strong it's been since the lows we saw last year, 34% above its 200-day moving average united rentals on industrials, 40%, and wynn resorts, 48% so, could they be some of the ones that fall the most because they have risen the most >> nvidia reports this week. we know hotels everyone has been bullish on >> yeah. good to see you, dom thanks for watching "power lunch," everybody. >> the new "closing bell" starts right now. >> welcome i'm scott walker this hour begins with serious questions about stocks and whether the rally to start the year is in the processof reversing, and in a big way. we'll ask super investor ke keith meister when he joins me for an interview we'll also set you up for coinbase and palo alto earnings in overtime, two stocks that have run a lot to start the year but our "talk of the tape.

today's weakness, what it means for your money in the days ahead. adam parker, founder and ceo, a cnbc contributor, is here with me at post 9 welcome to the program great to have you here >> thanks for having me. >> what is up with the market? we're cruising for our worst day of the year. it felt like the bulls had the upper hand for the last, you know, several weeks. are they giving that up now? >> i worry that consensus has shifted. we started off the year with the overwhelming consensus being, hey, we'll be down the first half of the year, up in the second half, i can't own anything that loses money, so naturally the market goes higher and the things that lose money go up the most i think right around now, i think the sentiment has shifted to things will be better, there will be money flowing in, the economic data have been strong, so, yeah, maybe the fed won't be as dovish, but the bear case in earnings isn't as likely so the market absorbed what i think six months ago would have

been interpreted as hawkish for the fed is okay. >> this is about how the rates are rising the more they go up -- and they've done so in a reasonably short period of time >> right. >> that's putting the pressure on stocks, right >> i think so. i think pause is now the new cut, meaning, like, you don't really want the fed to cut rates this year because that means the economy is nose-diving and corporate earnings are nose-diving when you wanted them to feel like things are eroding, not imploding, and maybe they'll hike less or pause but i don't think what you want is them to cut, whereas six, nine months ago, yeah, we want a more dovish fed. >> that's what everybody was hanging their hat on listen to mike wilson on the network today on why we got here in the first place and where it leaves us. here's wilson. >> we thought there could be a pivot on february 1st, but then of course the data came in a bit stronger and the feddoesn't want to give any chance to inflation rearing its head again. so, we think there's at least two more hikes, maybe three

going into june, and, you know, that got priced into the bond market over the last 30 days, but stocks seem to have ignored it so what we're left with is just stocks are more expensive, and there's really no justification for that because the earnings picture hasn't improved yet. >> right this is the idea you've had multiple expansion, based on what and now we're coming to the reality that, okay, well, the fed is not going to pivot, and if anything, because the data has been stronger than we thought it was going to be, they're going to remain higher for longer >> look, the worst thing is when you work at a big firm and you're bearish and you're wrong. i've been there, bullish, bears, wrong, right you'll be in all four quadrants at a big firm. >> he's been more right than wrong, though. >> i've been in that seat. you're in the hurt locker. to look, i agree the market is not as cheap as it was it's pretty expensive. semiconductors have gone from 17

times to 25 times. there's been big rallies it happens i think we'll be in a more volatile market. the setup for us is how do i outperform we don't do the market stuff because people don't pay for that we think of how we outperform underneath it. it's either cheap cyclicals -- a big down day today, copper, stocks are up, energy is outperforming. in the past with a big down day, those things would have been slaughtered. i think the signals are getting a bid and stuff that can go through 2024 earnings and cash flows will be better than 2022 so, i think that's still the recipe for outperforming what's interesting in the meetings we're doing, the growth guys are saying i don't have any cyclicals i can own, an envy of those guys the value guys, i wish i could get -- everyone wants something other than what they own >> most people are not positioned right >> they were short of companies and bearish on the market.

