Closing Bell - Closing Bell: The Road Ahead for Stocks 4/3/23

Episode Date: April 3, 2023

It is shaping up to be a busy week for investors with a jobs report, key data and earnings on the horizon. So, what is the set up for your money? Cameron Dawson of NewEdge gives her forecast. Plus, #1 retail analyst Matthew Boss of JP Morgan upgraded Macy’s. He explains why – and breaks down the state of the consumer. And, top chip analyst Stacy Rasgon from Bernstein is changing his tune on Intel. He breaks down the catalysts behind that call.

Welcome to Closing Bell. I'm Scott Wobner, live from Post 9, right here at the New York Stock Exchange. This make-or-break hour begins with major questions about the market as a new quarter begins. Can technology continue its amazing run? Is energy about to re-emerge as the place to be in this market after months of missing the mark? Here is your scorecard with 60 minutes to go now in regulation. Dow up for most of the day and led mostly by United Health and Chevron as oil surges. S&P hanging on to positive territory, too, by about a fifth of a percent. A pullback for tech. The Nasdaq sliding the most of the three major averages today.

Interest rates are lower, too, as a read on manufacturing disappoints. It brings us to our talk of the tape. The road ahead, given all that lies ahead. A jobs report this Friday. E, earnings in a couple of weeks, and of course, more reads on inflation. To help us navigate all of that, let's welcome in Cameron Dawson, the chief investment officer from New Edge Wealth, right here, as you can see on set. All right, welcome.

Thank you. New quarter. Yep. Same story for the market? Well, last quarter was certainly led by tech. I mean, it was massive outperformance. And if we look at the spread of performance between tech and energy, it was nearly 40%. And so what we see now is tech is extremely expensive and energy prior to today is extremely cheap.

Why do you say extremely expensive? Well, it was trading at a 40 percent premium to the market, which is even higher than it reached back in 2021 at the peak of the pandemic bubble. So that premium is huge and is already pricing in, we think, a lot of potential easing in the Fed or by the Fed. Oh, is that what you think has led to the run in tech? I think it's twofold. I think there is a factor of pricing in easier Fed policy reflected by lower interest rates. We did see real interest rates fall through the beginning of the year. And then, of course, there is that flight to safety, which tech has had good performance during past recessions from an earnings standpoint. So when you put the two of those things together, you get this big, huge surge in tech. Flight to cash flow, right? I mean,

if you're looking, if you're going to be, you know, scrutinizing balance sheets more, why wouldn't you go there? If you need growth in a low growth environment, why wouldn't you go there? The only reason why you would be cautious today is because of valuation. Valuation can be a risk in and of itself. Now, there has to be a catalyst. In 2022, valuation was a big risk for tech. Tech earnings weren't bad last year, but the valuation started the year so high. So that's where you have to be very cautious that quality at any price doesn't work. So would you be a fader of the, there's the XLK, right? We could show it again. We're looking at it on the screen. That's the tech sector ETF. It's a better than 20 percent. There is 21 percent year to date reflecting the move we've seen, which, by the way, you can really boil down to essentially five stocks, give or take a couple.

Exactly. I mean, the market's been extremely top heavy. And so if you do remove those stocks, you do see a market that's trading at less extended of a multiple. But even the equal weight S&P 500 is trading at about 16 and a half times. That's near the prior high in the pre-pandemic ranges. So it's not as stretched as tech is, but it certainly speaks to that this big rally that we've had year to date has all been multiple expansion. So obviously, you know, most people are wanting to know whether the rally can continue or not, whether seasonality is enough of our friend, so to speak,

to carry us through some of the rough patches that, you know, may be lurking out there. Chris Verone, Stratigas, seasonality and asset for the market into early summer, he says. But note that all three major indices, and that's the S&P, the Q's, Russell 2000, all have fewer stocks above the 200-day moving average than early February, along with a more restrained new high list. You look at this kind of stuff, too. Yeah.

Does it stand out, stick out like a sore thumb? It does. And the other point that Chris made today is that you're seeing less strength out of the cyclical parts of the market. So one of the things that was bullish to begin the year is we saw things like discretionary outperform staples that showed that there was optimism about the growth picture. But ever since we've seen the yield curve starting to re-invert and some of the wobbles going on with banks, what we've seen is cyclicals have rolled over. And so if they start to roll over, things like small caps also rolling over, that would suggest that there could be more earnings risk on the horizon.

