech sector and the delisting issues there. But there are much greater issues in the property sector. A story, I think, which has not been sufficiently paid attention to out there is that many property companies in China are not being able to report their results even. So the deadline for reporting these results on the Hong Kong Stock Exchange was the 31st of March, which is today. And we still don't have clarity how many have reported, how many have asked for a postponement, even though the authorities there have been relaxing some of the requirements, such as not having these companies audited.

So I think that there is a lot of systemic risk in China in the property sector. The property sector accounts for over 25 percent of the Chinese economy and Chinese growth. And what's happening there is an even bigger story than the tech headlines that we normally see in the U.S. And that's not even to mention the rolling lockdowns that we're seeing because of COVID. Rashir, the problem for American investors and some of these ETFs, these China names, is this quarter's been marked by, sure, they're uninvestable, right? We've heard it from JP Morgan and other of others because can't see what China's doing on its policy front, can't see what's happening in the economy.

It's slowing down. And then one day, bam, China just steps in and decides to fix it. And these stocks look like screaming bargains. So how do you know as an investor what to do here? Yeah, so I think that rather than focusing on these regulatory issues, we've got to still focus on the economic story. So, yeah, I've been in the camp, which has been very underweight China. I think there's a broader story in emerging markets.

It's very interesting to see the pattern of performance this quarter. We spoke about the Chinese market really underperforming. But it's still quite interesting that seven out of 10 emerging markets are, in fact, outperforming the U.S. market this quarter. I find this divergence to be really telling that from Indonesia to Brazil, you have these other countries which are being able to outperform even the United States, which has been relatively resilient, even though it's been a down quarter, even in the face of the Chinese market sort of being on its back. So I think that this divergence is what I think is going to be the enduring story for the coming year, if not this decade. Well, a lot of it, Rushir, I would think has to do with the fact that they are, a lot of them are commodity producers, and we've seen commodities have a great run this quarter. My question is, do you continue to stick to that strategy?

Yeah, I think that this is just the start of a cycle. These countries have done very poorly over the last decade. So the growth prospects of Brazil or even like in Indonesia, all these countries have been massively downgraded as far as the growth prospects are concerned. So I think that we're just about at the start of a new cycle. Decadal shifts are taking place. And this coming decade is likely to belong to some of these middle and small superpowers or powers rather than the big superpowers. So I think that this shift is just about beginning. I was speaking to an analyst the other day in South Africa, and she was telling me that back in South Africa, in the areas which are very heavy in mining, there's a big boost taking place to consumer demand in those places. So I think that this has a feed-through effect, which has not happened in a long period of time and is likely to last

for a while. Rushir Sharma. Rushir, thank you. Losses accelerating here again. We're down now more than 400 points on the Dow. 4.01. Under pressure on this final day of the quarter, which is looking like an ugly one for investor. First quarterly loss for the S&P since 2020. Let's bring in SVV Private Bank Chief Investment Officer Shannon Sekosha. Shannon manages $19.6 billion in assets under management. What are you

doing as we go into the second quarter, Shannon? It's been confusing signals. Well, I think Mike made a great comment about the catalyst for this run in equities over the last couple of weeks. We certainly have seen institutional money being put to work. We've seen rebalancing. I think the weakness in financials today is most telling because if we think about what's happening, we're starting to see or hear some stories about credit risk, right? We're starting to understand that, you know, there might be implications that go well beyond, you know, with this flat or inverted in some places yield curve. It's not all about recession. It's about what is the stress that is going to

be put on some of these asset classes where investors have frankly been going to hide out based on low yields in the investment grade space. And so I think there's a lot of things that we need to be looking at over the course of the next few weeks. We've had some nice earnings reports over the last two weeks that have given us some faith that we're seeing the Chinese consumer coming back. We're seeing consumer sentiment in general from some of these companies be very positive. Can that continue? We're going to get the financials right away, get that quick hit. Last quarter didn't start out so well. We had a big miss for JPM, for instance, coming into the quarter. So I think we're going to enter into a period here where we're going to be looking at

