Power Lunch - Stocks tumble, pushing S&P 500 into a 10% correction 3/13/25

Episode Date: March 13, 2025

Markets are lower once again, with stocks unable to shake a three-week rout under the weight of new tariff threats from President Trump. We’ll cover all of the angles for you. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch. We have got a big hour ahead as stock sell off again with more fears around tariffs and the economy hitting your money. Plus a huge about faced by the feds on Amazon and a pretty scary warning about American oil supplies. Kelly, we have all that on tap. All right. Let's start with the check of the major averages, quickly becoming the major story again today. The Dow is down 654 points right now, one and a half percent. Similar percentage decline for the S&P, NASDAQ, the underperformer. So there we go. with that tale again. The NASDAQ is down about 2.1%. And we've just been steadily losing steam throughout the session today. The president out on the tape making comments on everything from tax cuts to the shutdown to Greenland. All we can say is it didn't help sentiment. We also heard from the Treasury Secretary this morning trying to strike a more constructive tone. It's getting less constructive as we move throughout the day. Consumer discretionary is leading the S&P lower, makeup, travel, restaurants all down. Every single stock in the group is down right now. One of the

least bad is actually McDonald's, which hit an all-time high on Monday, although it's pulled back a little since. Been a rough week also for Walmart and Target. Target yesterday had its worst day of the year. It's falling even more today, Brian, so don't look here for any relief in the big staples. Well, certainly there is a lot going on in the stock market and the economy right now. And when it comes to stocks, so-called risk off is the name of the game right now, meaning kind of sell first, ask questions later. Some folks may be worried about their retirement funds, which is totally understandable, it's a scary time. Just remember this. History shows most stock market gains come from really just a few big up days, and those days will often come in some of the worst

markets. Just something to kind of keep in the back of your big noggins out there. All right, also out there, some companies beginning to warner, Warren, the consumer is beginning to crack. Let's walk you through it, all right? On the discount retailer front, dollar general saying, quote, our customers continue to report their financial situation has worsened over the past year. Over in apparel, American Eagle says that this year, 2025, has started off softer than anticipated. American Eagle highlighting that uncertainty tends to make shoppers a little more conservative with their spending. But it's not all bad. An interesting exception.

Ticket reseller vivid seats saying, quote, consumers increasingly prioritize spending on live experience. experiences over goods. Maybe that is a sign the higher end or the middle to higher end is holding strong. Let's talk about all of this and this market, weakness, the economy, whatever. We are joined up by Brian Jacobson. He is chief economist, annex wealth management. And for the technical takes, we've got Craig Johnson, chief market technician at Piper Sandler. Craig, I'm going to start with you. You've made some great calls. It is a very, very scary time. I get it. They're talking about this on the general news media, which maybe is good, maybe it's not. I don't know. You look at the charts, you strip the emotion out.

What are the charts telling you and your team right now? Brian, thanks for having me on in such a rough day. Certainly the headlines out here are extremely negative all over the place. And the sentiment toward this market, Brian, is absolutely awful. If you look at the AAI-I-I numbers, you're at some of the lowest readings you've seen. Typically, you find these readings near sort of bare market lows is what you typically see. And if you also start to look at the VIX, it is elevated out here at this. point in time. Now, technically, Brian, we have broken some uptrends. We've closed below 50, 200-day moving

averages, but we're getting to some pretty wash-out levels. And Brian, I've been on this show with you before. We've gotten to these periods like this. And I started looking at new highs, new lows, breath indicators, and all these pieces. And we're starting to get to levels where you look back and say, is this 1989? Is this a period of time that's like the great financial crisis or the 87 market crash. And I think the answer to that is flat out no. So we're setting ourselves up for, I think, a potentially pretty good buying opportunity, all this negativity. And again, as Warren Buffett has said, you got to be greedy when people are fearful and fearful when people are greedy. And there's definitely a lot of fear out here that seems to me to be a little bit misplaced on the charts.

You know, and Brian, I'll be honest, I made kind of a stupid tweet earlier today. I basically said, you know, folks, just remember you don't lose money until you sell stocks. It was an emotional response, something I heard on a non-business channel where they're like retirees are being wiped out. And I'm just thinking, number one, if you started retiring five months ago, I guess you're wiped out. But otherwise, you should still be higher. My point was simply that you don't actually cash in the losses unless you sell. And that most big up days happen in some of the worst markets. And if you strip out like 10 days out of 1,000, those are the days where you tend to make all your money.

