lot of times on "power lunch." in every market, somebody is losing money and somebody is making money when these prices go down, it's better for retailers, but freight companies get hurt >> and retailers are struggling because everyone is spending on services now frank, thank you very much >> all right >> thanks for watching "power lunch," everybody. >> "closing bell" starts right now. >> stocks are at session highs the nasdaq is jumping nearly 2%. the most important hour of trading starts now welcome to "closing bell." i'm sara eisen here's where we stand in the market tech heavy nasdaq stands out today, up 1.75%, but everyone is higher and we have recovered from nearly 200 point decline in the dow. s&p up .7% why is tech doing well well, you have the chinese internet names soaring on friendlier moves from chinese regulators twitter carrying the s&p 500, communication services the best performing group tesla doing well on deliveries and technology, consumer

discretionary, and communication services are the only green services on the s&p 500. here are my top takeaways. new highs for energy names today. apa, hess, marathon oil all hitting new highs. oil moving up 4%, as european politicians are horrified by the new image of atrocities coming out of ukraine president macron calling for oil and coal sanctions but germany is yet to get on board despite the market's hope of peace talks, the war is raging, and investors that are looking past it may need to recalculate. oil and energy stocks remain the tell both elevated today. >> starbucks suspending its buy' back under the return of founder howard schultz as the ceo of the company, now wants to use billions in cash instead to invest in stores and employees wall street doesn't like it, but schultz has proven in the past to be a very shareholder friendly key ceo during his tenure, shares gains

21%. will this time be different? we will see. and warnings from jamie dimon's shareholder letter, decidedly less up beat than we have heard in the past. he cites the war in ukraine and sanctions that will slow the global economy he warns fed tightening will cause lots of consternation and volatile markets and he says he thinks the fed will move rates significantly higher than what the market expects although he did say the u.s. consumer is in excellent financial shape on average, the overall message was one of caution. investors should prepare for negative outcomes. let's get straight to our top story. the musk effect on twitter the stock is soaring, near the highs of the day up more than 28% after the tesla boss bought more than 73 million shares representing a passive 9.2% stake in the company the purchase comes after musk's recent frustration toward that company about its free speech principles he's even considered building a

new social media platform, he says joining us now is jefferies, steve kovac, and wealth editor robert frank let's dive in, brent you have a hold rating on twitter. does this news of musk's involvement change the story >> as you say, don't bet against musk there's a halo effect in the interim. i don't think 30% of returns justify for a new shareholder. if any one of our clients came in, that certainly would create that kind of move as a passive investor so fundamentally, twitter has been strulging relative to its peers. stock has been cheap and many of the names are down, but we think that ultimately this move now refl reflects fundamentals are getting back on track. the new ceo is going to have a positive impact in thenix few quarters but it's too early to call the fundamental return of twitter. many of the advertisers still are struggling with roi.

they're seeing better roi on different platforms. >> you think it's overdone have we heard anything from the company? they have a fairly newish ceo. i wonder how he's going to handle this new challenge. >> yeah, sara, i'm kind of surprised we haven't heard an official comment i have been bugging them on twitter all day, saying you have something to say about this? they have a new stakeholder, 9%, and not just any stakeholder, elon musk. complete radio silence from the company today on that. and all we heard from elon is the lol hitweet, so take from that what you will there is nothing official about what his intentions might be, how the board is thinking about it, what we do know, sara, is that elon is kind of in line with this vision that twitter is going towards. this decentralized idea of twitter where people can kind of build on top of the twitter platform and create their own rules. so that sounds like something musk would be really interested in >> he's got the money to do it,

right? robert frank, today's move on tesla and twitter alone, more than pay for this investment, right? >> yeah. this trade has already been profitable on both ends. if you look at tesla shares, which are up remarkably today, more than 5% he's already added more than $9 billion from his tesla gains today. coupled with the fact when he bought these twitter shares he paid about $2.3 billion for them in mid-march the value of that stake now at $3.6 billion so he's up $1.3 billion just on the twitter investment alone added to the $9 billion at least he added on tesla. so this was not about the money for him. this was about the influence but look, he made $10 billion today on both sides of this trade. >> yeah, not bad for a new position brent, twitter has seen some excitement before when it comes to heavyweight investors steve ballmer, they were involved in a challenge from