>> good to have everybody with us john, you've been arguably the biggest bull who's come and sat on this desk with me or appeared like you are right now you're not wavering one bit? >> scott, good to see you again as always. we were very bullish going into this year, and, you know, we definitely have some calls we've gotten wrong this we were overweight cyclicals and underweight defensives you had steeply discounted valuations particularly based on price-to-book. if you look at it historically, price-to-book leading out of the big downturn in 2009 are stocks as cheap as they were back in december when we were on set together no are there still tremendous values out there yes. you need to be more choosey. look for cyclicals that have pricing power. we have some exposure with cyclicals that have gotten

richer and run hard. some of the home builders are 50% over the past six months they have less pricing power, and the valuations look richer we've reduced exposure there if you look at reits, which are deeply discounted because of the 10-year, or life sciences, those are attractively priced. they have pricing power. i think if you look at defense, the fear that i have for investors is if you sit in defense and you wait for a white flag to be flown and say hey, it's now time to get into cyclicals, you'll miss the move. the markets are up 15% since the bottom in october, and the 10-year is only 25, 30 basis points off its all-time high that's telling me that the market is not going back to those levels, it's pricing this risk appropriately. >> you are making the assumption all along here that the stock market was in a sense, quote, unquote, right, and the bond market wasn't telling the right story, because the bond market has moved more in line with the

fed. it's the stock market that some would suggest has been delusional through this entire process. how would you counter that >> i would say that the bond market has been right because the long bonds controlled by the market the shorter end of the curve is controlled by the fed. the fed has been very aggressive on pushing rates as high as they can for inflation. that makes sense that's a mandate but the long bond has been telling them no. the long bond could be at 6 or 7. we have a steep yield curve. that would be better for the banking sector that's not what we have today. the long bond has stayed relatively low and you have an 80 bips inversion on the 10 and the 2. i would argue the stock market has said they're wrong and the lond bond has said they're wrong, then the gift that the investors got in december was that everyone moved away from cyclicals and they piled into defenses there's a reason smeshg down this year, pfizer is down this year, all these defenses are down it's not like they got bad overnight, but people overpriced

them, pushed the valuations too high, and traded a massive dislocation in cyclicals i would argue that the market was right in pricing that and the bond market has been right all along, particularly the long end of the curve >> brinn, what's wrong with the bull case here and now >> the bull case, the market was game, set, match, the fed is done, we're going to move on, have a v-shaped recovery the bond market has to respect the stock market what i have not understood is the fed saying we're in a new bull market. i have yet to see in history that start while the fed is still raising rates and we have q.t. unfortunately, we're in this trading range, and i look back to see the last time yields were at this level, cott, the nasda was about 10% lower and the s&p was around 3,900 i don't know if we'll get that, but investors need to understand that on top of that, scott what the bulls got wrong, what i think the bulls got wrong is i've talked about this sentiment and

positioning. the first five weeks of the year, we had this massive short covering from the ctas and hedge funds. and that's been covered. so the energy to move higher has to go to something else. while it's been nice to see a nice beginning to the year, we're back to reality that the fed isn't done and inflation isn't going to go straight back down to 2% i think we'll be in this muddled area unfortunately where you have a little bit of something for the bulls, a little bit of something for the bears, but i think these extreme calls will be wrong on both sides i think we have to muddle through the next few months. >> what do you want to say about that >> i don't think it's about the interest rates, the 10-year or the 2-year i think it's about perception of rates, the fed fund futures. >> they've gone up quickly >> they get incrementally better from here. they're getting incrementally hawkish. i don't think it's the level i thits the fed fund futures

>> you had this super strong employment report. that is when it all started. bond market moves. fed funds futures move the alignment, and the stock market blows it off the stock market didn't seem to care >> because it was about the bear case in earnings having a lower probability, not just the hawkishness. you have to do both. >> no landing, right not taking into consideration that a strong economy only antagonizes the fed more >> the market has a distribution of outcomes. there's a probability times a base, a bull, and the probability of the bear case went down because the economy was better than people thought, at least for now that's a realistic data point. on brinn's point on short coverings, i would say those who have been most successful making the money in the last 12 months have been the platforms. they have big balance sheets so they might run $80 billion but $40 billion gross. so it's tricky because it's not are they done covering, it's are

they done borrowing money from the big three or four. they could gross up going bigger forward. it can last painfully long that's the only pushback i give on brinn's point there >> just want to make everybody aware of what we're watching on the screen 662 the decline on the dow we could have the worst day of the year on the three averages john, wrapping up our conversation, you don't think that much of this year's rally was due to, a, just positioning, and, b, what mike wilson suggests, this false notion that a pivot was coming and that led to a big woosh higher and a lot of the most beaten-up names that were just ripe for a huge bounce, and you throw on a pivot on top of that, and that's why you've got some stocks up 60% to start the year >> a lot packed in there there were some bonus rallies. you had stocks beaten up, short covering i agree.

