Power Lunch - Stocks Sell Off as Iran War Enters Sixth Day 3/5/26

Episode Date: March 5, 2026

WTI Crude Oil hits $80 per barrel for the first time since January 2025. Niles Investment Management's Dan Niles joins the show with his market outlook.   And Morgan Stanley Wealth Management CIO Lisa Shalett weighs in what she's advising her clients.   Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, welcome to Power Lunch, everybody. We actually have some breaking news out of Washington, D.C. President Trump announcing he will replace Homeland Security Secretary Christy Noem. Amon Javers, joining us now. Brian, the Homeland Security Secretary had been on thin ice for months now, and that ice has finally broken through here in Washington, D.C., with the president taking to social media just a short time ago, posting that he's going to remove Christy Noam from her position as Secretary of Homeland Security. He's going to intend to replace her with Oklahoma Senator Mark Wayne Mullen. Here's what the president said on social media a short time ago. He said, I am pleased to announce that the highly respected United States Senator from the great state of Oklahoma, Mark Wayne Mullen will become the United States Secretary of Homeland Security, effective March 31st, 2026. The current secretary, Christy Noam, who has served us well and has had numerous and spectacular results,

especially on the border, will be moving to special envoy for the shield of the Americas. Our new security initiative in the Western Hemisphere, we are announcing on Saturday in Dural, Florida. I thank Christy for her service at Homeland. Now, clearly, Noam had come under increasing fire just within recent days here in Washington after, I think you can say, was a politically disastrous hearing for her up on Capitol Hill, in which Democrats and even a couple of Republicans were very aggressively questioning her on a range of issues, ranging from her advertising campaign that she ran out of the Department of Homeland Security featuring herself in a lot of the ads, some of the spending and contracting and whether

there was favoritism in the contracts that DHS was issuing to people who were connected to Christy Noem and her associates. Her relationship with Corey Lewandowski, who is a contractor working at the Department of Homeland Security and whether that was appropriate or not. And on and on dating back to the killings of two American citizens in Minneapolis earlier this year during anti-ice protests. Christy Noem has been, as I say, on thin ice for that entire time. The president at one recent cabinet meeting called on just about every other cabinet secretary in the room other than Christy Noem. And I think this week's hearing kind of sealed her fate politically. And now the president says he's moving her to this other position involving the

Western Hemisphere. And Mark Wayne Mullen will be his pick to head Homeland Security starting later this year, guys. Yeah, understood. Amen, thank you for now. Really appreciate it. Amen, Javers, with the very latest there. We're going to stay on D.C. and all of the headlines coming out of that space lately, let's bring in former acting White House Chief of Staff during Trump's first term, Mick Mulvaney. It's great to have you here. Welcome. As I'm sure you're aware, we're also down about a thousand points on the Dow, as we're in day, what are we? We had five or six now of the Iran War. So there's a lot of upheaval, Mick. I don't know if you can kind of address that what your message would be to those who are looking at the oil price now in this country above 80

for the first time in a while. It sounds like the president is pretty frustrated. Reportedly, the Energy Secretary and others have been told, you know, find me some good news here. And what might that good news be? Kelly, I'm smiling. It's one of the reasons I love this program because when I come on with you and Brian, it could be about prediction markets one minute, then it's Iran, then it's the change in the cabinet. I love doing this program, so thank you for having me. Look, I think they've got an issue on gas prices. I really think they do.

I don't think anybody thinks this war is going to stop in a week or two, and even if it did, I don't see the Straits of a Hormuz issue getting resolved anytime soon. They're looking at higher oil prices for a long period of time. I remember back in 2019 when we were having discussions, which then Ambassador John Bolton, the National Security Advisor, who was talking about the possibility of military action in Iran. I remember asking the president, Mr. President, do you really want to be involved in a war in Iran and have oil at $120 a barrel going into the reelect? And, of course, he said, no, he didn't do that, but that's exactly where we are now, not going into a reelect, obviously, going into the midterms. They've got a problem.