Maybe discretionary was outperforming because there were hopes that the consumer was going to remain strong. And certainly around certain areas of staples and defense, for example, got expensive. They did. And they got really extended going into all of 2022. And that's what you saw with the health care sector. Health care has really underperformed to begin the year. And part of that is just because it did so well in 2022. And so maybe we're starting to give a little bit of that give back. But the reality is that you've seen such a huge move in growth over value. It's not surprising that you see some kind of snapback, mean reversion. And a cut from OPEC could be just the spark that causes that.

Is that, in fact, going to be the spark that helps this trade reemerge, restart from what has been a surprise? You said the way you characterized it was technology is incredibly expensive. Energy is incredibly cheap. Well, I mean, energy has surprised a lot of people in the way it hasn't worked, as much as technology has on the other side. Yeah, I think that the challenge that we have with energy, or had at the beginning of the year, is everybody was long it. It was everybody's favorite sector. And rightly so. I mean, it did incredibly well last year.

It did. And at the same time, you have this impact that energy is unlikely to have the same kind of earnings growth that it had last year. It did. And at the same time, you have this impact that energy is unlikely to have the same kind of earnings growth that it had last year. And so you have that positioning and you have a little bit slower earnings and then you get to this underperformance. And so what we want to be able to watch very closely, though, is if we can see higher oil prices supporting kind of a reacceleration in that earnings growth for energy names, which would be very bullish for those shares. All right, let's bring in Emily Rowland now of John Hancock Investment Management as we extend the conversation. Welcome. So new quarter. You heard what Cameron has to say.

Now, energy is getting a nice bit today and technology selling off. Is this the way it's going to be, the start of something new as the calendar turns to a new month? Nope, not so fast. We still prefer the technology sector over energy. And I'll tell you, you've got to be careful when talking about valuations, because one of the reasons that tech looks very expensive is because the earnings estimates have come down. And in fact, we think that they're quite reasonable. S&P 500 tech sector earnings right now are penciled in for just under 1% for 2023.

I think that makes sense. I think that that's something that's achievable. Given the challenging macro environment, you look at sectors like consumer discretionary, analysts are penciling in 26% earnings growth for this year. Comm Services is seeing about 15% earnings growth. We just think that that's going to be really tough, especially given the fact that these are very cyclical sectors.

They're very sensitive to the economy. Tech we think can do well. It features a lot of quality. These are companies with great balance sheets, tons of cash, a limited need to have to go to the capital markets in order to grow. So we continue to like tech over cyclicals in this environment. Cameron, I'd like you to respond. Yeah, well, I think that there are parts of tech that are cyclical.

And so we do have to be aware of that potential for earning cyclicality. Not all tech has this stable kind of balance sheets cash flow like software does. But I think that when we look at the valuations, how much of that earning stability is already being priced in. And so that's where we want to be cautious to say, look, if stuff is overextended and overbought, we own a lot of tech. We are neutral tech because it's such a dominant part of the quality index. We continue to focus on quality. But when we're looking for new buys at the margin, we'll look more towards value because of that valuation premium that Tuck already has. I mean, in other words, Emily, you're right. Earnings are going to hang in there. But why do you think the stocks have already done what they've done? So that's already being reflected. Is Cameron wrong? Well, I think some of it's just a reversal from last year's

performance. And I completely agree with Cameron that you've got to be really picky when it comes to the tech sector. And we're staying away from those unprofitable growth at any price type tech names. And we're really gravitating towards your sort of classic S&P 500 tech sector, those companies with lots of cash. So being picky, I think, here is really important. But again, if you like quality, which I know Cameron does as well, you know, tech is just going to be your poster child there. So I think in an environment where earnings are going to be significantly challenged, we think that there's going to be a big re-rating in earnings this year as margins come under pressure, as we see this cycle play out, unemployment go up. We want to gravitate towards those areas and just have better balance sheets, more cash,

good free cash flow. And that's going to be found in tech. But do you in part like tech because you also think that rates are done going up and you think the Fed is done raising? I think that that's certainly part of the story, but I don't think tech needs lower rates in order to outperform here. And that's certainly been the pattern over the past year or so. But again, going back to the fundamentals, going back to the denominator and the P.E. ratio, earnings are going to be the driver here. And those fundamentals are simply superior. Let's talk about the Fed for a minute. There's no meeting this month. Cameron, obviously next month, though, it's going to be front and center again.

