Power Lunch - Crypto Sell-Off, Energy Earnings & The Oil Trade 8/5/24

Episode Date: August 5, 2024

CNBC’s Tyler Mathisen and Kelly Evans take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. “Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch, everybody alongside Kelly Evans. I'm Tyler Matheson, the global sell-off continuing and worsening today. The Dow is 6% off its recent highs, but still up 2% for the year. The NASDAQ down nearly 3%, which would be its third straight decline of 2% or more for the first time Kelly since 2020. And watch this hour. We often see 2pm being this kind of market point where it either comes back or it starts weakening again. We're starting to weaken a little bit. And the tech power players that once led the market. are pulling it down today. Nvidia, 28% off its recent 52-week highs. Apple, 11% off its highs, meta, down 12%, alphabet down 14. But all of these names, well, they are still positive on the year. And now we saw the declines worsening first in Asia this weekend.

Japan's Niki had his worst day since October 20th of 1987, the E-T-F, which tracks South Korea's market, the EWI having its worst day since April of 2020. Even crypto falling with the first. rest of the market, dipping below 50K earlier on. Now it's around 54 and change. You could see ether kind of showing the similar pressures. No, crude oil prices are slightly lower, but holding up better than some of the other commodities, silver hitting its lowest level since May. Copper lowest level since March gold down 1%. We begin with the issues here in the U.S. and joining us is Nicholas

Kolis, co-founder of Data Trek research along with Bob Pisani. Bob, I'm going to start with you because Earlier today, I heard you walk the viewers through a couple of scenarios with respect to valuations. Would you give us sort of the abridged version of what you see from where you sit? Yeah, there's two problems. First, we don't know where the economy is going. There's not a perfect relationship between, say, GDP and the stock market and earnings. Generally, 2% GDP growth and 6% to 10% earnings growth, those are fair rules of thumb to use. The problem is we don't know where that GDP is going to be going. causing confusion. The second is the market's got very high expectations. So look at earnings.

For 2025, we're expecting 15% earnings growth. That's above normal. And some of this is due to, of course, AI and tech. But still, there's a lot of room for disappointment there. The other is the multiple, the multiple, the PE ratio, how much you're willing to pay for a dollar of future earnings. Right now it's at 19 times 2025 numbers. That's not only not recessionary. That's indications of an expansion, economic expansion that is expected. So there's a lot of room for disappointment. And you can game this out, Tyler, very easily from, let's take the status quote, 19 times, multiple times, 15% earnings growth. And you get roughly where you were on Friday. You can go all the way down, crush down that earnings growth instead of 15%, say,

make it 5%. And instead of a 19 multiple, well, recessionary multiples in the old schools were 13 to 15. If you put a 15 multiple on 5% earnings growth, you could be of 3,800. So you get the point. There's a very wide range of potential outcomes. Generally, tell me where the GDP is going to be in six months from now, and I give you a more narrower range of outcomes, but we just don't know, and the market's reflecting that confusion. So, Nick, what Bob seems to be saying here is that the market is expecting too high earnings or higher than might be plausible here and is willing to pay too much for them.

Is that what fundamentally is being reflected in today's sell-all? I think that's a large piece of it, that those fundamentally, will always play a role, but we've had several catalysts in the last, you know, two trading days, whether it be Japan overnight or the market action on Friday after the jobs report, that give us some hooks to hang that coat on, if you will, and give people a reason to be concerned. So market action is always a combination of underlying fundamentals and catalysts, and we've had two kind of difficult catalysts over the last 48 hours, and that's why you're seeing volatility spikes so much, especially this morning.

What are the levels you're watching now? And I thought it was interesting, the point you guys have made. that even if we see a slowdown and not a recession, we might have to revise earnings. Yes. I mean, analysts are looking for four to five percent sequential earnings growth every quarter for the next five quarters. The typical growth rates more like 2 percent in a non-recessionary environment. So numbers have to come down. They almost always do. analysts are almost always too high. So markets kind of expect that. But if we start thinking about maybe flat earnings, like $60 a share on the S&P, then Bob's point about earnings growth going forward comes into play and we can't pay as high a multiple for that.