There are certain things that they can do to try and lower gas prices. They can deregulate very quickly if they wanted to. But there's not much else. There's not much oil left in the strategic petroleum reserve, even if they were full, that still wouldn't have much of an impact on the market. So, no, I think instead that what they're going to have to do is start to explain to people why it's in America's best interest to be doing what they're doing, that, yes, we are going to have higher gas prices for probably a long time,

but that it's worth it because of X, Y, Z. They've got to get to work on that X, XYZ. Yeah, well, I appreciate you graciously. You know, I came on to talk prediction markets, Now you're asking me about so many of these different issues. But your point is valid. And what are the options? Because reportedly Susie Wiles and others have said, you know,

directed people to look at what could help, you know, kind of curb the, blunt the impact. So maybe the only, I'm looking through and I see these lists, the only one I keep seeing is maybe a gas tax holiday. I don't think that would go that far. I don't know. I'd love to hear your thoughts on that. And I don't know what you mean by regulatory,

how that might make a difference. stuff that figure out a way to make it easier to get stuff to market. To your point, maybe they, they do a temporary halt on the taxes. You know, so oftentimes when politicians run out of ideas, what they do is like to give people money, so you might end up seeing something about, you know, cards for that you can use at a gas station, something like that. But there's not much to do. Look, every incumbent president is worried about the price of gas going into a midterm or a re-elect because there is a direct correlation between the price of gas and the performance of the incumbent party. And if any of them could waive a magic wand to bring down gas prices in the months leading

up to an election, they would all do it, but no one's found that magic wand yet. So look, they've got an issue. They know they've got an issue. They've got six months to deal with it. Really, I think what they need to do is to try to explain to people why it's going to hurt for a little bit, but in the long run, America is going to be much, much better off, which I happen to to agree with. That's just a hard sell to do after you've already started a war. Yeah, but Mick, you know, listen, Morgan Stanley out with a note last night, and he said there's some keys to this whole thing via the investor. And one of those keys was clarity of policy objective. Clarity of policy objective.

Do you think there is clarity of policy objective here? What's the off-ramp? This could last for weeks, months, or longer? If you had asked me two days ago, right when it started, I thought I knew what victory looked like. Listen, I've been around Donald Trump to know that he takes the threat of an Iranian nuclear capability very, very seriously. We saw that with the attack on the Natanz facility six months ago. He's been consistent about that since, I think, before he was president. That's real.

That is not contrived. And if you'd ask me two days ago what the plan was, I'm like, well, I think they probably can claim victory if they are absolutely convinced that Iran is never going to have a nuclear weapon, at least in our lifetimes. That looked like victory to me two days ago. But the longer it goes on, the longer you throw in things like, well, we're doing this because of what the Iranians tried to do to President Trump and the alleged assassination attempts, or we're doing this in order to regime change. It starts to look murky as to what victory looks like. And let me jump in, Mick. I agree. I'm sorry to interrupt.

And this is why you love coming on the program, because we interrupt so nicely, which is we understand. Okay, so we know that the U.S. Army and Navy and military can handle. Iran militarily. But Iran can also just harass everything in the world as they are. They can blow up ships here. They can blow up ships there. They can go after pipelines. They can take out LNG plants. They can jack up the price of goods all over the world. What's the out? What's the policy out here with elegance? How do we get out of this? How does Iran get out of this and not fracture the global economy. Yeah, I think with every passing day, victory moves from no more nuclear capability, no more missile capability to where victory has to be regime change. I just think that's where

they're headed because of what you've just said. Unless they change the attitude of the Iranian government, the Iranian government will be able to do everything and more that you've just described. So I think they're moving with every passing day, you're looking at they have to have regime change in a very positive sense and a very positive direction for the this to be considered victory. I agree with you, Mick, that gambling is not investing. Okay. And, you know, look, tell us a little bit about why you started. Does this put you against Chris Christie or not exactly, right? He, well, maybe your allies, because he wants the, the prediction markets to be regulated like sports betters and things they're acting beyond

their scope in those states which haven't permitted sports betting. So I'm just watching a lot of the politicians flow into this space. And I'm wondering what this is going to mean for products like a Robin Hood and many, Cal she, many of these others, if you were to have your way. Yeah, Kelly, there's two different ways to look at. One of sort of a writ large and the one more of a micro, writ large, there are difficulties with prediction markets. There's difficulties with insider trading. Difficulties. There's a great article in the Wall Street Journal last week, an op-ed about foreign intelligence services using prediction markets to sort of go looking for classified information that folks might be using to gamble with. That is a fundamental difficulty

with prediction markets. We talk about that for one second. and then again on the second hand at the micro level, it's the gambling. It's the sports gambling. If I buy a contract on the Celtics winning tonight, I'm pretty sure that's gambling on sports. In fact, I don't know what else it possibly would be. And I think there's a real strong argument that you shouldn't be able to do this in states like mine in South Carolina where it's illegal. I'm pro gambling. I'm bored of Las Vegas for the basketball tournament next week.