Are they done? I think that there's a chance that they still go in May. If we don't have any more banking issues, just for the reason that they will only have March data to work with, because the April data comes out after they meet. They meet on May 3rd and 4th. And so when we look at the underlying growth that we saw, if we look at GDP Now survey, that would all point to this economy still remaining strong through the month of March. So if they're looking at that data and they are data dependent, that would support another 25 basis point move, which is what we've heard from all the Fed speak over the last couple of weeks.

If they do that, do you think that the 25 in May would be it? Likely. Because, I mean, I feel like the market is in part moving, not just on the idea of a pause, but on the idea of, okay, we can handle another 25, we think. And then that's it. And then that's it. But then what comes next? Because what's already being priced in is a lot of cuts.

By the time we would get to January of next year, nearly 100 basis points of cuts. So the time we would get to January of next year, nearly 100 basis points of cuts. So for the bond market to be right or for the bond market to price in even more cuts, you would have to see the Fed effectively outdove the bond market, which is already very dovish. Emily, you're looking at the two year and you think that that is a tell of rate cuts to come. You think the Fed cuts? Yeah, definitely. Over the course of this year, I think Cameron's right. Maybe one more in May. But, you know, it's so unusual to see some of these moves in the two year Treasury. I mean, it's acting like a meme stock

right now. We saw the two year fall, you know, 137 basis points over the course of just a couple of weeks. And that's a significant tell that the Fed is likely to cut rates from you. You don't normally see that type of action in the short end of the curve and you don't see Fed rate cuts after that. So I think that that's the response here. The Fed funds rate is now meaningfully higher than the two year Treasury. That's the direction. I think the bond market's probably right here. All right, Emily, thank you. Leave it there. Cameron, thanks. Thank you. All right. See you back here soon. Let's get to our Twitter question of the day. Now, we want to know which of these Q1 losers is the best bet for Q2. Is it Charles Schwab, Enphase Energy, 3M or J&J?

You can head to at CNBC closing bell on Twitter to vote. We will share those results a little bit later on in the hour. In the meantime, let's get a check on some top stocks to watch as we head into the close. Christina Partsenevelos, as always, is here with that. Christina. Hi, Scott. Well, let's talk about Tesla because shares are down roughly about 6% right now, the worst performer on the NASDAQ, despite posting a record quarterly deliveries after some deep price cuts. So a little short of the fact set consensus.

So that could be part of the reason you're seeing the sell-off. But you have to keep in mind, this stock has run up almost 80% just in the last three months or so. And so like Phil LeBeau has said on our air, investors might be waiting for Q1 results on April 19th, and maybe a little bit more details on margins given those steep price cuts. And to that point, shares of EV maker Rivian also lower after Q1 deliveries declined compared to Q4. So that's why you're seeing shares down 2.4%. And then lastly, shares of software HR firm Paychex trending roughly almost 2% lower. Mixed feelings from Wall Street. Barclays keeps an underweight rating with a price target of 109, so a little bit lower than what it is right now. Well, Bank of America just downgraded the stock

to hold on worries of an economic slowdown. And they didn't just downgrade Paychex, they also downgraded payroll firm ADP to underperform, saying the stock tends to lag as unemployment starts to rise. You can see ADP shares also 2.5% lower. Scott. All right. Christina, thank you. Christina Partsenevelos. We'll see you in just a bit.

We are just getting started here on Closing Bell. Up next, shares of Endeavor and WWE moving lower on the back of some big deal news. I spoke exclusively to the CEO of Endeavor and the executive chairman, the founder of WWE. What they had to say about the deal and its valuation after the break. And later, a change of heart. Bernstein, Stacey Raskin upgrading, you heard me right, shares of Intel today after being bearish on the name for quite some time. Their data center results were horrendous, and they sort of suggested they were going to get worse. On data center, I think AMD is going to steamroll them this year. I think Intel's issues are just getting darker. I don't see any reason to own it. They clearly got caught on the wrong foot here. And it's not even just this quarter. This has been building for the last several

quarters. They haven't had a good print in a while. This seems to be where they just went right off the cliff, though. They're out of money. They're out of free cash flow. They're burning cash. Well, that doesn't sound so optimistic now, does it? So we will talk about that upgrade when Stacey Raskin joins us with his updated outlook. You're watching Closing Bell on CNBC. Disney CEO Bob Iger firing back at Florida Governor Ron DeSantis today. Mr. Iger responding to a question at the company's annual shareholder meeting calling DeSantis' push to control the district that contains Disney World, quote, anti-business and anti-Florida.