elliott, paul singer i'm thinking back, marc benioff almost made a bid to buy the company. none of those really changed the game for the company they brought a lot of firepower in terms of big names and enthusiasm so what's it going to take >> exactly i mean, i think this is all surface. this isn't fundamentals. and if you look at what has to change, twitter just has to be more usable. anyone that uses the services realize it's a hard service to use. and it's not been optimized for the end users. i think ultimately there's a lot of work, and i think the new ceo is going to have a huge impact on changing this, having been a company for decade, that they can make the product easier and more consumable. can they start a subscription program, an ad-driven program? there's so many different call options but they have to do something because it hasn't been working. we talk to advertisers on the end side all the time, and no

one wants to count twitter out, but everyone also says they keep coming back with a story and then it breaks and then it comes back to a new story and then it breaks it's a yo-yo, and they have to get more even with their execution. we think they can do it, just they have to prove it, and it's somewhat of a broken record the last couple years. it's encouraging, no doubt, this is a positive step in the right direction. >> robert frank, there's also chatter he could all out buy the company, right he can afford it has he ever done anything like that >> no, you know, he's not a portfolio investor so he's really just got tesla, he's got spacex, and a little bit of crypto on the side. and you know, remember back when jeff bezos bought "the washington post" for $250 million, everyone was worried about the influence that he would have on that newspaper, and on the debate. and clearly here, you know, he could buy the whole thing with let's say just the gains that musk made in march alone, he gained $50 billion, so now the

market cap of twitter is around $40 billion. so musk could buy the entire company just with the stock gains that he made in march. i don't know if he wants to do that clearly, this is listed and categorized as a passive stake for now, but he could easily do it tomorrow if he wanted >> there's some scrutiny around that, that use of passk stake when he's had the twitter poll out there. for now, brent, steve, robert, thank you all for joining me on twitter, which is soaring 28% right now. >> coming up next, bridgewater's view on the market we'll talk to karen car neal tam bower. and the biggest risks she sees in the market right now. they have been betting big on comaumties you're watching "closing bell" on cnbc. session highs with the dow up 100 points

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mover. it's roku, the stock getting a pop after the streaming company said it reached a multi-year extension of its distribution agreement with amazon, which allows customers to maintain access to prime video and imdb terms of the deal weren't disclosed. roku had been one of the darlings of nand, but shares have had a rough stretch down around 40% even with today's pop. sticking with tech, the nasdaq outpacing the other indices today. the nasdaq up more than 8% but still lagging on the year.

let's bring in bridgewater co-chief investment officer for sustainability, karen karniol tambour. it's not just twitter today moving tech higher tesla and amazon and microsoft and inslinvidia as i recall, you guys weren't huge fans of tech. has anything changed now that valuations have corrected? >> i think that we are just much more macro investors that look broadly at what's happening in the economy. we're much less likely to make sector trades. and broadly speaking, our biggest kind of perspective on the economy hasn't changed, which is that you have demand radically outstripping supply everywhere and every sector in every situation that inflationary problem that was brewing and brewing is now vastly exacerbated by russia's invasion of ukraine. and that means that inflation protection is extremely important for investors. when we look at the stock

market, we see the stock market telling us that the fed is really not planning on tightening all that much, that the economy is going to stay fine and yet inflation won't get out of control, and that seems pretty unlikely to us. it seems much more likely the fed will need to tighten more than is priced in, especially next year, the year after, and that you'll get -- you'll need the slow the economy somewhat in order to get inflation under control. >> so are you guys in defensive sectors? like utilities or staples, which have actually been doing well on this idea that the economy will slow >> we really just rarely invest that way in terms of selecting sectors. we are much more macro investors, likely to pick between countries. when we look between countries, the united states certainly has had the biggest pockets of overvaluation, has had the most significant inflows into the united states relative to other countries. a big u.s. exceptionalism story for quite a while in the stock market we like a bunch of other country

