Closing Bell - Closing Bell: Stocks stage late session rally, oil prices plunge, and President Biden lays out his budget 3/28/22

Episode Date: March 28, 2022

Stocks making a comeback late in the day led by tech stocks. Medley Global Advisors Ben Emons on whether bond yields could be flashing a warning sign for the stock market. Oil prices plunging amid new concerns about demand from China. Husseini Energy Founder Sadad Al-Husseini gives his outlook for oil prices. And President Biden laying out his budget proposal, which includes big tax hikes on the ultra-rich and corporations. Raymond James Washington Policy Analyst Ed Mills has instant reaction to whether that will be able to pass Congress.

You're listening to Closing Bell In Progress. Busy couple days for all of you. Let me begin by saying that, thank you, Director Young. You know, you've heard me say this before over the years. My dad had an expression. He said, don't tell me what you value. Show me your budget. I'll tell you what you value. Don't tell me what you value, show me your budget, I'll tell you what you value. Don't tell me what you value, show me your budget, and I'll tell you what you value. Well, the budget I'm releasing today sends a clear message to the American people what we value.

First, fiscal responsibility. Second, safety and security. And thirdly, the investments needed to build a better America. The first value is fiscal responsibility. The previous administration, as you all know, ran up record budget deficits. In fact, the deficit went up every year under my predecessor. My administration is turning that around. Last year, we cut the deficit by more than $350 billion. This year, we're on track

to cut the deficit by more than $1,300,000,000. $1,300,000,000. That would be the largest one year reduction in deficit in US history. And here's how we're achieving this record deficit reduction. First, we're growing the economy. We've created a record 6.7 million jobs since I took office, and we've generated a GDP growth of 5.7 percent, the best economic growth we've seen in this country in over 40 years. This has led to substantial increase in government revenues and dramatically improved our fiscal situation. Secondly, this record economic and job growth has made it possible for us to responsibly and significantly cut back on emergency spending. Earlier in the pandemic, it was right to give people help to make ends meet and to keep this economy going. Because of the progress we've made dealing with these emergencies, the labor market is strong and unemployment claims

are at historic lows. We ended the pandemic unemployment assistance programs because Americans are back to work. I'm calling for new pandemic subsidies for large businesses to not continue those because those businesses are back and moving again as well. But because we have to put this economy in a strong foundation, even the Delta and Omicron variants of COVID-19 and the cost of Putin's aggression in Ukraine have not required an additional fiscal package for state and local governments. But we still spend what we need to spend to continue to fight COVID. Those expenditures will be dramatically less than last year.

Compared to 2020, we're reducing the size of the deficit relative to our economy by almost two-thirds, reducing inflationary pressures, and making real headway cleaning up the fiscal mess I inherited. After my predecessor's fiscal mismanagement, we were reducing the Trump deficits and returning our fiscal house to order. Now, the budget I'm releasing today will continue this approach. It makes prudent investments in economic growth and more equitable economy, Now, the budget I'm releasing today will continue this approach. It makes prudent investments in economic growth and more equitable economy,

while making sure corporations and the very wealthy pay their fair share. And I would add, nobody making less than $400,000 a year will pay a penny more in federal taxes. We can do this by, one, passing legislation that lowers costs for families on things like child care, health care and energy costs while lowering our deficit at the same time. We can give hardworking parents, raising children, tax relief that gives them just a little bit of breathing room and lowers child poverty. We can give Medicare the power to negotiate lower prescription drug prices. This will bring down the cost for seniors and reduce the deficit by hundreds of billions of dollars. Congress can do this all right now. They're debating it now. We can also restore fiscal responsibility.

The Trump tax cuts added $2 trillion in deficit spending and largely helped the rich and the largest corporations. Under my plan, as I said, no one making less than $400,000 a year will pay additional single penny in taxes. No one. If you don't make 400 grand, you're not going to pay a single penny in additional federal taxes. And the wealthy and corporations will finally begin to pay their fair share. For most Americans, the last few years were very hard, stretching them to the breaking point. But billionaires and large corporations got richer than ever. Right now, billionaires pay an average rate of 8% on their total income.

8%. That's the average they pay. Now, I'm a capitalist, but if you can make a billion bucks, great. Just pay your fair share. Pay a little bit. A firefighter and a teacher pay more than double, double the tax rate that a billionaire pays. That's not right. That's not fair. And my budget contains a billionaire minimum tax because of that.

With 20% minimum tax, it applies only to the top one hundredth of one percent. One hundredth of one percent of the Americans will pay this tax. The billionaire minimum tax is fair and it raises $360 billion that can be used at a lower cost for families and cut the deficit. As I said, my budget also ensures that corporations pay their fair share. In 2020, there were 50 Fortune 500 companies that made $40 billion in profit combined, but didn't pay a single solitary cent in federal taxes. My budget raises the corporate tax rate to 28%, far lower than the rate it was between World War II and 2017 when it was lowered as it is today. Last year, I rallied more than 100, some of you were overseas with me, 130 countries to agree to a global minimum tax for corporations

doing business in their countries, to put an end to a tax system that rewards multinational corporations for shipping the jobs and profits overseas and avoiding taxes at home. It's my hope that Congress enacts this law this year so I can sign it and we can get to work. The second value my budget reflects is

security. Security at home and security abroad. My budget tackles security in two key ways. First, it secures our communities at home. This is an issue families in every part of the country face. I've said it before. The answer is not to defund our police departments. It's to fund our police and give them all the tools they need, training and foundation and partners and protectors that our communities need. The budget puts more police on the street for community policing so they get to know the