But it is a scary time. How do we, for you and your clients, how do we take out that emotion? And remember what Craig and history has said about trying to time this market really is a stupid thing to do unless you're a day swing trader. Yeah, well, and even for day swing traders, right? I mean, how successful are they? Is it really skill? Is it luck? And when we're coaching our clients through events like this, it's about really refocusing on that,

financial plan, those long-term goals, because I think it's really easy to get caught up in the day-to-day movements in the market and lose sight of, well, where am I actually relative to my longer-term financial goals? And I think that can give people a little bit of comfort. It doesn't take away the pain, right? I mean, if you are warned by your doctor that you're going to get a shot, he says that this might hurt a bit, and it still hurts. But at least I think it can help provide that type of perspective.

And I really appreciate that you had started off this segment talking about how some of the biggest up days can occur shortly after some of the big down days as well. I think that right now it's just a matter of like FDR, what he said, we have nothing to fear but fear itself because this is really driven by fear. What are the fundamentals going to look like? Are we going to get a recession? And I think that sometimes headlines can amplify that fear as opposed to toning things down. If we think about the end game, we know that businesses, their fundamentals are still very much intact. Valuations across the board maybe were a little stretched in some areas, but not in others. So I think that it is one of those opportunities where it's about, you know, just put on your seatbelt, maybe put on a crash helmet if you need to and just ride through this.

Craig, how are you riding through this? Well, what we've been trying to do is sort of continue to focus on good quality stocks, focus on the ones where we're getting good. relative outperformance. Yes, we're breaking a lot of trends out here at this point in time, but now is not the time to start liquidating things and start running from things. That was 21 days ago when you're at the highs. And right now, just focus on good quality names and finding big areas of support. And so in our notes that we've been putting out over the last couple days, we've been pointing out stocks that have pulled back the big, long-term support areas, stocks that we'd call out like Sienna or Sincolns.

Finchraney Financial or El Nilem or Zoom. These are stocks that have corrected more than 20% off of their 2024 highs back to big levels of support. Those are the kind of things, Kelly, that we're looking to sort of step up to in this sort of uncertain period of time because a lot of the damage has already been done. Share some of those names again. Synchrony, El Nilem, Zoom. I think I forgot one of them. But I think people would be interested to go do a little work on those. Yeah.

Secretie Financial, El Nilem, Zoom, and also Siena. would be a couple of the names that I've been to share here today. And we've got a whole list of these names that we put together that are back to big, long-term. And again, I'm not talking day trading charts. I'm talking weekly and monthly charts. And when you pull back to those big support levels, you clearly know that a lot of the damage has been done. And it usually means a lot of the selling has probably taken place. And you're back to a good area of support, which sets you up for a nice probability of a nice move higher.

Does that leave you or kind of imply, Craig, that you feel, okay about the markets overall? Even if you take a position in a stock near a major point like that, I can't imagine you do so if you thought we were headed down another 20% overall. You know, that's an interesting point, Kelly. And let's me to step back and make two observations on this. Number one, if I look at every single stock on the New York and the NASDAQ, I'll point out to you that literally one third of all the stocks have already corrected more than 20% off of their all-time highs. Again, I don't think this is a great financial crisis. Credit markets aren't saying that. And I don't think this is a

1987 moment. And so when you look at this, what's the likelihood that we're going to have all these stocks down 30 or 40 percent? I think that's pretty small. So from our perspective, I have not changed our year-end objective of 6,600. I know a lot of people are out there slashing

their year-end price targets. We're not doing that at all. We're standing behind our analysis and stepping up on these sort of big pullbacks. I love it. You're strong like ox. Brian Jacobson, here's again, I'm not making light of what's happening. It's scary. It's scary for a lot of people. Actually got on a plane yesterday. And the United Cabin steward was like, should I, should I sell?

I'm sort of afraid. Here's the thing. When I look at stocks that are down and we can throw these charts up, guys, they call this producing from the desk. If I look at a Robin Hood, it's down like 40% in a month. Trade desk has been slaughtered, interactive web brokers, Palantir, App Lovin. Names that I don't think, Brian, have anything to do with tariffs. It'll make steel. It'll make aluminum. They're not an oil and gas. It has been crushed. In fact, many oil and gas stocks are up the last few days. My point is that it looks like the market is selling stocks that are up huge, have very high historical valuations, and are also sellable. I myself, doing this 29 years, see a little comfort, a little solace in that fact. Could change, but that's what I'm seeing. What about you? Yeah, I think that really the key here is,

to remember that this is really driven by fear, and will that fear become a reality? And that's where people can have different opinions as to what will happen in terms of the growth numbers, the earnings numbers over the course of the next few quarters. And when you do see the indiscriminate selling, that's where it looks like, okay, people are just sort of throwing the proverbial baby out with the bathwater. And that's where you do want to go back to thinking, can I take that longer-term view? Can I provide liquidity to the people who are selling indiscriminately. And that's where I think you get those tremendous opportunities over the longer term to position your portfolio. So we've been looking at quality names, a lot of the