Now the offset's going to be if the Fed does begin a fairly aggressive rate cutting cycle, then markets have visibility into the back half of next year. And remember, markets discount six to 12 months ahead and that begins to put a floor under stock. So it's a real balancing act right now. And that's why you're seeing the market swing around so much. Nick mentioned the VIX, Bob. What is the VIX saying? And sometimes when the VIX does what it has done today, and that is go up as much as

as it has, it can signal that the market is bottoming. Yeah, the VIX is indicating it is in panic mode. Look, the long-term average on the VIX is about 20. When you start getting above 30, that's like concern. When you're above 50, that's genuine panic. So this morning we saw something very unusual. Backwardation in the VIX curve. So the cash contract was 60 or above.

The front month contract, the August contract, about 30, a little bit higher than that, and then everything else lower than that, even going into November when the election, that kind of extreme move there, 60 and then into the 30s for everything else, or even the low 40s, is very, very unusual. I'm talking about the magnitude of the difference, and traditionally that has indicated some kind of short-term bottom in the market, and that actually appears to be what's going on. The low print today on the S&P 500 was right at the open. Traders are very good at sort of panicking and telling the market when there's extreme selling pressure in the market. And the VIX backwardation is a very good indicator of that.

Nick, what has today's market action told you as we look now at the Dow down, closing in on a thousand point loss, which is kind of where we began the day? It went down a lot, came back a lot. What does this remind you of? Are there any historical allusions here? Yeah, there absolutely are. Bob made the point about the VIX. I'll tell you, the VIX has never closed above 50 since 1990, except for 2008 and 2009 and 2020. That tells you how egregious that risk reading was this morning. It tells me that markets were genuinely panicked about what happened over the last two days. And it tells me also that we're going to have some volatility over the near term because the history of the VIX is the volatility clusters. It never just spikes and then goes back down to normal. It hangs around. kind of spicy levels for a while. And the other thing we know from recent history, say past 2022, is that the S&P doesn't bottom the day the VIX peaks.

It takes usually four to seven days for the S&P to actually bottom when the VIX spikes to a level, not as high as today, but above normal levels. So the message is history says, watch the market, keep looking for opportunities, but don't be rushing in to buy today. And what kind of lesson do you draw from the fact that, well, even with a thousand point decline in the doubt, even with the kinds of several 546 point decline in the NASDAQ, we're still down in the 2.5, 3% raise.

This is not, this is not way out of normal, is it, Nick? It's about a two-standard deviation move to put in statistical terms. A 1% move is one-stranded deviation, so 2-and-above begins to be unusual. Things get really crazy at 3% moves and above, like we had this morning when the VIX was trading where it was. So we're out of the norm, but we also have to remember that August is more than twice as likely to peak in terms of volatility for a given year than any other month. The big volatility months for August, October, and sometimes January.

So we're kind of running true to seasonal form, unfortunately. Yeah, you know, I was thinking that earlier just this morning, and we're going to wrap it there. But often this kind of stuff does happen in August, for whatever reason. Stuff happens in August, and we'll see what happens next. Nick Collas, thank you very much. Bob Bizani, appreciate it. Okay. Let's ask Paul Christopher what he thinks about that as we explore what's going on with markets globally. In addition to Japan, we're seeing weakness across the globe with the ETFs tracking Brazil and Mexico, hitting their lowest levels since March and of January 2023, respectively.

Paul Christopher is head of global market strategy with Wells Fargo. Why is it always August, Paul? Why? When we all want to be on vacation, right? So I guess I'll start. I mean, and there is an aspect of this where you could say, you know, it's thin liquidity, it's, you know, maybe senior folks who aren't on desk. I mean, there are reasons often, but I think even back to the debt default crisis in 2012, you know, like we've, we've been through a number of these. So here we are wondering if this is something fundamental or not, and I wonder what you think it comes down to. Yeah, it really comes down to the sort of risk levels

of the risk readings that we've seen on Friday and then especially again today. Coming out of Friday into the weekend, it looked like people were wondering if the U.S. was going to have a recession. If the U.S. has a recession, it typically drags other countries down with it. And so you have a sell-off in Europe. And then Japan gets open. And what you see is a huge sell-off there. Keep in mind that a lot of those Japanese investors are coming to the U.S. to buy stocks because their market really doesn't do much. And when you get risk-off moves like Friday and then again today, those investors will switch to bonds and they'll hedge. And when they hedge, what they're doing is selling the forward. They're buying yen. So you take a yen that's gone from 162 to 150, let's say, in the last month, and then you add on all that extra hedging to buy U.S. treasuries because of the risk off move, and you've got another huge move higher in the yen to 140, 142 per U.S. dollar. And so when that happens, now you get more selling in the Japanese market, not just because of what's going on in the U.S., but because the yen has strengthened,

and that's going to hurt the earnings of a lot of Japanese companies that are exporters. Explain that with me one more time for short, as if I, you know, because I think this is so important. And we're all trying to understand the next leg of this, right? So what would you be watching for in terms of the yen, treasuries, and so forth as to what happens in the next couple of weeks' time? Well, we've got to get some sort of consensus back in the market about what's going on with the economy. Our view is that the economy is still heading for a soft landing. What we've seen so far is not inconsistent with that view. And so there might have been an overreaction.