community they're policing, allows the Bureau of Alcohol, Tobacco and Firearms and the FBI to hire the agents they need to help fight gun crime and other violent crimes in our communities, and funds body cameras and makes sure police work with our local communities and are accountable to these communities. It funds crime prevention and community violence intervention, drug treatment, mental health, criminal justice reform, and reentry for people coming home after incarceration. All demonstrable ways to reduce crime and proven ways. Security also means national and international security. This budget provides the resources we need to keep Americans safe, ensuring that our military

remains the best prepared, best trained, bestipped military in the world. This budget also provides additional funding to forcefully respond to Putin's aggression against Ukraine and its economic, humanitarian, and security consequences. The world has changed. In addition to dealing with terrorist organizations, for the second quarter of the 21st century, we're once again facing increased competition from other nation states. China and Russia. Which are going to require investments to make things like space and cyber

and other advanced capabilities including hypersonics. This will be among the largest investments in our national security in history. Some people don't like the increase. But we are in a different world today. America is more prosperous,

more successful and more just when it is more secure. We can restore fiscal responsibility and safeguard our security at home and abroad while meeting the third value, what I call building a better America. Let's provide universal preschool, cap the cost of child care at 7% of a family's income. Like many families, that would cut the cost of child care in half, and it will make college more affordable. My budget doubles the maximum Pell Grant. Families make $150,000 a year to nearly $13,000 and helps more than 8 million students who rely on Pell Grants to pay for college. My budget invests in building more homes to deal with the skyrocketing cost of housing for the

middle class and the poor. My budget lowers family energy costs with tax credits to help people make their homes more efficient, research and development to broaden the reach of solar and build a clean energy future. My budget also invests in other areas of bipartisan common good. I call them unity agendas. I spoke to them at the State of the Union. Beating the opioid epidemic. Taking on challenges of mental health. Supporting our veterans.

And ending cancer as we know it. This budget includes investments to get Americans the mental health services they need, and we need them. And when it comes to fighting cancer and other diseases, my budget funds a new organization called ARPA-H at the Department of Health, and it stands for Advanced Research Projects for Health. It's based on DARPA, the Defense Department program, that led to breakthroughs in technologies like the Internet, GPS, and so much more. ARPA-H will drive breakthroughs to prevent, detect, and treat diseases, including Alzheimer's, diabetes, cancers, and more. And here's what this all adds up to. Historic deficit reduction, historic investment

in our security at home and abroad by modernizing our capabilities in both areas, and an unprecedented commitment to building an economy where everyone has a chance to succeed. A plan to pay for those investments that we need as a nation. That is what we do.

So I look forward to working with the members of Congress, Democrats, Republicans, and Democrats to build a better future. Thank you. A plan to pay for those investments that we need as a nation. That's what we do. So I look forward to working with the members of Congress, Democrats, Republicans, and Independents to deliver this budget and keep delivering for the American people. I want to thank you all. God bless you all.

May God protect our troops. Let me, uh, Kelly O'Donnell, NBC. Thank you, Mr. President. Do you believe what you said? Thank you, sir. Do you believe what you said, that Putin can't remain in power? Or do you now regret saying that because your government has been trying to walk that back? Did your words complicate matters?

Well, you asked three different questions. I'll answer them all. Number one, I'm NOT WALKING ANYTHING BACK. THE FACT OF THE MATTER IS I WAS EXPRESSING THE MORAL OUTRAGE I FELT TOWARD THE WAY PUTIN IS DEALING AND THE ACTIONS OF THIS MAN, JUST BRUTALITY. HALF THE CHILDREN IN UKRAINE. I JUST COME FROM BEING WITH THOSE FAMILIES. AND SO – BUT I WANT TO MAKE IT CLEAR, I WASN'T THEN NOR AM I NOW ARTICULATING A POLICY CHANGE. with those families. And so, but I want to make it clear,

I wasn't then nor am I now articulating a policy change. I was expressing the moral outrage that I feel, and I make no apologies for it. Personal feelings, sir. Your personal feelings? My personal feelings. Secondly, you asked me about, well, what was the second part? Does it complicate the diplomacy of this moment? No, I don't think it does. You know, the

fact is that we're in a situation where what complicates the situation at the moment is the the escalatory efforts of Putin to continue to engage in carnage, the kind of behavior that that makes the whole world say, my God, what is this man doing? That's what complicates things a great deal.

But I don't think it complicates it at all. Let me go to Steve Holland, Reuters. Mr. President, thank you. When you say that you're not walking anything back, you do feel that Vladimir Putin should be removed from power? Is that what you're saying? No, I was expressing just what I said. I was expressing the moral outrage I felt towards this man. I wasn't articulating a policy change. And I think that, you know, he continues on this course that he's on. He is going to become a pariah worldwide,

and who knows what he becomes at home in terms of support. And just to follow up, are you concerned this remark might escalate the conflict? No, I'm not. I'm not at all. Look, the other thing is that a couple of people have asked me as well, might as well speak to it unless you want to ask the question, but, you know, that other governments have suggested that this is a problem, I'm escalating things. No. And is it weak in NATO?

No, it hadn't. NATO has never, ever, ever, ever, ever, ever been as strong as it is today. Never. So if saying he cannot remain in power does not mean regime change, what does it mean to you? It means that I would hope he just — it was expressing my outrage. He shouldn't remain in power. Just like, you know, bad people shouldn't continue to do bad things.