All of this as the governor orders an investigation into an agreement between Disney and the district's previous oversight board. Let's bring in Disney shareholder and CNBC contributor Brenda Vangelo now. So it's good to talk to you today, especially as all of this is taking place. And now we have, you know, this battle staying in the news as it is. Does that issue in and of itself in any way affect how you think about this stock and the prospects for it going forward. It doesn't. And I but I do think

it's unfortunate that this is coming up as just one more potential distraction for Bob Iger to have to deal with when he's really trying to institute some significant change at the company over the next couple of years. But from our standpoint this does not change how we view institute some significant change at the company. Over the next couple of years- but in

from our standpoint this does not. Change how we view the stock but I think this is a tricky environment there in where. Is me is a company that really has always. Tried to be inclusive of all. And I think that was at the heart of the

statement that was made- last year. And that's now leading to I think some of this- back and forth with the same test that I in our view as this does not change. And if our view of stock at all and we continue to think that Disney is

incredibly uniquely positioned within the space and really content is it is so unique we've heard a lot about that recently with some speculation that Apple might be interested in the company. And that this does not change our view. So what does matter most if this does not? I think really seeing Bob Iger implement the plan that he talked about just recently in February,

where the company plans to cut five and a half billion dollars of costs, have three new business units I organize the company into three business units really focus on creativity leading some of the business decisions they make. Those are the parts that heart and in our view of of seeing

this company turn around although we would say the company is incredibly valuable as it is and so and to the extent that Bob Iger can make it a little bit better by improving profitability. Especially within the streaming part to the extent that Bob Iger can make it a little bit better by improving profitability-

especially within the streaming part of the business that's an added bonus- and that I really think that that's what's going to be the most important but I'll also say the other thing that I think we're. Need to start hearing about soon is a

succession plan or at least- learning more about more senior executives at the firm that might be in the running to eventually take Bob Iger's place, because two years is going to go by pretty quickly. Yeah. All right. Brenda, we'll talk to you soon. Thank you, Brenda Vangelo. Joining us once again, CNBC contributor. A quick programming note, by the way, do not miss tonight's last call. The close ally of Governor DeSantis, Central Florida

Tourism Board member Bridget Ziegler joins Brian Sullivan. That should be a very, very interesting conversation. Tune in to Last Call. That's tonight at 7 o'clock Eastern Time. Speaking of the entertainment business, both Endeavor and WWE shares lower on news that Endeavor will merge its UFC brand

with the WWE, forming a new company that will eventually go public on the New York Stock Exchange. The transaction values the so far unnamed company at some $21 billion, $12 billion for the UFC, $9.3 billion for the WWE, which is a substantial premium over WWE's current $6.5 billion market cap. After the deal closes, expected in the fourth quarter, Endeavor will hold a 51% controlling interest in the new enterprise, while existing WWE shareholders will hold a 49% interest.

I asked Endeavor CEO Ari Emanuel about the deal and its valuation during an exclusive interview on Sunday in Los Angeles. We paid a fair price, and I'll tell you why. We paid a little bit for control premium with our cost cuts, their new deals coming up, which is right now, and our cost savings that we think we can extract from the business right now and grow the business with all of our levers, whether it be international sales, domestic, sponsorship, gambling, all the things that we do um i think it's right i would also say to you is when i bought img everybody said i overpaid it was actually one of the cheapest deals in sports for sure when i bought the ufc everybody was like at 4.2 billion they were like crazy we've've tripled the EBITDA in that period of time.

And now with this, this is going to be UFC 2.0 as it relates to all the things in the flywheel that we can bring. And we have unbelievably attractive economics. The balance sheet's incredible. Our debt ratio is less than three times. Our free cash flow conversion is unbelievable. So I think when people look at this business on a combined basis and also look at the remaining assets, for both shareholders, it's incredible. Are you still as committed to deleveraging as you've told

Wall Street that you are? You said at a conference about a month ago, we've taken the company from eight times levered to four times. I'd sleep a lot more if we got it lower. You still committed to that? Well, right now in the new company, we'll be at, I want to make sure I say below three. And at Endeavor, we'll be below three also times. So I think we're doing our job there. Why didn't Wall Street see this coming? I read analyst notes which said Deutsche Bank, we believe a WWE acquisition is off the table at this point.