So I'm not trying to make that case. What I'm saying is, look, the federal government is making them a mistake. stake here by allowing these prediction markets to engage in sports gambling nationwide. In other words, all that you really want to see happen is that those aspects of the platform that are involved in making sports bets are defined and regulated like sports betting, which may means they go dark in certain states. I think that's certainly a win. No question.

By the way, that's about 90% of I understand it of Kalshi and polymarket's activity. So my guess is they won't go down without a fight. And do you think we've seen some of these things are people placing huge bets? Mick the day before we invade Iran, things like that. Sounds like you would agree there needs to be some more level of regulation here because whatever is happening, maybe people are just getting really lucky. The optics aren't good and people are pretty high profile. People are starting to imply that there's bad stuff going on in some of these markets.

One of the things I'm enjoying about this position is the executive director is that you just made the argument for me. I mean, I can tell by your toe to voice. You're like, yeah, maybe we should be looking at this. people would agree with that. And I think most regular people would also say, if I bought a contract on the Dodgers game, that's a sports gambling. This is going to be an easy sell. And interestingly, I think, Brian, I think it might be something that is a rarity these days in Washington, D.C., which is we might get bipartisan support for this. That's really, really hard to come by. But I think enough

folks are scratching their head in enough different ways along the lines you just laid out to where I think it's going to be a fascinating discussion for the next several months. They're like, we've got to go. To me, it's a little more complex. And that actually... We're not going to get to Christy Knoem and Mark Wayne Mullen. Do you have a thought? Look, for Mark Wayne, you know, a big... But is there...

What is the take for our audience on that? Do you think, Mick? He gets confirmed. He does. Trump doesn't like firing people. I think that there's a rule of thumb in Washington, D.C., when you have a congressional hearing, don't make news. And my friend, Christy, we were classmates together in 2010,

violated that rule. She made news yesterday. I think you saw Senator John Kennedy come out and said that he called the president about the advertising program, and the president remembered it differently than Christy. Once that starts happening, then your time in the cabinet is short. All right, but final thought then on the government shutdown piece of this? They really do need to, heaven forbid, something bad happens. Look, I respect the Democrats' position.

I disagree with it wholeheartedly, but we need to have a discussion about ICE and about DHS when we're not at war. So they need to open up the government, at least as far as DHS, we can come back to it when things calm down. Mick Mulvaney. Thank you so much, sir. Appreciate it. Thanks y'all. And we mentioned prediction markets. CNBC and Cali do have a commercial relationship that includes customer acquisition and a minority investment. We've reached out to Calci and Polly Market for comment here. Didn't get a response, but there will be much more to come on this story. Yeah, and we've got a lot more to do is we head to a very, very short breaks. Don't worry. We're going to stay on the stocks and your money. Markets down across the board. The Russell 2000 down 2.6%. The Dow is down over 1,000 points. We're back after this. Welcome back. Pretty severe sell-off today.

There's one group of bucking the downtrend, though, and that's the software names once again. Atlassian's up 7%. Service now 6, App 11, Adobe, or higher. And keep in mind, some of these are the stocks that have been the most sold since the start of the year. Our next guest is warning about chasing this, though. He says, don't get too excited. It may not be the all clear here. Let's bring in Dan Niles.

He's the founder and portfolio manager at Niles Investment Management. Dan, before we just jump in to the software piece of this, What do you make of the broader market sell-off of the Iran war, the higher oil prices, higher yields now that we have to contend with? Do you just look past that? You can't look past it, obviously, Kelly. But I think what we're all trying to figure out is, is this a short war, meaning less than a month? Or is it sort of medium term, which is a bigger problem?

Or does it last for a long time? In which case, I'm talking oil above 100, at which point you're probably going to end up with the global recession. So I think that's what everybody's trying to figure out. I'm more in the camp that this is more in the span of hopefully a month. But if you go back to when Russia and raided the Ukraine, that was February of 2022. It's been five years and it's still going on. But the good news is oil prices, you know, after initial issues, obviously were well contained. And so the economy went on just fine. But if you're looking for the bull case, you can go back, to Russia's invasion of the Ukraine and the fact that the market ripped during 2022 anyway,

despite there being no end in time. You know, later in the year, we had a nice little thing called ChatchipT that came on the scene. Dan, a lot of people are pointing out the irony that in the time since the conflict has broken out, you have software technology outperforming. I mean, those would not have been the obvious trades. Even if this is what we always say, if someone had told you the news and then said how to trade it, I don't think a lot of people would have said, oh, go pick up software in the Mag 7.