But it doesn't mean we have a fundamental policy to do anything to take Putin down in any way. What made you add that? Because that wasn't in your prepared remarks, we were told. So what made you add that at the end, Mr. President? Because I was talking to the Russian people. The last part of the speech was talking to the Russian people, telling them what we thought.

I was communicating this to not only the Russian people, but the whole world. This is just stating a simple fact that this kind of behavior is totally unacceptable. Totally unacceptable. And the way to deal with it is to strengthen and keep NATO completely united and help Ukraine where we can. Cleve, you had a question. Where is he?

Thanks, Mr. President. On your budget, you've said repeatedly at the State of the Union that you're not for defunding the police. I do wonder how much emphasis you think should be put on alternative forms of crime prevention, not just defunding the police, but crime reduction in communities? Oh, a significant amount. I've laid that out in detail in the budget. For example, we do know that intervention programs work. We do know that what police need, they need psychologists in the department as much as they need extra rifles. They need people who are in the department who can deal with the crisis that the police are going through as well. Dealing with their

crises. Dealing with their mental state and how they're handling things. They need social workers engaged with them. I lay it all out. And it all works. If you see these community intervention programs, they work. They actually reduce crime. They significantly

reduce crime. So that's a big piece of it. Just a follow-up. Is any of it related to political pressure from Republicans saying that Democrats are soft on crime, that you guys are careening to the left? Isn't that kind of fascinating? When I first got elected, I was being beat

up because I supported the police too much for the previous 30 years. No. That's what I think. And Asma. Surprising call. Thank you, Mr. President. Are you willing to try to meet with Vladimir Putin? And I have a quick follow-up to that.

When you last met with him face-to-face in Geneva, you had described that as a productive conversation. You said that he did not want a Cold War. And do you feel, given the actions, though, that have happened over the last few months, I guess I'm asking what has changed in his mind? I don't know what's changed in his mind. His behavior has changed. When we met,

remember what we were talking about. We were talking about setting up a strategic dialogue and talking about the relationship of NATO and Russia and facing off in the regions and how we could have more transparency and all the rest. It was a normal discussion I had going all the way back to Kosygin and others back in 100 years ago when I was a young senator. And so what changed was nothing, nothing remotely approaching that. Remember when he first met with me, he said, I have two objectives. This is the second or third time I met with him. He said, I have two objectives. One is to make sure that they never become part of NATO, and two, to make sure

there are no long-range missiles in Ukraine. I said, we could deal with the second one easily, but we can't close the door on the first, because when we talk about missiles, we want to talk about what's also on the Russian border heading toward Europe. Do both. And then, if you notice, that demand list of his, not with me, with others, have escalated significantly in terms of what he thinks is necessary. Thank you. Mr. President, we need some more clarity questions. Thank you. Thank you very much.

I know you're going to ask a really nice question. Well, it's an important question, I think. Are you worried that other leaders in the world are going to start to doubt that America is back if some of these big things that you say on the world stage keep getting walked back? What's getting walked back? It made it sound like, just in the last couple days, it sounded like you told U.S. troops they were going to Ukraine. It sounded like you said it was possible the U.S. would use a chemical weapon. And it sounded like you were calling for regime change in Russia. And we know...

None of the three occurred. None of the three occurred? None of the three. Mr. President? You interpret the language that way. I was talking to the troops. We're talking about helping train the troops that are the I was talking to the troops. We're talking about helping train the troops that are the Ukrainian troops that are in Poland. That's what the context. I sat there with those guys for a couple hours. That's what we talked about. So when you said you're

going to see when you're there, you were not intending to say this? I was referring to with, speaking with and talking with the Ukrainian troops that are in Poland. And when you said a chemical weapon used by Russia would trigger a response in kind. It will trigger a significant response. What does that mean? I'm not going to tell you. Why would I tell you? You've got to be silly.

The world wants to know. The world wants to know a lot of things. I'm not telling them what the response would be. Then Russia knows the response. Mr. President. All right. I'm going to take two more questions. One, two. Mr. President, thank you. I still want to get back to your original words that he cannot remain in power. Can you help us understand you have more foreign policy experience than any president who has ever held this office. Whether those are your personal feelings or your feelings as president, do you understand

why people would believe you, as someone commanding one of the largest nuclear arsenals in the world, saying someone cannot remain in power is a statement of U.S. policy? And also, are you concerned about propaganda use of those remarks by the Russians? No and no. Tell me why. You have so much experience. You are the leader of this country. Because it's ridiculous. Nobody believes we're going to take down, I was going to, I was talking about taking down Putin. Nobody believes that. Number one. Number two, what have I been talking about since this all began? The only war that's worse than one intended is one that's unintended.

The last thing I want to do is engage in a land war or a nuclear war with Russia. That's not part of it. I was expressing my outrage at the behavior of this man. It's outrageous. It's outrageous. And it's more an aspiration than anything. He shouldn't be in power.

There's no, I mean, people like this shouldn't be ruling countries, but they do. The fact they do, but doesn't mean I can't express my outrage about it. Last question. Thank you. You've said that you're confident that your comment won't undermine diplomatic efforts, but just to be clear, are you confident that Vladimir Putin sees it that way, that he will not use this as an escalatory? I don't care what he thinks. Look, here's the thing. He's going to do what he's going to do. Putin, look...

