that's a limited supply. thank gause that the spring is around the corner is all i can say, and they need to bundle up because there's only so much we can do it's a limited resource and it's very difficult to ramp up, impossible to ramp up in any short amount of time >> thank you very much for joining us this afternoon. what a busy hour, kelly, it has been >> it has. with the market down about 450 points, thanks for watching "power lunch." >> "closing bell" starts right now. >> thank you, tyler and kelly. welcome, everyone, to "closing bell." i'm sara eisen in washington, d.c. today stocks sinking midday on concerns about increased tensions between russia and ukraine and a potential invasion we have all the detail coming up >> i'm melissa lee in for wilfred frost. as stocks are sinking, oil is rising it's up by about 4%. coming up on the show, eurasia group president ian bremmer will join us to discuss the potential market and geopolitical fallout in a few minutes, leon panetta will join us with his take on the events

>> we have full coverage of this developing story for you kayla tausche here in washington mike santoli at the stock exchange, and jan is standing by kayla, let's start with you and what we have learned >> the white house says russia may invade ukraine in a matter of days, underscoring the use has not reached a definitive conclusion that vladimir putin has decided to go forward with an invasion, but putting a finer point on what one would look like and when. here's the national security adviser. >> now, we can't pinpoint the day at this point. and we can't pinpoint the hour, but what we can say is that there is a credible prospect that a russian military action would take place even before the end of the olympics. >> sullivan warning if one were to happen, it could begin with an air campaign, followed by a ground invasion, which sullivan says could see a rapid assault on the city of kyiv. that could cut communication lines, close roads, and shut down commercial transportation leading him to issue this

warning to american civilians to get out. >> we encourage all american citizens who remain in ukraine to depart immediately. we want to be crystal clear on this point any american in ukraine should leave as soon as possible and in any event, in the next 24 to 48 hours. we obviously cannot predict the future we don't know exactly what is going to happen. but the risk is now high enough and the threat is now immediate enough >> the u.s. has long warned of the possibility of an invasion, but that last sentence is key. sullivan saying the risk is now high enough and the threat is now immediate enough sara and melissa >> kayla, clearly, the administration has been planning for this and warning of this this is the most imminent warning we have gotten what happens next if russia does move what does the u.s. have prepared as far as sanctions and other repercussions? >> the u.s. has in the executive branch a package of sanctions that they have been crafting

within several agencies. the state department, treasury department, and others, to try to punish russia's involvement in the global financial system, its involvement in the global energy market, and certainly they have been trying to warn that these will be swift and severe consequences that will bear such a high cost by russia that it's not worth invading clearly, if vladimir putin makes the decision to invade, it means he's calculated that the cost just isn't that high and that is not what the administration had hoped to see, especially with so many of the officials involved in crafting thispackage having served in 2014 when russia annexed crimea and for a lot of them, they're worried history may repeat itself >> kayla, thank you. kayla tausche in washington for us mike, no surprise, the market has been sort of skittish, looking for any hints about what the fed is going to do, then you throw geopolitics on top of it and you have this, especially when the markets were struggling to hold up key levels, particularly for big cap technology >> absolutely. yeah, market already back on its

heels. it got an extra push from a new direction, i think that's the way to think about it, and most of the way it really directly filters into the stock market is through crude oil prices they make new highs, you actually have also seen a retreat in treasury yield, so that's just a classic recoil from risk reaction thament you would see normally ahead of a weekend with this little bit of a geopolitical threat hanging out there. not easy to see that there's some kind of real rush for the exits. i really do think it's people getting hedged up and taking another half step back we're down a little less than 2% on the week in the s&p 500, but it's been kind of a grind because we're already trying to assimilate this whole fast moving fed tightening outlook, and i think this is an extra push also a test, the s&p fell below its 200 day average. on a technical basis, there were vulnerabilities there, too >> i was thinking of the nasdaq 100 struggling, as well as the individual components like microsoft and alphabet

we'll see if that holds. it's not holding right now, so that will be key, sara >> been a downside leader, and 14% or so off the highs. >> nasdaq composite down 2.3% right now. coming at a vulnerable time for the markets. mike, stay close for more on what the increased fears of a russian invasion of ukraine means. let's bring in leon panetta, former defense secretary under president obama, joins us now by phone. great to talk to you, mr. secretary. help us understand what these comments from the nsa mean to you. jake sullivan today saying that this invasion could come before the end of the olympics, contrary to initially thought that u.s. citizens should exit in the next 24 to 48 hours how do you interpret that? >> well, there's no question that the dangers involved in the situation in ukraine are increasing why? because of russian exercises in belarus, because of the intelligence that we're picking

up with regards to the movement of their forces. and it generally would create a situation where you have this large concentration of military forces, probably the largest concentration since world war ii one mistake, one misjudgment, one bad decision, and the result would be war >> is there anything diplomatically at this point that could be done, mr. secretary, to diffuse the situation? >> well, you know, again, i think the issue is up to vladimir putin if putin thinks he's going to pay a high price for an invasion, then he's going to just continue to put pressure on and try to avoid an invasion if he thinks that he can get away with it, paying a minimum price, then the likelihood is that he's going to use these tactics to ultimately try to

create an opportunity for direct invasion into the ukraine. it really rests with putin i think the issue is whether or not diplomacy still has any room to try to find some kind of resolution you would hope so. but i think the light at the end of the tunnel is fading on that one. >> yeah, we saw macron try earlier in the week. so mr. secretary, what does an invasion look like >> i think an invasion, they would try to apply maximum force, if they were to have a full-scale invasion coming in from belarus, and also coming in from the other borders in the ukraine. and trying to move directly towards kyiv in the hope that they could bring down the government you know, the issue here is the ukrainians, who have a lot more weapons, have prepared themselves a lot better to

confront the russian forces. i think the russian forces are still strong, but they will pay a price, particularly in russian lives. and the issue then becomes, how long the russians can accept that kind of price >> when you play this out in your head, mr. secretary, is this a protracted skirmish, is this a protracted conflict >> well, you never know quite how these things break once a war breaks out that's something we have learned from history but once they invade, once the russian soldiers are getting killed, once civilians are getting killed, once ukrainian soldiers are being killed, you know, it can take several different approaches one could be it could result in a very prolonged war there, turning into a resistance that would continue to undermine the russian position the other is that they're able

to move quickly, and totally defeat the ukraine i think there's a good chance that this is going to wind up in a very long-term military operation that ultimately is going to bog down one way or the other. i don't see this as playing out the same way it played out in crimea and other areas this is going to be a different game for the russians in which they're going to pay a much higher price, both in terms of sanctions as well as militarily. >> oil prices, we're just looking at the chart, up 4%. got a spike on the news. there are concerns about europe's oil supply, for instance what will this mean for europe its security and its dependence on energy? >> well, it's absolutely essential that the united states and nato remain unified in their position to make russia pay a price. and the bottom line on that

price is not only these economic sanctions but cutting off their oil through nord stream 2. and i think that will happen that will happen it will have an impact in terms of oil supplies. and the hope is that the united states and nato allies have tried to work out other alternatives for the supply of oil. certainly in the short term. so it is going to be disruptive, not just to russia it's going to be disruptive to europe as well >> what is the commensurate level of sanctions, the severity of sanctions, mr. secretary, should russia invade >> i think cutting off russia from the international banking system, cutting off their high-tech supplies, cutting off their oil supplies i think that's a pretty -- a pretty large agenda of sanctions that could weaken the russian

economy. add to that just the cost of war and what that will do in terms of the signals that it sends, messages that are sent by virtue of having russians dying in a war. that combination is going to put a lot of pressure on russia. this is not just the kind of cake walk that putin likes to have and used in crimea, used in syria and elsewhere. this is going to be a very different game for the russians. >> thank you for phoning in. former defense secretary leon panetta. let's bring in jan hatsius things have changed a bit with these headlines, and i'm wondering if the backdrop is what is going on in europe and an invasion in ukraine, does that impact how the fed views tightening at all in your view >> well, i think at the moment,

you know, there's no decision for the fed to be made the next meeting is still more than a month away. i think we'll see where we stand at that point. but of course, geopolitical issues can have an impact on the economy, especially through commodity prices and that can have an impact, but usually it is really more the economic data and financial conditions that drive this but yeah, we'll have to see where we stand when the meeting is actually there. >> it is interesting timing. it's sara here, tightening into what some are worried about already, an economy that is slowing with the fiscal withdrawal of stimulus, and tightening into a hot geopolitical situation like this what are the risks there >> the economy is slowing, the economy needs to slow.