Well, if you look at what I wrote on Sunday, I thought the rally in software would continue. And then I put out a note yesterday as well on X talking about the fact that I thought it would continue. Because even if you assume everything that Citrini research said at the beginning of last week is correct. And then you saw Block go ahead and lay off 40% of their workforce and they said it was AI. And this all happened last week. The software index finished the week up 1%. The SMP was down 0.4, and that's why I wrote, I thought this could continue. And even if you believe that this is, you know, the end of software and it's going to continue to go down,

and so you use the 0102 analogy, when the S&P was down 49% over two and a half years, you still had seven rallies that averaged 14% each. in the S&P 500 that occurred over two months on average. Those are huge moves. So my feeling with software is, and that's why I have a lot of my exposure right now, because my belief was in the short term, you would get this kind of rally, and that has continued. And if you look at IGV as the example of that, which is the software ETF, it has been bought open to close, if it closed here, for eight straight days.

It's been on better than average volume. And so at a certain point, you go, yeah, 35% sell-off from September to its lows. You know, you're going to get a counter-trend rally and could it gain back half of that. That's kind of what happens during these vicious sell-offs, even if this is not the bottom. The NASDAQ 100 is down 1.7% this year. The S&P small-cap, 600 in mid-caps, are higher. and we are at war. I understand the old adage,

you buy at the sound of cannons. I get it. But I just feel like, or does it feel like to you, Dan, that the markets are overly complacent given that we are in the real position of running out in the world, not in America, of pretty significant commodities

if this continues for a couple of weeks? Well, that's true, Brian, but you can go back to, Russia, Ukraine and have come up with the same conclusion, right? There's a lot of rare earth minerals, agricultural stuff coming out of the Ukraine. And so that was the fear. What did 2022 end up doing? It ended up being up 27%.

So you can look at this. And so I always say it's not the news. It's the reaction to the news that matters because people will make up reasons to support why the stocks are doing what they're doing. price leads the narrative. It's not the other way around. And so I'm looking at this going, well, I know what I believe, which is stocks should be a lot lower. But the market is telling me that this is going to get resolved. And whether that's because the number of missiles flying keeps going down every day. And so, you know, they have to run out of that at some point.

Whatever it is, the market's trying to sort through this. Now, I do believe, which I've been saying for a while, you need to be hyperselective. And so I've said on CNBC before, you need to get messy. And what I mean by that is, right, utilities, the U is up 9% year-to-date. Materials, energy, staples, industrials, you know, you look at that five sub-sectors of the 11 of the S&P 500. They're up between 9 to 25%. You're only suffering if you're in tech. Yeah.

Right? And there's some good reasons for that. But if you're diversified, you're not having a problem. The Russell's up 3% year-to-date. the magnificent seven are down seven. The equal weighted S&P's up four. The S&P might be down a percent year to date. So you really need to be more diversified and broadly diversified

and what sectors aren't going to get wiped out by obsolescence due to AI and what has a lot of heavy assets. I think if you have that kind of mix, you can get through this period in much better shape, much like you have so far. The halo trade always seems to come back to that this year. Absolutely. Dan, thanks very much. Good to see you. Thank you. Dan Niles, founder and portfolio manager at Niles Investment. Make one quick point. Dan was talking about Russia and Ukraine. I want to make one point, which is that the sad irony of this is that this is probably good for Russia.

Because Russia now can sell more oil and sell more oil at a higher price. You can sell more natural gas and sell more natural gas at a higher price. And the point of me, too, that Iran did manufacture a lot of the drones Russia reportedly is using in its war with Ukraine. So the hope was, hey, they're starved of that on the battlefield. The problem that you're describing is, hey, they're getting a lot more money now. That's right. As a result of these prices. It's not ideal.

All right. Let's get a quick market shake, folks. Check as we head to break because the NASDAQ is down 1%. The Dow Industrial is down over 1,000 percent. By the way, yields are actually rising. We'll get more when power lunch returns right after this. Welcome back. Dow is still down about 1,000 points this afternoon.