But you're not concerned that he may see your language and view that as a sign of a reason for escalation, use that as an excuse to escalate, given his recent behavior? No. Given his recent behavior, you should... Excuse me. I shouldn't say that to you. Given his recent behavior, people should understand that he is going to do what he thinks he should do, period. He's not affected by anybody else, including, unfortunately,

apparently his own advisors. This is a guy who goes to the beat of his own drummer. And the idea that he is going to do something outrageous because I called him for what he was and what he's doing, I think is just not rational. You didn't say whether you'd meet him again. Would you meet with President Putin ever again? No, it's not a question. The question is, is there something to meet on that would justify him being able to end this war and be able to rebuild Ukraine? That's the issue.

Can you just say yes or no, Mr. President, whether or not you would be willing to meet with President Putin again? It depends on what he wants to talk about. Thank you. Okay, last question. What if he wanted to talk about negotiations? What if he wanted to- Hello, you said Supreme Court.

Now don't quote me. Well, you can't leave that hanging. Just real quick, two matters on the Supreme Court. While you were away, there were reports about the wife of Justice Thomas and texts that she had with former White House Chief of Staff Mark Meadows. Should Justice Thomas recuse himself from any cases involving the January 6th insurrection or former President Trump at this point? I'd leave that to two entities. Okay, go ahead. Oh, go ahead. Ask the second question. No, two entities. Go ahead. Sorry. One, the January 6th committee and two, the Justice Department. That's their judgment, not mine. So on Justice Thomas recusing,

you don't think he should or? I said that, I told you, those things get into legal issues. That in fact, I told you I would not tell the Justice Department what position to take or not to. And I'm not going to instruct the Congress either. And did you get any chance to watch much of the Judiciary Committee hearings? I didn't get a chance to see any of it, unfortunately. The fact that Republicans were questioning Judge Jackson on matters like former sentences related to child pornography cases or the definition of a woman. Does that, as the former chairman of the Judiciary Committee, make sense to you?

Look, this is one of the most qualified nominees ever nominated for the Supreme Court in every respect, in terms of her disposition, her intellectual capacity, her experience and background, serving on three additional courts, a woman who is totally, thoroughly qualified, totally, thoroughly qualified, and will be a great addition to the court, in my view. Thank you. Thank you, Mr. President. Thank you, sir. President Joe Biden there to outline the broad strokes of his budget, which was unveiled today. Receiving the bulk of the questions, though, from reporters about comments that he made on Saturday

about Vladimir Putin saying the man cannot remain in power. President Biden, the news there says that he stands by that. He's not apologizing for it, characterized it as moral outrage and said it is not a new policy change. Doesn't see it as an escalation when it comes to the approach with Putin. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Just want to point out what's happening in the market right now, because we've seen a little bit of recovery here in this final hour of trade. At the low point of the day, we were down 300 on the Dow, we're climbing back toward the flat line, down 17, higher on the S&P. The Nasdaq's been the winner all day long, up 1 percent.

Small caps are lagging behind. It coincided with an FT report, a Financial Times piece that came out suggesting ceasefire talks between Russia and Ukraine are moving, at least, and that Russia's no longer demanding denazification of Ukraine. We'll have more on all of this. Just wanted to point out the move, though, in stocks. Let's talk more about what we heard from the president, though. Raymond James, Washington policy analyst. Ed Mills is here. CNBC's Elon Moy and Kayla Tausche also join us. Kayla, the questions on Russia, certainly front and center for reporters. What else did we learn as far as President Biden's posture here and to that FT report? What might come next? Well, Sarah, on the president's remarks,

he was very clear that this was not a policy change that he was articulating, but more that he was sharing his personal feelings about President Putin. But when specifically asked about whether he was worried that it would possibly inflame tensions, he said no, and that he does not care how President Vladimir Putin interpreted those comments. And interestingly, where it concerns possibly those in Russia or being seen as a comment that would attempt to stoke a revolt or revolution or potentially a coup in Russia. He said this remark, which I found particularly interesting. He said that Putin has become a pariah in the international community. Who knows what he becomes at home? So certainly seeming to allude to that possibility, even if it doesn't represent a formal policy change within the administration. As far as those negotiations, Ukraine and Russia are set

for yet another round of ceasefire talks tomorrow in Istanbul, Turkey. Ukraine has seemingly appeared warmer to the idea of becoming a neutral state, joining the European Union. And there was also a report in The Washington Post to that effect a few hours ago before that FT report about Russia dropping that demand of denazification, which is one of the demands that he's been raising to nearly every world leader that Putin has spoken to on this point. So certainly it is a positive development, although you do have to continue to take a massive grain of salt into whatever you expect to happen tomorrow, Sarah. We are seeing the highs of the day. S&P up 19 points on just word of talks and ceasefire and negotiations. And I guess it relates a little bit to the budget today that we got the ideas from President Biden. He wants to increase defense spending by four

percent, I think was the increase over last year's spending and a big jump from what we saw in the president's last budget. How much of that will actually see the light of day? Sarah, I think a lot of it. I think this is a fascinating story in terms of year over year and the amount of capitulation that has gone on in the Biden administration as it relates to the Defense Department spending. We're in a very different geopolitical world. President Biden highlighted that. And unfortunately for the market, it's going to be these geopolitical events much more than a budget proposal that's going to move things. But ultimately, when Congress works on the budget this year, the top line numbers here