ones that you were mentioning there as far as, you know, how tied are they really to the tariff talk, turbulence that could come there. And that's where we're finding some opportunities is more, let's look at quality, but then also focus on the valuations, because valuations have come down as a result of this. I guess that is one of the redeeming qualities of a market correction is it does correct some of those high elevated multiples. Yeah, Craig, I love the fact that you're sticking to your guns and your price target. Is there something, though, that would make you change your position? This has been, whether you support them or not, it's been an administration.

We're getting kind of different words every day. You're not a political analyst or a technician. I get it. But is there something that could trigger a change to what you think what happened? Any kind of meaningful thing that's in the back of your big brain out there? What has to the back of my big brain, Brian, Brian is I keep thinking about interest rates and I keep thinking about 10-year bond yields. And right now we got 10-year bond yields up until about 20 days ago. We're heading lower and we were watching equity markets respond positively. Now we're seeing the

flip opposite of that happening at this point in time. But if 10-year bond yields start working their way higher, 5, 6 percent, we all know that. there's a lot of U.S. debt out there that's got to get refinanced, that would sort of make the problem even worse. And so if we see inflation picking up, and again, I'm not the economist, but inflation starts picking up, 10-year bond yields start going up, and it's not from growth, then that's going to be sort of worrisome to my viewpoint right now. But, Brian, the point that I would bring back, though, is there's a lot of damage that's already been done to this market. I mean, in this 21 days is one of the fastest sell-ups I've seen in my 30-year career here.

And for my perspective, a lot of damage has been done. We're due for at least a relief rally, if not more, at this point in time. Quickly on that, on that speed thing, I think this is really, really an important point that not a lot of others are talking about. I've noticed that I'm sure Kelly's in the same way. And if you're not, Kelly, please say something that all these sell-offs and the rebounds, by the way, tend to be faster and faster every year. I get it. Computers are speeding up, Internet speeding up, algorithms speed.

Everything is speeding up. but it does feel like people are a lot, or computers, are a lot quicker to hit the trigger now, the cell trigger now than they were a few years ago. Is that just me and old man yelling at, you know, the cloud computing? Or is that actually happening? Ryan, that is actually happening. And you're not that old. I think we're about to see me.

I want to appreciate it. I would say that, you know, when you take away a lot of these market makers and you don't have human judgment coming into these things, is all computer driven, all of a sudden, they just sort of computers back away from these things, and you don't have as much, you know, stepping up and buying the dips in the market here. And I think that's part of the challenge of what you got. It's a bit of a structural challenge for this market. And then if you couple that together with, you know, perhaps there's some degrossing happening across the street at this point in time due to the uncertainty that's

happening out of Washington, whether that's by design or not by design, we'll soon find out. But put those combinations together with more computer trading. And this is kind of what you get. Quick, fast sell-offs. But in the past, Brian, the faster the sell-off, the faster the rebound is what we've often found. And I think that, again, will probably prove to be true. I still think that you're going to get the Russell to outperform the S&P 500 this year, Brian. And maybe that's going to be a couple rate cuts to come.

But I'm happy to put my neck out there and throw that out here for you today. See, you're not the only one putting your neck out. It's that kind of day. It's that kind of market. Gentlemen, thanks. Love it. Really appreciate it today. Brian Jacobson and Craig Johnson. Lots of more shows still to come. But first, after the break, a surprise reversal from the FTC. It could be a problem for one major tech stock. Right now, the Dow is well off session low. Same for the NASDAQ. Still pretty sizable declines. Power Lunch will be right back. Welcome back to Power Lunch. The Federal Trade Commission is reversing course and now says they have enough resources to pursue the Amazon Prime Deceptive Practices case. Now, this came just hours after the FTC had requested a delay due to what they called resource constraints. But here's what Chairman Andrew Ferguson had to say about all of this on Squawk Box this morning.