We're going to take a look at some. individual stocks on the move, including one that's up double digits. Dom Chu joins us now with more, Dom. All right, so let's talk about that both ends of the spectrum, Kelly, Brian, right? This is a big down day, of course, but the bad news first. The worst S&P 500 performers so far in the day is Sienna. The computer networking equipment and systems companies down, call it 15% at this point after it posted, actually, better than expected profits and revenues for the quarter, but then gave

a full year revenue forecast that fell below consensus estimates. Sienna shares, of course, have been a massive. outperformer over the last year with all the optimism around AI buildouts. Now, even with today's drop, the stock is still up roughly 290% over the course of the past 12 months. Now to the good news, the biggest gainer in the S&P, Trade Desk. You can see those shares are up about 18%. The advertising technology or ad tech company is surging that much due in large part to a report from the information that said that Open AI has held early talks with Trade Desk. And some investors are seeing this as a possible signal that Open AI might be open to partnering with other companies to help monetize

its AI offerings. And speaking of monetization, another information report is leading to a big gain in online travel stocks, shares of booking, Expedia trip advisors you can see here all up massively. They're moving higher after it reported that Open AI is looking to scale down its plans for direct shopping or checkout links within its chat GPT platform, which is reducing some of those fears that AI-generated search results could lead to direct booking on sales on chat GPT that bypass the commerce platforms themselves like online travel sites. So Kelly, Brian, that's the reason why online travel is having a big update and an otherwise red tape. I'll send things back over to you guys. Thanks, Tom. Thank you. Appreciate you flagging. Let's get to Leslie Picker now for the

CNBC News update. Hi, Leslie. Hey, Kelly. The Department of Homeland Security says it's re-evaluating what to do in the future with its largest immigrant detention center located at Fort Bliss in Camp East Montana has already seen fatal construction accident, three detainee deaths in less than six weeks, and outbreaks of tuberculosis and measles. However, with Mark Wayne Mullen set to replace Secretary Nome, it's unclear whether plans will change. The detention center houses nearly 3,000 detainees. According to ICE data, 82% have no criminal histories. Signs of hope in the housing market as the all-important spring selling season gets underway. According to Redfin, almost 45,000 homes were re-listed.

for sale in January, and that's the highest January number since the real estate brokerage started tracking it a decade ago. And take those phones and tablets off speakerphone. United Airlines says it will now start removing passengers from flights if they refuse to wear headphones to listen to content on their personal devices. In an update to the airline's carriage rules, the airline also says such behavior could lead to a permanent ban. What? I know. I mean what? Who's listening on speakerphone? Everybody. Are you kidding? Kelly, Kelly, I fly almost every two weeks. But you're happy about this, right?

Everybody, all it takes is one or two people on their, everybody in my audience knows what we're talking about, where they're going, that's right. And having full-on conversations on their speakerphone, sometimes on FaceTime, loudly. You're pro-speakers. No, I'm anti that. I want to have a pocket full of headphones and just dole them out. But I will say, Leslie, throwing people off a plane over that is going to be a non-good. Like, that's going to be a problem. I mean, my three-year-old, there are times where, like, to get through, survive the flight. You know, she doesn't want the headphone. She just wants to listen on a speaker.

And I'm like, would you rather this or crying? I don't know. True. Maybe an exemption for kids under five. If you're over age of five, put on your head phone. The other 230 people on the plane may disagree. But that said, these are not three-year-olds, though. There's like 45-year-olds.

who are yelling into their phone. It's like headphones are $6 now. They give them out for free on Delta. Exactly. Well, Delta headphones. Leslie, thank you. All right, on a serious, let's get back to the markets. Quick check, heading to break.

We are. The Dow is down 1,100 points. I think I said percent earlier. Feels that way. More than 100 percent would be zero. Correct. So mathematically impossible, I apologize for the critical error. The Dow is down 1100 points.