stocks like japan, like some of the emerging markets, more than we like u.s. stocks broadly because they're already been so many inflows into american companies. and if you look at the tech sector certainly a piece of that, it's already priced that american companies will continue to outperform basically every other company in the world for a very long time so there's no way to surprise on the upside by america remaining exceptional. there's a lot more room for others to catch up >> are you in the recession camp for the u.s. >> i don't think the fed has signaled nearly enough tightening at this point to cause a recession. i think they will need to tighten a lot more than is currently priced they were priced to do so little coming into this year and now they're priced to do a good amount of tightening this year, but almost no tightening is priced in for 2023 you look at the bond market and it's telling you, don't worry, the fed isn't going to tighten and inflation will get back under control. if you look at historical periods, that's very unlikely. it seems like first the fed will

have to tighten more than people expect and eventually that will threaten the recovery. >> what are you expecting on that front do you have an estimate on how many hikes this year it sounds like you expect them to go into next year as well >> what's priced in this year looks relatively reasonable for me, but after this year, there is almost nothing priced in. when you look at the yield curve inverting and it had been flattening for a bit but finally inverting, you look at that and it's all hikes priced in the next year or so and then very little i would expect the fed has a long way to go one way of seeing that is looking at what people call real yields, the inrist rate for anything, for a home loan or borrowing, and you have negative real interest rates. history will tell you, you can't slow demand, affect inflation without raising the real interest rate. unless inflation comes down

quickly, you need higher rates >> why do you like emerging markets in that environment? if the fed is tightening so much, doesn't that hurt hem? >> i don't think all emerging markets, and for example, i would separate the companies from the currency exposure and depends on where you are and what most investors are most importantly just radically underdiversified and emerging markets, one of the nice things about the companies is they haven't really received the inflows. you went through the post covid period where people got all these checks and put it into stocks and crypto. they didn't really going into emerging markets, so there are a lot of places where company valuations are very attractive there are places that are going to benefit from the commodity boon, for example, and you can separate that view from a view on the currency, which is more sensitive to balance of payments, but you have to look at each place. >> karen karniol tambour, always good to hear from you. thank you. >> after the break, the market's next catalyst, earnings season

kicking off next week. mike santoli looking at the latest expectations. check out the nasdaq 100 heat map and the chinese internet names giving the biggest boost names like pinduoduo, baidu, jd.com, all jumping, and leading the charge right now that on top of some gains from tesla, apple, amazon, microsoft, facebook, nvidia, google, netflix, and qualcomm. 'lbesd 1y for the naaq00 wel right back. ♪ ♪ we all need a rock we can rely on. to be strong. to overcome anything. ♪ ♪ to be... unstoppable.

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up about 90 on the dow earnings season kicks off next week when the big banks report results. mike santoli looking at earnings expectations and stock valuations for the dashboard today. it has been surprising that these earnings expectations haven't come down more, hasn't it >> absolutely. tr probably the steadiest single input into what markets get priced off of. a steady march higher. that's the blue line, left

scale, above $230 per share right now. so basically around 20 times earnings at 4600 on the s&p 500. as you see, that valuation has come down from the low 20s back several months ago, back during the pandemic when you really had the overall market just surge and essentially price in a massive profit recovery. so the fact that you see the estimates crossing above the valuation level, that's kind of arbitrary in terms of where we place it, but it does underscore the point that we do have some kind of earnings support, assuming as you suggest, we don't get lots of estimate cuts. now, analysts have trimmed first quarter estimates just by a little bit, not even by as much as they do typically historically, but for the remainder of the year, supposedly we're going to make it up. where are the earnings coming from right now, that's not really been the swing factor. it's all been about the fed and how much we're going to pay for each dollar of earnings. >> i wonder how much of the revisions are oil, which is

getting -- oil companies, which get their revisions higher >> a lot of the upward revisions are from energy, but because it's such a small part of the s&p, that doesn't necessarily explain why the overall estimates are going higher yes, that's been a strong point. also, the big five, you know, nasdaq names that are the big five in the s&p, a quarter of the s&p right now, and they're very steady. you have to keep in mind that a lot of the earnings are almost baked in before you get into a year >> i think the strong dollar will hurt. we'll see. that tends to be with a lag as well thank you. we'll see you soon >> jamie dimon warning the fed could raise interest rates higher than wall street is expecting. former fed vice chair roger ferguson weighs in when "closing bell" returns.