Didn't file anything saying we didn't have the resources. Lawyer was talking during hearing. The lawyer was wrong. The lawyer said he was wrong in the filing. I've said since day one, Big Tech is one of the main priorities of the Trump Vance FTC. It's one of the reasons the president appointed me to this position. We will make, I've said since day one, every resource necessary to litigate these cases. is available, will be made available. That remains true. That's why the lawyer filed what he did

after he said what he did. He was wrong. We've got the resources. We've had them since day one. We're going to litigate these cases. So you're not backing off of Amazon? Unequivocally, no. Our next guest just co-authored a piece lamenting the politicization of antitrust enforcement, both in the U.S. and in the U.K. Joining us now to discuss is former FDC Chair William Kovassik. And it's great to see you again. We're so glad that you could join us today because have you ever seen anything like this? What does it tell you? I think we see two things here. That is no junior case handler ever goes to court asking for an extension on his own. There had to have been

some discussion inside the Bureau of Competition about this. That was not his judgment alone. So I think what you heard from him was a sincere expression of concern about where his team was going to get the resources to do this case. This was certainly fed back to the chair and one former another. And the chair said, as you heard now, we will get the resources from whatever source we need to do it. That means that they will mask their resources to support this, but it means they're going to be taken away from something else. So you heard a genuine expression of concern about the agency's ability to function well, given the existing insistence on reducing the workforce. So what does that tell you that this is important enough for him to correct the

record, come on and say, and again, this is the area where I think people are most confused and interested about the FTC's approach here. The chair is clearly a conservative, but that agenda seems to encompass a tougher attitude towards big tech, the willingness and necessity to push forward with this Amazon case in particular. What does that say? It says that it is a high priority, that the concern, in his view about the power of big tech, especially to filter speech, to be a gatekeeper to decide what kind of speech gets to the public, and specifically the capacity to filter out the views of conservatives is a top priority.

And I think what you heard him say in the clip now is that whatever pressure we face, we will take the people we need to back up these cases. Now, you can ask, how many cases are they going to be able to run at one time? And I take from the chair's comments at face value that we will back up the tech cases as much as we can, must with everything we have to make them work. Where does this then lead them next? Do you think? I mean, what if there is a real resource issue? It means that they're going to have to back off of other matters. It means they're going

to have to be more selective in deciding what merger cases they bring. It's going to mean that they might be more accommodating and thinking about settlements in merger cases. It might mean that they back off some other consumer protection matters. That is, it forces them to decide which matters are going to be most important. But the simple, The simple fact is you can only go as far as your people carry you. And if you don't have the people to run difficult, demanding matters, you have to bring fewer of them. So at some point, they're going to have to decide this comes at the cost of bringing additional merger cases, bringing additional fraud cases, in order to back these cases. Bill, it's Brian.

What do you think happened here? Was it like a rogue employee just saying something they shouldn't have said? unimaginable. That is no junior person walks into court or walks into a hearing at any form and tells the court, we need a two-month extension. It's a bit embarrassing task for a two-month extension. That's not something you think about lightly. And they didn't pick that number out of thin air. That had to reflect a serious discussion at some level of the agency. But that discussion, I think quite apparently was not linked back to what the chair thought. about that. So let me, let me, let me back up kind of get a lot of our people are driving. You know, they're listening on the radio that maybe not sort of focused on what we're just saying. What you think, and we're speculating a little bit, what you think likely happened was they had a real discussion in a room, a meeting, whatever. They decided they don't have the resources to, they need a delay. They ask, they go into a courtroom. They ask for this, as you called it,

embarrassing delay. That became then embarrassing for the administration. Somebody higher up called those people and said, stop talking, we're switching our position. We have the manpower and the, this is a political fight as much as a resources fight. This is, this is somewhat, this is either the chair became aware of this directly from what happened in that proceeding, somebody told him and he said, wait a minute, that's way out of line for my priorities. And you can imagine maybe that someone in the White House hears about this and says, that is not the approach. We don't want to be shown up for what we're trying to do on cutting back the federal government. And second, big tech is a high priority. So whatever you have to do,

pulling away people from other projects, you will make the tech cases work. And I think that coincides with the chair's point of view. But whatever conversation had at the lower level was not communicated to the chair. My guess is if he'd heard about that idea, at the starting point, you've said, you're not going into court and saying that. No, Bill, thank you. It's a great point. And also in what he said, too, for the person, reading between the lines is, if you want to go forward with a major merger and you're afraid this FTC might come forward and stop you, they are potentially so resource constrained now and focused on. on pushing the big politically sensitive items forward, they may not have the ability to go after.

Is Bill, am I fair in summarizing what you said? I think that's exactly on target. I mean, you look at the total number of people you have. There have been departures. We don't know exactly how much. Some of the departures have involved people with really good skills and people have been good at managing big cases. If you're going to take, if you're going to watch people go, you have a hiring freeze so you're not adding new people. That's a severe capacity constraint. and it's got to show up somewhere. And it means that you're going to be able to do fewer other things. Now, I don't question the desire to back up the big tech cases.