There might have been a knee jerk when the employment numbers missed last week. But once we get that consensus back in the market, then you're going to start to see treasuries come back up. They're actually, yields are starting to come back up a little bit this afternoon. That would be a good sign. It would mean that there's not panic anymore that we're heading back up towards where we were closer to four or four and a quarter before. And that would do internationally.

It's going to reverse some of those risk haven't trades and help the end to come back. back down a little bit, and then the Japanese market stabilizes, too. So essentially it comes down to that consensus on what's going to happen with the U.S., and then from there, the yields come back to more recent levels, and we see the panic go away. Is Japan the real outlier here? We were just looking at some of the European market numbers, and they were in the 1% decline, almost 2%. We're in the 2% to 3% decline for the day. But Japan is way out of line here, isn't it? Yeah, it is out of line from the others. But that's, that's. That's that one-two punch I was talking about.

They're going to see their market sell-off and sympathy with the U.S. sell-off, worrying about U.S. recession. That would be bad for Japan, so equities sell off. But then you get the yen boost, right? Those Japanese institutional investors who see U.S. stocks selling, they turn to bonds, and they hedge, which means they're going to buy yen, and that pushes the yen higher, and that has a spillover effect into the Japanese markets because the strong yen hurts those exporters. So, yeah, they can. the one, two, punch. Everybody else just gets the first bunch.

All right. Paul, thank you. Appreciate it. Paul Christopher. All right, so what can the bond market tell us about today's sell off? The yield curve teetering between inversion and de-inversion. Boy, I love saying that. Rick Santelli, live at the CBOE tracking the action. Explain it to us, Rick. Well, you know, Tyler, the 2s 10 spread, in my opinion, that's the trade to pay attention to.

Yes, briefly it was in positive territory. It's going to be a lot more than brief in positive territory as time. goes on. It's a way that many traders, especially cash traders, like to be short looking for higher rates in the long end, even though rates may be generically going down doesn't mean that curve can't move. And today, well, today it's all about the VIX. Now, if you look at the Intra Day of the VIX, here's what you need to look at. Early in the morning, 65 and change, rounded to 66. By lunch, cut in half. How many times, look at the big chart, whether it's 2008 or 2020. It had closes above 80. And here's our lucky day. We have Rob Hawking here today.

He is one of the CBOE architects of many of the new volatility contracts. So we have the man. Rob, I know we disagreed off camera. My thought is when you see 65 and change almost 6'6 and then it gets cut in half. If we don't get a good close, I don't think it's going to mirror some of the other events of this type. You'd seem to have a different opinion. Thanks, Rick. Yeah, I think it's interesting, right? It's exciting times. Overnight we spike 65-10, I think, was the number. We come in this morning. We're now trading closer to 34. I think the big piece is what happens in volumes. Like that spike overnight's not uncommon. You see those spikes. Liquidity's tighter is big moves. Now, though, markets open. Guys are trading. So what happens to the liquidity? On Friday, you saw big numbers. Big numbers coming out of the VIX. I think it was 3.4 million contracts traded in VIX options. It's around, I think, I think, close to 370,000 VIX futures that traded. And so now we're coming into Monday. What's going to happen?