They thought maybe you were going to go in a different direction. What did Wall Street miss? Everything. You know, listen, I don't think people realize, one, that Vince saw what we built with the UFC. He knows what he wants to do with the WWE and take it to the next level. We had long conversations about it. We think this is right for both groups. I think they just missed the value proposition and the flywheel effect on both of the companies.

Now, the deal creates a live sports and entertainment giant, one that will soon be renegotiating its TV rights deal with partners NBCUniversal, our parent, Fox, and potentially even other new players. Both Emanuel and WWE founder Vince McMahon optimistic about what they have to offer, no matter who does the bidding. Here's what I would say to you. The number one show in cable is Raw. 1.8 million viewers. Up 9% from the same period of time, 2022 to 2023. Even though everybody says cable's dying, Raw is up.

SmackDown, I think it's 2.3 million viewers. Up 7%, same period, same period. And the unbelievable thing is the 18 to 49 demographic is the best in the business. And the rate card is way below market by a significant amount. So when you think about those things, and in my opinion, and Vince and I talk about this, content's king. There's linear players, there's cable players, there's the SVOD players. Everybody wants the young demographic, the social.

I mean, we're across the board, male, female, young, old, both assets. I think they're going to get a a proper price and the idea here is there's nothing like the two combined it's live that's really a key is our events are live people want to watch live yeah one reason why we are a success and continue to be a success and can fit and every every every medium we can fit everywhere and in terms of social media and everything else, we fit everywhere. Emmanuel made it clear to me he wanted Vince McMahon to stick around, even as many assumed that was unlikely after a scandal that rocked the WWE

and sent McMahon into retirement. He returned after nearly six months to help lead a potential transaction. So how will the two coexist? I asked. We've known each other for 23 years. He, when I was a young agent, said, you know, why don't you represent us? It was an honor then. Throughout the pandemic, we got even closer closer we've sold the media rights there's a lot of trust here um but i think we built the flywheel that vince realized the value and what we did with ufc he could see what we could do with his assets um and i i'll just give him a little credit right here you know he saw cable when nobody saw cable And he built a national brand way back in the day when there was about 15 different promoters out there.

He built an in-house sales force to sell the product that nobody had. Pay-per-view. Took it public. And last but not least, I think, you know, five, six years ago, he went direct-to-consumer when none of us were thinking about the right of human so us being in venezuela with vince and now you're sitting there with a guy who's seen around the corner better than anybody in our space and him being able to play with our flywheel just look out an important postscript here i'm personally represented by wme it's a unit of endeavor a talent agency that represents several CNBC anchors and on-air reporters. Up next, Macy's big move higher. That stock is popping big time on the

back of an upgrade from none other than the top retail analyst Matthew Boss. I can see him standing in the wings, which means he'll be right here with me at Post 9. Next, we'll find out where he sees the consumer heading from here when we come back. Black breaks down some under the radar names. Closing bell back after this. Macy's shares are higher today after getting an upgrade from J.P. Morgan, the move coming on the heels of the firm's ninth annual retail roundup conference. Joining me now at Post 9 to discuss is the top retail analyst on Wall Street, Matthew Boss of J.P. Morgan. It's good to see you. You too. Thanks for having me, Scott. This is a big deal. Obviously, it's being reflected in shares today, primarily because

when they announced their 2020 reset to today, you say they've largely accomplished their goals. Yeah, you nailed it. So I think the first part was a leadership overhaul starting in 2020. I think it's a merchandising overhaul. And I think if you now think about the growth vectors moving forward, this is frankly a different company since 2019. And what I like is they're citing market share opportunity from the specialty sector so they can coincide with the off-pricers and they have the strongest global brands within the box. Jeff Gannett, CEO, announced he's leaving early next year. What does that mean? Is that a negative? No, I think Jeff put in place the stability of the organization. And like you said,

starting in 2020, this overhaul, more from a merchandising, the closure of the stores, and right-sizing the box and the distribution profile. That was the heavy lifting that I think Jeff has done. And now under Tony, I think the next leg with Tony and Adrian, their CFO, I think they're set to now accelerate the growth into back half of 23 and into 24. You, I guess, have to admit, I mean, it's, look, for all of the things that the company has done to help its reset, you know, as they call it, it's a tough time to upgrade retail stocks. Absolutely. With all these concerns about the economy. Absolutely.

Think about that at all? No. Despite the positives you look at? 100%. Look, and I've been on before and we've talked about the tough retail road in the front half of the year. The idea with this is a tactical move, meaning we're staying best in class. We're staying selective. We like the Nikes and the Lululemons of the world.

