Closing Bell - Closing Bell: Winning Streak Snapped, Cryptos Crushed & Bed Bath & Beyond Gets Burned 8/19/22

Episode Date: August 19, 2022

Stocks sliding on Wall Street as the S&P 500 snaps a 4-week winning streak. BTIG Chief Market Technician Jonathan Krinsky explains why he sees big headwinds for stocks on the horizon, but reveals the one sector he thinks is attractive right now. Ally's Lindsey Bell thinks the market will remain volatile for a while, but it is too soon to say whether the summer rally is over. Mizuho's Dan Dolev on the sell off in bitcoin and why he sees significant downside to shares of crypto exchange Coinbase. Shares of Bed, Bath & Beyond plunging after investor Ryan Cohn sold his entire stake in the retailer. Former SEC Chair Harvey Pitt discusses whether regulators should look into the timing behind that sale. And Sunpower CEO Peter Faricy discusses how the Inflation Reduction Act could be a huge boon for the solar industry.

Hot summer rally cooling off today as stocks add to losses on the week. We are sitting at session lows right now. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we stand right now in the market, down 1.4 percent on the S&P 500. Only two sectors positive, health care and energy. Everybody else is lower. Consumer discretionary financials, communication services, all at the bottom of the market. The Nasdaq's down 2% today. So that does bring us to negative territory for the week, down about 2.5% for the Nasdaq 100, 1.3% for the S&P. We break the win streak. We're coming off of four up weeks for stocks. Not going to happen this week. Our chart of the day is once again bed, bath,

and beyond. Falling off a cliff today, along with some of the other meme names after influential investor Ryan Cohen completed his sale of the stock. Look at the damage down 43, more than that percent. Coming up, we will talk to former SEC chairman Harvey Pitt about the timing of Ryan Cohen's sale, whether the SEC should be looking into it. Plus, the CEO of solar company SunPower will join us to talk about the big run up in that stock around the Inflation Reduction Act. It is up 50 percent in a month. Let's get straight, though, to the weakness of the market. Senior markets commentator Mike Santoli here with the dashboard. And Mike, I did notice also the VIX, which a lot of people have been watching, went back above 20. It did. It was barely under 20. And I think just a little

bit of a 1% index move is going to awaken the VIX, but still very much inbounds. I wouldn't say a whole lot that's going on today is necessarily really upending the message we've gotten from the market in the runoff. We hovered for a couple of days, and now we have a little bit of a slide with the more aggressive parts of the market getting hit the hardest, as you mentioned there, Sarah. So here we go. This little uptrend we have here, it's still in place. I would say, you know, as I've been pointing out, back to the early June highs, right, that's an area just under 4,200. That would be really normal and no big deal if, in fact, it stopped there. If you want to hang on to, I would say, more than

half of the total rally that we've gained since mid-June. That's usually a sign that things are in decent shape. So we'll see if it proceeds anywhere from here. But one of the catalysts, I think, or some of the pressure did come from both yields and the dollar. So a retightening of financial conditions after they loosened up over the last couple of months. Look at the 10-year yield as well as the U.S. dollar index. Now, this is year to date, obviously going more or less in sync, very similar shapes to these charts. We got a very hot inflation data over in Europe. Global yields started to fly on that. The 10-year yield pushing 3 percent again. That's been a little bit of a critical level for

stocks. They haven't really made some progress there. So I don't think that, Sarah, just because financial conditions are snugging back up again ahead of the Fed's Jackson Hole conference next week, it means that you have to unwind all of the progress in stocks over the last couple of months. It's not a binary thing to me that a certain level of yields means we go back down to the lows, but it shows you have to absorb it. You have to make your peace with each new level and what it implies about the inflation and growth outlook. And what can you tell us right now about positioning? Because part of this rally's case is that everyone just got so bearish and had to go the other way. And clearly people got back in the FOMO factor. But people have been hating on the rally the whole way up. Yes, I would say without a doubt, the real rush higher that fed off of the

real negativity, a lot of that has been burned up. But I wouldn't say we're anything beyond kind of a neutral standing right now in terms of positioning. I'll look at things like some of the investment manager or hedge fund positioning stuff. They're still somewhat cautious at these levels. It's just that it's not a big tailwind to say everyone has to buy because they're so underexposed to stocks anymore. So maybe just a little more of a balanced positioning outlook versus what we had two months ago. Which makes sense. Mike, thank you.