As of 10 a.m., we already saw big volumes coming in. We saw VIX futures at around. I think it was 270,000 already coming in. You saw SBX options already printing close to the $1.5 million mark. And then you saw VIX options already approaching $700,000. So with that, is the staying power of the options trade coming through? Is the liquidity there to back all of the repositioning that we think trade? need to do, given that people are starting to believe maybe this is more of a recessionary

process setting up. What does it look like? You know, many believe that I talk to, they're kind of bond guys. They look at the date of Friday being on the weak side, so it teed up the possibilities of any exogenous factors coming into the U.S. markets have an outsized influence on the markets. And I think that does explain it. So my take with many bond traders is if we don't get a significantly higher clothes in the VIX, might not have stain power. So let's say, assume you're right and it's going to cluster at higher levels. How would you expect this to play out? I think you're seeing it play out exactly as I would expect. You see that 34 level. It's elevated,

but obviously nowhere near the highs. I think we're going to start to settle in. People are getting comfortable. You can already see in the pit behind us, things are settling in. People are starting to reposition. We've seen those big volume numbers for two days now coming in as people are repositioning to get ready for what lays ahead so that they're comfortable and you don't see those outsized spikes because people are chasing the market. If we don't get any closes for the rest of the week and the big VIX that are above, let's say, 50, would you change your opinion? I don't think so. I think 34 is really outsized. You look at a historic VIX level, call it maybe near 20 historically over the long term. 34 is a pretty elevated level. Now, it's not 50, of course.

I think sustained moves. And it's certainly not 80. I think, you know, if you look back to, I think, geez, the 90s, we've only had three instances where we keep closing above 60. So 50, not far from there. I think 34, though, is a very elevated number. Well, Ron, thank you very much. I always like to disagree with somebody of your caliber intellect. Let's see how this plays out. I think a lot of this action is due to the Japanese carry trade blowing up.

Kelly, back to you. That was a great discussion. Thank you, both. We really appreciate it. Still to come, we'll have more on navigating this market sell-off with the Dowdown-down-9. 962 points. As we head to break, check out the energy space, which is somewhat outperforming the XLE down about 2%. APA, Targa, Halliburton, among the bigger decliners. Crude, though, back around 73. We'll dive more into it when Power Lunch comes back.

Welcome back, everybody. Oil prices moving lower today as recession fears continue to mount with WTI hovering right around that $73 a barrel range, 7301, to be exact. The broader energy sector, are also taking a hit down about 2% right now. Big oil names like Exxon, BP, Chevron. They are all in the red. For more, here, let's bring in John Kilduff founding partner at again Capital and a CNBC contributor. John, welcome.

Good to see you. I can see why, if the only thing we had to worry about was the economy and the possibility of economic slowdown, why oil would be down. But that is not the only thing we have to worry about. We have to worry about the imminent prospect of an essence. escalation of violence in the Middle East that could be very destabilizing. That does not seem to be reflected in these prices. Well, and good afternoon, Tyler, good to see you. Look, these prices are

down fractionally at this point, down half a percent versus, you know, losses of two and three percent in the equity markets. Normally, Kuroa would be tagging along with the losses that we're seeing across the board. But it is this major shoe that we're waiting to see drive. up here that's keeping these prices somewhat stable. And if we weren't having this tumult in the equity markets and capital markets generally, we'd be a lot higher this morning. The market is just completely a Twitter about what's going to happen here. And the game theory runs from full-on, all-out war with Iran versus Israel with the United States throwing in to potentially a very modulated response by the Iranians once again to a significant affront, if not

downright embarrassment for the Iranian regime. So we're waiting to see. My experience is that it will be a modulated response by the Iranians, not something that will carry us into sort of end-time fears. So that's what this market's grappling with right now. The oil market, Tyler, had been down over the past several weeks on softening economic data, particularly out of China, where one of the major private manufacturing measures, for example, ticked into contraction territory. It was reported last week. So it got underreported.

But, you know, we're already losing China. If we lose the rest of the Western economies in terms of economic activity and demand, it's going to be hard for these prices for WTI, even maintain the $70 barrel. You know, we checked in with Emerita Sen last hour, John, as well. And she said that in the oil market, they've been kind of flagging weaker demand there than maybe what the rest of those in the stock market have been thinking or hoping. So your comments about China are spot on. And if that's the case, she's saying maybe equity markets are now catching up to what oil has been telling us. It maybe isn't an outright contraction or recession, but it's kind of just sluggish growth.