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jpmorgan ceo jamie dimon out with a warning about the fed's difficult task of engineering a soft landing writing in his annual shareholder letter, the stronger the recovery, the higher the rates that follow. i believe that this could be significantly higher than the markets expect and the stronger the quantitative tightening. joining us now is former vice chair of the federal reserve, roger ferguson roger, always good to see you. how much work and tightening do you think the fed has in front of it in controlling inflation what's it going to take? >> well, i think jamie's letter

and general message is roughly correct. which is indeed, inflation is far beyond their 2% goal and the market is expecting, i think, roughly two 50% tightens in the next two meetings 25, 50 basis point meetings and 25 basis points after that that sounds roughly right to me, but as jamie says, it is very, very difficult to engineer a soft landing >> so if you were in the fed, and i consider you a fed insider, you were there as the vice chair would you tolerate a recession in order to get a handle on inflation? >> i think you put your finger on exactly what the dilemma is you know, most, unfortunately, engineering a soft landing is very, very difficult if one goes back to the early modern period of the fed in the 1950s, they tolerated three recessions, two short and shallow, one pretty deep in

order to get rid of inflation, and obviously, paul volcker put the country into a very severe recession in order to get rid of inflation. that's the tradeoff they're confronting. they don't want to go there. but i think they may be forced to deal with that very, very tough tradeoff sooner rather than later the odds of recession, to put it mildly, have gone up but it's not the fed's goal. however they may be forced into that hard choice >> yeah, there's this idea, and cathie wood, ark investor, put it out on twitter this weekend, that the inversion of the yield curve is a signal that the fed is going to raise interest rates. she says, as growth and/or inflation surprise on the downside, and that would be a mistake. would that be a mistake? is that what the bond market is telling us >> well, i think the bond market, first, there are many yield curves to focus in on. so i think the one that people are most excited about last week was the difference between the two-year rate and the ten-year rate that inverted slightly

the data show actually the yield curve that's more important in terms of forecasting recession is the very short end three months to ten years. that's still in very positive territory. i think the market has gotten overly excited about one yield curve relationship and is ignoring many others nevertheless, when everyone sees an inversion of the yield curve, i think what the market is saying to us is the amount of tightening called for may be a little less than perhaps the fed might be pushing for ie the risk of recession has gone up. but i wouldn't get overly excited about the one yield curve inversion. i think the broader question that jamie raises is the one we should focus on, which is the balance of risks between unstable, excessively high inflation and a risk of recession. i think that's the knife edge or the tightrope that the fed is walking right now. >> and how one relates to another. what's been surprising in a way

is how strong the u.s. consumer really is. the fiscal stimulus is largely worn off, and yet we're still seeing companies have pricing power and the ability to push on these higher prices onto the consumer do you expect resistance to that at some point? in other words, how strong is the consumer when it comes to dealing with these spiking prices on everything, including food and gas >> well, first, we start at a place where the labor market is very strong. we have unemployment practically at pre-pandemic lows of 3.8%, 3.6% we have started to see an increase or a slight pickup in the labor force participation rate, which is another positive sign yet the data also show that real wages, wage increases minus inflation, are still not enough to keep up with inflationary pressures. so real wages growth is negative, so i think what we're seeing right now is some

fundamentally strong labor markets pushing up against these inflationary pressures and at some point, there is going to have to be a reckoning, so to speak. right now, individuals are clearly dipping into very vast pools of savings that will go on for a period of time, but not forever. that again takes us back to this tightrope question because if in fact there is a recession that occurs, it will be from a combination of interest rates that are tightened more than the economy needs, just as consumers are starting to slow down the consumption pattern we have had thus far because their wages aren't keeping up. the other thing to talk about, obviously, for many is house prices so rents are also going up houses themselves are becoming less affordable. all of that is putting pressure on consumers right now, i think the strength of the labor force is playing out as the winner, so to speak but that's not going to last