We'll see you later. Mike Santoli. Let's continue the conversation now. Our next guest says the action in oil and Bitcoin could signal the next move for equities. Joining us on the news line is Jonathan Krinsky, Chief Market Strategist at BTIG. What signals are you getting, Jonathan,

for stocks from oil and Bitcoin right now? Hey, Sarah. So, you know, let's take a step back quickly. Michael hit on it a little bit. But, you know, last Friday, we did close above that 50 percent threshold of the entire bear market decline. And we know that since 1950, once you've done that, you've never gone on to make new cycle lows. So that's kind of the backdrop. Again, we work in probabilities, not certainties, but probabilities suggest we've seen the lows in June. Now, that doesn't preclude a decent pullback. And oftentimes, once you do hit that 50% threshold, you actually see a pretty decent shakeout following that.

So I think that's what we're in right now. We tested the 200-day moving average earlier this week, got rejected. And then, as you mentioned, there's been some kind of macro cross-currents that have not quite jived with the rally in equities. The first being crude oil, which is not really broken out yet, but it's certainly starting to regain some strength. We're also seeing nat gas near 52-week highs. And then you mentioned Bitcoin. You could throw in the ARK names with that as well. Those have been pretty highly correlated to growth stocks, and those have started to diverge negatively over the last week or two.

So I think today is a bit of recognition. There's some options expiration activity as well, but I think some of those negative divergences below the surface are starting to come to fruition. WGI is at $90. So, yes, we've made up some ground, but we're still off the highs. Are you saying the market cares about this one because it is the inflation tell? I think so. I think it's a little premature to say inflation's over.

If you look at the way commodity equities are reacting, energy equities typically lead the commodity, and those are starting to show some relative strength. We're seeing, as I mentioned, natural gas in the U.S. is near 52 highs. In Europe, it continues to hit record highs. So I think it's, you know, and then let's not forget about interest rates with the 10-year back at 3%. So there's just some subtle signs. You know, we may not go back to the peak inflation narrative, but I think to say that it's, you know, collapsing is a bit premature as well. Well, it always felt a little treacherous to fight the Fed, didn't it, Jonathan?

Yeah, I think so. I mean, look, I think the rally off the June lows, you know, in hindsight has been a largely position driven rally. There was, you know, sentiment positioning were clearly quite bearish at the June lows. I think a lot of that has now worked its way through the market. And now I think we'll get more of a real sense of where the market wants to go now that positioning seems to be a bit more squared up. And just to be clear, so you expect a downturn, not necessarily a retest of the June lows, but you expect it to be bumpy from here?

Yeah, I think $4,177 to $4,200 was kind of the June lows, but you expect it to be bumpy from here. Yeah, I think, you know, 4,177 to 4,200 was kind of the June highs. In a, you know, in a really strong new bull market, we should probably hold that area if we pull back. So I think we, at a minimum, we get, you know, a test of that 4,177 level. If you get below 4,177, you're probably looking something closer to $39, $39.50 on the S&P. I think that's certainly reasonable. And then if you start getting below that, then you have to start asking yourself, OK, maybe this is, you know, one of those exceptions to the 50 percent rule that we talked about at the top of the show. And so Bitcoin, you think the rally is over for

now? Well, you know, it had been lagging a lot of the other risk assets off the June lows. It's really, from a technical perspective, I would say it's tough to defend it here. I mean, it's below all of its moving averages. It's kind of breaking its uptrend from the June lows. So, yeah, it's not a great chart there from our perspective. Which sector stands out as a safer spot? Energy's made a move higher, you've noticed here in the last week as crude oil has rebounded. Healthcare is at the top of the market right now. Would you be siding with some of those defensive groups if we are heading toward a lower period? Yeah, I think healthcare, defensive healthcare is an area that actually we

did not like in the end of June because it had kind of been that hideout. And if you look at its performance since the June lows, it's one of the worst performing sectors off that bottom, largely because everyone was already hiding out. And in it, I think now, if you look at healthcare, it's kind of resetting itself up and is a bit more attractive. But you have to differentiate within healthcare. Biotech is certainly more along the lines of kind of the high growth, long duration assets, which we would see as a bit more vulnerable here. And then just back on the defensive side as well, utilities actually are not an area that we want to be in right now. They're pretty extremely

stretched on most metrics. And we have an interest rate starting to break out as well. So I think utilities, you have to be a bit careful here. Because they're up 8%. That's the only sector that's higher for the year besides energy. You're saying it's not so safe anymore just because it's already had the run. Yeah, I think it's, you know, a lot of the defensive, the reasons people were in them has largely been exploited. Doesn't mean, you know, they're going to go down hard from here, but I think the risk reward is just very, very skewed to the downside in our view. Good time to look at the charts. Jonathan

Krinsky, thank you for joining us from BTIG. Thank you. Look at shares of SunPower. They have been outshining the competition lately, up around 50 percent in a month alone in the lead up to the Inflation Reduction Act. Up next, we'll talk to the company's CEO about the benefits to his industry from the new legislation. We've got a down 366 or so. We're at the lows of the day. You're watching Closing Bell on CNBC. We are looking at a pretty broad sell off right now on Wall Street. There's the S&P 500 sector. It's the heat map, actually.