That's a reasonable choice that the chair can make. But the cost is there are fewer other things you can do that are either more ambitious or you have to be more willing to be more light-handed. Yeah, if I'm listening in corporate America, I think, all right, maybe I'll pursue. If I'm not a big tech company, maybe I'll pursue that deal. Bill, thank you for joining us today. Appreciate it. Thanks for having me on.

Former FTC chair. It's a wild story. I mean, can you imagine somebody comes out and says we can't put on power lunch today on the people? Then the boss's boss says, no, no, no, we're totally fine. That's kind of what just happened at the FTC. All right. We're going to go back to the markets and your money coming up. Is it time to find a port in this stock storm?

If so, market navigator. We're mixing all kinds of metaphors. We're back right after this. All right, bad news, good news, bad news kind of market. Now, the bad news is you can see or you'll hear when I tell you markets are down across the board. Dow's down 488. It's about 1.2 percent NASDAQ down about 1.5 percent. The good news would be that we are off our lows. Not a lot, but we are off our lows or not at our lows.

Going back to, quote, the bad news, as you heard our guest, Craig Johnson at the top, suggest that this sell-off, while, again, maybe the 10th or 12th worst that we've seen in 10 or so years, is maybe one of the faster ones that we have sold with computers and speed and the and really the death of humans on Wall Street, everything is happening a lot faster, including elevated levels of volatility. They have gone up in the last few days as markets have gone down. And that is elevated interest in adding portfolio protection. As your next guest puts it, quote,

most portfolios rely on a two-legged stool of stocks and bonds, but adding a third leg of alternatives can provide greater stability. And I don't know about you folks, but I like my stool's three or even four-legged. Joining us now is Paisley Nardini, managing director and flintam manager at Simplify Paisley, because a two-legged stool does not sound very comfortable right now. It sounds dangerous. It sounds risky. But that's also kind of what the market seems to be right now.

How do you and your team see it? Yeah, absolutely. First and foremost, thanks for having me. Also fun to be joining you in a time of turbulent market environment. I would say it simplify. We kind of thrive in this type of environment. Our strategy lineup is really built to weather the storm. We're looking at diversifiers and back to your earlier point of how can we build out a more stable stool or portfolio for our clients to leverage.

And as we look at stock bond correlations over the last couple of years, the two-legged stool isn't cutting it. So as we think about how to build out, round out through diversifiers, our strategy lineup is looking at low correlation to stocks and bonds. And as we can see, stocks and bonds have moved in tandem over the last couple of years. So how can we find low correlation, even anti-correlated sources of diversifiers to bring us through this market turbulence that we're seeing right now? Answer your own question, Paisley. How do we do that? If they don't want to sell their 401ks, they're taking tax hits, whatever it may be,

is there a way using alternatives or other strategies to downside protect in a crazy market? Yeah, absolutely. First and foremost, we're looking at liquid alternatives. So not talking about locking up capital, not talking about high fee, talking about transparent liquid diversifiers that are available in ETF vehicles. We're really focused on sources of diversification as well as dynamic strategy. So being able to go long and short, this can be looking at commodity strategies that are more dynamic, long and short positions. Managed futures available in liquid ETF vehicles have been a really strong source of positive return. in equity market sell-offs, and we've seen that already year-to-date. Our strategy has significantly outperformed the S&P 500 exactly as intended. So looking at those liquid sources of diversification, and then also just looking at broader dislocations, whether it be through monetary policy or currencies broadly, the ability to take long, short positions in currencies is another attractive source of portfolio diversification in this turbulent time. Yeah, it is. It's scary time, turbulent time, but I,

I'm told longer-term investors want lower prices for down the road, but that's a different segment. Paisley Nardini of Simplify. Thank you. Thank you both. Is U.S. shale running out of oil? A concerning red flag was raised right here on Power Lunch earlier this week. We'll discuss that and the implications next. Welcome back to Power Lunch. I'm Bertha Coombs with your CNBC News Update. President Trump hosted NATO's Secretary General Mark Ruta in the White House. House this afternoon as the U.S. pushes for a 30-day ceasefire between Russia and Ukraine.