We like off-price for value and convenience. But at two times EBITDA, this Macy's, which is now off 40% relative to early February, this to me was a tactical opportunity given the hard work that they've done that I think you could see a potential double in this. So you consider this to be part of your best-in-class group? I think you have best-in-class, and this is the show-me story. But at two times EBITDA, I like the risk-reward on a tactical opportunity such as this. Why has it been trading at a discount to its peers?

Because of the ongoing reset and just questions about where the company was at the given time? So you have the brick-and-mortar versus e-commerce versus off-price debate, and they're right at the epicenter of it. You have the choppy consumer over the last couple of years. You have all of the changes with the brands that they sell and the disintermediation thesis of brands relative to the retailer. But I think the size and scale opportunity, the data science and all of the investments that Macy's has made positions them to come out as one of the winners. What's the other takeaway from the conference? I mean, the prevailing view on the state of the consumer is what? I think it's still uncertainty. That's why we remain selective. But I think now as you move forward, second quarter of last year

is when the consumer rebudgeted. That was the peak of the food inflation and the fuel inflation. As you move into the back half of the year, comparisons ease 1,000 basis points for the top line. And you lap the margin glut from a year ago when all of the inventory was overheated and the clearance actions took place. So you have raw materials that are now coming down. Freight costs are now coming down. The consumer, I think, has rebalanced. So I think the biggest tone from retailers at our conference was more visibility into the controllables, even despite the uncertainty from the consumer. This fits right into my next question when you're

talking about Macy's, this idea that department stores were, if not dead, were sort of sucking wind. I mean, you know, malls and all of the concerns there. Has the state of that changed? Are department stores getting new life in any way or no? So I look at it differently. I think the lines have blurred across all of retail. I think what you need to win is value and convenience. So thinking about a company as a department store relative to an online REITs, I think what really matters is can you be the destination for top brands at values and offer convenience? And that's the investments that I think Macy's has made. That's why I think the off-pricers Ross, TJ, and Burlington are working. And that's why the direct-to-consumer for those strong brands such as Nike and Lululemon is winning in this environment.

It's good to have you here. Thank you very much. I appreciate your time. Great to be back. You send shares of Macy's higher by better than 7%. That's Matthew Boss of J.P. Morgan. Up next, we are tracking the biggest movers as we head a little bit closer to the close. Christina Partsinevolo standing by again with that. Christina? Well, we have a cybersecurity attack on one semiconductor storage name.

But one analyst says don't fret. I'll explain this potential investment plan when we return. Let's get back to Christina Partsenevelos now for a look at some more key stocks to watch today. Christina? Well, let's start with shares of data storage device maker Western Digital. They're down about 2% after disclosing a cyber attack from March 26. Several of its services are still offline right now, and that's why the shares are actually 1.3% lower, so they're a little bit better. But Wedbush's Matt Bryson points out there have been similar breaches at NVIDIA and AMD just over the last few years or so with limited repercussions. In other words, they aren't too worried about Western Digital. Could be an opportunity to buy in. Shares of

health insurance firm UnitedHealth are up, let's see, oh, almost over 4.5% after the Center for Medicare and Medicaid Services on Friday afternoon announced updated payment rates. For example, Medicare Advantage should see a revenue increase of at least 3% higher. That means these policy updates could benefit UnitedHealthcare, and that's why you're seeing the shares up. Yep. Big day at UNH. All right, Christina, thank you.

It's the last chance to weigh in on our Twitter question of the day. We asked which of these Q1 losers is best positioned for Q2. Charles Schwab, Enphase Energy, 3M, or J&J? Head to at CNBC Closing Bell on Twitter. Please vote. We've got the results right after the break. Let's get the results now of our Twitter question. We asked, which of these Q1 losers is the best bet for Q2? The majority of you saying Charles Schwab by a landslide, more than 51%. Up next, under-the-radar stock picks for your portfolio

from top value investor Scott Black. That's next. We're now in the bell market zone CNBC senior markets commentator Mike Santoli here to break down the crucial moments of the trading day plus Scott Black of Delphi management with two stock picks

he sees weathering market weakness. And Stacey Raskin on a Bernstein on why he is turning. Reluct, lukewarm, sort of, kind of on Intel. We'll talk about that coming up. Mike Santoli, you first. It was primarily a two-stock story for much of the day. UnitedHealth and Chevron broadening out a little bit. S&P is up about 14.5. In terms of the Dow, that's absolutely the case. And nothing else is really standing out in terms of individual names. What I do think is noteworthy is this is exactly