probably only go up in budgets are going to be spent much more on defense than anyone had anticipated. It's interesting. I would have expected with that view, the stocks would be up. They've done well lately, especially with Europe's increased defense spending, but not so much today. Ilan, of course, the president also talked about fairness when it came to the budget. He talked about the billionaire's minimum tax. And there are some other things for Wall Street, including repealing the carried interest tax. Talk us through what's realistic here when it comes to some of the more money-centric proposals around taxes? Yeah, fiscal responsibility was one of the president's key priorities in this budget. You heard him talk about the importance of deficit reduction, of combating inflation,

and of targeted investments in spending. And all of that messaging is very different from what they said last year, which was big, bold, ambitious investments, which for senators like Joe Manchin and Kyrsten Sinema, those centrist, moderate Democrats, just translated into expensive. So what you really heard the president try to do in this budget is tailor that message to their concerns that unfettered Washington spending was leading to higher inflation. But at the same time, both of those senators have also expressed some concern about proposals like the billionaire minimum tax, as well as a higher corporate interest rate. So unclear how much support the president can actually get for some of the revenue raisers that he's hoping to use in this bill to achieve that fiscal responsibility

that he says is so important. Well, especially the billionaire's tax, right, Ed? Hasn't this been tried before and failed? They couldn't get past the Democrat season. The whole idea of taxing unrealized gains from billionaires, do you expect any traction on any of these proposals? So the takeaway that I have from this, Sarah, is that taxing the rich is still a popular talking point among Democratic

politicians. However, the threshold keeps on going up and up and up. The president did highlight that $400,000 level he said in his campaign. But what's proposed here is starting to tax higher at $100 million. In the Build Back Better that passed the House, it was a $10 million per year threshold. So the market implication here is that if there are tax changes, it could still happen through reconciliation. But for the average household, no tax changes are actually going to occur on the corporate tax rate. That's not going to happen. You might get Manchin on board for that, but you're not going to have Sinema. So lower taxes than anticipated are here for the time being and probably for the medium to long term as well. A big market change versus last year's expectations.

Ed, Elon and Kayla, thank you all. Good to have you here on this breaking news. And just a reminder, the president's budget doesn't get voted on, right? The next step is Congress has a budget. Well, oil prices getting hit hard today as new COVID lockdowns in China raise concerns about energy demand. Down 7 percent, 9 percent now for WTI. Up next, oil expert Sadat Al-Husseini on whether he thinks crude prices will fall even further. We'll be right back. Session highs for stocks, session lows for oil prices, and energy is by far the worst performing sector right back. Sadat Al-Husseini. Sadat, it's great to have you back on the show. Do you think that the market has this right when it comes to China being a swing factor now when it comes to oil demand?

Well, China is definitely one of the biggest. Its economy is as large as the U.S., if not larger, and it does need a lot of energy. It consumes a different variety, though. It doesn't depend entirely on oil. It uses a lot of gas, a lot of coal, a lot of nuclear. Yeah, but China will be in trouble if it can't get the volumes that it requires. And it will be continuing to buy, I believe, a lot of Russian oil and gas just for that reason. So what do you make of, look, the market went even lower. Just around the top of the hour, we had a Financial Times report that there are ceasefire negotiations are ongoing between Russia and Ukraine. Russia's perhaps giving some ground here when it comes to calling for denazification of Ukraine.

Oil prices moving lower. If we actually, and Kayla reminded us, we have to take it with a grain of salt. We don't know Putin's intentions. But if we did get some sort of ceasefire, what would happen to the price of oil? Well, look, it's been so high. It's got a scarcity of supply and a security of supply premiums that if we could settle it down, at least as far as a conflict, then we would have to go back and try to source out enough oil for the global economy to continue to grow. Because just before this broke out, this conflict, we were very short already.

I mean, we hadn't had investments for a long time, in part because of the low price of shale oil and in part because of the pandemic. So we would be right back there. Still $100, I'm quite sure. The rest of the year, we will have to see what happens, as you say, with the conflict because Russia itself needs to get its production back up. It's been running a little bit below its historical levels, more like 10.5% instead of 11.5%. So everybody's got to be confident that we're out of the conflict and can start investing again. Well, it's down now more than 9%. Energy stocks down 3%. Sadat Al-Husseini,

sorry to keep it brief. We appreciate the analysis. Tesla getting another big pop today on news. A stock split could be on the horizon. We'll talk to an analyst about what it really means for the long-term share price. That story and more when we take you inside the market zone. And as we head to break, check out the meme stocks having another big rally day. AMC is up nearly 40%. GameStop up almost 18%. We'll be right back. 20 minutes left of trading.

We are now in the closing bell market zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of the trading day. Plus, Oppenheimer's Colin Rush on Tesla's big rally at the top of the S&P right now. And Medley's Ben Emmons on the big moves in the bond market. Let's kick it off with the broader market, though, because stocks are gaining steam here into the close. And we are at session highs, Mike. Word of a potential ceasefire. Bitcoin is also at the highest now level of the year.

The S&P has shot up from lower levels. Technology was always outperforming in today's session, which was sort of an interesting dynamic. But what do you make of this rally? Yeah, to some degree, Sarah, I see it as the old rule, never short a dull market. We were just kind of hovering here for a while. About three stocks are really powering things. Tesla, Microsoft, Amazon taking most of that S&P 500 move higher. Not to say we're dismissing it. The S&P is at a very interesting level right here. Came into the week people saying this might be the last decent shot for bears to prove that this is a bear market rally and not a sustainable recovery. I don't think this level, but over the next 1% or 2% of the market, this rally has some proof behind it perhaps if it gets there. So I think that's mostly what's going on.