i mean, our expectation for growth is actually somewhat below the consensus. but we still have growth above the longer term trend. which means that we're already at full employment, maybe on some measures beyond full employment, and the economy is still growing above trend. i think it does make sense for the fed to slow things down and normalize policy so i think that's the backdrop we're coming from extremely strong threats because we're coming back from the pandemic recession, but we are still growing at a pretty rapid pace we have 3%, a little over 3% growth for 2022. that's definitely still above the long term trend. >> so then why wouldn't the fed step in? why is 50 basis points looked at as the outlier view when james

bullard said that. you had many other officials, many nonvoting, saying they don't see that path necessarily, but they left the possibility on the table. why isn't 50 basis points a real viable option given where we are on inflation and as you mentioned, the growth in the economy? >> look, i think it's a possibility. it's not our expectation our expectation is 25 basis points the argument against doing 50 is not so much that it's a bigger step in march. it's more the concern that if you do 50 in march, that the markets then build in another 50 in may and another 50 in june, and you get a tightening and financial conditions that is maybe more abrupt than maybe what the fed wants i would also say if you go back to history and the 50 basis points steps we have seen in 2000, in the 1990s previously, that was a period when there

wasn't really communication about the whole path of policy and now, there is a lot more communication about what the fed experts through the dot plot and you can deliver, i think, more sort of hawkish news, not just through doing more at the meeting but adding 25 basis points steps, and that would be our expectation. a long series of 25-basis-point steps in 2022. >> seven, i think, was the news you made today with your new note after the inflation outlook. >> that's right, basically every meeting through the end of the year >> so my question is, they are trying to fight inflation, and at the same time, they want to preserve the economic recovery is it possible to do both of those things, and which one do you think ultimately is a bigger priority for the fed >> well, i think they want to preserve the economic recovery, and i think what they're going to try to do is target something

close to trend growth. they would like things to slow because they no longer think that, you know, the above trend growth is ultimately a constructive development given that we're already showing clear signs of overheating, and the inflation numbers are too high but growth does need to come down so that's what you're going to be shooting for. obviously, it's always difficult to thread the needle to do, you know, enough but not too much. but that is going to be the goal >> jan, i think it's really interesting when you said it's the market reaction basically that would keep the fed from moving so suddenly and with such a big first rate hike. but basically, the markets cleared the way for that rate hike when they digested bullard's comments in some ways, the fed is going to get a free pass if the die it because there's so much expectation built in now in terms of fed funds futures that the market is digesting it at

this point that's what we're seeing >> i think the worry would be not so much about march and whether a 50-basis point step in march is a big surprise. the worry would be that you get a big basically steepening in the curve as markets build in additional 50s in subsequent meetings that's the concern, and that's not priced in. i can certainly imagine circumstances where that's designed if you were to see for example that inflation expectations are becoming unanchored to the high side, you would want to deliver a large hawkish shock, but i'm not there yet. i think they're probably not there yet. although they stillival a month to make up their mind. >> so the thinking that the markets could build in additional 50 basis point hikes sounds like you think, and you tell me if this is what you think, that the fed basically would be admitting that it's behind the curve in a big way, with a 50-basis point hike out

of the gate, so there is some degree of catchup that has to be done there's an issue of fed credibility that seems to be in play here. >> i don't think it's that much about admitting a mistake, although nobody loves admitting mistakes it's more about what it says about subsequent meetings. if you're doing 50 right out of the gate, why wouldn't you do another 50 six weeks later and another 50 six weeks after that? that's, i think, the thinking that they would be concerned about, that they're generating that kind of idea. and i think it really depends on how concerned they are about inflation, and especially inflation expectations, whether they want to generate that kind of thinking. >> jan with the note of the day, thank you for joining us we appreciate it >> we have just about 42 minutes left of trading. dow down 470 it was down more than 500 at the lows shares of under arm our tumbling

today. the retailer posting a beat on the top and bottom line but did node supply chain constraints would have a material impact on the spring and summer season patrick frisk joins us in a cnbc exclusive interview w the stock down 13% after you had a good quarter, it was the warning, the outlook on this current quarter and supply chain that is worrying people. what is happening right now that you see? >> first of all, it wasn't just a good quarter, it was actually a great year a record year, record earnings, record gross margin, record operating income, and really managing our inventories well in this dynamic environment with our inventories at the end of the year in line with the same level as 2015, when we were only a $4 billion company and we have momentum coming into the quarter. what we talked about was specifically two things.

first we talked about the fact that we have constrained our own demand in the first quarter based on the supply chain difficulties we saw in the fall coming into this first quarter we actually mentioned today that we had taken that down by about ten points, so our growth in the quarter that we guided to around the mid single digit was much stronger than that we also mentioned the facwe see continued volatility toom some extent in terms of how to think about supply chain impacts beyond this first quarter, and that really is a little bit, i think, what's going on with our stock right now. >> how long do you see the supply chain issues lasting? why did it take so much longer for it to tach up with you than some of your competitors in retail >> we felt we really navigated the back half of '21 better than we had anticipated and the reality is, i think there was a lot of talk last year, especially coming into back to school, about the

holiday period and the worry that people had that the supply chain issues both from a vendor perspective as well as logistics was going to impact holiday. the reality for us was that was not so much of an issue. it was more about the snow plowing effect into the quarter we're in now and now, of course, i think the entire world is well aware of the fact there's still a lot of constraints in the supply chains around the world, whether it's outbound or inbound, and we just see that affecting us into our new first fivscal quarter for '3 as well. >> so many concerns about the interest rates it would be great to get a read from you on the u.s. consumer. you saw nice growth in the top line your brand is making a good comeback what do you see as far as consumer willingness to spend and get out in person and how much buying power they have?

>> we have had a tremendous run in '21 our gross margins are much stronger our gross to net has improved. in other words, our promotions are down our discounts are gone we're selling at a higher term, all indications of the fact the brand is getting health. ier. we have been upping our dramatic in the back half of '21 into '22. we're continuing that and seeing the response from the consumer we believe the consumer is there, and we believe that athletic performance is still very strong coming into this year for us, as we think about inflation, for example, we're going to think about surgery raising prices when we see opportunities, and we also believe we have opportunitied opportunity in being more full price f you like, more premium which is the same of the exercise for under armour, in terms othe playbook we're currently rolling out. >> patrick frisk, you're going to have to come on soon and talk

about the sports youth participation that wour rr trying to attack here. but we have a big sell-off late so we'll lee it there for now. >> we have just about 37 minutes before the bell rings on wall street we're off the session lows but looking at steep decleans across the board. the dow down by 1.4% nasdaq is down by 2.8% under the surface, there are big moves lower like semiconductors, down about 5% still ahead, ian bremmer on how increasing tensions between russia and ukraine could impact the market and inglobal economy.

you're a one-man stitchwork master. but your staffing plan needs to go up a size. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

♪♪ matching your job description. ♪♪ ♪♪

take a check of the market off session lows but looking at steep losses s&p down by 1.9% a defensive tilt to the markets right now. utilities as well as staples being the relative outperformers in the market. technology is really having a hard time. nasdaq down by 2.8%. it's worth noting the nasdaq 100

is testing its 200-day moving average. check on microsoft as well as alphabet hovering around the 200-day average. sara >> brent crude hitting the highest level since 2014, $95. the dollar getting big stocks, though, getting hit on fears russia could soon invade ukraine. let's get back to mike santoli now for a look at the broader market fallout we have seen this afternoon. >> yeah, sara. second day in a row where you had a headline jolt in a market that was trying to get its footing. you see here, we're also down about 2% for the week, so we were basically break even on the week on the s&p 500 starting out today. now down about 2%. we talked earlier in the week how the bounce off the low from late january kind of got as far as you might expect. it was still below some key areas, gained back about half the total losses the intraday lows for what it's worth is more like 4220 or there about. so you still do have some room, just not very much

still in this sloppy chop zone the other thing to keep in mind, we go all the way back to july here, the levels we're trading at at this point really no net movement for six months, and guess what, that's not terribly unusual in a midcycle period when we're starting to handicap when the fed might start to get active in tightening look at a prior time when the fed initiated a tightening cycle, in 2015 here's the years before and after. this is the first year, 1994, my mistake. 1994 was in the news this week was there was an intrameeting rate hike. that happened in here in february of '94. you see the market was strong in '93. they had this long choppy sideways period about a 10% correction along the way, and things did lift into '95 by the way, the fed was cutting by '95 you had a near stall speed economy. i don't think that's what we're in for, that ramp, but it's worth remembering how things go when you get in this midcycle

area now, 2015, december of 2015, the fed did initiate that hike it was a strong year in 2014 beforehand, so things were tilted higher. by the way, we're talking about russia invading ukraine. that happened right in there not that much of a market event in 20 flaen. it went on for a while, but again, 2015, sideways. corrections. down about 15% then things got better as there was some clarity and a break in fed rate hikes not that unusual even though the specifics of the post pandemic period and everything else, the level of inflation, all very different, the rhythms of the market in these types of periods tend to be somewhat similar. >> and mike, it's tech in the cross hairs again. if you look at where the most pain is in the market, technology, consumer discretionary, commune services, nasdaq 100 is currently down 3%. it's the chip names that are actually getting hit the hardest. amd down 10% invade yeah, some of these names. that tells you there's still a lot of rate sensitivity out there as well. that's not a geopolitical

selling, right >> no, but it is the let's just pull back on some risk, by the way, yields are down today obviously, they're higher on the week, but they have backed off so to me, that's where the valuation aggressiveness is, that's where the stretch va valuations still are if we're in for this period of valuation compression, the nasdaq 100 forward multiple has only gotten back to where it was right before the pandemic started. in other words, we're not back to multi-year lows in valuations, so that's where that kind of premium has to keep being pulled out, that's part of the story, anyway. >> thanks for that, mike for more on how these developments in ukraine can affect the markets, samir samana, senior global market strategist great to have you with us. we were already in sort of a risk-off multiple compression environment ahead of fed tightening, what does the geopolitical environment do -- we have actually just lost sameer, so we'll try to reconnect with him in the meantime, mike, if we