coming up. Well, your next guest says is the biggest enemy of investors right now, and we'll tell you what that is next. Welcome back. The markets are at session low. So just we started off this morning in a weak position and just can't do anything to undo the damage. The Dow's down 1132 points. That's a 2.3% drop. And it, by the way, it's about twice as bad as what's going on with some of the other averages. The NASDAQ down 1.2%. The S&P is down 95 points at 6774. A lot of this, the intensifying sell off. has to do with the oil action. Oil just in the last hour, hour and a half or so, we saw WTI popping above $80 a barrel for the first time since last year. That's an 8% gain on the session. And remember, we've already seen gasoline prices

at the pump up 20 cents in a couple of days. So this is going to keep them moving higher. Now, our next guest says the selloff presents a buying opportunity, but let's unpack all of this with Lisa Shalett. She's the CIO of Morgan Stanley wealth management. Lisa, starting with the oil price, the longer we're up here,

for the more days, the more we move higher, the more we do have a bit of a situation for the consumer. Welcome. Welcome to you. It's good to see you. Happy to be here. Yeah, I mean, I think, you know, one of the things that we're fascinated about in this market is the amount of rotation and churn and individual stock dispersion. And so that's why we think that this is kind of a stock pickers and a hedge funds paradise. So, you know, to your point, some of the dynamics here are potentially a headwind for consumer, consumer discretionary oriented sectors. But for materials, for mining, for energy, for the aerospace defense industry, and a lot of the industrials that already had a wind at their back, you know, linked to cap-x spending, you know, this is a very good time to buy, you know, into some of this weakness.

That said, you know, one of the energy traders says, you know, the diesel crack was at $72. He says, I've never seen it this high. I mean, so I'm not sure how great these levels are for, you know, for the industrials, if you're making weaponry, okay, that's one thing. If you're in the KAPX supply chain, fine, but you do have to contend with now higher energy prices. 100%. I mean, as you know, there's always winners and losers when you see, you know, these very big moves in commodity prices. clearly, you know, some of the airlines, some of the transports, they're going to have to absorb these prices as incoming costs. But, you know, for others like, you know, folks who are linked directly to production of energy and oil, and those who are moving it around and freight rates, you're seeing all that going up. I think the order, and I'm going to speak very generally

here, Lisa, and a little global macro. I think the order of the way this is going to play out, it's going to damage the poor emerging markets first, the ones that rely the most on commodity prices. It will hit Asia second, Europe, third, and then we'll be last. We are geographically blessed to be where we are, plenty of oil, plenty of gas.

So two ways to look at it, I guess. The U.S. market is sort of immune to this, or the U.S. market is ultimately going to follow the rest of the world and whatever direction that may be. How do you see it? Yeah, so what's interesting is, and I think this is part of what the bond market is pricing, it is very possible that this is a scenario where the dynamics around energy, the dynamics around oil, the fact that we are in a position to be a net exporter here

actually adds to kind of overheating or run it hot conditions. And so you're seeing yields back up, and they're backing up both in the real component and in the inflation expectation component. I think that the bond market is also concerned about this idea that perhaps if we are in a prolonged military engagement, that our ability to make progress on debts and deficits may also be inhibited. There's going to be pressure on these military defense spending budgets, and that could, you know, really eat into progress on reducing the deficits. Really important point. Bonds are up. 4.15 or so on the tenure. And also because we were talking about this yesterday as well,

it's one thing when you just have to kind of up the defense spending. What if you now have to up the consumer stimulus? Fortunately, the tax refunds are hit, but no one wants to spend that on gas prices. So, you know, they might have to kind of empty out both sides of the wallet here. No, precisely. And so it's that, it's that consumer. side stagflationary story that I do think is the risk, right? For the industrial side of the economy, the manufacturing side of the economy, there's a reason to be constructive and think about resilience, but we are worried that the consumer side of the economy could be where a negative surprise sets. Is the market way too complacent here, Lisa? It just feels like we're just thinking this is

just another thing. We're a war. We sunk an Iranian naval ship with a submarine yesterday. We could have jet fuel shortages, fertilizer problems. I'm not trying to be fud, fear, uncertainty, and doubt about it. But the market, most of it is either flat or higher this year. Yeah, so I actually share your observation. And, you know, we are at a macro level questioning whether there is a bit too much complacency. Certainly, there's an assumption, I think, in the market right now, that this will be brief and that, you know, the economic implications of it will be modest.

I do think that this is much more complicated, however, than Venezuela, for example. We're talking about the Middle East, after all. I think history is replete with examples of, you know, confrontations that drag out. We have 12 to 13 countries already that have, you know, been engaged in some type of incoming fire, etc. And so that's a complication. And, you know, fundamentally, we are talking about a regime that is not a Western secular regime. This is a religious regime that has been assaulted. and, you know, the followers of, you know, Shia Muslims and the Ayatollah may, you know, want to think about the exit here in a very different way than the West may think.