We did see a lot of reversals in longer- term yields, but also in commodities, oil coming off. And I don't know how to decipher that from quarter end back and forth flows. So I think we'll have to wait and see. Did want to highlight the financials. They're one of the top three, bottom three groups, I should say, in the market right now. It's materials, financials and energy. Financials, though, being dragged down by bank stocks right now. Morgan Stanley actually downgrading the sector to neutral, saying financials will have a harder time outperforming given the firm's prediction of a full yield curve inversion this year. The firm singling out Citi of the big banks, downgrading it to underweight, saying deglobalization will pressure revenue there. Mike, what is the deal?

If the yield curve inverts, obviously that's seen as a recession signal, not good for the banks, although they were riding high on the back of higher treasury yields as well. So which is it? Well, it's both. And rate hikes themselves really do filter right into their bottom line. And that is a net positive. I think this call from Morgan Stanley is essentially saying the late cycle playbook is in effect. Now, that may or may not come to pass, but that's kind of what they're saying, where the banks kind of lose the benefit of improving credit conditions. There is at least this recession watch, even if, you know, the two-year, 10-year yield curve is not really a

timely indicator. We're still going to be in that mode. So it's a lot more about how the stocks tend to perform under what conditions and what sort of acts as a headwind. So I think that's, look, there's probably a trade in here if you believe that's wrong. If you think the cycle has a lot longer to go, if you think the capital markets activity is going to come back in a big way and all that. But I do think that's at the root of it is saying banks tend not to be able to escape those late cycle dynamics once they kick in. Well, I think there's also a China slowdown fear coming into the market here today. Bonds are getting bought. For instance, I know we had a bad auction earlier this morning,

but this idea of slower growth and slower growth in commodities, you just heard from Sadat al-Husseini, China's the biggest, most important consumer of oil prices. And when we see lockdowns in places like Shanghai, it will slow our growth. I wonder how that has been, though, because this isn't the first time that investors have been worried about that. Yeah, there's been a couple of times that the market has flinched on headlines like that. I guarantee it's weighing on psychology, at least this idea that the overall growth picture is fragile enough that it doesn't need new challenges. I'll also say, though, treasuries in general, longer-term treasuries, were way, way oversold. I mean, they've been basically going straight down, yields going straight up.

So anything that just is a little bit of an easing of that move just makes sense right now, given how far they've traveled. $2.46 there on the 10-year. Check out shares of Tesla, best performer right now in the S&P, also helping out the Nasdaq of 8% or so. On news, the company is considering another stock split, Tesla last split its shares, remember, back in August 2020. With us now, Oppenheimer Senior Research Analyst Colin Rush. It shouldn't impact the stock this much, should it, Colin, to have a stock split? Or maybe yes, because of the whole moves into ETFs and index funds and potentially the Dow.

I'm not sure that's what it is. I think it implies a bullish stance from the company that things are going well, that they would consider this. The company's had a long history of trying to make the stock more easily ownable for some smaller investors and really make that broad investor pool available to the company. So you think it's just about the signal. Were there questions, though, about the fundamentals of the business? The stock's actually been on a roll lately. You know, we were in the Fremont factory last week with investors and things were humming right along. You know, I think there's some concerns around the Shanghai facility shutting down for a couple of days and some supply chain issues, you know,

that are endemic to the entire auto industry. We're seeing them execute along a lot of that, you know, in a very coherent, capable manner. But, you know, I think for us looking at these guys, you know, there's always expectations that they get out of whack around the end of a quarter. So it can be kind of a mixed bag, but we think things are going awfully well there.

So spending a Shanghai factory for what, I think four days until everyone can get tested, does that have a material impact? You know, it won't on the overall scheme of things, but in the short term, if they're reporting numbers at the end of the quarter here and you lose a few days of production, that can be pretty material in terms of what happens.

And so that's something we're watching for, But it's something we also think they'll make up those volumes as they go through the rest of the year. So what do you do with the stock here as it's had a remarkable comeback? It got hit and is still lower for the year, I think, but has had a really strong bounce back in the last few weeks. We're still buyers on a couple of trends. One, EV demand is continuing to outstrip supply in a massive way. And we're seeing dates for deliveries extend out as the volume of demand for Tesla is really extending past what they can supply. We're seeing the rest of their competition, particularly the startups, go through some teething on these ramps. It can be really hard to make these vehicles. And we've seen that with the traditional OEMs. And we're seeing

production from some of their peers not keep up with the growth that's happening at Tesla. And the other thing that we keep highlighting is the volume of vehicles that they have on the road for their self-driving functionality. And one of the things that we're seeing them do is really leverage the volume of data and the number of cars that they have on the road to really evolve that functionality. And while we see it still being a big challenge left for not only them, but the rest of the industry, we think they have the critical element of that with all of those cars collecting information and collecting experiences that they can roll into the functionality over time. And we see them really outpacing the competition on that full self-driving functionality. A buyer on the weakness.