forever. and so that's why you're getting this range of concerns around the possibility of a recession, even if the fed is not attempting to engineer one >> you're on the board of alphabet and corning and iff when they ask you, roger, where is the economy going, what do you tell them? the recession is coming when >> no, no. what i say to them is that the risk of recession is certainly risen. it's not over 50% yet, but it's much higher, maybe 35%, 40%, maybe a little higher. if we get into recession, it will not be an intentional one, such as the ones in the 'sg50s r the one paul volcker maneuvered so the fed will i think move quickly to avoid that problem. and so as jamie's letter said and others, where think what we're in for is a lot of uncertainty, a great deal of market volatility, headline risk, and in that sense, sort of buckle up your seat belts. possibility of recession higher than we would like, and

therefore at least think about what one might do to be defensive in that space, not a foregone conclusion, and the second part i would make is if the odds play against us and we end up in a recession, i think the fed will move relative lay quickly to avoid having that be long and deep. but you know, we will see. so much of this depends on the other thing, which is inflation expectations, which have been rising a little bit. and obviously, some, a great deal of the inflation we're dealing with has to do with supply chain matters that we're hoping would sort themselves out. and then finally, we see oil prices, which are very volatile and headline driven. so it's a complete witch's brew of forces and factors, some which the fed controls, some which they don't some which reflect geopolitics, some which reflect the domestic developments so highly complicated system, and the fed is trying to walk that tightrope as best they possibly can >> well, well said, roger, thank

you for joining us appreciate you summing it up for us and to that point, about positioning, walmart right now trading at levels we haven't seen since december 2020 new 52-week highs for a defensive company. wall street buzzing about two big spac deals today atmeckoreac coba f rl? th's next. yeah...uhhh... doug? [children laughing] sorry about that. umm...what...it's uhh... you alright? [loud exhale] [ding] never settle with power e*trade. it has powerful, easy-to-use tools to help you find opportunities, 24/7 support when you need answers, plus some of the lowest options in futures contract prices around. [ding] get e*trade and start trading today.

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also, hypebeast merging. the platform is a much read blog for sneaker heads. it has a loyal customer base of gen z and millennials. me included. tom brady, naomi osaka, kevin durant and other celebrities are investors. so spac mergers are happening, but the numbers are significantly down from this time last year only 54 spacs have priced in the first quarter of this year compare that to 203 in the first quarter of last year a decrease of 73%. and blame the performance of many of these companies that have gone public via spacs and regulation, of course, and just last week, the s.e.c. advanced a set of rules if implemented could make it harder for spacs to execute mergers >> up next, amd makes a big buy and what elon musk's new stake in twitter could mean for tesla shareholders don't seem to mind today the stock is up more than 5% those stories and more when we take you inside the market zone.

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♪ “baby one more time” by britney spears ♪ good to have you back, old friend. yeah, eyes on the road, benny. welcome to a new chapter in investing. [ding] e*trade now from morgan stanley. 17 minutes left in the trading day. we're now in the "closing bell" market zone. senior markets commentator mike santoli here as always plus, phil lebeau is here on elon musk's huge stake in twitter, and stacey raskin in amd's big cloud deal first let's start with the broader market stocks have been gaining steam the nasdaq up nearly 2%. if you look at what else is working today, energy is doing well, materials, industrials, financials the bottom performing groups are utilities, health care, and real estate it's kind of the opposite of what we have been seeing in recent days.