continue this conversation, you know, we're talking about tech looking fragile going into this, and my question would be, are we just fast forwarding the multiple compression we would have already seen because of the geopolitical environment or are we compounding it >> i would -- well, it's impossible to know where the destination point is, as you know, but i do think it's just part of this whole process this is what the correction has been about largely. i don't really think that the geopolitical piece of this, aside from it being on a friday when the market was already apprehensive and already a little wary of risk, i'm not sure that that would be reason enough to start taking, you know, 2%, 3% out of microsoft and things like that apple is the one stock that really continues to hang tougher than the other ones. meaning, it's not really that far off of its highs we'll see if that changes. and to me, it is just about investors not being as confident in buying the dips

partly because they're losing money on their bonds so if you talk about a portfolio effect, if you're taking losses on the fixed income side, it just creates that much more stress and less room to maneuver when it comes to taking on equity risk and maybe being opportunistic and buying into some of these dips >> dow down 1.4% nasdaq down 2.8% again, broader marking sinking over fears russia could soon take military action in ukraine. kayla tausche has the latest on the story. kayla. >> just a few moments ago, president biden departed the white house. he was speaking with staff and making his way to marine one he's headed to camp david for the weekend. accompanied by his top staffers. he's expected to spend the weekend evaluating the evolving intelligence on the likelihood that russia further invades ukraine. earlier today, national security adviser jake sullivan said a military operation could begin before the olympics conclude on february 20th. intelligence pointing to an air campaign, followed by a ground

invasion, with russia aiming to seize significant amounts of ukrainian territory and conducting a rapid assault on ukraine's capital of kyiv. congressional aides briefed on the matter tell me if putin orders an invasion, they believe it could happen as soon as this weekend. sullivan warning americans in ukraine to leave in the next 48 hours. warning that the government will not be conducting an evacuation effort and saying today the risk is high enough and the threat is immediate enough melissa and sara >> kayla, what do we know about communications and any collaborations on the response coordination, i should say, between the u.s. and other nato allies >> we know earlier today, for about 90 minutes, president biden convened a secure video call with nato allies, ranging from the uk to the european commission to poland and romania. and they discussed the intelligence that the u.s. and also the uk have both been receiving and really leading the

pack on this i'm told that the uk believes that the risk is just as high as the u.s. believes it is. and that there is shared intelligence and a shared belief about the russian posture across many of these nato allies. so certainly, there is a very strong belief, and they are coordinating on the various sanction packages that each country is putting together. of course, they have varying levels of trade with russia, so they're going to have sort of bespoke packages with how to deal with this if russia does in fact invade, the u.s. has been warning of swift reactions president biden standing next to the german chancellor saying if putin invades ukraine, the nord stream 2 pipeline will definitively not go forward. they're trying to say the cost will be too high for russia if putin invades, but he could make a different calculation. >> kayla, thank you. >> energy meantime, the best performing sector with oil hitting its highest levels since 2014 rallying by almost 4%. joining us now by phone is paul

sankey, lead analyst from sankey research great to have you with us. >> hi. sorry, i'm at the airport so there's some noise >> we can hear you clearly wti is up 4% does that make sense, given reportedly impending russian invasion of ukraine? should it be more? >> i tend to think that the u.s. administration, the uk administration, a blank check as well i'm not convinced this is going to happen. but yeah, if it does, obviously, we have three major producers of the world being obviously saudi, the u.s., and russia so if there is an invasion, it is very significant for oil prices, no question. >> so do you see -- it's sara. do you see a path to $100 wti? >> yeah, the market is going to panic, no question about it. i'm just not sure the invasion is going to happen if it does, it's a significant

issue. russia is, you know, 10 million, 11 million barrel a day producer it could be very dramatic. >> we're obviously seeing a sharp reaction in energy, equities, and energy equities for their part are relatively cheap compared to other sectors in the market, the end of 2021 with a forward pe of about 11, compared to the s&p's 19 or so with every dollar higher, how much does energy -- do energy eq equities have to go higher or i there a cap in your view >> we don't want a squeeze to a spike, because that's going to be negative ultimately for oil so i'm not convinced that the invasion happens having said that, i think it's reminding everyone, and this is clearly a pain trade, that you need to be long oil and gas. we're not in an energy transition here. we're in an energy regression. and we're only more dependent on oil and gas than we were previously, so yeah, it's very

concerning to markets, obviously, and as a result, these oil, you know, 15%, 20% free cash flow yields going for 30% if this happens. >> talk about the context around this, paul, because oil prices were already higher on the day they have been higher all year for the last year and a half at least. and on increased demand and tighter supply, so what's the context to all of this with ukraine happening now? >> well, as i say, i mean, i think putin's paying 40 checks and the u.s. and uk are playing checkers, trying to distract from their own political problems at home that's why i think they're making such a big deal of this so i'm cynical this is actually going to happen. but as i said, if it does happen, yeah, it's drama, and things go higher it's not -- i'm not happy about it i don't want to see russia invade ukraine and i don't want to see a major issue with global oil supply

as you know, demand is very strong at the moment, as we come back from covid. so there's a squeeze on, and we're long oil stocks. don't get me wrong we're long everything. >> it's interesting you say 4d chess versus checkers. and i mean, president biden does have a state of the union address on march 1st it's interesting to get that viewpoint in, but if there is an invasion of ukraine, paul, what does the oil spike become in your view? assume that there are strong sanctions that follow. >> right, exactly. and as i told you, you know, you have got three major suppliers russia is one of them. they're doing 11 million a day will they cut off russia will they cut off russian gas? you know, they have a real problem. so the reason that russia would do this is because, you know, they're playing against someone playing checkers so if putin really does want ukraine, which he kind of does from a global long term history,

russian empire point of view, you know, yeah, it's going to be -- we're going to go quickly to $120. we think $120 a barrel is the demand destruction point x i think you could get there quickly if this happens. >> on wti, paul? that's what you're talking about? >> well, normally i talk about brent, but wti is trading very tight to brent at the moment because there's not enough u.s. oil for the demand in the u.s. the big story here is u.s. demand is so strong. so wti is pricing right next to brent at the moment. so yeah, you could say $120 wti. >> you're long the oil companies. they're all up today every one in the s&p energy sector but some more than others. baker hughes surging 6.4%. occidental which names are best positioned for this price rise and the current environment? >> well, if it's going to be a ukraine invasion, you would worry about refining, because it's going to be bad ultimately for demand and prices spiking on fear

so you doworry about refiners. for the producers. obviously, devon is one of our names, diamondback, chevron, exxon, any of them they all make a lot more money in this environment. obviously, it's pure free cash flow, but we're not happy, as i said, we're not happy about this potential happening because it's ultimately going to destroy demand and destroy economies >> no kidding. paul sankey, thank you for joining us, for jumping on the phone. you can go take your flight now. >> thank you >> with oil prices higher, and one of the only two sectors in the s&p right now stronger, energy and utilities, everybody else is down for more on how the development in ukraine can affect markets, joining us by phone, sam sameer samana, senior global market strategist. whenio jump on calls with clients this afternoon, what do you tell them about the economic and market risk of a potential russian invasion of ukraine? >> the first thing we tell them is, look, this is something

that, you know, at least history would tell you will probably be acute. that doesn't mean it couldn't drag on into weeks and months, but whether it's the previous invasion of ukraine back in the sochi winter olympics or other different scenarios that are kind of like this, they eventually kind of resolve themselves and what ends up kind of driving markets over the medium to kind of long term is fundamentals and earnings and all of those other things that really matter. now, in the short run here, as paul mentioned, you could have an oil spike that could be something that at least in the near term pushes you towards an economic slowdown, especially when you take into account how the fed and a lot of other global central banks are moving toward tigh tightening you can't rule out some short term economic crunch, but again, medium to long term, i think what you're realizing is once we get past covid, once we return to work, there's really healthy demand for goods and services. >> a short-term economic crunch,

but if you have more than $100 a barrel oil, whether it be wti or crude, on top of the inflation that we have already seen, that is a crunch that is pretty painful. does that change your view of various sectors? or of what the fed does? >> so we have kind of been positioning for a world that has inflation becoming more sticky really since last year so one of our best calls, one of our bigger calls is commodities. and both natural gas and oil have done very well. so we have been advocating to clients to get that exposure, if they don't have it already we had been, you know, really very unfavorable on energy until call it late 2020, when the vaccine started to roll out. and we upgraded it to favorable. we're neutral currently because we thought oil had already gone maybe a touch too far, but clearly, geopolitics is a bit of a wild card, but we want folks to be tilted in that direction and then we look at other

cyclicals. financials do very well when inflation takes off. industrials, you know, to the extent you have to do more exploration and production for energy, that's a very intensive activity a ought of industrial companies do well. we still like tech we think things like geopolitics will keep rates on a glide path that's not terribly disorderly, and so a lot of the profitability we still see for larger cap tech should do pretty well >> what about safe havens? we're seeing gold pop today. treasuries are in demand the u.s. dollar getting bought what is your preferred way to have some sort of safety hedge in your portfolio if indeed this does happen? >> probably the best thing to do right now is, one, don't overreact. do your point, stocks are already down commodities have done well, so one of the things we would advocate to clients is if you do have commodities exposures, technical exposures, it's okay

to rebalance, okay to sell some of that energy allocation if you have become overweight and rotate back to cash. it's okay to sell commodities and rotate some of that back to cash we probably wouldn't go to the fixed income side, at least to the longer duration areas, but you could probably park it in the short to medium term with the fed about to raise interest rates, this is not the time to take duration risk we would say having that optionality that cash provides probably is a pretty good thing for investors to keep in mind as we go through 2022 >> cash is safe. sameer, thank you very much for jumping on with us we appreciate it >> we have just over 15 minutes to go here in the trading day. we're going straight into the closing bell market zone mike santoli of course here to break down these crucial moments of the trading day today, we have varitas financial founder. and we have seen a deterioration, back toward the lows the down is down 540 points.