you also had high quality stocks up a lot, nvidia -- >> up 60% in six weeks >> that's a lot. that's a lot that's a lot but i would argue that that's not just short covering, okay. going up 20% off the low is not just short covering. i don't think that's all that. i do think you dig up a positioning stock going in with wide dispersion between good momentum stocks and bad, when you have that, you set up a nice january. what i would say, though, if you step back, big picture, everyone seemed to agree that the back hatch of this year was going to look good, okay. everyone seemed to agree that was consensus. now we're two months into this year, okay, moving toward the end of february. when are you going to get in what are you waiting for are you waiting until june 30 toth say now is the time to buy stocks i don't agree. you should be layering it.

we need consolidation. the market was looking for an excuse to pull back in my opinion. home depot gave great excuse home depot did not give bad results. they gave moderate result, and the market is selling off hard i think the consolidation days are kit critical for long-term investors. if you're performance chasing, you're scared today. that's not the reason you should be in the stock market >> all right that's the last word appreciate it. brinn, thank you adam at post 9, see you soon >> thanks for having me. let's get to our "twitter question of the day. is the early-year rally over yes or no. you can vote we'll share the results coming up in an hour. we are just getting started on the "closing bell." up next, star investor keith meister joins me at post 9. what he is forecasting for stocks and what he thinks the fed's next move might be and we'll talk about his portfolio.

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welcome back where we stand here, got about 40 minutes or so to go in the trade before "overtime" begins the dow down 662 a rough day. industrials bad, discretionary not surprising given home depot down about 3% is that sector kristina partsinevelos is here >> investors saying sell auto nation, suggesting it's overvalued and recent acquisitions won't help with the

growth near term they're down 7%. they're downgrading sonic automotive, also down 7% both sonic and autonation hit all-time highs last week carvana is the biggest laggard, shares plunging over 10%, this ahead of earnings out on thursday the company also says they hit their ten-year anniversary today. happy birthday >> not a happy one thank you. kristina partsinevelos we'll see you in a little bit. stocks are down sharply. some are saying even more weakness is ahead in coming weeks. keith meister is the founder and chief investment officer what is your general view of where we are right now >> we're micro investors, but we need to let the macro inform the micro. last year was about the move from qe to qt and this year will

be about the move from interest rates being zero to some higher number over the last six weeks, the terminal rate for fed funds has increase chris christied by 50 basis points, and the data that's come in says the fed has more work to do. my sense coming into the year is sort of unchanged, a choppy year, a year of dispersion the markets repriced a lot last year thought this was going to be a tough year i think we're all surprised by the move this january. i heard earlier in your show you were talking about positioning that was a big contributor the economy being stronger was a contributor. china reopening. mike wilson today talked about liquidity from stimulus in china, from yield curve control in japan, from a weaker dollar all these factors sort of drove equities up in thebeginning of the year but the fundamental backdrop did not change and that fundamental backdrop is how much more work does the fed have to do the any economy is strong. and if interest rates are higher, what are equities worth?

and our general view is it will be a choppy year if you think about the risk premium for equities, a week ago it got as low as 150 basis points, so the excess return you make in yield on the equities versus bonds so it's, you know, not great asymmetry on the equities. with that said, there's always wonderful one-off opportunities, and my guess is this year people can create good value, being good stock pickers, knowing businesses well, finding idiosyncratic events, taking van of short-term dislocations the good news is there's not mass disruption problems companies have a lot of self help >> like the mega cap tech companies when you say self help, right-sizing their businesses the question for those, and you've been involved in several throughout the years, is whether they have right sized enough or whether their valuations have

right sized enough too >> silicon valley are not great costcutters. however, everyone has gotten the message and each company will do it differently my guess is what they have going for them is they have a lot more self help than the average widget manufacturer that over the last 13 years of a good economy has probably opt miced their business how do you make money owning an equity you make it if you have multiple expansion. >> which we've had >> and probably not going to get from here. our multiples are probably at peak levels or some multiples become a headwind. what is your tailwind? it's earnings growth if the economy is slowing, dough hou do you make 20% on a stock need 20% eps growth. you won't get that from most data-slow businesses unless they have levers to pull or one-off idiosyncratic events we're trying to find a managed portfolio.