Yeah, definitely sluggish growth. And even look, the employment data on Friday in the U.S., I mean, that wasn't a bad number. It wasn't horrific. I mean, we still had over, you know, 100,000 plus jobs. And gasoline demand has actually been okay the past couple of weeks. Now, we are finishing up the summer. You know, we'll see where that goes. I mean, I do think, though, in terms of, you know, the financial markets more generally here today, the Japanese are really, you know, throwing us all for a loop here with their various moves. Now what they're doing to unaligned the Japanese carry trade, that is the actions by the Japanese Central Bank. Look, that's all going to work its way in monetarily to the oil price for sure. But again, as you were pointing at it was, and what Amrida was pointing to as well, is that the oil market, you know, has problems. And check it out. Just as the oil demand starts to slow, OPEC right now, at least, is on schedule later in the year here to increase production right into the face of that slowing. They'll probably turn tail and dial those back, if not eliminate them, but just know that that's on the table too. And that's what this market's

grappling with in terms of trying to keep these prices somewhat aloft. So what I heard you say in answer to my first question is that oil prices would be markedly higher but for the overhang of a potentially slowing economy and a negative pressure on equity markets. So I got you right there? 100%, Tyler. We'd be pushing on $75 at least for WTI this morning, over 80 for Brent. No question in my mind. That's how I object the fears are on this market right now about what's going to happen literally at any minute now. And in terms of our watch. If the world gets what you describe as a more moderated response from Iran or its proxies in the area, what would you think the response in oil would be? Oh, there'll be a sell-off. You'll see WTI testing $70 a barrel rather quickly. Tyler, there's some nominal round number of support there on the chart. Really, the big number below is 68 and change. So I think we will probably quickly go down to that way.

John, thank you. As always, great to see you, sir. John Kildove. Again, Caput. Could do a lot to keep inflation fears at bay here as well, lower gasoline prices. Coming up, we'll take a technical look at the sell-off and search for some ways to navigate the volatility. But first, as we had to break, got to check out Apple. Down 3%? Well up below, 4.5% now call it, but we were down as much as 7 after that news that Berkshire slashing its stake in the iPhone maker. Details when Power Lunch returns. All right, welcome back, everybody. Technology is in focus today.

The S&P Tech Group closed at a record on July 10th, and we're now around 15% below that level. So here to discuss further is Carter Worth, founder of Worth charting. Carter, good as always to see you. What are the charts telling you? first at the S&P or the S&P tech sector, if you have that one ready. What do the charts tell you? Sure. So we can get right to the charts if you want, but just to put this selloff in the context of all 5% plus selloffs.

And the reason 5% is important. When a stock drops 1% or rallies 3 or currency or combining, people don't really do much, but there's something happens once you go down more than 5, whether it's because stock losses have been pre-entered or risk managers get uncovered. People generally say, I should do it. something five's getting to be uncomfortable. If you look at the history of the S&P, all instances where the S&P has dropped 5% plus, there are 240, I'm going back to 1927, the exception of the index. And this sell-off now is 9.7%. It's 14 sessions. They're making from that high of July 16th.

So to put this in context, 9.7%. The average decline of those 240 instances is 11.8. The median is 8.2. So we're kind of there in terms of the magnitude of all 5% plus givebacks. Now, one could say, yeah, but this one's going to be 40. And individual stocks have dropped 40. A big stock like Micron is down 40 or a small stock like Robin Hood down 40 plus. But the aggregates are at a point where it's a proper re-rating. Whether you use the word dip, corrections, sell-off, decline, drop, it doesn't matter. What we've done is we were steep, uncorrected, loved, complacent, and now much has

been reset. My hunch is, right, that the intraday lows of today are good on a day-to-day basis, which is to say we're already bouncing intraday. And now we've set a goalpost of sorts. But let's look at a few charts and try to figure out the way forward together. I don't know what we might have first, but we can look at the tech sector. Yeah, let's see. Why don't we look at the tech sector first? How about that? No, yeah, there's the Invesco QQQQQQs, right? So down some 15, 18%, which is a considerable amount. And the thing about the line, right, it's like I didn't fit it or wanted to go there. That line connects those intermediate lows, and we have sold off to the penny and we bounce today.

And so what I mean by goalpost is I think that high of three or four weeks ago won't be exceeded next week, won't be exceeded this month or next month. I think those highs are probably good for the year. And then conversely, the low of today, which is similar to the April low, I think we hold here and we start to actually sort of grind and back and fill. But it's not random. I would just end with this. Where the index, the QQQQQS stop today, it stopped to the penny on that trend line title. What is that trend line, the orange line showing, Carter?

Well, that is the rate of ascent from the lows of the bare market low. So in the October 22 law, right, the QQQQQ is down 37 at that point of that first arrow. The S&P was down 27. We've been ascending since. So that is the trend that we are in, and that line measures the trend, and we sold off to trend today. I see. Exactly. That could clearly explain. Well, let's move on to the next chart that we have, which I think is an S&P chart. Do we have that one? Yeah, there's an S&P.