pushing back against the recession theme. what stands out? why is nasdaq doing so well today? >> to me, the market is showing signs of being somewhat back in gear i don't think there's a specific why the big nasdaq stocks are working except this jolt of energy from the musk twitter purchase and the fact that there's been a big lag growth stocks had really lagged value and defensives for a while right now. so it makes sense there was a buy in here. what's interesting in terms as the day went on dynamics was you got buffered by the mega caps in the beginning of the day and the rest of the tape came around so it shows you signs of having a little more of that constructive rotation action that we got used to and in terms of are we are with the s&p, we clawed back to the levels where we kind of fell off a cliff on thursday at the end of the quarter. there was that mechanical sell-off i don't think you have necessarily kind of gone up in a way here, but i think it's net positive action here >> it's not just the mega caps,

as you say in tech, it's draftkings up 7%, roku, block, which is doing well, some of the biotechs, the ark innovation fund is having a more than 4% up day, and it sold out of its shares of twitter. take a look at shares of twitter, surging on news elon musk has bought a 9.2% stake in the company, making him the largest shareholder, outside shareholder. two weeks after musk polled people on twitter asking whether or not the platform adheres to free speech principles tesla also out with some delivery number over the weekend that slightly missed estimates the kacompany delivering around 310,000 cars expectations were for 317,000 cars despite falling short of the estimates, bullish commentary and a bullish stock reaction for tesla. what's driving it? >> well, a couple of things. first of all, it was not a huge miss this was not like they had a big dropoff in production and deliveries and also, when you take a look at the momentum they're building for this year, most analysts

believe that this is a company that should hit about 1.45 million vehicles delivered this year you have the texas gigafactory coming online. berlin started a couple weeks ago. they're ramping production there's a lot of momentum building here. >> mike, on the twitter story, talk a little bit about the filings. does anyone think he's really going to take a passive stake? then i want to get phil's take as well. >> it's sort of a choice to say at this point, i do not have plans as a 9% investor to try to affect change, to try and be hostile, to try and get board seats or anything like that. so you can file under the category of passive investor so obviously, it's a judgment call maybe there's going to be scrutiny on that there's also scrutiny on how long it has taken for this filing to happen when the purchases of twitter shares seemed like they were done maybe three weeks ago. all that stuff in the mix. obviously, not exactly a rule

follower, elon musk, but for now, there may not be specific intentions and as you can see, it's all about just sort of looming over twitter as a presence and having people follow him into this trade, which is why you have the stock up the way it is >> what do you think, phil and is it a risk for tesla shareholders he might get more involved >> i don't think it's a risk sorry to cut you off i do not think it's a risk for tesla shareholders look, elon musk has shown he can multitask with the best of them. whether it is with spacex, the boring company, neuro link, he has his hands all over the place, and investors are used to that in fact, i would say they kind of enjoy it. they like the idea that here's a guy who was out there thinking what can i do next what is the next move that we can make because generally speaking, he's been spot on with his calls. now t may not happen as quickly as he expects it to, but i think investors are pretty comfortable with what he's doing here. they'll wait and see

>> yeah, more s.e.c. fines, who cares. the question there is he did file a 13-g, not a 13-d, which would be more of an active stake, given the fact he put it on twitter and by the way, he put that out there before the disclosure came anyway, we'll leave it there for now. phil, thank you. >> starbucks the worst performing stock in the s&p 500 right now after founder and interim ceo howard schultz announced the coffee chain will be suspending its share buyback program in order to invest more in employees and more into stores the move comes amid a big unionization push by workers over there, and other challenges including rising costs and supply chain issues. kate rogers joining us now kate, do we know what types of investments starbucks will be making its in employees and cafes with this cash >> so, sara, he had a letter out to partners today, and howard schultz didn't say exactly what the investments would look like just yet in the cafes and workers, but remember, starbucks did announce last fall a wage hike of getting to at least $15 an hour from this summer we could see a wage hike there,

could be investing more in training and making the stores run smoother which is a big complaint of the workers seeking to unionize. what is interesting is how this is all received by the union when called schultz good and bad cop by making the moves and in their words, launching a vicious anti-union campaign. they're pushing back on him. it seems like this won't be enough for them just yet >> mike, i mentioned the stat earlier of the 21,000% increase in starbucks price as howard schultz has been ceo, and he had two previous stints. now this is his third. is he still going to be a shareholder friendly ceo because that has been his reputation >> no doubt, but most of that return, of course, dates back to when this was a tiny company in the '80s, went public at a relatively early stage and became ubiquitous. i don't think it's how he's done managing the mature version of starbucks and trying to balance all these countervailing constituencies i understand why the stock would be down today. the anticipated stock buyback of