And my bad, it's actually up year to date now with this rally. It takes it up 3% for the year. Colin Rush. Colin, thank you. Mike Santoli, 25% month to date for Tesla, but still about 12 or 13% off its recent highs. Yeah, it's back to levels that traded at early to mid-January, which the overall market's not back to those levels. So obviously, it's had one of these sprints. The excitability around the stock split feeds right into just this general idea that retail enthusiasm, even institutional enthusiasm, they just run the stampedes through the options. It does make options more affordable. If you go back to look at the run up to the 2020 split, it had this vertical move, calmed down for a little bit,

and then just kept rising into the actual execution of the split. And then for the next two and a half months, it was lower. So in other words, anything you can say about the mechanical benefits of a split, they don't really hold up because it's all the anticipation of the split that got the upside in there until it was announced Tesla was going in the S&P, which was a separate move. So I just feel like it's atmospherics around a name that trades in the short term on lots of emotion and collective belief. Is it a different catalyst for Tesla than, say, Apple and Amazon and Google, which have also announced stock splits recently? I would say yes, only because of the velocity of

the moves in Tesla typically and how it is really in a lot of individuals' hands. It has this massive upside over the course of the last few years and it's gotten people kind of it's like a buy first and ask questions later type of thing obviously the fundamental story has has moved in line as well and obviously we're having a different conversation around production and profitability than we were a couple of years ago but yeah in the short term I do think it's more effective and by the way you know Google's trading below where it did when it announced it the day after it's announced its split. There you go. Well, after a rough start to the year, Bitcoin now rallying back above 48K,

highest level since December 31st, thanks to rebounding sentiment, short covering, significant new buyer emerging. Let's bring in Kate Rooney. Kate, what are the key levels to watch and the themes to watch now that Bitcoin is above 48K and really took another leap higher this hour? Yeah, that's right, Sarah. Huge move over the weekend. So 45,000 really was that key resistance level. Once that was broken, I'm told it really triggered a lot of short covering. That's why we saw that huge spike on Sunday. $47,000 appears to be sort of a level to the downside. It is holding above that. Like you mentioned, it's above $48,000 at this point. $50,000 is a key psychological level for some traders. There really hasn't been a five handle in front of Bitcoin's price in about three

months since at least December. And then $52,000 in terms of the next technical level seems to be the level of resistance for traders I'm talking to. Another thing, though, guys, to watch. So it's not technically a level on the trading side, but it's an important metric to a lot of crypto traders. It's the average cost basis for short term holders. So that's really the price where a lot of these newer buyers got in, meaning really anybody who bought Bitcoin in the past few months. That's a group that people watch really closely. They've been underwater for most of the year. They're now back in the green. So that's helping sentiment. And these newer buyers really are important. You look at retail

participation. That's historically been a sign of some of the more sustained bull runs in Bitcoin. It's been a hallmark of other sustained rallies, and it's really been lacking this year. So the fact that they're now back in the green, no longer underwater in most cases, it's likely helping sentiment and helping prices here. Kate Rooney, Kate, thank you. Mike, I'll tell you another thing that might be helping Bitcoin is you have a crash of the Japanese currency. I was going to mention this in the Wall Street buzz today, but because of Biden, we got cut short. So I have to note, because this is a crazy move that we've seen from the Japanese yen, it's been collapsing. It's down more than 6 percent for the year, which is very unusual for a major currency. The latest trigger, they had to step in and buy bonds to defend their low yields, basically, as yields rise around the globe. The stronger treasury

yields hurts Japan. The fact that it's an oil importer hurts Japan. Is this, I wonder, a sign, a green light for the bulls on Wall Street? Because usually when the yen is weakening, that's a good sign for overall markets. It's the way things should be operating from a risk perspective. I guess the question is, is this move too fast and too large? Yeah, absolutely. Normally, it is a good risk appetite tally. You don't want to see the yen rallying because that's the reverse effect. It means people are getting a little bit more nervous. On the other hand, I don't know if we're going to tie it to anything beyond what we were already responding to, which is the yield move. So to

me, it's not necessarily a new phenomenon. It's part of the whole thing we've been watching and has been driving markets for a little while. I would say it's the removal of a potential negative, except the speed of these moves when it does cause, you know, some kind of ripples throughout the rest of the market. If it does, that's what you want to watch for, as opposed to, you know, what is the real macro meaning of the yen move here? And I have no idea if it's really funneling into crypto or just feeding into the general, you know, kind of storyline of why people might like Bitcoin. Right. Just another big currency just getting diluted, I guess you could say. I want to point out the Dow here. It's trying to go positive. Attempting was positive just at the top of the

hour. And it looks like we're up about two points. Microsoft, Walmart and Salesforce, biggest contributor to the Dow gains today. Biggest weaknesses on the Dow are Chevron, Dow and JP Morgan. Also want to point out the pharma space. Shares of Amelix Pharma plunging today, getting halted several times during the session for volatility. This as the FDA releases briefing documents ahead of its vote on the company's ALS drug, which will happen on Wednesday. The FDA says the drug appears to be relatively safe and well tolerated, but there are still questions surrounding the results of a study. This is going to be a key moment for the FDA as the agency is already under some fire for its accelerated approval of Biogen's Alzheimer's drug.

Let's bring in Meg Terrell. Meg, seems to be a lot of similarities to what happened there in the Biogen drug and this. What do we need to know? Yeah, there's a lot of similarities, starting, of course, with just it being a terrible disease. ALS or Lou Gehrig's disease is a fatal neurodegenerative disorder for which there really aren't good drugs out there. There is definitely not a cure. And the drugs that there are out there really only help things for a couple months at a time. The other similarity is that the data are really not straightforward here.