The president said during the Oval Office meeting that he hoped Russia would do the right thing. The comment came as Russian President Vladimir Putin said that he would not agree to an immediate ceasefire. However, he said he did agree in principle with the proposal. New York police loaded protesters onto buses today after they flooded the lobby of Trump Tower. The demonstrators from the Jewish Voice for Peace are calling on the Trump administration to release pro-Palestinian activist, Mahmoud Khali. He was arrested last week by immigration authorities who claimed they acted on State Department orders to revoke his green card. And rents in Manhattan are soaring to record highs. Data from real estate firms Miller Samuel and Douglas Elliman show that new apartment leases were signed for an average.

of $4,500 a month in February. It's $100 above the previous record set in the summer of 2023. All those bargains people got five years ago, Brian, not there anymore. No, they are not. The costs are just bonkers. Everything's back. Thank you very much. All right, also noteworthy today in all the market chaos,

what appear to be two new sanctions on Iran and Russia. First up, Treasury Department's Office of Foreign Asset Controls, if you're following that, adding a number of oil and shipping companies to the Iran sanctions list, Treasury naming a number of companies as so-called shadow fleet operators. This could make it more difficult for these shippers to transport Iranian oil. That Treasury notice today pretty clear and a clear salvo on Iran. Another potentially big development is what could be another hit on Russian oil. Yesterday, Treasury took no action on a Biden-era exemption on some banks dealing with Russia that expired.

You follow that? It's like a double negative. It's very complicated. But the exemption that was put in place last year seems to allow some Russian banks to wind down their energy business through 1201 a.m. yesterday. So by allowing the exemption to expire, our sources that we have talked to say this could make it even tougher for banks to do business with Russia and help facilitate the sale and purchase of Russian oil. As we have said, these are complicated orders from Treasury, but they were flagged to us by contracts in the energy business as potential hits on both Russia and Iran, still we're going to get more clarity. We're going to bring you that as we get it. Let's stay now, though, with oil. Because also, earlier this week, we sat down with a number of big and private and public companies in the energy world. Now, one of those players that we talked to, Scott Sheffield, founder and CEO of Pioneer Natural Resources, which was sold to ExxonMobil, had these comments about American oil that generated a lot of buzz.

Now, one of the main reasons that Pioneer sold, we had a choice. I felt like that we had to diversify. We were running out of Tier 1 inventory. Everybody's running out of Tier 1 inventory. Tier 1, the best inventory is going to be run out of Pioneer by 2028, Tier 2 by 32. So people don't talk about the fact that we're running out of inventory. And the question is, where is all prices going? With what's happening with all prices, with the Saudi move to add 2 million barrels a day,

over the next 18 months. You got Kazakhstan adding oil. You got Kurdistan adding oil. We got Canada, Brazil, adding oil. There's too much supply in the world. Now, those comments catching the attention of 9-point partners, senior portfolio manager Eric Nuttall. He manages the firm's energy fund and says,

the twilight of U.S. shale may be upon us. He'll join us now to talk about that. And maybe these sanctions which are confusing, Eric. But let's start with Scott Sheffield's comments because Scott sold his company to Exxon, mobile, he used the word inventory. That's a fancy word for oil. He basically said some of the best oil is going to be drained. And I'm using the, there will be blood voice. In just a couple of years, those comments caught your ears and mine. Absolutely. That interview that you held was

unbelievably important for the energy market because it's bringing something that many of us have spoken about more to the forefront. And that is, U.S. shale very clearly is in its twilight. I'm I mean, the best days are behind us. And it's especially important now to believe in what you see rather than what you hear, i.e., we hear every day about from your president, Donald Trump, about U.S. energy independence and drill baby drill. Yet when we look at 2024, shale grew at its slowest pace since its inception. That was at an oil price of $75.

And so your energy secretary, Chris Wright, was down at Houston and Cereo Week this week, talking about how shale's going to magically grow somehow down to 50. And so we just don't see it. What we think is the era of meaningful growth is behind us. And why that is so unbelievably important is that over the past 10 years, non-opack production has grown by 5 million barrels per day. US shale over that same time frame, which is a component of that growth, grew by 6 million barrels per day. So we're not for the rise of U.S. shale.

The world would have been in a very clear supply crisis. and that's where we're going with the twilight of U.S. shale. Eric, are you Canadian-based, by the way? I am. I'm based in Toronto. Okay, because I got the sense. How'd you guess? It was the part when you said your president. I thought, okay.

Yeah, not a bent. Just to be clear. My question, though, is about the price of oil. So we've seen it falling considerably since Trump's election. And probably it's the only thing that hasn't round-tripped back to before election day. There's, you know, it's still in the kind of mid-to-upper 60s. But if you're right and shale supply is running out and so forth, I mean, should we expect crude price? to be back on the rise again or no?