well over $10 billion was significant. if you're removing that and the read is that howard schultz is going to be much more about stakeholder capitalism, an investment phase for the company, it's little bit of a change of message. not disastrous the stock was down quite a bit and is not that expensive based on its history, but i understand why you have those doubts out there as to whether shareholder first is going to be the credo going ahead. >> and at what cost is he going to fix this issue with workers kate, any more union votes expected at starbucks? we saw the successful staten island push at amazon. what else should we be monitoring for this space? the union had a big win last week with a new york city reserve roastery, the first roastery that wound up organizing and successfully un unionizing more than 167 stores have put putegzed for these votes as you mentioned, amazon, i think it's important for viewers

to remember, amazon had hundreds, thousands of workers voting at the cafes, sometimes it's just a dozen or two dozen. perhaps it's easier to get everyone on the same page. as f you have been following this closely, they have been notching win after win because they have been organizing successfully in stores, but it's spreading very quickly initially a month or so ago, starbucks workers united said it took off faster than theyiment anticipated. >> is that why the stock is down so much? >> a great question. a lot of restaurants have been struggling over the last few month and this stock has been down since the union push began last august. it's down about 20%, so it has been struggling, but that's not to say other restaurant names aren't struggling as well. >> thank you >> take a look at the chips getting a lift today amd announcing an acquisition today. a private cloud start-up for $1.2 billion it should bolster the data center start-up amid booming

demand in the sector lisa su was on "squawk on the street" discussing the purchase. >> high performance compute is the fastest growing, the most exciting part of the industry. and we have all of the components for it. so of course, we love our traditional pc and gaming markets, but the data center is the most strategic area. >> joining us now, bernstein research analyst, senior analyst, stacey raskin market likes it. how much does it change the amd story, which there's been some negativity around lately because the stock has had such a good run. >> most of the negativity recently has just been growth stocks have sold off early in the year, and people are getting more worried about the pc space, especially notebooks i think lisa is right that the real long term narrative here is data center. it's not pcs, not anything else. and data center is absolutely the growth driver for the company. i like this deal i think it makes a lot of sense. it bolsters their ability to offer data center solutions, especially in the enterprise

you look at this company they have been around since 2017 they have 100,000 deployments at numerous enterprise customers we have all heard of, goldman and ibm and microsoft and oracle tons of industry partnerships. i think this is going to be really good for them, and it also bolsters their portfolio. it's very synergistic with zylinx i like this deal >> who is most threatened by it? who of the competitors >> threatened by this? i don't know that anybody is threatened by it necessarily, but it is amd continuing to strengthen their data center portfolio and their data center offerings. so i guess amd's data center business in general is getting stronger, when obviously it's bad for intel. right now, there markets they play in are kind of a duopoly. i don't know that this specific deal is necessarily good or bad for anybody else, but i do think that it really does help amd strengthen their own individual

position, obviously, that's what they're focusing on. >> $180 billion market cap for amd, $200 billion for intel. you think amd will surpass the size is there any significance there? >> they actually did surpass them a few month ago i think amd's peak was at the end of november. the stock hit $160 i think at that point it did surpass intel. >> should it beabove it, i guess is the question? >> i think it could happen again. what was your questions? >> all right, stacey, thank you very much. >> earning season kicking off with the banks next we're. wells fargo says the street is too bullish. lowering quarterly estimates for goldman sachs today. joining us via phone, mike mayo behind the call, wells fargo senior banking analyst mike, why did you make this call is it the weakness we have seen in capital markets >> yeah, the equity markets have been pretty shot in the first