It shows you all the stocks, and you can see a lot of red. Down 1.4% on the day. We're now down 1.3% for the week. Two pockets of strength at the top of the market. It's health care and energy. Everything else is lower. Consumer discretionary is getting hit the hardest. Names like Etsy at the bottom of the list, Carnival, Caesars Entertainment, Royal Caribbean.

So a lot of the consumer names, a lot of the retailers getting hurt today. Hasbro and General Motors are holding up in that group. Financials, communication services, materials all weighing down the index. The future, though, looks bright for solar stocks. Senator Joe Manchin and Chuck Schumer coming to an agreement to vote on the Inflation Reduction Act on July 27th. The tan solar ETF, it's up more than 15 percent since then. And look at SunPower. It's up more than 50 percent in that time period. Joining us now is the CEO of SunPower, Peter Farsi. Peter, it's good to have you. The stock move has been very stark. Is it that much of a game changer for your business? I think so. I think the stock move is two things, Sarah. First, thanks for having me on. But

we had a terrific second quarter. Our customer growth was up 51 percent, revenue growth up 63 percent, third consecutive quarter of accelerating growth. So I think investors are really starting to believe, is this the inflection point we've been waiting for on consumer residential solar? And then, as you mentioned, this is a historic week, really, for the United States. It's a much bigger story than just a business story. The Inflation Reduction Act gives the U.S. a chance to really lead the world in clean solar energy transition, which is quite exciting. And from our perspective, there's three big pieces to this bill. One, for consumers, it increases the incentive on solar panels from 26 percent to 30 percent tax credit, extends it for 10 years,

does the same thing now for solar batteries, 30 percent tax credit for 10 years. And then equally as exciting is this piece of the bill about domestically produced content, which we believe is going to produce a lot of jobs, but also gives consumers an additional 10 percent benefit when they buy locally sourced solar panels or solar batteries. So it's a historic week. It's a big, big time, I think, for the world as we make this important transition away from fossil fuels. And we expect that this will have a big impact on our business as we go forward. There's been excitement, though,

before about, Peter, residential solar. And I believe only 4 percent of U.S. single-family homes actually have it. The numbers are way higher abroad, 15 percent in Germany, 20 percent in Australia. Why is there such a big gap? Well, you're right, Sarah. And what's interesting to me as a relative newcomer to the industry is that three or four percent gap is pales in comparison to the estimated 60 million people in the U.S. that would save money if they had solar power this month, net of their solar costs. And so what's interesting about this bill is that increases... Sorry to interrupt. Sorry to interrupt. Is that because electricity costs and energy costs right now are so high?

Or is that always the case? Well, they have been historically. Yeah. So if you take a look at the energy prices from traditional utilities, they've been above the consumer price index for most of the last three years but this year has been the most dramatic if you take a look at that spread how much are we all paying for our utility bill compared to how much we would pay if we had solar power it's our belief and you'll see customer feedback confirm this that people are seeing this as an opportunity to both save more and more money, but also make a big difference in the world, a big positive difference. What about the U.S. as a real manufacturer here? Because a lot of this bill and other bills like

the CHIPS Act have been about this. You know, the tariffs on Chinese solar equipment did not work, right? They backfired. So is this going to do the trick, actually make America a manufacturing powerhouse where we could actually export some of these products? Well, I think it certainly gives us the opportunity to serve this huge demand in the U.S. with U.S.-produced solar panels and batteries. We announced recently that we're in late-stage discussions with First Solar, who would be our partner in making a U.S.-manufactured residential solar panel that we think could be the most innovative panel in the world. And it's exciting.

You know, as this industry begins to take off and accelerate its growth, I think you're going to see it get into this virtuous cycle of more installation jobs and more R&D jobs and more manufacturing jobs, all tied to this big transition. As you mentioned, there's only three and a half million people that have solar today. That's 60 million we expect to increase to 100 million by the time we get to 2030. So I expect to see, you know, every home in America someday have solar and solar batteries as standard equipment, just like you can't imagine a home not having a refrigerator and a washer and dryer and everything else. So I think that's the

world we're headed for. Now you get a, what, 30 percent tax break on some of those expenses of installing it over the next decade. So further incentives. Exactly. So I think for consumers, there's never been a better time. Exactly. Peter Farrise, thank you for joining us. Thanks, Sarah, for having me. Let's give you a check on where we stand in the market. Pretty big sell off here on Wall Street. The Dow is down about 300 points. So we're off the lows at this point. The S&P 500 down 1.3 percent. The Nasdaq getting hit the hardest today. 2.3 percent higher yield, stronger dollar. Bitcoin's falling. Oil prices are rising. These are sort of the correlations.