All right. And this is a bit different in the sense that we're not down to that lower band, but I put it in the context of a channel. These are mathematically parallel lines. And again, the start point is the October line. low of 2022, the bare market low. Yes, and P at that point was down 27%. And we overshot the upper band, which you can see how sort of complacent, Steve and uncorrected the market was getting. And now we're back into the channel. The midpoint of the channel, interesting, it comes into play around 5,050, and I think

that would be a normal place for at least on an intermediate basis for the market to settle. Very interesting. really illustrative in the literal sense of the term, really illustrates what's going on well. Carter, thank you so much. Appreciate it, man. Thank you. You got it. Let's get over to Bertha Coombs now for a CNBC News update. Tyler, the United Nations announced today that it will fire nine staff members of the UN's Relief and Works Agency for Palestinian refugees because of their possible involvement in the October 7th Hamas attack on Israel. The UN says,

was sufficient evidence to conclude that they may have taken part in that surprise attack that resulted in the death of nearly 1,200 people. Israel has previously claimed some UNRWA employees took part in that attack. The agency employs about 13,000 people in Gaza. Hurricane Debbie has been downgraded to a tropical storm, but that doesn't mean its impact is over. The slow-moving storm is expected to bring catastrophic flooding of up to 30 inches of rain in Florida where it made landfall this morning. And Italian restaurant chain Bucca di Bepo has filed for Chapter 11 bankruptcy.

It comes after the planet Hollywood owned chain closed 13 locations last week. In a statement today, Bucca di Bepi says, or Bepo rather, said it would keep its remaining 44 locations in operation. and open one new one, which is unusual to open a new one when you're filing for bankruptcy. I guess it's reorganization. All right, Bertha, thank you very much. Let's move on to cryptocurrencies up next. They've been falling with the rest of the market. And I'm saying really falling, whether it's Bitcoin or gold, even the hedges are getting trimmed today.

More Power Lunch coming up next. Welcome back to Power Lunch. Crypto is also tumbling today amid the global sell-off. Bitcoin down more than 9% and it's near that level now, falling below 50,000 back up to 53. The crack below 50 was the first time since Feb. It's down 13% since Saturday. Our next guest says it's in part because crypto is open seven days a week, 24 hours a day, and it was the only venue for investors to express their concerns over the weekend.

Joining us for more is Michael Busella, co-founder and managing partner at Neo-classic Capital and investment firms specializing in digital assets, crypto and blockchain. Mike, it's good to see you. I think that's absolutely right. I mean, we love being able to kind of gauge risk through Bitcoin, but how did Bitcoin itself become so, you know, beta and risk on and risk off? Do you think this is what the founders and creators wanted? It's, yeah, so good to see again, Kelly. I mean, the reality is this is a situation where Bitcoin has become a macro asset.

Everything else in crypto, aside from a few higher quality alt-coin, we'll call them Ethereum, Salon, avalanche, the like, has become more of a macro play. So it's become a liquid macro asset. And now we're in a macro environment where bad news is just bad news. And you can speculate. It's all informed speculation, whether it's the Middle East, the yen carry, the over allocated growth trade. Basically, the world was wrong way. Economic data compounded the fact of the matter. And we saw risk off environment on the weekends.

Bitcoin is the only asset or one of the only assets. You can actually trade to take that view. And so, you know, we woke up this morning to a lot of panic. I think panic as a result of two things, leverage and strategy drift. And I think we saw a lot of people overposition themselves from a leverage standpoint. And I think mispositioned themselves from a strategy standpoint. I mean, are we still in the day and age where we can say, do the purist holders want to get the leveraged institutional money out of it? Or do they care anymore?