This application is based on one phase two trial, and the FDA in its briefing documents today essentially called the data not exceptionally persuasive here. The other thing that it has in common is very strong patient advocacy here, who is saying to the FDA, hey, you've shown this flexibility before. We need better drugs. This trial worked. You should clear this. So as you can see in the stock price today, it's kind of a U-shape. When the documents came out, it was much more negative than a lot of people had expected. But still, some analysts are saying the FDA could still approve this drug. So Wednesday is going to be a huge day for this patient population, for this stock, to see how

this group votes. And Sarah, it's the same group. It's the neurology division at the FDA who's already under fire for the Alzheimer's decision. So there's just a ton of pressure here. Right. That's got a way on them as well. Meg, thank you. We will keep an eye on it, down 37 percent right now. Stocks are near session highs as we approach the close. We also wanted to point out the move in treasury yields, very important lately. The 10-year is moving lower, the yield is, for a change. And while the 5-year and 30-year did briefly invert earlier. Joining us is Ben Emmons, head of global macro strategy at Medley Global Advisors. Ben, what do you make of all the inversions happening at the

same time that we've seen bond yields go higher on the expectations of higher interest rates? Is all of this a threat for the stock market rally? Hey, Sarah, I don't think it is because, you know, we're at this cycle where the Fed has just lived off. And I think the market is really trying to price what's the appropriate Fed funds rate to get this inflation rate ultimately down back to target over time. And that's what you're seeing with Treasury yields. They all moved up since the Fed meeting on March, mid-March, all moved up about the same, a little bit to a little bit more. So you get this inversion, but you mostly get actually yields that are above

what the Fed considers to be a neutral rate around 2.5%. So I think the market is working towards this process of saying this Fed funds rate may be somewhere in two and three quarters, three percent range that may be sufficient then to bring inflation down. I think that's what the story of Treasuries is, which had no negative bearing on the equity market. So if that's the case, so we're looking at March performance coming up at the end of the month this week. Every sector in the S&P is actually higher for the month of March, obviously led by energy, which is up 9 percent. But the weakest sector staples up six tenths of a percent. What is the strategy for April? Do you see more of the same until this conflict with Ukraine gets resolved,

or do you switch it up? I think that the strategy remains similar. Let's say that, you know, we have this big wave of inflation coming at us. It's a lot of food inflation. So that sector is obviously doing extremely well. I think that's going to continue to perform. You see the switch between growth and value. That sounds a bit broad, but it is really a reflection, I think, of future expectations that ultimately inflation will come off. And this is, I think, why the growth trade has revived. There's also emerging markets that are on an uplift here, despite the dollars breaking towards this 100-dollar index.

And I think broadly that the market remains in this, I say, positive tone. If there is ceasefire, that's a tail risk off the table. If inflation does get adeptly attacked by the Fed, that will be eventually a tail risk off the table, too. So I think that's why you're seeing a positive momentum going into April. Is it too early to bet on inflation coming down by buying tech? Now, I think it is actually a timing war about over time that inflation comes down. We can't expect inflation to go from 7, 8 percent or so this year all the way down to within a matter of months. If that happens, then the yield conversion is right. It will be signaling a recession.

So since we're not a recession scenario, I think it would be more about inflation moderating more by the latter half of next year, really down to two percent. So, yes, tech was so oversold that I think that has a lot to do with the momentum, bottom momentum coming back to people seeking it out for that reason. Ultimately, high-growth companies should prevail when inflation does start to moderate. So that, I think, is what the market rationalizes here. Quite right, I think. Ben Ammons, thank you for joining us with the latest strategy from Medley.

As we head into the close, still near session highs right now. Consumer discretionary is a leading sector. It's being driven by Tesla, but also Carnival Corporation, e-commerce, some of the retailers. Two minutes to go in the trading day. Mike, what do you see in the internals? It's improving, Sarah. It did start off pretty negative. In fact, almost the entire day you had more stocks down and up, more volume down and up.

Overall, very light volumes, but that's showing you we're about even. So as I mentioned earlier, it is a handful of mega caps that are flattering the S&P 500. But still a day when kind of the market kind of shrugged off an excuse to go lower. And by the way, it hasn't been up on a Monday in a couple of months, the S&P 500. Take a look at some of those consumer discretionary areas you mentioned. Housing and autos seem like a little bit of an overhang right now on the outlook, an economic outlook. There's CarMax and the homebuilders. Now, homebuilders are bouncing a little bit of an overhang right now on the outlook, an economic outlook. There's CarMax and the homebuilders. Now, homebuilders are bouncing a little bit today, so it's not necessarily game over.

But this shows you year to date, people have been moving away from those consumer durables, whether that's a forward-going message or not. Volatility index really cooperating here, cracking below 20. That's kind of down into the normal range. It shows you the market's back in gear. You have these rotations going on, suppressing volatility. Maybe the fever has broken. We haven't really been sustainably below 20 in a while.

We were there for a little while going into January peak and not really there since the highs of the S&P in early February, Sarah. Going into the close, we are solidly positive for the Dow, something that was not the case all day long. It looks like we're going to go out with a gain of about 68 or so points. Biggest contributor, Microsoft, Salesforce, and Walmart. S&P 500 also going strong here in this final hour. Looks like a good close, up almost three quarters of one percent. Tesla is your best performing stock in the S&P. You've also got Carnival, as I mentioned, SC, Moderna doing well, Adobe. NASDAQ's been outperforming all day long today thanks to Big Cap Tech, Microsoft, Amazon, NVIDIA, Adobe, Apple all doing quite well. And the Russell 2000 lags. Looks like it's going to be negative, the only one of the big four, just barely.

That's going to do it for me on Closing Bell. Have a great evening. We'll see you tomorrow.