>> i want to talk for a moment about your 13 things, which tend to be misleading, backward looking, and between end of year positioning and tax loss, i want to make sure we're on the same page the recent one said you cut microsoft and google and sold out of amazon. what's the real status of those names and how you think of them? >> we still have some exposure to all three names we think they're unique businesses we found a better way to own that exposure was by selling long-dated puts in those names volatility was high in the market we believe there's a cap to the upside use google as an example if you can go out to january of 2024, volatility is probably in the mid to high 30s. you can sell a put at a 20% discount to the share price, so $75 or $70 put, bring in $5 or $6, okay that's a 25 delta.

so at the equivalent of one delta you'll make a 20% irr, and the only way you don't make 20% is if google is down more than 20%. it's a business that grows next year, $6 of earnings. if you have to buy the stock at $70, it's a great value. in a world we think is going to be choppy, right, doing things that are a little hard, taking advantage of what the market gimps you is of more value during a period of qe, all you had to do was buy the easiest, obvious things your multiple was safe and you had the earnings growth. in qt, you get paid for complexity if we can invest with companies with complications, with value add, it's worth more to do now because beta's harder to get with that said, still with microsoft and google and amson, the greatest businesses in the world, but maybe own it through the different structure. >> talk about incumbents most recently i've had conversations with investors and

they use uber as the example, which i think you own. >> yep >> yaep. versus a lyft, for example and in a zero-interest rate world, all things look equal the start-up, nipping at the heels, can compete with the incumbent. but with these interest rates you separate yourself from the pack is that a fair way to describe what's happening with uber, lately, which seems to have a kick-start here? >> i think that's right. there are some one-offings that affect uber, but incumbency is a powerful thing when capital goes from free to very expensive. when it's free, uber is competing against subsidized business models. they have the largest gross market value, the most activity on their platform, is effective will profitability break even, then capital goes from free to expensive, plus it's hard to get. that means less competitors.

so uber should be in a much better competitive today if you knew capital would get expensive, you'd want to spend it recklessly while it was free. the best example, the dotcom crash and amazon they spent the capital, built the mote, and they won whether it's uber and ridesharing and food delivery, whether it's a few names that were invested in sports betting, we think there's a bunch of companies that will win from incumbency so, this concept of rates going from zero to five doesn't necessarily kill everything. it creates winners and losers. our gross is pretty high right now and our nets are relatively low because we think it's a really good environment for traditional long/short investing and markets will end the year on a relatively tight range where we are but you can find value in

some businesses. >> before we take a break, it brings to mind this idea of what's run to start the year unprofitable, tech versus profitable when you see the kind of moves that you had in the highly speculative names, the highly short names, what do you think about? are you thinking about increasing your short exposure to things that look just insane to you what do you think about? >> it's clearly positioning. and it's clearly, you know, maybe there was a fear inflation was out of control and we've gotten it more under control but we don't want. to go out and buy business models that don't work that are based on tam we've slightly leaned into shorts on high-growth equities, but we try to avoid the names that are the -- it's a hard way to invest, but there's way to play it. i would say on the margin we've been betting against the recovery in tech and prefer to

aern the high quality. >> we'll sneak in a quk brk.icea we'll come back with keith meister. but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine.

welcome back to "closing bell." keith meister is still with us, founder and chief investment officer of corvex management individual stocks. salesforce you own it right? >> yes >> there weren't enough activists in there for you >> let's call it the efficient market theory. we bought salesforce last year because we thought it was a great company that had been overly punished by the market. and, you know, i think it's very rare you see a great company that had been hit as much because there's one-off events that caused a crisis in confidence at salesforce the business model didn't change they sell a product everyone needs. it's a deflationary force in an inflationary world 90% of their customers reup

every year they sell more to the same customers every year management changes, some acquisitions that didn't go the way people expected them to, and just software and tech stocks getting hit, all occurring at the same time, created an opportunity by one of the best businesses in the world at a discount to market multiple. n they were trading at $130 at the beginning of the year. if you want to be optimistic about the world, lots of smart people bought it because it was a cheap and marc benioff was an enduring founder and created on of the best businesses in the world. however, sometimes founders can, you know, have one unique skill set that is their strength to build these companies, but often that strength can be a weakness at times as a manager. >> you any the presence of the activists is a plus for you in your -- >> i think for all investors,