Do they just want it to go up? And what do you make of the fact that gold has out basically been steadier than Bitcoin throughout periods like this? And it will continue to be. I mean, same thing. So the last two, everyone talks about the VIX movement. was in the last 24 hours, and we were at levels not seen since 2020 in 2008. To show you how much crypto has grown since then, in 0.8, we didn't exist, but it didn't matter. But in 2020, there was a point where we thought, you know, the price of Bitcoin from just a market structure

standpoint could potentially go to zero. And we've seen the same level of volatility, according to the VIX index, and a what I would consider, which is a bizarre concept to most people in traditional markets, a relatively benign reaction relative to the volatility of the broader market. And so that just goes to show you how far the market structures come from super, super high levels of speculation to primarily, again, just going back to what's happened with the ETFs and a bit more of institutional ownership, what's happened with Bitcoin. I mean, if this type of environment occurred, this isn't the GFC, this isn't the world shutting down, but it is the same level of volatility as measured by the VIX. You would have thought you'd seen a much

more exacerbated move from that. You're sort of touching on what I want to ask about. I mean, Bitcoin was roughly 70,000, wasn't it, within the last two or three weeks? And now it's in the 50s. Is Bitcoin an investor's asset or a trader's asset? It's both. So, you know, full disclosure, you know, you personally, the idea is you compound high-quality digital assets, Bitcoin being the primary one. You also can trade these assets. I mean, some of the greatest trading vehicles, depending on your assets,

size are things like cryptocurrencies. And a lot of what's happening below Bitcoin, below high quality alts, a lot of that long tail of alts is what we call PVP. It's player versus player crypto-native capital. And the overall market cap doesn't grow that much, but the capital markets flow within crypto. I think when you think about the hedge fund industry, things like Bitcoin, things like the basis trade has been a fantastic trade for many folks, things like Bitcoin miners and Bitcoin-related stocks are super. And so for hedge funds, that makes a lot of sense to trade. But for purposes of the audience, the general audience of this program, you want to compound over time. And I think

if you're in a position where you have, you haven't over levered yourself and haven't positioned yourself in an area of the market you're unfamiliar with and you've over exposed yourself to that area. I think that's the only time you get into trouble because at this point in time, you know, our firm, for example, we have no current exposure to Bitcoin or Ethereum. I personally have exposure to Bitcoin and Ethereum might compound that over the years and I've continued to do that. And I've recommended that to anyone that I know that invests their own capital. But there's a lot of things that occur in the market on a day-to-day basis that, you know, make from the speculative portion of your portfolio would make you reduce risk in a certain asset.

And so I'm not saying this is not a time to be buying. As a matter of fact, I think this is a great time to be buying. As I said, in December of 2018 on CNBC when Bitcoin was trading at 3,300, it just means doesn't, don't basically don't go out there and buy your entire lot on a day like today. All right, 12, 20 percent. And Coinbase shares, by the way, at 189, they were at 250 a week ago. So there's been a lot of pain. Mike, for now, thanks. We appreciate it. Thank you. All right. All right. Still ahead. Some of the biggest names in trading, getting slammed with outages in today's market selloff.

We'll get the details on the issues plaguing Schwab, Fidelity, and several others next. And before we had to break, take a look at shares of Intel. The stock closed with a 26% loss on Friday, recording its worst drop, in 50 years. Shares are still off about 6% more today. We'll be right back. Welcome back in a familiar pattern. Stocks are heading back toward their session lows this afternoon. Dow's down more than 1,000 points. Again, more than 1,200 was the low so far. It's going to market flash on some of the fintech names getting hit just as hard as the Mag 7 today. Kate Rooney with the details. Kate. Hey, Kelly, they are. So Robin Hood is one of the companies I want to point you towards that's getting hit the hardest in the selloff we're seeing. It was down.

15% earlier. It's cut those losses pretty much in half. There are a few issues at play here for Robin Hood. Customers had some problems accessing 24-hour trading. Robin Hood telling me, this is due to a third-party provider called Blue Ocean that handles overnight trading. Folks also had some issues logging into their portfolios over at Charles Schwab and Fidelity, too, I'm told by those companies, the issues have been resolved. And then the rate environment, that's another factor weighing on Robin Hood today. Over time, it's diversified. It now makes a larger portion of revenue on things like interest in companies. versus just trading, so relying more on cash accounts and credit cards, which could get hit

if the consumer picture looks a lot weaker. Although this jump in volatility we are seeing today often means more trading activity, we are going to see, though, Robin Hood reports later in the week. And then if you look at Kathy Woods' Arc FinTech ETF, that tends to be a pretty good barometer for this group. You can see it's down more than 4% today. PayPal, Block, Coinbase, all in that group, among some of the biggest losers. So-fi, though, that's one name in the green. One of the very few names in tech and the green rising on some expectations. of more loan refinancing. Software as a whole, though, it's really the tech sector having one of the toughest days out there. You mentioned the Mag 7, but these software names were already