Wall Street doesn't like to see those things happening. And it's been a bit of a reversal than what we've seen in the last few weeks. Still ahead, former SEC chairman Harvey Pitt here to weigh in on the frenzy surrounding Ryan Cohen's decision to sell his stake in Bed Bath & Beyond. It has the shares falling more than 40 percent. Plus, two big name companies just announced major buyback plans. But does that mean you should buy their stocks? We'll discuss it next. And as we had a break, check out some of today's top search tickers on CNBC.com. You've got Bed Bath & Beyond once again with the top spot unseating the 10-year yield, which now goes to number two. Selling

off yields higher. 10-year yield brushing up against 3% as well. The GM is an outlier today. It's higher, 2.6%. Tesla gives back some of its recent gains down 2%, and so does Apple, but still holds up relatively strong against technology, down 1.5%. Boeing, JP Morgan, and Salesforce are the biggest drags on the Dow. We'll be right back. Check out today's stealth mover, Axum Therapeutics. That stock is soaring 40 percent. Just won FDA approval for its new adult antidepressant drug.

Analysts believing the treatment could have blockbuster potential since it apparently can reduce depression symptoms much quicker than older drugs. And this will be Axum's first marketed product. We should also note that the short interest in this name makes up about 18% of the float so big squeeze higher on this news check out shares of General Motors and Home Depot General Motors saying it plans to reinstate its quarterly dividend and raise its buyback the dividend was suspended back in April 2020 meanwhile Home Depot announcing it authorized a 15 billion dollar share repurchase plan Mike Santoli with a look at what it could mean for the stocks and I've been Meanwhile, Home Depot announcing it authorized a $15 billion share repurchase plan.

Mike Santoli with a look at what it could mean for the stocks. And I've been noting all hour how GM is a rare bright spot in the consumer discretionary world, which is the worst performing sector right now. Yeah, real, I guess, gesture of confidence by GM management to reinstitute a dividend and then do the buybacks as they think the cycle's in decent shape. More broadly, I think the buyback flow has absolutely restarted, which isn't necessarily some kind of magic upside force for buyback-heavy stocks. Take a look at this ETF that covers the Buyback Achievers Index. This is a three-year chart, basically performed exactly in line with the S&P.

If you look at a two-year, it looks better. Look at a one-year, it looks worse. Essentially, it's a lot of companies that consistently buyback something like 5% of their shares over the prior 12 months. So it's not every stock that has a big buyback. It has to be net share reduction. So it's a good thing for the overall markets, but doesn't always influence individual stocks. Let's look at the flow of buybacks and dividends in aggregate among S&P 500 companies. So this is the buyback yield, dividend yield, and then both of them together, which creates a version of what they call shareholder yield.

It's a quarterly number. And you see it's turned back up again, of course, after the pandemic, but really not that high relative to where it has been for much of the 21st century. And what's interesting is right before the great financial crisis right there, that's when really people went wild with buybacks. They were leveraging up to buy back their shares.

It's been more consistent right now. So we'll see if it's really part of the overall bull case error or if it's just kind of the way companies return capital to shareholders when they seem like they have excess cash. And whether it continues, you know, once this Inflation Reduction Act, do you think that's because there's now an excise tax on share buybacks? And some investors were expecting that to mean more dividend moves than buybacks. I say at the very margin, maybe. But a 1% dividend tax, a 1% buyback tax on net share buybacks, by the way.

So if you issue a lot of stock through stock-based compensation and that's offset by buybacks, that's not getting taxed. I don't think companies are that fine-tuned in their buying intentions that a 1% swing factor is really going to matter that much, but we'll see how it goes. Mike, thank you. Mike Santoli, Bitcoin and crypto-related stocks getting hurt today. Up next, a top analyst on whether this sell-off is actually creating a buying opportunity for investors in some of these names. He covers a lot of these stocks, including Coinbase, which is down almost 11 percent. Take a look at Bitcoin, along with stocks here falling. Bitcoin's down about 8 percent in the session. That's dragging down some of the names in the crypto universe like Coinbase, Block and Robinhood.

Joining us now is Mizuho senior Analyst Dan Dolev in person. Nice to see you and have you here. Happy Friday. Happy Friday. Not so much for the crypto stocks, though. I feel like you have to be a Fed follower or a macro economist to follow some of these stocks and where they're going. Or a fortune teller.