Absolutely. And I take your, I mean, very clear that you guys are selling the consumer staples and discretionary. So we'll leave it there for now. Lisa, thanks very much. Appreciate it. Absolutely. Thank you. Have a great afternoon, guys.

You too. Lisa, Shelet. with Morgan Stanley. All right, let's head to Chicago and bringing Rick Santelli to talk more about the bond market, Rick, because again, I guess this is an inflation trade here. Markets are going, stocks are going down today. Bonds, they're also going down and yields are going up. I'm a little surprised.

Well, I don't know if I'd call it an inflation trade yet. The second round effects could be inflationary, but oil shocks aren't a monetary phenomenon. So we should clear that up right away. I'll tell you what, oil is having their way with the markets, no doubt about that. And I have some charts that really will paint an accurate picture here. Look at the first chart. Okay, this goes back two weeks. So on a good baseline before the Iran conflict started so we can see.

So that's a 10-year, and that's a 2-year, and that's oil prices. So what we see is obviously oil is having an effect. It's having a bigger effect on the 2-year than a 10-year, but it's not having a dramatic effect. 10-year yields are still down on the year, and we're only in early March. Now, let's look at Europe. Okay, so this is the European two-year, the European tenure, and crude oil. So what you really need to notice is how much bigger effect. You see those two lines on the bottom?

They're way more aggressive than they were on the U.S. chart, and that is for a good reason. We'll get to that in a minute. What I want to draw your attention to is how much more two-year is responding to oil in Europe than their tenure. And that's important because the two-year here and abroad is most closely associated with central banking activity. So what's being reflected to some extent is that central bankers and investors are worried that maybe they need to raise rates, which, in my opinion, is about the dumbest thing you could possibly do. Let's raise rates at a time where energy prices are slowing the economy.

If they stay up here long enough, it could possibly be recessionary. Raising rates makes no sense at all. And finally, the markets are pretty smart. This is Fed Fund Futures, and this is the December contract, and this is kind of down and dirty. But what you see there is that last peak is Friday the 27th, 9695. Today it's hovering right around 96, 71, 72. The difference is 23 basis points.

Basically what we've done since Friday of last week, when we made the lows for the year in pretty much every maturity, the bounce back has now created an environment where we've taken one quarter point ease off the table. Back to you. Rick, great way of putting and framing this issue. One question for you, which is, all of this said, why in Europe are the markets now positioning

for the possibility of a rate hike, when they're even more affected by everything that you're describing? Well, there is kind of some talk. What they've done is they've taken half the road there. They're talking about the possibility of easing as pretty much going out the window. And certain people are talking about a possibility of tightening on the ECB. Others are saying what I'm saying. It makes no sense at all.

But that is being reflected in that two-year abroad having such a bad day. Yeah, the two-year German boon, especially. Rick, thank you for now. Appreciate it very much, Rick Santelli. All right. We are looking so the biggest movers of the day and whether it's time to buy some of these names. You got Steve Grasso coming on as the Dow is down nearly 1,100 points. The Russell down 2.7 percent. The market's really selling off. Steve Grasso will give you some real world advice next. Volatility is up, markets are down. Dow's off 1,000.

This is bringing Steve Grasso, CEO Grasso Global, obviously CBC contributor. Steve, great to have you on particularly. I know it's kind of short notice. Thanks very much. What's your take on the market action today? Yeah, so this is an ever-evolving situation in the Middle East, Brian. And when you think about it, you know, we were on the desk the other night on Fast Money. You had mentioned this. We were only a couple of days into this, hard to really take away any massive conclusions. When you have the news flow coming out so precipitously, and then one day Iran is talking or there's rumors of Iran looking, for negotiations. The next day they say, we have no interest. Those are the things that keeps

traders on their toes. I still think that the energy space has overreached, and I was using the example of large integrated names, really kind of flat yesterday to down. Refiner's were up, which indicates that their input costs were probably most likely the market looked like they were going down. But when you have this flow of information where things are ratcheting up, not easing, and we're on a Thursday, headed into Friday, headed into the weekend. It's a really, you know, self-first react later event in my mind. You got a VIX at 24 and a half. I don't want to say it's at the right level because the market does what the market does.