2% decline in the s&p. even worse for the nasdaq. it's everything, right it's geopolitics, clearly the ukraine headline and although rates are lower today, it comes on a week where cpi came out at 7.5% and the whole fed timeline and number of interest rate hikes got adjusted so add it all up for us. >> an abundance of reasons and excuses to be defensive. that's the way i would say it, especially on a friday going into the weekend we have all of these maxims that go around. how it's difficult for markets to kind of firm up late on a friday when you have this overhang on the weekend. i'm seeing things like a lot of hedging activity, so people just wanting to buy short term protection because the market is down at these levels not too far above the january lows really, it doesn't seem like, you know, urgent flight out of this market. it really is kind of a little step unin risk sensitivity, and you know, down 2% for the week i don't necessarily think that,

you know, if nothing much happens over the weekend, it's the kind of activity where you're probably going to see a bounce attempt just because it really is about sagging toward the lows as opposed to anything incremental beyond what we got at 1:00 or 2:00 this afternoon that's driving things. >> back to our january lows. if we test the lowser that's not a good sign for the market at all, sam and monday morning, 8:30 eastern team on "squawk box," james bullard will be interviewed. we'll get more color behind the comments on the 50 basis point cut. what are your biggest concerns here given the market action today? >> well, my feeling is that the market yesterday was battered by bullard because we did get the very sharp rise in cpi, but at the same time, we then had his surmising we would end up with a 1 percentage point increase in fed funds rate, not in 12 months as most are airnticipating, but rather in four months.

today, however, i really believe the action is more predicated on worries over russia invading ukraine, and that's really what's driving the prices today. >> so how do you deal with that, sam? as an investor, because these geopolitical events are a little tricky to figure out what they could mean for global growth and markets. >> oh, absolutely, sara. i actually think that this, if we do see an invasion of ukraine by russia, that actually it would be a short-lived event history tells us looking at these kind of military and terrorist activities since world war ii that we end up with a fairly mild one-day decline, about 1% or more but then the total decline is no more than in mild pullback, 5% and that we end up having a round trip that takes about 30 days, if you exclude pearl harbor so basically, what i find is that it will make headlines, but it really will not affect bottom lines because it will not lead

to a global recession. >> even putting aside geopolitical tensions, greg, the tech trade looked wounded. for the tech trade to be wounded, that's not a good thing for the broader markets. we have a lot of the big cap tech stocks already technically below their 200-day moving average. we have other ones, big ones, microsoft, alphabet. alphabet gave back all of it post earnings gains, is now below the 200-day average. this is a market that looks a little damaged here. >> it does look damaged, and where i disagree with mike and sam is i think there's another link down. at the end of the day when we look back at mid-january l of the fears, all of the poignant factors are either intensifying and certainly all present. more liquidity is going to be taken out of the system than we anticipated. we did have a taper, we talked about reducing the balance sheet, but the yield curve is also flattening. banks are going to be disincentivized to loan.

and as that spread compresses, they will be disincentivized to glow those books secondly, in terms of interest rate hikes, on the top of a very hot inflation number which i suspect will continue to be hot for a number of months, on top of a hot jobs number, i think the fed's hand is a little forced here and i think we'll see 50 bips in march that is not priced in. consensus is not there yet on the back of that, yes, the tech trade is broken, but i think it will bifurcate. i think we'll start to separate those companies that have shown sustainable demand in the face of macro factors that present a headwind for most. i think that will happen in the dow and s&p as well. but we'll look for those companies that are more insulated to the top line and bottom line challenges that we're going to face and that the market will start to focus on in the next few months. >> just wanted to point out, the russian ruble, the dollar spiking against russia's currency, having a huge drop lower today. in fact, its worst daily performance in terms of

percentage drop since march 2020 at the height of coronavirus obviously, the concern here is that russia's economy has a lot to lose, sam, when it comes to steep sanctions that president biden has threatened potentially locking its banks out of the international system how do you think about potential global spillover effects of that >> well, i think that we are still looking for more than 4% gdp growth globally. really driven by the u.s. but also other areas so certainly, that is dramatically lower than the near 7% we got for the final read for 2021, but i also think that that's probably an additional reason why we might not end up seeing russia invade ukraine, because of the consequences. either that or putin then just looks to us as the bad person to try to cement ties with his own people so i would tend tosay, again, that while there could be more pressure to the downside,

retesting the late january ows i think that usually military activities end up representing good buying opportunities, not reasons to bail. >> meantime, billionaire bond trader jeffrey gunlock joined cnbc >> the fed is obviously behind the curve. even fed officials are acknowledging it and they're going to have to keep talking and acting more hawkishly, which is always problematic for risk assets, as real yields have been rising until very recently so it's a tough environment. no one is making any money >> craig, we were talking to jan of goldman sachs earlier in the show he said the dangerous of doing a march 50-point rate hike would be that the market will start pricing in other 50-point rate hikes on the back of that. is that your take on that, or do you think the fed should go ahead, rip the band-aid off

because we have 7.5% inflation and the fed is still buying bonds and we're at zero percent interest rates >> i wish we had that luxury if we were back in september, we would. but as the video just said and i have been on tape since august saying, we're behind the curve i called for 7% in august of last year. and said that the fed is going to be proactive or reactive. i don't think they have a choice particularly given the jobs number we have just seen, particularly given the inflation number we have just seen, and that they are so late in the cycle to try and offset this in a more diplomatic way. and so dwroent really think they have a choice, i don't think it's priced in at this point i don't think they have the luxury of weighing what the markets are going to digest in a palatable way. >> mike, the market has gone a pretty long way into pricing in a bunch of hikes this year where are we, six hikes? >> absolutely. >> also increasing odds of a 50-basis point one coming in march. >> yes >> so does that mean that the

risk potentially is for the markets to do well when this actually starts to happen? >> if it's not incrementally worse or less certainly. i do think if there's some confidence about the path, there's no way we go into the march fomc meeting with there being a tremendous amount of uncertainty as to what's likely to happen. i think, in fact next week, there's a ton of fed speaker out there in addition to bullard i would guarantee all of them probably including bullard are going to be less hawkish than bullard was yesterday. so i think there's going to be a massaging of the story, and as to the idea the fed is behind the curve, there isn't one curve. the curve isn't drawn yet. we don't know the path of inflation. we don't know how far you have to go. this fed has told you it was not going to be pre-emptive this cycle. i don't think that tells you much of anything except yes, probably seven live fed meetings this year, and that's probably the makings of a little bit of suspense each time but to me, it's not the story

and the market has gone a long way. credit markets have wobbled a bit. that's a little bit of a concern alongside, but one final thing, since the cpi number yesterday, we haven't gotten anything that would make the fed incrementally more hawkish you had a bad consumer sentiment number today, yest, mostly because of inflation, and of course, you have the uncertainty with ukraine so i think you have to just be open minded about what they're doing because they haven't figured it out yet >> the only thing that really happened is james bullard opened his mouth, sam we recovered off the cpi print, and james bullard is going to open his mouth back up on monday i'm wondering, how do you think the fed regains the policy narrative, if you will, in the coming week with all of the fed speakers do you think they get a mandate to go out there and talk the markets off the ledge of a 50-basis point hike? >> well, i think what they're doing is floating trial balloons to see first it was bostick talking about the possibility of a 50-basis point hike in march next it was bullard talking

about one full percentage point by july 1st. so they're really sort of preparing the market for a more aggressive approach. we have actually recently increased our total rate increase to 1.25% between now and the end of the year. so yeah, i think everyone is playing leap frog as to how much the fed will be raising rates and by when. >> down 465. we're moving fast here on the dow, coming off the lows tech stocks selling off hard kate rooney here with some of the biggest losers kate >> hey, sara yeah, part of that move away from risk, not just macro factors. we of course had news out of ukraine. rates are a factor here as well. tech havy nasdaq down almost 3 percent heading into the close the chip names really feeling the pain amd, nvidia, qualcomm among the biggest laggards those have been in part due to supply chain issues.