I think it's going to be a process. So there's a massive disconnect between what I view the fair value of oil to be in where we trade today. And I think the reason for that difference is horrendous sentiment. That's being driven by the mantra of drill baby drill. The market generally buying into it and believing that Trump can somehow force shale companies to drill at an oil price that is below their brink even right now. We need an oil price, $10 higher to get any semblance of any modicum of growth. And at the same time, there's this confusion about OPEC spare capacity, this belief that they're sitting on 6 to 8 million barrels per day. And due to the loss of market share to the U.S., they want to come and crush the price. We think spare capacity is about 4 million barrels per day. When you look at the actual amount of production in February by OPEC members, over the next 18 months, we think the amount of oil to be returned is much less than consensus beliefs. RBC put out a good report showing that they think it's only 900,000 barrels per day over the next 18 months. and that's obviously at a very gradual pace, that roughly matches one year of demand growth.

And so I look at a year from now, we think shale is maybe at its peak, maybe going to grow by 150,000 barrels per day in 105 million barrel per day market. It's a rounding error. We see countries like Canada. We're going to grow by roughly 95,000. Brazil's been disappointing. Guyana's later in the decade. And so it's a process of normalizing OPEC spare capacity in the next year to year and a half, at which point I think the world is going to wake up and realize that we have a real problem on our hands. I want to go to these sanctions. They're confusing.

It's legalese. Somebody sending to me like an hour and a half ago, so I'm trying, you know, I have a law degree, but I'm not a lawyer. I'm trying to read it. Sending it to people, I send it to you, Eric, to kind of glance over it. It looks like two pretty heavy steps

against Iran and Russia from the White House, vis-a-vis the Treasury, right? It looks like the Iranian stuff's pretty clear. These shipping companies basically should not be shipping Iranian oil. That's it. The second one is this exemption expiring. It's confusing. I'm sure we'll do more on it tomorrow.

How do you read it? And do you read it as pretty preemptive strikes against Iranian and or Russian oil? Because if that's the case, that should be a wake-up call to the oil market, I think, but oil's down today. I think it demonstrates the contrast between what is being set in front of cameras and what is actually happening behind the scenes. It feels like this is a very strong negotiating tactic or pressure that's about to be placed. It's shocking to me that even post-Trump's election, in the month of February, Iranian exports, according to Kepler, hit a multi-multe year high of about 1.8 million barrels per day. And so the market is completely asleep to the potential of losing both Iranian barrels. We know that sanctions, if they were enforced, which clearly under the Biden administration,

they existed but were not enforced. And we had Iranian exports grow from 400,000 barrels a day to 1.8 million. Should the Trump administration choose? And when staffing is complete in the next couple of weeks, the world could lose a million barrels per day of Iranian exports. And it is completely unprepared for that. And perhaps that explains OPEC's confidence, OREPEC Plus is confidence of those voluntary members to start moving ahead with returning barrels to the market in April.

What do they see that the rest of the market doesn't see? My guess is slightly stronger demand growth and also the growing likelihood of actually losing barrels. But the market is just completely complacent. It's been fooled a few times. And I think they're going to have to see it to believe it. All right. Eric, thanks for joining us. And it's definitely out of a contrarian play, we should say, given what's been happening with the price of oil, an important one nevertheless. Eric Nuttall of 9.

Stocks remain in the red, but we're off the lows of the day. And we'll have more on the movements in the bond market lately with Rick Santelli, who joins us next. Welcome back. Stocks are under pressure, but well-off session lows. Treasury yields were lower after the PPI and then a little bit more mixed throughout the day. Let's get to Rick Santelli in Chicago. Rick, what can you say? Well, you know, Kelly, there was a bit of nuance today to the numbers.

But let's start at the beginning. When we came in early before the PPI release, let's look at the first. look at twos, tens, and thirties on one chart. Because we were higher than yesterday's yields, and yesterday's yields were higher than Tuesday's yields. And that usually is a dynamic, I call, stacking, that puts momentum to the direction, meaning to upside of yields, downside, and price. And then, of course, a cooler PPI hit, and the market largely ignored it. It started actually to creep higher. It wasn't until the equity markets impacted by what we call in trading community tape bombs, whether it was tariffs or debt ceiling issues. So as you look at a two-day chart of

tens and the Dow Jones Industrial Average on the same chart together, you could see how yesterday it seemed to be normalizing them, boom. The minute equity started to go down, that up-moving interest rates, it started to get captured, and it dragged rates down. Now we're in a one-for-one. The small bounce you just pointed out is a small bounce in yields as well. And there's also a global issue. We've talked about it. Here's a chart starting in the third week in Feb on boons, guilts in the UK and tens.

And you can see the impact is starting to grab our market, but our tape bombs keep that impact on a slight level. Eventually, that's going to have a bigger impact on U.S. yields. Brian, back to you. Good stuff. As always, Rick, thank you very much. All right, coming up, we continue to track the sell-up in stocks, the Dowland Pace for its worst week in the first week

in more than two years. We're back after this. Welcome back. Let's do some three-stock lunch with our fast money trader, Tim Seymour. He's CIO at Seymour Asset Management, and it's great to have you here today, Tim. We really appreciate it.