Yeah. You've never liked Coinbase? No. I mean, we're- Is this why? Because an 8% move in Bitcoin and then you've got an 11% move lower in a stock? And plus you're getting the movement. That's actually a great point.

You're getting the move in Bitcoin, but also you're getting pricing pressure, potential looming pricing pressure, massive volume declines. Basically, now they're running at like $1.8 billion in volumes per day. It's a fraction of what they did last year and a huge cost basis that they need to cut. So it's like Bitcoin minus. The bulls say there's potential there. They're expanding beyond just the crypto trading and they've got first mover advantage.

And actually what I would have to say here is if you look at their non crypto trading revenue, which is a fraction of their crypto trading revenue, if you take out the interest income that they were getting because of the higher interest rates, it's actually down sequentially pretty dramatically. So this whole thesis of like we can create a crypto economy around trading and outrun the decline in fees, it just ain't happening. So you're not at sell, you're at hold still.

I'm at hold, but we have a $42 price target. So we see significant downside. It's a crazy 80% off the highs and 80% off the lows. It's a really tough one to follow. Also, I wanted to ask you about Affirm, which I know you've loved and have defended. Delinquencies are rising, and this is what Wall Street has been worried about, the change in the credit cycle, even though Affirm and Max Lepshkin comes on and says, this kind of environment is good for us. Yeah, and I think that the one thing that people are missing, delinquencies are up, but it's expected in this environment, and I think they can manage it. What people are missing about

a firm, it's a merchant conversion tool, i.e. it helps merchants get more sales. So merchants, in my view, this is almost a counter cyclical stock because merchants are going to be willing to accept a bigger, you know, a bigger take rate or a bigger merchant discount rate to be able to sell more stuff even in a downturn. So I think people are looking at delinquencies and they're getting scared. But in reality, it's something that helps merchants make more sales. And that's going to make it a very sustainable thing, even in a downturn. I think that's what's missed about a firm. But how bad are the delinquencies at this point? They've ticked up a little bit. But remember,

a firm has like a lot of balance sheet. They have a lot of other, right? The delinquencies are up on the ABS, on the ABS securitization market. They have other forms of financing, order flow, balance sheet, et cetera. There's no demand problem here. They have more demand than they can actually finance. So I think the demand for their product is there, and that's the most important thing. Also concerns about higher interest rates and what that's going to do. Correct. That's the main concern. They're interlinked and they're intertwined, but I think that those concerns, they ticked up, but I think those concerns are way, way overblown. So which is the one that just frustrates you, all the negativity on your stock the most? Because

you also like Robinhood, SoFi, I think you like as well. So which one do you think is most disconnected? I think Robinhood is the most frustrating because it's the best app. Young people love it. The ARPU actually went up this quarter, so it ticked off, I think, $2 from $30. Revenue per user. Revenue per user ticked off. And just people love to hate it. And I don't understand why people love to hate it. And there's a full remember. Well, they're struggling, right? And they've been laying off workers and downsizing and struggling with profitability. But cross-tech, but they have something that nobody else does.

They've got the long end of retail. And I think that a lot of people want that, right? If you think about like the FTX guys at Sam Bankman Freed, a lot of people want that long end of retail, which they own. They've got like 15 million users that love the app. And I think eventually once they kind of get over this like post-COVID hangover, they're going to thrive. So getting that, capturing that long tail of retail is really, really, really hard.

And they've got it. It's good when Bed Bath & Beyond is up 100%, but today it's down 43%. And then you wonder what's going to happen to the retail trader because there's always concerns that it ends in tears. But it'll come back, right? Eventually those traders will come back. People spend like billions of dollars on marketing to get those retail traders. They've got them. And that's a huge asset.

And I think there's a floor for this stock because if it gets too cheap, someone's going to take them out, right? So I think this is a stock where there's a clear floor to the stock. Dan, thank you. It's good to see you in person. Dan, don't love. Here's where we stand right now overall in the markets, we've got the Dow down just about 300 points. We've sort of been hovering around this level for the hour. The S&P 500 down 1.3 percent. Again, energy and health care stand out. Those are the positives. Energy actually just dipped into the red. So it's just

health care right now, up two tenths. Everybody else is down. Consumer discretionary. The banks are getting hit hard today. The communication services group is also getting hit. Some strength in some of the media names like Warner Brothers, Comcast and Verizon, but everybody else in that group is lower right now. You've got some of the big techs under pressure as well. Apple, Alphabet, Meta. Wall Street is buzzing about a CEO shakeup at Foot Locker and whether the former CEO of Ulta will be able to turn around the footwear retailer. More on that next. And you can listen to Closing Bell on the go by following the Closing Bell podcast on your favorite podcast app.