then big tech, twitter, alphabet, amazon, all down right now. looks like apple is actually outperforming. still negative, but performing a bit better than the other big tech stocks today. tesla, meanwhile, down more than 5% and salesforce, crm, is thigbust laggard right now on the dow, following the tech names lower, bitcoin. that's selling off more than 5%. trading a lot more like a tech stock than any sort of store of value this week. >> not such a safe haven, rallying with the gold and the yen and treasuries thank you very much. sam stovall, some of these tech names, especially the chip stocks, down 10% would you be a buyer on this sort of reaction many of them are still down for the year as well >> well, we do think since we focus more on 12 months down the road, our belief is, yeah, we probably could be looking to buy some of the tech stocks in general, chip makers in particular our feeling is that we are looking for good growth in the tech area.

we are looking for a turnaround in the chip shortage, and we will be seeing the global economy expand now that mask mandates have been coming down, et cetera. so our belief is that there are some definite longer term opportunities in the tech space. >> would you use this as an opportunity, though, sam i think the question for a lot of people is are you catching a falling knife here if more fed equals more volatility, which is basely the rule of thumb for the markets these days then maybe it's not a good time to actually try and find these opportunities. you stay on the sidelines. what do you do >> well, i think you do look to some of the technicals right now, we just broke back below the 4500 level, which was an important level we'll probably retest the 4300, 4200 level on the s&p 500, where we bottomed in late january. but right now, i would definitely say we have strong buy recommendations on such semi-conductor companies as

broadcom, equipment makers like applied materials and kla corp so our feeling is strike while the iron is hot. and while the prices look attractive >> sam stovall, thanks to you for jumping on the phone line. technology is the worst performing sector. consumer discretionary, communication services, financials also at the bottom of the pile energy and utilities faring better today they're both actually up as we head into the close, two minutes in the trading day what do you see. >> thanks for having me. >> the internals got a little sloppy, as i mentioned, market was trying to kind of have a stiff upper lip this morning about a 50/50 split, but there has been more downside volume relative to up not too much of a washout, more like 70/30 to the downside there are still pockets holding up reasonably well, even as the index and especially the mega caps get hit on a week to date basis, you take a look at consumer discretionary on an equal

weighted basis they actually, again, have outperformed internally, the market has sort of tacked toward some of the cyclical strength. the volatility index has been interesting, it did click up to 30 as we got to that little bit of a crescendo near the lows today when the s&p 500 was down near the 4400 level. the lows of the day. we have bounced about 20 points off that now we have receded two to three vix points, and that usually is going to have to go a little further to create a good little spike that says more stability is in this market. but that shows you there was a little bit of welling up of concern and it eased back just a touch. >> as we have seen with the overall markets. the nasdaq was down by more than 3% at the lows of the session. now looks to close with about a 2.7% loss on the day under the surface, though, we're seeing some big moves. sara had mentioned the semi-conductors, the sox is down by more than 4% at this rate we're also looking at big losses in semi-conductors, big cap technology seeing some pain for

the day. with the names like microsoft, as well as alphabet, down. alphabet down 3% at this hour. but overall, it was going to be a flat week for the markets, but here we are down a couple percent. sara >> off the session lows, but still closing sharply lower. s&p down almost 2% there into the close. the nasdaq down 2.8% welcome to "closing bell." i'm sara eisen along with melissa lee in for wilfred frost, and mike santoli, as always coming up this hour, eurasia group's ian bremmer with his take on the rising tensions between russia and ukraine the news that took down the markets this afternoon we'll drill down on the potential geopolitical fallout greg branch from veritas financial group is still with us, and michael, i'll turn it to you because usually the market brushes aside geopolitical concerns maybe a little bit on the nlsh

rea initial reaction, but this has been building for weeks. the difference this time is the fed tightening concerns are reaching a fever pitch on the back of the strong inflation number, and that really took tech especially down and the broader market how much damage did we do this week >> yeah, there was a low conviction in the market when we did get this news. you're right, this has been hovering over the markets. it's been one of the elements behind this correction that's been going on, really for a month and a half in earnest right now. i don't know that we did any sort of incremental damage beyond what happened in january. so you keep in mind, wee still above the january lows just a little bit. that january sell-off really did kind of climax in a pretty efficient and concentrated flush lower. so that usually means that, you know, most of the motivated selling got done now, volatility in the bond market the way it's been, and also the huge misses that we got out of companies like meta and paypal, i think that also sapped

some of the premium out of the big growth stocks that really did act as sources of stability in this market because if those stocks can basically hit these massive trap door moves to the downside, what are we paying the premium or all of those things mixed together have this sort of maybe quasi-retest field to the market, but honestly, i don't see anything happening today that was more than a continuation of the process we have been in for a while >> i mean, facebook was moving like bitcoin after earnings. the reason behind the sell-off today, the white house warning russia could invade ukraine during the olympics. kayla tausche is live from washington with the latest >> melissa, there biden administration has warned for months an invasion of ukraine is possible but today, national security adviser jake sullivan said in no uncertain terms that a coordinated military campaign by russia could begin before february 20th. >> i can't obviously predict what the exact shape or scope of the military action will be, as i said before, it could take a variety of forms

it could be more limited it could be more expansive but there are very real possibilities that it will involve the seizure of a significant amount of territory in ukraine and the seizure of major cities including the capital city >> congressional aides briefed on the situation say it could happen any time beginning this weekend. sullivan warning american citizens to leave ukraine in the next 48 hours. but unlike evacuations during covid and the afghanistan withdrawal, u.s. carriers have no direct flights into or out of ukraine, so they're not being enlisted by the administration to provide more departures, according to a source close to the situation who notes ukraine's large land border means most of this evacuation activity will happen by rail a senior defense official saying the u.s. is sending 3,000 more troops to poland to bolster the eastern european countries serving as the first line of defense against russia earlier today, president biden convened a roughly 90-minute call with several nato allies to

discuss the possibility of an invasion the kremlin just moments ago told reporters presidents biden and putin will speak by phone tomorrow we have reached out to the white house, have not heard back yet >> keep us posted on that. very quickly, did anyone in the white house mention what the evidence was or what the intelligence was that was leading them to think this may be more imminent than initially thought? >> no, and they haven't given that level of detail throughout the course of this situation they're always very careful not to reveal sources and methods that may lead them to be able to obtain that information. but we have seen a steady and incremental escalation in the severity of the information the administration has been bringing forward, not least of which today with the news that americans should evacuate in the next 48 hours. definitively, sullivan saying the risk is high and the threat is immediate >> kayla, thank you. kayla tausche. let's bring in helima croft from rbc capital markets.

if we take a look at the jump we saw in oil prices, whether it be brent or ti, is that a market that believes an invasion is going to happen? >> i think the market, this is to be expected given the fact russia is such a major energy producer but i think what the market really needs to take account of is, the u.s. president, national security adviser essentially warning americans should leave ukraine in 48 hours, i mean, that is a step change higher than what they had been warning before that indicates they believe commercial aircraft may not be available in 48 hours. so i think the market actually is taking this seriously, but again, things could really deteriorate. i think the risk is probably higher than the market is pricing in right now >> so just tease that out, helima explain why this kind of crisis would lead to higher oil prices. >> i mean, sara, we look at the fact that russia is one of the largest oil producers, oil exporters. they are a significant natural gas exporter they're the main exporter of

natural gas into europe. there is a concern that natural gas supplies going through ukraine will be disrupted, that russia would potentially weaponize energy exports because they will be hit with very, very significant sanctions if those troops cross the border into ukraine. we're talking about there are major financial banksbeing sanctioned potentially russia being removed from the script payment system so there is a concern that in response, that russia could look to weaponize energy exports in order to try to change calculations in western capitals about their willingness to come to the aid of ukraine. >> so helima, the biden administration in this situation is in a very sort of difficult spot because the reaction would be very tough sanctions. the reaction would engender higher oil prices, and here we are with inflation at 7.5% how do you think we play this out? >> the biden administration has been working around the clock for the past couple weeks to try

to get additional natural gas supplies into europe a special envoy for energy security has been in phone calls and conversations with key agent consuming nations like japan, freeing up cargo to geinto europe the emir of qatar was in washington last week there's an expectation qatar would likely waive destination clauses for l & g to allow more supplies to go into europe u.s. lng has been going into europe, so the administration has been working to try to mitigate the impact of a russian energy disruption into europe. >> mike santoli, wanted to get your thoughts on the energy stocks, which soared today up 3%. this is coming at a time where profitability for them is strong on the back of higher prices and increased demand so what are those valuations telling you at this point? >> and kind of in the sweet spot, and so far, their investment activity is very much lagging the revenue growth that

they're getting off these prices the sector as a whole is very overbought almost the sole main source of upside momentum in the market. but it only gets this stretch to the upside, stocks do, if there really are kind of powerful longer term forces in there. so i think valuations are not really all that challenging just yet. simply because mostly the sector has tracked what the underlying commodities have done. maybe that's something for after crude peaks out, if natural gas comes in a fair bit, and you know, their own costs maybe have a bit of further to run to the upside, then maybe you have to talk about them getting a little overpriced >> helima, talk to us about the levels you would expect if there's an actual invasion of ukraine, oil gets to what? if there is an invasion plus sanctions, oil gets to what? >> i mean, the scenario that is the most impactful for oil would be a full invasion where you see the capital taken.