Novo, you picked some of these names, too, and there's a reason. So Novo Nordisk is one for you. We may not talk a lot about it, but it jumps out. It's bucking the market trend up a percent today. It's down about 13 percent this week, but why is this on your radar

as a name people should be taking a look at. Yeah, Kelly, I think this stock is completely misunderstood. It was a darling stock, obviously, of 23. This is one of two ways to play GLP1. This is a company that I think is, first of all, there are two-thirds of the supply of GLP-1 out there. They had some recent phase three announcements on their redefined two, essentially that which is competing with Zepbound and Eli Lilly.

These numbers were fine. Market punished them. If you look at Kager, they're going to grow north of 20 percent. They're priced it around 20 times. this is a really attractive name that people forget is part of the secular growth story. And they may be the bigger player with supply constraints, I think, eased up quite a bit. I think it's very attractive, very misunderstood here. All right. Number two is the name you say provides a little bit of safety and steady return.

Safety, I think, is probably the watchword right now. Pipeline, massive pipeline company, energy transfer, ET. Yeah, Brian, I think you know this story. This is an MLP play. And often when you think MLPs, you're thinking singles, not home runs. I mean, this is a story where over the last few years also the balance sheet restoration in the entire MLP space. But this is the best way to get exposure to gas demand and NGL and some oil, all in the best place to have it in the Permian free cash flow yields. This is a 7% dividend yield.

This is a during volatile markets. This is actually behaved kind of like a growth stock over the last six months. But this is make no mistake. This is a conservative play and a difficult market. I love this one. All right, let's move on. So far, I think you're like two for two. The one to avoid is a firm, though, you say. Okay, it's down 4% today, about 10% in a week. So others might look and say a chance to pick it up, but why do you shy him away? Look, we know that this has been the darling story and buy now, pay later. They just had fourth quarter numbers that show that they're actually seeing acceleration in some of their trends. They say they're going to be EPS positive in 2025. I just think in the world we're in with consumer confidence pulling in with all the uncertainty. you do not want to be in this space. And they're known for being credit nimble. I don't think

that credit nimble story has been tested yet. I don't know why you would be in a consumer credit story here that hasn't really been through one of these cycles before. It's a high multiple stock, trades almost five times sales. This is not one you're owning in this environment. By the way, Tim, Brian and I liked the Fast Money Live. I think we should do, I think Power Lunch Live should be on the docket. Well, you guys would do a great job. I will say we had an event two weeks ago. We've got another one coming up June 5th. And what's great about this moment is it's not only a backstage pass to fast money and a meet and greet, and we get a chance to really have some fun. But in turbulent markets, this is a great opportunity for everybody to kind of really

ask those questions for us to get up close and start to really talk about market themes and do it in an environment where people have access. I think this is a perfect time to have this event. It was so much fun, so successful a couple weeks ago. We're really excited for June 5th. Well, it's exciting point. On a more serious note, Tim, I tweeted out something earlier today, sort of tongue-in-cheek emotional reaction, that you don't lose money until you sell. And I'm getting murderized for it on the interwebs. It's fine. It was in reaction to something I heard on non-business media where I thought they were sort of fomenting panic. There's a stupid instinctual reaction by me, whatever. But is there any truth to that? I mean, if I'm wrong, tell me. I mean,

but if you're holding your markets and the markets go down on paper, I don't know how much you've lost. If you don't sell, what am I missing? There's all kinds of investment adages around every night you go home long, et cetera. The reality is it depends on what kind of money it is, depends on what your time horizon is. Trading through volatility is extremely difficult. And I think people that are sitting on the sidelines here with positions they know and feel very comfortable, understand the fundamentals, that's great. You crystallizing losses, taking either some profits or taking some losses and managing risk

is also a critical part of being a trader. So you shouldn't be lambasted for a statement like that because the reality is it's true. And a lot of people are probably overtrading in this environment. There's a lot of uncertainty. That's the kind of stuff we talk about in Fast Money. You talk about in Power Lunch. You're fine. All right.

Book a plane trip. Scan that QR code. Go check out the next Fast Money Live event on June 5th. It was a great turnout the first time around. Very fun room. I love it. Tim, thanks for joining us. Good to see you.

Tim Seymour. And all those folks, by the way, as you know, Kelly, are as nice, or nicer in real life than they are on the television. Or then, oh, I was going to say the commenters and the fans are nicer than they are on Twitter. They certainly are. Thanks for watching, Power Lunch, everybody. Closing Bell starts right now.