outlooks. We're going to be thinking about what is the impact of some of this credit risk that we're starting to hear about as a potential risk. And does that potentially put the Fed at a slower pace despite these inflation numbers? I think that's going to be a much bigger story for us going into the second quarter, Sarah. But one thing we know, Shannon, is that we are entering this period in a different liquidity environment than we've had thing we know, Shannon, is that we are entering this period in a different liquidity environment than we've had over the past few years and that economic growth is slowing down. We don't know how much, but we know that that's happening as fiscal stimulus wears off, as the Fed is hiking rates, as we are dealing with inflation we haven't

seen in decades. And we've seen what kind of bumpiness that can mean for portfolios this first quarter. My question is, has anything changed in that outlook that would make you do anything differently in the coming months? Well, I think everybody needs to acknowledge the fact that we are obviously going to be moving into a slower economic environment. If you think about what has happened over the last decade when we've been in periods of slower GDP growth, whether it's globally or here in the United States, you're looking for growth in other parts of your portfolio. And so we talk about these tech stocks that have been under pressure and going back to free cash flow, consistent earnings growth, valuations. There's a lot of technology or growth adjacent companies across sectors that are going to benefit in a lower growth environment you need to get earnings growth from somewhere and if it's not

going to be a secular tailwind like fiscal spend and monetary policy looseness then you have to look for growth elsewhere i think we're going to see some real nuanced trading over the course of the next three months or so as people look for that growth against this more challenging economic backdrop. And you like health care still? Is that still one of your favorite sectors? Absolutely. So if you talk about secular headwinds and tailwinds, there's a huge secular tailwind for health care. We're continuing to see, you know, people taking health care in their hands. We're continuing to see the importance of technology getting out into rural areas, being able to leverage, you know, the network that we have in order to deliver health care to an increasing population globally. And we think that there's a lot of opportunity there to, again, get really strong fee cash flow, dividends, consistent, sustainable growth in the health care space.

It's not just a defensive sector anymore. Well, as we go into the close, every sector now is lower in the health care space. It's not just a defensive sector anymore. Well, as we go into the close, every sector now is lower in the S&P 500. The Dow hitting new session lows down 487 right now. Shannon Sekosha, thank you very much for joining us. Mike, we've got just about two minutes to go here in the trading day. Sell off picks up steam. What are you seeing in the internals right now? Yeah, David wrote it fairly quickly, Sarah, along with the rest of the market. Clearly, quarter end, there was a big sell imbalance on the market on close orders. It seems like there's some programmatic sort of shifting out of the indexes, and that's taking its toll on the volume splits, like three to one negative to positive volume right now.

Didn't want to point out, too, on a quarter to date, year to date basis, it's been the lower volatility parts of the S&P 500 that have now outperformed the more aggressive ones. Not by much, but you can see it's been a smoother ride to slight outperformance for the SPLV, the low volatility ETF there. The volatility index has popped up back above 20. It hasn't really changed the overall shape of things. We still have that nice spike well above into the mid-30s, but clearly ahead of our jobs number and with a little bit of turbulence and the S&P sort of going back down into the range that has been in place since the end of January. You're seeing just a little bit more unease filter into the market toward the close. VIX at 21, a little over 21, as Mike said. Thank you,

Mike. As we go into the close, session lows again on the the Dow down 488 right now. And just to recap where we are, this is the end of the first quarter and it has been a bruising one for investors. The S&P down about, oh, at a 5 percent or so for the quarter, a little more than that. NASDAQ down 9 percent for the quarter. There is the look right now at the Dow. If you want to know what's weighing on the Dow, Home Depot is the biggest drag right now, as well as Walgreens, Intel, JP Morgan, Nike. They're all underperforming today. Apple as well. The only one that's contributing to the Dow right now is Caterpillar, as we see the sell-off pick up steam.

Within the S&P 500 right now, the safer plays are doing better, and that has been a theme lately. Utilities are green. For the year, for the quarter, the only positive sectors are utilities and energy. We know the story with energy up 38 percent year to date. And for the quarter, technology among the worst performing sectors, communication services is the worst performing sector of the quarter. And you can thank Netflix and you can thank Facebook or Meta, both down more than 30 percent. That's going to do it for me here on Closing Bell. Have a good evening. I'll send it to Scott Wapner in overtime.