how the cooling off of the big tech stocks you would hope it would go if you were bullish on the market, which is a push for the broad tape, 50-50 up and down stocks in the New York Stock Exchange. You have the index is kind of a push and you have software and semis down about 1% each. On a day when you got an OPEC production cut and a bad manufacturing number and crude's up 6%, the VIX is going to close red. Right. So the volatility index is sort of being drained away of drama because we're rotating instead for now of retreating. I'll just say it looks sort of like the beginning of February. Great January accelerated higher into the end of January. You had two days of extension higher and then you got your broader pullback. So NASDAQ off the

lows. So they're not letting technology get get down too much. We'll see if that continues as well. Scott Black, to you, judging from your notes, you're pretty negative on the market, no? Well, we try to be agnostic in terms of percentage invested but by any stretch of the imagination valuations are high if you use 113 for a number on the s&p which i think is realistic for 2023 earnings you're 19 and a half times earnings the nasdaq is selling at about a 25 multiple and even the the Russell 2000, which has been decimated, is over 21 times earnings.

And I don't think interest rates are coming down in the near future. So I think the market's fully priced. It's been liquidity driven by the mega caps in the month of March, as I alluded to in the write-up. Obviously, the Russell 2000 value and the 2500 value

that left them with us, they were down dramatically and they lagged the S&P by 12 and 14 percentage points respectively, which is a huge gulf. But you do see the Fed raising interest rates more. I mean, that remains the central question as we head into the second quarter because you have to believe that part of the rally in the first was on the idea of a pause. I don't think so. I'm old enough to remember the early 80s. And Jimmy Carter had high inflation over 12 percent. Mr. Volcker came in at the beginning of the Reagan administration. We had

to break the back of inflation. Inflation is still running at 6 percent on CPI. Even on a six-month lag, it's still over 4 percent. And the PCE, X energy and food, still 4+. That's nowhere near close to what the Fed wants at 2%. So I think that all things being equal, unless we have another disaster worse than Silicon Valley Bank, interest rates, the Fed funds rate, are going to have to continue to climb this year. Can we choke off inflation? Well, let's hope we don't have that. Chubb, one of your two picks to help weather the storm you say is still swirling around us. Tell me briefly why, Chubb, and then we'll move to choice number two. Well, Chubb's down to $197 a share, and I use it on the

Barron's Roundtable. I think they're going to earn about $18.20. This is my own model of an 88 combined ratio it's a 10.8 multiple 14 and a half percent return on equity one the quality underwriting they outpace the industry year in year out in combined ratio by five to six hundred basis points a year whether you take a one three five or ten year trailing the net written premiums are going up at about seven percent clip they have a well diversified book of business in terms of lines. I mean, large company commercials, 20%. Small mid-cap commercials, 25%. Personalized, 18%.

It's a very well-run company. It's extremely well-reserved. And Irving Greenberg's done a very good job. The other thing is they're a beneficiary of rising interest rates. For every 100 basis points increment in interest rates, they earn 1.1 billion free tax. So unless there's some... Okay. Hey, Scott, forgive me. I'm going to have to let you go, but I'm doing it for a good cause, and I promise I'll make it up to you sometime down the road. But it's a special day here at the New York Stock Exchange for the close. The gentleman on your left here

is U.S. Navy Commander Everett Alvarez, as he is walking up to take part in the closing ceremony today, along with the United States of America Vietnam commemoration. He was a pilot shot down during the Vietnam War near Hanoi. The first American aviator taken captive, he was held for eight years and seven months before being released on February 12, 1973. See him signing the book there alongside Josh King of the New York Stock Exchange. Numerous decorations. The Silver Star, two Legions of Merit, the Flying Cross, two bronze stars, and two purple hearts. Great tradition they have here at the New York Stock Exchange, as you heard those clapping. Any time a serviceman or woman show on the floor of the exchange, and he is going to ring the bell.

He's signing the book now, as you can see right there, and we certainly, we thank him for his service. That's, again, U.S. Navy Commander Everett Alvarez. right there and we certainly we thank him for his service that's again u.s navy commander everett alvarez we will move back in just a moment to our uh interview with stacy raskin uh who uh upgraded intel today half-heartedly so i i said earlier stacy no-heartedly so really because you still don't like this stock. So, look, from a sell-side standpoint, there's two things that are bad. The worst thing that happens is when a call blows up. The second worst thing that happens is when a call works. When it works, at some point you have to figure out when is the right time to take your foot off the gas.