Down about $2.96 on the Dow. We'll be right back. What is Wall Street buzzing about? Footlocker getting a new CEO, and the stock is soaring at more than 20%. Mary Dillon, who used to lead Ulta Beauty, also on the board of Starbucks and KKR, will take over September 1st. It comes at a tricky time for Foot Locker. Mall traffic has been under pressure and so is its relationship with its number one supplier, Nike. Nike's been cutting shipments to lots of retail wholesalers as it pivots to selling sneakers itself through its own app and through stores, the direct-to-consumer strategy. It's something I've asked the Locker's outgoing CEO, Dick Johnson, many times about.

I think you have to go back and look at the whole ecosystem. We bring certain customers to the market, cash-based customers, customers in neighborhoods that don't necessarily shop as much digitally and DTC-led. You know, we've got, you know, just about 3,000 doors around the globe that we've got a secret sauce in our store associates that provide great service. Are we competitors? Sure, they're our biggest suppliers and great partners. And we want to figure out

how to service more consumers in total. The hard truth is that Nike made up 70% of Foot Locker purchases last year. That's the problem. This year, it's set to make up only 60%. The company clearly needs to diversify and find ways to drive the kind of excitement that happens when a new Jordan retro sneaker drops. Dylan has a ton of Wall Street credibility, though. Citigroup upgraded Foot Locker today on the news from sell to neutral, lifting the target to $38 from $25, saying Dylan put Ulta on the map in prestige cosmetics and skincare by gaining access to sought-after brands and driving years of strong growth and margin expansion. Analysts there

believe she will make it more likely that Foot Locker will have a lasting and profitable relationship with Nike. Williams Trading also upgraded the stock today, saying under her leadership, Ulta revenue increased 288 percent. Now, it'll be a challenge, but investors are certainly more optimistic about it than they've ever been. Stock Today rallying hard. Up next, former SEC chair Harvey Pitt on whether regulators should look into the timing of Ryan Cohen's sale of his entire stake in Bed, Bath & Beyond. That story, plus the outlook for oil and Roblox, poaching a top meta executive, when we take you inside the Market Zone next.

We are now in the closing bell Market Zone. Allied chief markets and money strategist Lindsay Bell is here to break down these crucial moments of the trading day. Plus, former SEC chair Harvey Pitt on Bed, Bath & Beyond. We've also got Bank of America Securities' Francisco Blanche on oil. We'll kick it off with the broader market here because we are in sell-off mode here on Wall Street. The Dow is down about 300 points. S&P 500 down now for the week and sharply here for the day. Lindsay, is the market signaling that this little bull stretch could be over?

I think it's a little too soon to call if the bull stretch is over. But I do think that we've had several weeks of solid performance by the S&P 500. So it might make sense to take a pause here as we come into month end, as earnings season winds down, and just general flow of news is going to also slow down. We're going into a weekend, and a weekend right before Jackson Hole, where we're eagerly awaiting to see what the Fed has to say, what Jerome Powell has to say, if he echoes the hawkish tones that we got this week from other Fed speakers.

So there's a lot of things on the table, and there just might be some white space going forward. So that might make investors a little nervous. What would you need to hear or see whether you tell your clients or you put more money to work after we've had this good little run up here over the last four weeks until this week? You know, I don't think now's a bad time to put money to work.

Sure, there could be some more volatility. And I will say we are going into the month of September, which is known for volatility and underperformance. So that's one thing to take into consideration. I do think we're entering a period of more uncertainty, especially, you know, we'll hear from the Fed next week. But that doesn't necessarily mean we're going to get any clear direction. I think we need to see that next CPI report next week. But that doesn't necessarily mean we're going to get any clear direction. I think we need to see that next CPI report next week. We also get PCE, which I think will be good to hear about. But also jobs data. This week, we saw jobless claims come down. Can that become a trend? We're not so sure. We've got to see how the next couple of weeks pan out. And I think the

market's going to continue to be reactionary. So volatility, it's been high all year. I think it's going to stay that way for the next month or so. Let's hit the latest on the meme trading. Bed Bath & Beyond shares tanking right now after filings revealed Ryan Cohen has sold his entire stake in the company. This caps a dizzying stretch for the stock. Investors began piling back into Bed Bath & Beyond this month after filings revealed that Cohen had previously bought shares. They thought he was adding to his options this week, but the truth is he hasn't purchased any new securities in the company since that March buy. The confusion was because the company's buybacks increased his stake from 9.8% to 11.8%, triggering a filing this week. Joining us is former SEC Chair Harvey Pett. He is currently CEO of Calorama Partners. Harvey, is there a case for the SEC to look into here?