that would potentially lead oil prices to go $10 to $20 higher from where they are here natural gas prices in europe would also rise sharply. but it's not just an energy story. russia is a major commodity superstore foyou look at russia and ukraine combined, 29% of global wheat exports come from those two countries. russia's a major coal exporter a major palladium exporter i would look to broad based commodity markets to rise if we have this russian invasion story pan out. >> helima croft, thank you so much for joining us. >> thank you >> oil spiking today, and greg, before we let you go, we want to zone in here on the market zone on your best trade idea right now. what is it >> well, i'm going to use microsoft as a proxy you know, like mike said, i think that for the most part, there are certain companies in this environment that are well insulated from the macro factors that we're citing and that i'm concerned about. mainly, i want companies that have demonstrated and continue

to demonstrate sustainable growth tethered to secular tail winds and large cap tech, we see a lot. i'll use microsoft as an example, but we can cite google, adobe, oracle. these are companies that despite the macro environment will see sustainable growth through the future not only just on the top line, but they'll also demonstrate the earnings growth we want to see i think this trade will bifurcate. the macro will get more challenging with rising interest rates, but those that can demonstrate the earnings growth deserve the multiple we have largely seen the multiple with microsoft trading at less than 30 times give up all of their pandemic era gains. they're now trading on forward pretty much in their history, despite putting up 40%, despite microsoft giving us 100 basis points of margin expansion that would have been 300 basis points without an accounting change those are the types of companies that i'm looking for, for safety, maybe not today, because i think there will be another

let down as the market digests some of the macro factors but that's where you're going to find safety. >> greg branch, thank you. >> we're just getting started in the second hour of "closing bell." tim seymour on where he sees opportunities amid all this volatility plus, ian bremmer joins us with his expert take on the big geopolitical risks amid rising tensions between russia and ukraine, and what it might mean for the global economy we'll beacinwo bk t what happens if you ever need to miss work for a long period of time?

why would i miss work? i don't know. you could sprain your ankle, throw out your back... get hit by a school bus. or a regular bus. get kicked by a horse. fall off a ladder. bathtub mishap. polio. boating accident. stuck by a fork. rabies. wolves. scurvy. talk to us about disability income insurance today. feel comfortable about tomorrow. massmutual.

small caps, relative outperforms. overall, the russell 2000 has lagged the broader market, down 17% from its record high hit in early november joining us now is jill hall, head of u.s. small and midcap strategy, and not just today but for the entire week, small caps are higher by more than 1% everybody else ending with declined why do you think that is, that we have seen a turn after they

underperformed for so long >> yeah, hi, sara. thanks for having me look, we have been positive on small caps relative to large this year, and a few weeks ago, we wrote about the sell-off and how we think that the worst could largely be behind us for small caps i think a lot of the risks have been priced in this point. you saw the relative price to earnings ratio of small caps relative to large caps fall to levels that was really below what we saw during covid, below what we saw during the financial crisis really levels that we haven't ever seen except for during the 1998 to 2001 period after which was actually a really great decade for small caps. so i think around covid, around fed tightening, a lot of risks out there in the market we have seen reflected in small cap valuations at this point, and i we are seeing a more positive backdrop with respect to covid cases turning the other way, that could be supportive of services spending which benefits small caps the pickup in capx spending

should also be relatively more beneficial to more domestic smaller companies. >> but the yield curve is flattening, jill and there are increasing worries about recession. and a real economic slowdown, the tighter the fed has to get, and the theme of the week is the fed has to get really tight because of theflation. wouldn't that be bad for small caps >> look, i think if we -- if we were going into a backdrop that were expecting a recession, which is not our base case, then yes, small caps do tend to underperform during economic downturns and downturns within the markets on a substantial basis. but if we are in an environment where even despite the yield curve flattening, we have actually found that in flatter environments for the yield curve, small caps have outperformed the large caps. with the fed tightening, usually small cap multiples have compressed more than large cap

multiples, but again, with the amount small caps have derated in terms of their multiples compressing leading into this tightening cycle, it's been much more than usual. they're already reflecting a lot of risks around that, and we have really found that long rates are more correlated with performance and matter more than fed funds rates. so there's been virtually no relationship between small caps relative performance and the fed funds rate, whereas if the ten-year yield is rising and that in the context of a spill supportive economic backdrop, that's generally positive for small caps >> to believe small caps have basically priced in the worst of what's coming to it, do you also have to believe that inflation, we have seen the worst of inflation, that the fed has a grip on inflation? >> i think if the fed is hiking to control inflation, then we think that's a positive since inflation overall has been detrimental to multiples within both small caps and large caps

you know, again, on the inflation front, when you look at the historic relationship between the price to earnings ratio and cpi, small caps have been pricing in higher inflation than large caps. so again, another reason why we see more downside risk in large caps you know, so far on the inflation front, small cap margins have generally held up you know, the pricing power historically within small caps and inflationary backdrops has actually been good and small caps have tended to do well inflationary environments obviously, you can only raise prices so many times if the wage backdrop remains elevated, that could be a risk to margins going forward in some aspects, the fed hiking to control inflation could be a positive and so that's something that based on our outlook is what we're banking on >> it's largely based on valuation, which you say you saw

the turn because they got so cheap. within the small cap universe, which sectors or types of names? >> you know, i think some of the cyclical sectors still look attractive look very attractive on valuation and are also seeing positive trends, whether it be earnings revisions or looking at upgrades relative to downgrades by analysts. energy is one that ranks well across our work, both within large and small caps obviously, you're seeing higher oil prices right now, but the sector is one that is very inexpensive versus history, offers attractive free cash flow yields, you know, is critically more within the large cap spectrum, but in small caps the sector does rate well as well. i think financials is one that is screened well in our work, and really from a style perspective, focusing on higher quality small cap stocks that have earnings rather than no earnings, that's something that's been rewarded by

investors in later cycle backdrops. small caps with attractive free cash flow has been a consistent way to pick stocks and overall, we think it's a supportive backdrop for stock picking. we have seen active managers do very well. we see signs that that could continue this year you know, there's a lot of small cap opportunities out there. our analysts, over 800 small and midcap stocks. it could be a good environment for stock selection. >> jill, thank you nice to see you. >> meantime, we have breaking news on the russia/ukraine situation. kayla tausche has it kayla. >> we have learned that president biden will be speaking from camp david with russian president vladimir putin saturday morning a senior administration official telling me that russia first proposed the call to take place on monday. the u.s. countered with a proposal for saturday, and russia accepted. one can imagine that the u.s. would want this call to take place before any possible military action by russia invading ukraine, which as we learned today, the

administration believes could happen beginning in the next 48 hours. as we learn more about the situation, we'll bring it to you, but we know that presidents biden and putin will be speaking by phone tomorrow morning. >> thanks. >> we have much more on today's late day sell-off. up next, what's at stake and how you can best position your portfolio. plus, eurasia group's ian bremmer will join us to weigh the risks and explain what it might mean for the global economy. "closing bell" will be right back

hey businesses! you all deserve something epic!

so we're giving every business, our best deals on every iphone - including the iphone 13 pro with 5g. that's the one with the amazing camera? yep! every business deserves it... like one's that re-opened! hi, we have an appointment. and every new business that just opened! like aromatherapy rugs! i'll take one in blue please! it's not complicated. at&t is giving new and existing business customers our best deals on every iphone. ♪ ♪

stocks selling off on increased fears of a russian invasion of ukraine. the nasdaq the worst performer, closing lower by more than 2%. let's bring in ben emons, managing director of global macro strategy, and christina hooper, chief global market strategist christina, i'll start off with you. we had so many people come on and say geopolitical usually doesn't move the market, doesn't impact the markets too much longer term, yet you say this

could be different because it involves oil, a spike in oil at a time where we have hot inflation. how does that play into the markets differently than past skirmishes >> it just adds to the concerns. it adds to the fears because it really could translate into even higher cpi prints. i think what we have all been hoping and assuming is that we're going to peak. we're going to see inflation peak soon. but that might not be the case if we have a situation like an invasion of ukraine that results in very significant economic sanctions and drives up the price of oil that's only going to exacerbate all of the inflationary pressures that we're already experiencing and that's why the stakes are higher this time >> just to sort of connect the dots, does that mean, if this goes into the next cpi print, because there is one more ahead of the march meeting, could that force the fed's hand to do something more drastic than 25 basis points, even if fed officials come out this week and try -- not this week, next week, skurm, and try to talk the market down from a 50 point

hike >> well, melissa, it might tilt the balance. i mean, keep in mind that there are a lot of inflationary pressures that we have already experienced and are experiencing that the fed can't solve for this is yet another inflationary pressure that the fed won't be able to solve for. and yet again, it may push the fed to get more aggressive because it needs to at least keep inflationary expectations anchored and they're coming unglued, so i think that's part of why the fed really feels as though it needs to act as aggressively as we're hearing in recent fed speak. >> ben, your beloved reopening names got hit hard today a lot of airlines and leisure names. which makes sense if you're worried about the consumer and high energy prices do you see this as temporary, or is it a game changer >> i find today like a classic flight to safety reaction.