I'll be honest, I actually still would love to be able to make that call. You're right. I don't really like the company fundamentally at this point. I think they've got a lot of wood to chop in front of them. But if you sort of stand back and you take a hard look, and I do try to be intellectually honest in all the work that I do, I think we're at the point now where at least tactically expectations are finally low enough. There's been a lot of bad news that has happened. Everybody knows everything that's happened, but it's out there.

It's known. And then this is the first time in a long time where when I look at the numbers going forward, I actually think they're finally low enough, maybe even too low. And I think there is the possibility as we get into the second half and end of the year that we could actually see numbers start to go up for a change rather than down. And given that, it's just hard to maintain the underperformed call, like at least tactically into the end of the year. And like when we get there, we'll see what happens. But let me ask you this. Every good thing comes to an end at some point.

Yeah, but let me ask you this. In all seriousness, I mean, you mentioned, you know, you're looking at the numbers going forward. And I wonder about the other number going forward. And that's the stock price and the fact that this stock over the past few months, if my memory serves me correct, is up better than 20 or so percent. Yeah. Do you swayed at all by being afraid of missing what looks to be a more technically

advantaged stock, if you will? We're already there, right? I mean, it's already been, as you mentioned, strong. And in fact, you know, what marked the bottom was actually the dividend cut a little while back. That day or the day after was the bottom of the stock. And then people started to buy it because I think, again, if you were tactically short on bad news happening, that was about the end of it. That was kind of marked like the worst that could happen.

And I think the general view is it can only get better from here. And again, you start to look at the dynamics. You know, PCs have obviously been really, really bad. But where the company was like stuffing the channel before, they're now draining out inventory. You can look at expectations for both Klein and data center again as we get into the back half. And there's almost no growth. In some cases, it's Intel, but barring that to the idea that like enough bad news is in the stock where people can feel a little more comfortable buying it,

I think we've been in that sort of technical regime for a while. So what, technically, yes, I hear you, but what gets you to the point fundamentally where you can say, you know what? I think the risk reward is decent enough that you can buy the stock. Yeah, I mean, look, let's let's look at the roadmap execution. So, like, you know, they had their data center event last week and the stock was up, I think, 10, 10 percent in the day or two after that. Not because they said anything was better. It just it wasn't getting worse. So that's fine. Let's see it actually start to get better and then maybe we can talk. Stace, good to have you. Interesting call. Certainly a lot of

people talking today, even you and the manner in which you described your own upgrade. We'll talk to you soon at Stacey Raskin. Mike, we're going to get the we'll get the two minute warning in just a moment. We need to talk energy. Yeah. whether this surprise OPEC cut has this trade back on the move for the first time in months. It's back alive. What's interesting is, and we were talking about it last week, you were able to say even through all the bad news and the macro uncertainty and the fact that oil had had trouble getting out of its own way, it wasn't breaking 70. It was kind of in

this range. So now we're at the top end of that range. I think the stocks are responding very well, but they also have been outperforming crude. I was looking at the free cash flow ETF, the cash cows ETF. It's 35 percent energy. So that's what this stocks are about. The stocks are about. We think they can maintain the free cash flow and the shareholder capital return and things like that. I don't know if it means crude actually gets moving. We do have the dollar weaker right here, but it's not exactly like you caught flight. We're still at 80. Brent was actually down. So we'll see how it how it plays out. I do think it insulates you from this sense out there that the fundamentals are really falling away for crude, even if demand is not really roaring back. Noticing, as we're showing these stocks on the right-hand chart under market zone here, Apple, positive on the day.

You described, and you didn't use the word, but I was thinking of it, as you said, the orderly nature of if this is how tech is going to pull back, so be it and fine with me. And look, it might be a lot to ask for it to be exactly this gentle. You are overbought on the big cap indexes. You can go sideways for a while and that takes care of that. But, you know, the VIX, I was flagging this stat on Friday, too. If it closes here, we're down seven days in a row. It's extremely rare to have that kind of volatility drain. So it's happening at a time where the S&P is like one percent from its high

for the year. So I think it is a good test. But the nature of the pullback is going to be significant. And if it is really benign the way this is so far and people aren't leaving the market, they're just moving within it. I think it's a net positive. We'll see if it can last. NAS was down 1%. So it's recovered quite substantially. The S&P 500 about a third of a percent higher. The Dow leading the way today up 1%.