Oh, I definitely think so. I think there's a real question about whether there was an intent here to use the meme provisions that he has made so famous and benefit as a result of selling shares when people thought he was buying. In other words, market manipulation, is that what they'd be looking into? I think they would look into market manipulation. I think they might look into general fraud provisions as well. The difficulty with market manipulation is they have to prove intent. So there would be an investigation to see exactly what his internal emails and discussions showed. But in my view, this is definitely a case for governmental review. SHOWED. BUT IN MY VIEW, THIS IS DEFINITELY A CASE FOR

GOVERNMENTAL REVIEW. HOW DOES THIS SORT OF THING HAPPEN? IT FEELS LIKE THE WILD WEST. AND THIS IS NOT A NEW PHENOMENON, Meme Trading. WE DEALT WITH IT LAST YEAR. IT'S A PHENOMENON THAT WAS BUILT ON RYAN COHEN'S SUCCESS AT TAKING CERTAIN SECURITIES that was built on Ryan Cohn's success at taking certain securities and turning them into winners

and being followed, GameStop was a good example of that. So having developed this reputation, he in effect gets the benefit when people see that he is now into it, and he's using his bulletin boards to basically tout what his investments are. And that's the kind of thing that creates a form of reliance on the part of unsuspecting investors. Beyond, though, the Ryan Cohen suspicions that you have here and the question marks that the SEC has to look into, you know, it goes well beyond that. AMC, some of these other stocks as well, GameStop, obviously there's a Cohen connection there. But do you expect to see action, enforcement action from the SEC to prevent these sort of things from happening?

I think there's a likelihood that there'll be some enforcement action. But I also think it's possible that the SEC will consider rulemaking. The problem you have is that for some people, this looks like it's a game and it looks like it's a way for them to pad their own earnings by getting unsuspecting investors to follow along with them. You're talking about for the companies? I'm sorry? You're talking about for the companies? I'm sorry? You're talking about for the companies? Would the companies have the blame here? I think that the blame is really on people who are using social media and others to tout their investments to obtain a following on the part of unsuspecting investors and then have the rug pulled out from under them by simply dumping their securities. With respect to the companies

themselves, I think Bed Bath & Beyond had made it quite clear that it was in dire straits. So it was only Ryan Cohn's efforts that actually started a market movement in favor of Bed Bath & Beyond. But that's not illegal, is it? It's going to be hard to show that it's illegal. Social media is being used. We have the First Amendment, which is a serious issue. But what is illegal is when people publicize their stock transactions and their likes and dislikes for the purpose of getting others to follow suit. That is illegal. Got it. Harvey, this is one to be continued. Thanks for joining us with some perspective here.

My pleasure. SEC, former SEC chair. Roblox is poaching Meta's head of government relations for South Korea and Japan. The executive who previously worked in Meta's Oculus virtual reality business is expected to help grow Roblox's business in Asia. Our Steve Kovach joins us. Steve, why is this new focus on Asia so important for Roblox? How big of a coup is this? Yes, Sarah, I'm not sure about the coup side of it, but Asia is a huge market opportunity for Roblox. Right now, most of the users are here in the U.S., Canada, Europe and throughout South American countries like Brazil. They do exist in Asia, especially in Japan and South Korea, where this executive is based, but not to the extent that they would like to grow.

So, look, Roblox investors value the stock based on their ability to grow users. They've had some really tough comparisons, despite showing double-digit percentage growth over the last year or so. The comps look really tough against COVID whenever it's stuck indoors and kids are playing Roblox. And so this is really, you're putting this executive in place on that side in Asia, really helps them help grow that user base and establish more business there. Lots of gamers in Japan, lots of gamers in South Korea. And it sounds like Roblox is trying to get a piece of that, Sarah. Got it. Steve Kovacs, Steve, thank you. Lindsay, your take on a company like Roblox, which really has fallen out of favor from the enormous strength that it

saw last year. Yeah, I think when it comes to tech in general, it's a story-by-story basis, a company-by-company basis. You can't really group everyone together, but I do think there are opportunities across the market, but especially within tech for companies that have been beaten up, that do have good stories, that do have good high-quality cash flow, that can end up on the other side of this in a stronger position. Because what we are starting to see is some of the economic indicators, Citi's Economic Surprise Index is starting to show signs of turning up. So things are coming in a little bit better.