quarter and it's about relaying this to our estimates for the quarter. but i would say for each jpmorgan and morgan stanley, there's a little extra the big news for jpmorgan today is jamie dimon's ceo letter came out. and i would say i'm convinced on the direction the company is taking but not the details and jamie dimon doesn't disappoint he says change or die. and they're changing it's kind of jamie dimon against the world. he's talking about competition, not just from banks but from non-banks, neobanks, and shadow banks which are twice as large as the u.s. banks. remember, these are all nonregulated competitors, so jpmorgan is spending, buying, and paying whatever it takes to compete on all events. they say they want to be an international digital consumer bank on defense, they say they want to make the ship tip top shape, unquote, but they'll still have likely the greatest expense

increase in history, so the devil is in the details. so we need more information. revenues, returns, and key performance indicators for all this spending. we have one of the low estimates on the street for the year for jpmorgan, and for morgan stanley, the transformation with their deals, e trade, the engagement has fallen off and with the bond fund outflows have been happening for the industry as a whole, we think jp morken and morgan stanley don't look as good as investors think they do. we would prefer being with the likes of a bank of america >> because you like the whole mainstream banking theme better, given the weakness in the markets? >> absolutely. look, you have wall street banking headwinds, main street banking tailwinds, and we think bank of america is a better play on that main street banking theme. especially with the wall street headwinds being a bit more than we think consensus expects

>> you also like the regionals on that theme? >> yeah, we do the regionals have sold off big. look, in the first quarter, we think equity will get hurt from securities losses. the banking industry has $6 trillion of securities so don't think there aren't losses and all that means is book value might not grow or it might go down but after the first quarter, you start to have the best main street banking growth since 1984 and i just don't think people appreciate the magnitude of not only the top line but especially the bottom line as the tech revolution of banks allowed more of any dollar of revenue to fall to the bottom line >> can you just -- >> like u.s. bank. >> can you just clarify how the shape of the yield curve influences the financials? because we have seen interest rates rise and we know the fed is going to keep raising rates all that should be good for banks, but then you have this inversion in many key parts of

the curve, which typically signals recession. how does that all add up for the performance of financials? >> well, the stocks are being hurt by the sentiment. you have the two-ten year spread turn negative last couple days and so people are saying recession, recession, recession. i'm telling you from a bottom up perspective, i don't see it. but that's the concern out there. and the logic is fed rate hike, slowing economy, recession, self cy cyclical, therefore sell banks, and i get it it's like, you know, pavlovian dog effect or something. but i think that's wrong if you look out over the next year. because i think credit quality will be better than people expect even if you had a recession, you just started having loan growth in the middle of last year even if you had a recession, you won't have big losses. then you get this amazing main street banking tailwind. and expense control, you know, banks should grow revenue faster than expected. this is the moment for banks it might be the opposite of

other earnings seasons if banks have sold off, maybe now they recover once banks report can the past earnings seasons, you have seen banks get bit up to sell off >> sure. >> the first quarter might be the opposite of prior earnings seasons. >> mike mayo, thank you for jumping on the phone with the new calls, taking down the price target of jpm to $150. >> mike, what do you see in the internals? >> they have improved, almost 2 to 1 negative to positive volume it started off about 50/50 it's a growth led day today. also, here's the six-month russell 1,000 growth kind of catching up to value at this point volatility index also continuing to tell a constructive story down below 19 for today for the first time in a while. >> as we go into the close, we're looking at the highs of the session, up 37 points on the s&p 500. energy just joined the positive sectors on the day along with technology, communication services by far the winner thank you, twitter

and of course, consumer discretionary. the nasdaq is doing the best of the major averages, up almost 2% into the close 1.9% there goes the bell. the dow up 100 points. biggest contributors there, salesforce and microsoft as mike said, a growthy kind of day. that's going to do it for me have a good evening, everyone. i'll send it into "overtime" with scott wapner. >> and welcome to "overtime. i'm scott wapner you just heard the bells we are just getting started. in just a few minutes, i'll speak exclusively to glen kacher and get his best ideas looking forward to that interview. we begin with our talk of the tape the resiliency of this market on displace yet again today as the dow erases a big hole and the nasdaq surges. even so, some say stocks are still on the edge of another major pullback let's welcome in bmo's brian belski whose year end target for stocks is among the most aggressive on wall