out of favor. So the narrative that AI spending has really been taking away from more of the basic IT spending is continued. The IGV tells the story of what's going on with those names today, down about 3%. Kelly and Tyler. Back to you. Kay, thank you very much. Still ahead. Potential buyout rumors have got this stock hitting a sweet spot amid a very sour market's day. We'll reveal the name and a few others in today's three-stock lunch. That's next. That's the news on the DOJ and Google and Deirdreboza has it deep. Hey, Tyler, Google has lost its Department of Justice antitrust suit. The judge finding that it violated antitrust law. The distribution agreements were found to be anti-competitive and in violation of Section 2 of the Sherman Act. The

remedies are still to come here, but I can tell you that Google shares are falling on that news. We are not at session lows, but we're around $160, just breaking that, getting close to it, the of the day is $156.60. We'll continue to get more information on this and bring it to you as we have it. We've reached out to Google and haven't heard back yet, Tyler. All right. Thank you very much. Deuter Bosa. Now it's time for today's three-stock lunch. Let's take a look at some of the biggest movers amid the market sell-off. Starting with InVIDia, those shares are down nearly 6 percent as investors continue to worry over the return on investment for AI spending. The stock is about 30 percent off its highs here with our trade. CBC contributor Boris Schlossberg. He's the managing director of FX strategy at BK asset management.

Boris, so if clients pull back on the need for a big investment in AI, it could hurt in Biddy. I don't know what the deal is with blackwell chips and so on and so forth. With the price action alone is making us all take notice. What do you do with the stock here? Well, you know, I think for all of us who've survived.com here, it's like a PTSD. Is this another Cisco? I don't think so, however.

I think AI is still a huge opportunity. And of course, NVIDIA stands to benefit from it the most. Yeah, the black wallet chips are actually still a major issue high in demand, and they're going to start shipping them in third quarter. So I think given all of the turmoil they've had and the correction they've already had from the highs,

it's probably one of the more interesting opportunities right now is to give them the volatility, is to actually sell puts against it and let it come to you. I mean, I'll give an example. Just the put that is expiring this week, 87s, will give you a dollar and you can buy the stock $13, 13% below its current price. So if I was going to put a position into Nvidia right now, I'd just be selling puts and trying to let the stock come to me because a long term, I think, is still going to be a very, very good play.

All right. Let's go on next to Boris Kelanova. It is one of the few bright spots in the market today. Up 14%. This comes as Reuters reports that Mars, the name behind M&Ms and Snickers is mulling a buyout of the snack food company. Kellanova now on track for its best day and decade. You call this a Kellan Novella, couldn't you, Boris? It's a spin out of Kellogg. I think that's what people, you know, easier way to think about this. And they are in a very good space. They are in the snack space, which, as we all know, is the single most addictive form of food consumption.

So the market loves that. They also have a very big wide footprint in the emerging world. So therefore, there's a lot of potential for growth. however, and they've improved their margins by 300 basis points. So a lot of good things on their part. But this bump off of the potential takeout makes it much more expensive. So to me, I wouldn't want to be go chasing the stock right now. If I was going to take it, I would take half a position now and keep my powder dry.

Just in case the takeout rumors turn out to be false. It's still going to be a very good long-term play, but it's definitely going to deflate very quickly if this falls apart. All right. And speaking of deflating and falling apart, you know, the market is just not a pretty afternoon. Let's talk some Palantir. They're going to report after the bell. Tough day for that. The shares were down as much as 7% this morning. They've reversed course. Do you want to try to get ahead of this one? What do you do here? Yeah, I think Palantir long-term is a category leader in AI. It's the only company that's really actually making money whose demand

is, I'm sorry, whose product is very much demanded by corporate America. And therefore, I absolutely think it's a long-term buy. But again, I would scale into this position. now. All right. All right. Boris, thanks very much. Boris Slussberg on three-stock lunch. The Dow off more than a thousand points, as you see there. The low was about 1,200 points lower. More power lunch next. Welcome back. Heading back towards session lows as we look to close out the trading session. There are some names at all-time highs, though, Lockheed Martin-Tie, Southern Company. Willis Towers-Watson, Motorola Solutions, Colgate. Colgate, all-time high, but off of that, obviously,

Yeah, down 2% now. Well, a busy day. Thanks for watching Power Lunch. We appreciate it. Yeah, we'll see what the next hour or so brings.