it's about you have tension there, high uncertainty. we're just getting the headlines out that biden and putin will speak tomorrow again, diplomacy could prevail, which could flip the picture on monday morning in a completely different market keep your reopening trades on, because if this conflict doesn't happen, although there's signs that it may, then diplomacy will lift the reopening trades and make it attractive at the same time, you don't know what plays out so the defense side is also warranted, which means staying in sectors that benefit from this environment of high energy prices what we're seeing now is a stronger dollar, that's energy and basic materials and consumer -- sorry, durables. >> there are a lot of ways this can play out i guess it's choose your own adventure at this point given the phone call biden and putin will have tomorrow let's say the adventure we choose to play out in the markets is one of an invasion and one of sanctions, and there are certain european economies that are very, very dependent on

oil from russia, energy from russia, including germany, the biggest economy in europe. i'm wondering, does this change the view of investing in some of these areas? >> i think it definitely could be, melissa, on the eastern european side. that's where the big economic f fallout will be. i'm not sure for europe itself it would completely change the picture. it's true that european gas supplies could be very disrupted. at the same time, we have made some intervention through the u.s. by adding more supply so and demand for brent will probably stay very high. so i don't think that the european economy will lead quickly into a recession as of a result of this invasion. i thinkrussia will be significantly challenged economically the russian banks and russian energy companies are under significant pressure today >> it's happening at a time where investors were starting to look overseas for better valuations in places like europe, potengsomy china, you

had a call would do better this year does that get thrown on its head with this surge in energy prices and potentially lower global growth if we do see an escalating conflict? >> well, it depends upon how much the conflict escalates. i still remain very positive on emerging markets, countries, for a number of reasons. i think we want to be selective, but in general what we're seeing is maturing, an end to their tightening cycles in general and in fact, china getting more accommodative. so that's a very effective and powerful tailwind. but having said that, emerging markets countries that are oil producers may start looking more attractive so again, we need to be selective in the em space and look for areas that are going to benefit and are going to be disadvantaged by a significant rise in oil prices but i maintain a call on em in china. >> thank you both, ben and kristina >> time for a cnbc news update with shepard smith >> thanks. from the news on cnbc, here's

what's happening this hour a russian invasion of ukraine could happen at any moment the national security adviser calling it a distinct possibility. and that it could happen before the olympics are over. his warning today for the thousands of americans believed to be in ukraine, clear and stark. >> we encourage all american citizens who remain in ukraine to depart immediately. we want to be crystal clear on this point any american in ukraine should leave as soon as possible, and in any event, in the next 24 to 48 hours we obviously cannot predict the future we don't know exactly what is going to happen. but the risk is now high enough and the threat is now immediate enough >> this new urgency as senior defense officials tell nbc news the secretary of defense ordered the deployment of 3,000 more u.s. troops to poland, joining the 1700 troops already there. as nato allies prepare on the eastern front of the alliance,

russian military exercises are under way in belarus an area from which military experts say it would make most sense for russia to launch an invasion and the man leading those exercises and likely any future invasion is russia's top general. he is the architect of russia's plan for strategic gain that is in essence permanent conflict. but as the brinksmanship escalates, the u.s. and nato allies insist a diplomatic solution is still possible, as kayla tausche just reported, president biden and president putin expected to speak by phone early tomorrow morning tonight, we'll be on the ground in ukraine, plus the latest from the white house and a conversation with the former supreme allied commander of nato on what to expect next in a potential military conflict. olympics coverage starts top of the hour, then news time, 7:00 eastern, cnbc. sara, back to you. >> we'll look to you for that, for sure thank you. shep smith >> up next, we also have more on the rising tensions between russia and ukraine

eurasia group president ian bremmer breaks down the big geopolitical and potential market impact right after the break. "closing bell" back in a moment.

time for our rapid recap it was an ugly day on wall street the major averages finishing the day deep in the red. you see there, the dow down by 1.4% s&p 500 down by 1.9% nasdaq off the lows of the session, down by 2.75% oil prices jumping in the afternoon trade. wti crude hitting highs not seen since 2014 $93.87, up 4.5%. defense stocks also in the green, northrop grumman, lockheed martin seeing strong gains. airlines sank, american, united, southwest all closing out the day in the red sara >> saw a sharp turn lower in the markets after the white house told americans in ukraine to leave in the next 24 to 48 hours. that russia could invade before the olympics end joining us now is ian bremmer, founder and president of the eurasia group. ian, always good to get your read you talk to a lot of investors and clients about these

geopolitical issues. what are you telling them happens next, especially in light of the news that there will be a phone call between putin and biden tomorrow morning? >> yeah, i will tell you that 24 hours ago, the expectation was that the phone call between biden and putin was going to be next week. so there is urgency. and this call is absolutely critical diplomacy with the russians, not just between the russians and united states, but with the russians and the eu, the russians and innato allies have not gone well. frankly. macron's trip to moscow was ineffectual. the british foreign minister's foreign secretary was absolutely sham bolic and we are not seeing a russian government that is looking like they are moving towards accepting what's been put on the table by the americans and the nato allies so far and frankly, that means that if putin requires an outcome that is going to address some modicum

of his security concerns in ukraine and europe, he needs to be taken more seriously on the ground, especially by the ukrainian president. frankly, that probably means some level of escalation what exactly that escalation looks like and when it happens, of course, are massively important for the markets, and a big question right now >> so what is your expectation and along with that, retaliation in the form of very severe sanctions on russia. >> well, first of all, in terms of timing, put me in the skeptical camp that there would be a russian invasion during the olympics the chinese government has made very clear that they continue to view ukrainian sovereignty as important. they told that to putin directly that was the joint statement the fact is that the chinese consider crimea a part of ukraine, and they want the minsk dialogue to be the outcome for the occupied territories in dumb

bas, so i think that and the tact the chinese who are not only a supporter of the olympic violence boycott but the co-author along with the u.n., i think xi jinping would be discernibly angry with his new besty, putin, if the russians were to take that step and there's no reez frn the russians to antagonize their one friend on the global stage i understand there's intelligence around this, but i think there's a lot of downside for putin to take that step. further more, there's a very big difference between the russians taking steps of military escalation and a full-on invasion the latter of which would lead to a massive and unified american and european response the former, if there's any troops that go into even occupy, the nord stream 2 pipeline is dead, but there would be room for potential negotiations, including with the french in particular who as you know have talked about the prospect of

finlandization, which means some kind of ukrainian neutrality, which today the ukrainian president is uninterested in but if it looked more likely that the ukrainians were about to have, you know, about to lose everything, might feel a little differently. if you're putin, you're thinking about those options now. >> just to underscore that point, ian, it sound like you're skeptical of anything happening in the next week because putin doesn't want to upset his new besty, xi jinping, is that right? >> no. no i wouldn't go that far look, yesterday, we actually saw that there was a partial blockade in the black sea of ukrainian ports. i think we could see more cyberattacks i think there's all sorts of things the russians could do short of rolling tanks in, but i do not expect that there will be an invasion of ukraine before the olympics are over. but could there be a false flag attack could some russian passport

holders die? i don't think the next week is safe i'm just saying i would be quite surprised if there was a sudden decision by putin, unprovoked as it were, to go in and send forces into sovereign ukraine. i would be quite surprised >> what would the u.s. nato response be that would be commensurate to an attack short of actual physical violence on ukraine? cyberattacks, et cetera, the kinds of attacks you had outlined that could happen in the next week? >> so sara, i do think that president putin is quite surprised by the strength and the unity of the american nato response so far. and i think that's one of the reasons why we hadn't heard much from putin over the past four weeks until the beginning of the meeting he had with i guess it was victor orbon in moscow was the first time he said anything in a month now he's out there much more publicly again, i think what you would

see from the americans, if it's considerably short of this invasion scenario, i think you would be some sanctions. i think you would see nord stream over, and i think the germans are 100% onboard with that, and the senators that were in the meeting with schultz absolutely understand that to be the case earlier in the week. but i also think that further sanctions of the sort that we have talked about, sovereign debt sanctions, for example, technology, export controls, even steps taken against, major steps taken against members of putin's family, oligarchs close to him, those would be perhaps a harder call. and i also think that if the french were to say we're not on board with some of that, a lot of other eu countries like italy, like greece, lie cyprus are going to be with the french there. so i think there is a real open question about whether putin sees -- whether he thinks it's in his interests in the coming days to shake the branches more, especially because he's really

provided very little on the diplomatic front he can have a call with biden in the next 24 hours, he's not going to get meaningfully more diplomatically from what he's already heard from biden so i'm not feeling great about that call right now. >> it's good to get your analysis in real time, ian ian bremmer of the eurasia group. >> up next on the show, mike santoli heading over to the telestrator with a look at how investor sentiment is impacting the market right now >> plus, fast money trader tim seymour with his take on today's big sell-off and the key things everyone investor needs to know while trading the turbulence "closing bell" will be right back

what the world needs now... is people. people who see flight a little bit differently. so it takes less fuel to bring people together... ...and make faraway places feel a little closer... ...with engines that power planes more efficiently. because seeing a better-connected world isn't far in the future. we're building it... now. ge. building a world that works.

new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. we're hoping things will pick up by q3.