That's what the market sees. It's up 16%. But, I mean, I guess the only question is, Steve, how long does this go on? Because if we start to see shortages of jet fuel, probably starting in poor nations, that it expands. It may not happen. But I'm just, it feels like the market is discounting some of these possibilities. Yeah, no, I totally agree with you. You're going to see the overreach, right? The markets overshoot, they undershoot. They're overshooting now, my opinion. And if you, if you bring back the lens, everyone wants to focus on the next two minutes. Bring back the lens. Lower left,

upper right. Right, right, we talked about the other day, the most overused line. It's time. It's time. in the market, not timing the market. So if you have things on your dance card that you were looking to buy, I would start sniffing around them. It doesn't mean you have to allocate fully, maybe a 10% position in things that you thought you'd never get a shot to buy at a discount. I will tell you the real fear for me, though, Brian, are layoffs. If you look at layoffs, Morgan Stanley announced them last night, you're going to see more layoffs going through the tech space. Those are things that I think the market hinges on. Cap-X spending a large part of growth and has been a tailwind. If we start to see that get crimped, I'd be more worried about the market versus a geopolitical event.

That makes sense, Stephen. Then, is there anything, you know, we were talking earlier this hour about software stocks, and, you know, that's been a nice trade that you can kind of ride, I guess, even throughout this. Does that interest you or no? Yeah, I would be more focused on the four-nine. those profitable companies that are within, more value-oriented companies. But yes, there are some bargains that you can get in the software space. Kelly, think infrastructure. Don't think fads. That's the way to gauge your software companies. All right. Steve, thanks. Appreciate it. Good to see you. Steve Grasso.

All right. So we've talked about it a lot this hour with the markets down. After the break, we'll take an in-depth dive into the real state of global energy, maybe a little good news on The oil loading side, all that as the Dow is down over a thousand points. We're back right after this. All right. Here's where we stand right now on energy and energy-related stocks around the Iran War. First off, the price of oil and natural gas. You know, they're both higher today.

We hit $80 a barrel for the first time in more than a year. Crude oil now up $20 a barrel since December. There you go. It is a big pop in oil ship. There's at least one ship in the Arabian Gulf, which has been hit by a, and rumored or reported Iranian bomb. Now, the move higher is helping oil and gas investors. That's the one side of it, the XOP oil and gas ETF,

hitting its highest level nearly four years. Mini stocks, Exxon, Chevrons, whatever, they are at or near multi-year highs. Now, there is some new and important new news on oil. While the Strait of Hormuz remains too dangerous from most ships to pass through, a couple of sneak through at night. The Saudis have fired up an alternate, loading port. It is in the Red Sea. It's called Yumbul. It is said to be able to handle about

five to seven million barrels of oil per day. Okay. Basically, this is it. And you can tell these red dots. There's a lot of ships around that port right now planning to or loading oil. Now, that is getting the focus, oil, of course. But it's also important to keep an eye on other impacted commodities like natural gas. Don't forget, Qatar's biggest gas plant, still offline. for weeks. Fertilizer also impacted, major food stuff. A lot of it comes through the straight and the Persian Gulf as well. You also got to watch stocks like CF and Mosaic on that news. CF, by the way, having a huge pop, aluminum also in focus, and jet fuel. We could see shortages in some airports around the world soon. It is important to remember that while the price of oil has gone up,

yes, it has. Many refined products have gone up even more because many of the ingredients, in those refined products come from these regions around the Arabian Gulf, and those have to be carried by ships. By the way, the ships that are moving, here's an actual fixture, Kelly, I want to show you. There was recently a couple days ago a ship from Houston going to Thailand. I'm going to get out of them blocking Thailand over here. There we go. You know you're big one you can actually block Thailand.

There we go. $29 million. A normal price for that tanker would have been $8 to $12 million. that, not related to the war, that is going to trickle through to a lot of things. You're blocking a lot of Southeast Asia there. I'm sorry, in Hawaii. Incredible economics, Brian. Thanks. More power lunch after the short break. Welcome back. A lot of pressure on stocks is coming from the oil price there with WTI. Brian, now above 81. It's up 9% today. The national average at the pump is 325. It was 2.89 a month ago.

A lot of the ingredients. Remember, gasoline is not just oil. It's a lot of things that go into gasoline. All those things, those ingredients, they're also up. You heard McMilvaney telling us earlier this hour is going to be a problem if it stays at these levels. Thanks for watching, Power Lunch. Closing bell starts right now.