And some of these cyclical sectors and cyclical stocks especially are going to benefit from that. And so the ones that have fallen the hardest can fly the fastest. We're seeing that actually even today. Tech has been up substantially over the last several weeks, and it's getting hit harder today than some of the other areas. But I think that you have to dig through the tech sector to find your opportunities and be picky about it and not just throw all your money into one industry or the sector overall. Yeah, giving a lot back today, down 1.8 percent on that

S&P tech index. Let's hit energy. WTI is back above $90 a barrel, bouncing back from a few days earlier when it went as low as $85 a barrel. And energy, one of the three sectors hanging on to gains this week. Joining us is Bank of America Securities Head of Global Commodity and Derivatives Research, Francisco Blanche. Francisco, it's good to have you. Why the little run-up here, back higher in oil? Hey, Sarah. So I think the market's starting to realize that going into winter, we have three big drivers of demand that could uplift oil prices. I think first we have this massive energy crisis centered around Europe,

which is pushing natural gas prices above $400 a barrel of oil equivalent there, and therefore likely to result in substitution into oil. Remember, at $85 a barrel for WTI and $70 a barrel for some of the fuels at the bottom, like residual fuel, bunker fuel. You're looking at very, very cheap energy, very cheap calorific value in the oil barrel, which will be displacing, natural gas will be displacing, potentially even coal, which is trading close to $100 a barrel in international seaborne markets. So that's number one. Number two, we have more jet fuel coming. There is news that we're going to see some of the Asian countries downscaling their restrictions in other countries,

their quarantines. That'll drive up jet fuel demand. And then today, we just released a note looking at gasoline demand that dives into our own bank of america card data that shows we could see in our analysis an extra 350 plus thousand barrels a day of gasoline demand into the fourth quarter on the back of this dip in prices american consumers are sensitive to gasoline prices so i think those factors could take us higher so you just published a note on gas prices there were There was a lot of concern when we went above five dollars a gallon earlier in the summer and have dropped below that. The Biden administration certainly has been celebrating that. And so consumers,

where do gas prices go next? Well, we've seen a 20 percent plus drop in gasoline prices, which we think is going to result in a 10% to 15% run-up in gasoline demand into the fourth quarter. We've already seen about half of that looking at the internal data, and we expect that to continue into the fourth quarter. So gasoline should provide support to the overall petroleum complex at a time when we still have barrels missing from many different parts of the world.

So I think the big story for energy still remains very much centered around what's an enormous natural gas supply shortfall in Europe that needs to be filled up with oil or coal or whatever it is. And I think all of that supports markets. So we think we're stabilizing. Obviously, a big negative story is China. Macro data, the strong dollar do not help. But I think if the macro is sustained, we'll see oil back above $100 a barrel in the next few weeks. Not great for consumers. Francisco Blanche, thank you very much for joining us from Bank of America. Lindsay Bell, energy up a percent this week. So it's now outperforming the broader

market again. It had fallen about 13 and a half percent off the highs. How much exposure should you have to the energy patch? You know, I think you've got to have some exposure to his point. What's priced in the market in these stocks from an oil price perspective is much lower than where we're at today. So from a valuation risk reward perspective, there is opportunity within these space. These companies are being prudent about their capex spend and they've shored up their balance sheet. So there's a lot more cash at these companies than there have been in the past. They're spending less on CapEx, and they're doing less in buybacks as they're being mindful of their capital allocation. So I think there is

still opportunity here, especially if you believe that in the nearer term or into the end of the year and beginning of next year, we could see higher oil prices. Finally, really quickly, Lindsay, is consumer discretionary still your favorite sector? I know that's what you've said in the past, but since it's had this nice little run? Yeah, I still like consumer discretionary. I think there's still a lot of opportunity within the services sector especially, and I do think in the holiday season that you're gonna see opportunity within some of the retailers. We're getting a mixed bag of results right now, but don't count the consumer out when you have gasoline prices right now going down.

That opens opportunity for spending. And the consumer really is focused, even though they're shifting to services and events and experience spend, they are still focused on shopping around appointments, like the holidays. Back to school was strong. So I still am in favor of consumer discretionary. Lindsay Bell, thank you very much for joining us. As we head into the bell here, we've got a 274 or so point decline on the Dow. S&P is down 1.25%, which makes it down a little more than 1% for the week.

The Nasdaq down 2% as we speak. So for the week, NasdaQ 100 is down 2.3%. What's working today? It's health care and energy. What's not? It's consumer discretionary, except for a few names with some positive catalysts like GM on the buybacks. Hasbro getting some analyst love. Small caps going out with a decline of more than 2% as well.

That's going to do it for me here on Closing Bell. Have a great weekend. I'll see you about a week. Now into overtime with Mike.