yeah...uhhh... [children laughing] doug? [ding] never settle with power e*trade. it has easy-to-use tools and some of the lowest prices. get e*trade and start trading today. stocks close out the week with declines. s&p down 1.8%. let's send it off to mike santoli for a look at how investor sentiment is impacting equity flows >> there's a bit of discrepancy between what retail investors are saying and doing, at least for the short term this is from bank of america it shows you cumulative equity inflows into stock funds over the prior eight weeks. basically a two-month average. you see this massive spike into the first half of last year. that was record levels it has moderated, but really still at very, very aggressive level of flows you see way higher than we saw at any point in the prior decade or so.

however, the percentage of bulls in the leading retail investor survey, the aai poll, is actually near rock bottom along that scale as well so essentially there's some anxiety among small investors but still some flows following pretty good multi-year purp form nls in the markets take a look at retail options trading activity this is a proxy for small call option orders. it basically surged right into the pandemic that was the robinhood phenomenon, and definitely has rolled over. you see it in the results of the online brokers and all of the rest a little less aggressive but still present, and trading desks will tell you hedge funds have pulled in their horns but the retail bid has not fully gone away we'll see if that's a good or bad thing as the markets proceeds >> we're wrapping up a chaotic week on wall street. tim seymour will join us on what investors should do to position themselves amid all of the volatility check out shares of affirm down more than 20%. the buy now pay later company posting disappointing guidance leading to questions surrounding

the new partnership with amazon and how that is painimctg affirm's revenue >> "closing bell" will be right back power e*trade gives you an award-winning mobile app with powerful, easy-to-use tools, and interactive charts to give you an edge. 24/7 support when you need it the most. plus, zero-dollar commissions for online listed u.s. stocks. [ding] get e*trade and start trading today. at vanguard, you're more than just an investor, you're an owner with access to financial advice, tools and a personalized plan that helps you build a future for those you love. vanguard. become an owner. need your prescription refilled? capsule pharmacy can fill and hand deliver your medications vanguard. - the same day - for free. go to capsule.com to get started.

we handle your insurance, coordinate with your doctor, and text you when your medication is ready. all you have to do is schedule delivery. we bring your medication directly from our pharmacy, straight to your doorstep. get your prescriptions filled and delivered today - for free. go to capsule.com and get started in 15 seconds.

the markets ending the day near the worst levels of the session after taking a big downturn when the white house

national security adviser jake sullivan urged americans to leave ukraine immediately, saying an invasion could take place during the olympics. joining us now, tim seymour. tim, nice to see you it's been a while. what's your take on the market downdraft today? >> well, i think we had a combination of we had a very good run going into some difficult fed statements over the last couple days, and obviously, russia heightens volatility going into a long weekend. you have inflation trends i don't think are getting a lot better in fact, i kind of feel like labor prices are going to follow prices and this is going to be a slightly longer and more difficult period you add that up, and we close on the lows on friday with the technical position of the s&p and the triple qs or the nasdaq 100 not great. and i don't want to rain on what's already been a dismal afternoon, but i think there the parts of the market that are working, and volatility was too low probably coming into today >> we saw that spike 15% in the session today.

you know, james bullard is going to be on the network on monday morning. is there anything he could say that could jar it much beyond the jarring it's already seen? >> we always have to listen to the fed's interpretation of the labor market and again, so far, they have given you some sense that they think is part of the reason why i think they went on the front foot on the hawkish rhetoric i get sense they're seeing a labor market that may be tighter and hotter than they expected. and i think that's what worries me in terms of the part of the inflation curve that doesn't really concern me, i think, is related to supply chain dynamics and even food prices, i think, can ease up. it's the services inflation that's tough we need to listen for that i think there's a sense in the markets that the fed could -- we might be pricing in a little too much fed now even though again i think that they're a little behind the curve but we're probably not pricing in enough long term fed. and i think people probably

don't realize how long this could go on. >> he also doesn't speak for the fed, he speaks for himself, and it's a voter so obviously important and market moving, but as your overall theme of inflation, i wonder how much the russia story feeds that top energy exporter to europe, also looking at some of these numbers, it provides 40% of the world's palladium, 30% of the world's titanium i wonder what it does to the overall commodity picture and the fed fight it has on its hand >> and nickel, the biggest nickel company in the world, they really have been a marginal producer in the past and the spare capacity producer. i do think it's something, look, if you look at the markets that are working right now, russia had a tough day, but off the bottom, russia was about 21% off the lows, and brazil is on fire. and again, you talk about central banks that are well ahead of the curve in terms of actually having brazil's hiked

seven times since january of last year. up about 725 basis points. so on some sense, they had that fiscal and monetary adjustment, and some of these places actually look really interesting here, but no, i don't expect a lot of relief on oil in fact, i think the energy trade that has largely been a trade for most investors should be the energy investment for most investors i think we're going to have ail prices longer, higher, and i think it's one of the reasons you're even seeing the oil services space outperform. >> you mentioned brazil. there's a perception some of these emerging markets have had a better handle on their inflation because they have been dealing with it sooner and quicker than the u.s. has. i'm wondering if this higher oil picture around the world makes these regions even more attractive in your view. >> it does and as someone who has been investing in emerging for 20 years and who lived in russia at one point, it's nice to see that em, so if you're trading this with etfs, you have the eem and

it's out performed the s.p.y. by almost 9% since the end of last year this was in the middle part of last year and as we got to high yields, em got to fresh all-time highs, but this has been one of the worst trades to be on for the last seven or eight years if you rur long emerging and waiting for it to turn against the s&p. if we get more volatility, ultimately, i don't want to own a ton of em. i think there are also plenty of em economies that are reliant on importing oil and other commodities. china is one, india is absolutely one of them when you look at the south africas and brazils of the world, i think this is a pretty interesting time for countries also whose currencies took a beating over the preceding couple years around covid. interesting times and be cautious >> tim, i also wanted to mention earnings because if you look at the biggest winner in the s&p today, it was newell brands, off earnings, having a really good

time dealing with some of the cost nput pressures and the worst performer was under armour, we talked to the ceo warning on supply chain. huge moves, double-digit moves which is a continuation of what we haveen from the big tech last week any opportunities around earnings for you >> i tell you what, i think we have a case where if you look at some of the hospitality and some of the travel stocks, we had really solid numbers look at expedia's numbers and these are places i want to continue to be we are three quarter thofz way through earnings season and it leaves us with a lot of fed ahead of us. we have a case where you definitely are going to see margin pressure. you're going to continue to see companies and there's no reason to talk about why things are good right now i think that's going to weigh into the guide >> tim, thanks nice to see you. tim seymour. >> thank you, melissa. see you later. >> up next, your wall street look ahead more key earnings on deck for next week. we'll break down key names to mehe"csi bl" wn longel cos right back

your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

what happens when we welcome change? matchwe can transform ourtion. workforce overnight out of convenience, or necessity. we can explore uncharted waters, and not only make new discoveries, but get there faster, with better outcomes. with app, cloud and anywhere workspace solutions, vmware helps companies navigate change-- meeting them where they are, and getting them where they want to be. faster. vmware. welcome change.

stocks selling off late in the trading day. the dow closing down more than 500 points nasdaq almost 3% lower looking ahead to next week, more big name earnings to keep an eye

on ro roblox, wynn, roku, draftkings and more set to report and then of course, mike, we have also have a raft of fed speakers from bullard to williams a few next week. we'll be watching and hopefully more clarity on this tenuous situation between russia, ukraine, with the call scheduled for tomorrow morning between biden and putin. what are you watching as far as how the market absorbs it all? >> well, the fed speak is interesting because we got the moderation in bond yields for the wrong reasons, the ones you didn't want, which was people getting spooked by the russia/ukraine situation you did nonetheless get this bid into treasuries. the ten-year finishes at 1.91, down from 2 .06. you want to see if things can stay in that zone a little bit along with presumably fed officials coming out and trying to maybe have a more nuanced take about how many hikes they're going to need, maybe they're going to talk down the idea of a half point in march or whatever it might be so i think that's going to be one of the beacons to watch.

>> if it weren't for today, mike, we would pretty much be a flat week, which is interesting given all of the scares we had between the inflation print and bullard. >> absolutely. although in fairness, at wednesday's close, we thought it was going to be a strong week. you're down like 4% from wednesday's close. the market took a chance in saying that maybe the inflation number would be benign, maybe they had lost some of its capacity to scare, and kind of lost that gamble >> the small cap outperformance is notable on the week, mike on the day and on the week that is a bit of a change. and i wonder what is signaling that or if it's as jill told us, a valuation thing. >> valuation out of a deep hole, and cyclicals did relatively well that could be part also. >> stocks finishing out the week in the red, as we saw. sinking today on fears over a potential russian invasion of ukraine. down 1.8% for the week, for the s&p. that's going do it for us on "closing bell. for the next two hours, you can

enjoy olympic curling followed by the news with shepard smith at 7:00 p.m. eastern time. and of course, go bengals. >> good luck, sara, yes. >> thank you ♪ can he get it? he can five on the board for team usa >> the united states has won curling gold ♪ the beijing olympic tower rising 846 feet above street level is actually five connected towers meant to suggest the olympic rings. the bird's nest, the opening and closing ceremonies and located short walk across olympic park the national aquatics centre, illuminated with the year of these olympic ga