whether it's the activists who are there, the reality, i think positive rate of change is going to occur at salesforce, and the market gets that and forget who gets credit or how or why it happens, you know, i said you're only going to make 20% on the stock if it's free cash flow growth at 20% a year there are very few companies that have that salesforce with so much self-help has the ability to do that, and they can take a business that can grow revenue at 10% or 15% a year and turn it into five years with an amazing business the market gave you a one-off opportunity, and my bet owning the stock is i think marc benioff is aligned with me and will ultimately do great things for shareholders i'm happy to own the shares, i'm happy people are doing what they're doing, and i'll watch what happens and i can make a great return >> activision, is that an a.r.m.

play on the deal getting done? >> another example of exactly the same thing an idiosyncratic event with a great product and cycle. microsoft buys it for $96, a big return from the low 70s at the start of the year, or the deal doesn't happen, they get a breakup free, they have billions of cash, they'll do earnings this year, and you're buying a great business with a huge product with "call of duty" at a discount either way we can win. we can use an options structure where most a.r.m.s want a hedge price. we can say we're thrilled at 60 or 65 and use that premium tied to the deals happening if the deal doesn't happen, we don't lose money if the deal happens, we make a lot of money it's finding deals we think are

value added. >> lastly, iac, new position barry diller >> i've been on the board of mgm with diller and jim for many years. they're really smart people, they own a lot of stock, and they want to take a commonsense approach to co-do what's right owners i'm on the board half the asset value of iac is mgm stock, and i get to guy bye that stock at a discount through iac. if you take the value of mgm plus the cash they held on their balance sheet, i was paying plus or minus $10 for everything else that $10 could be worth $40 or $50. so once again, very asymmetric i understand people were sending it at the end of the year because they were tax loss harvesting theyed a a bunch of businesses to lever in e-commerce and they bought a big asset at a

time when advertising turned and they had some hiccups. they'll get it fixed lit work ultimately, whether it's meredith dot dash, care.com, you're getting paid to own those assets and paid to be with joey and barry. it's the right time to trade for this market. >> a great way to kick off our new "closing bell. appreciate you coming down >> thanks for having me. >> keith meister right here exclusively at post 9. let's look at where we stand here again, we were trending for our potentially worst day of the year for all three of the major averages the dow down a little less than 2% it's at 33,212 really watching the s&p 500 over the next 20, 25 minutes or so to see if we can hang on to that 4,000 level. want to try and close above that key level. the nasdaq the biggest loser today along with the russell we're tracking the biggest

movers heading to the close. kristina partsinevelos is standing by with that. >> we're seeing prices erupting in one sector dragging down the sdnaaq 100 i'll tell you who's involved after the break. at morgan stanley, old school hard work meets bold, new thinking, ♪ to help you see untapped possibilities and relentlessly work with you to make them real. ♪

we've got 20 minutes before the closing bell rings here. the dow jones industrial average is down by 650 that's a near 2% decline s&p 500 at a critical level as well just above 4,000 we're going to see where exactly we close there nasdaq has been the biggest loser throughout the day nasdaq, technology, growth stocks moving lower. kristina partsinevelos is back with what to watch

>> margin compression, growing price wars among chinese tech names are weighing on the nasdaq jd.com plans to spend $1.5 billion to better keep with the owner of the pinduoduo app pdd almost down 10%. and dill a larddillard's is dowt now, its worst day since november 2021 after they posted weaker sales at the start of the quarter and during the important holiday season, leading to higher markdowns, aka margin compression. they plan to close three stores this quarter >> thank you kristina partsinevelos last chance to weigh in on our "twitter question of the day." is the early-year rally over we'll bring you the results after this break don't miss the north kea ut -

norfolk ceo al an shaw

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our twitter question near 59% said the rally is over. we are in the "closing bell" market zone. our commentator mike santoli to break down the trading day erin is here and dan ives from web bush has a look at palo alto ahead of those key reports, a couple stocks that have moved a lot to start the year mike santoli, you were tracking for the worst day of the year for all three of the majors as rates continue to go up and stocks look unsteady >> and a pretty steady bleed

lower, a little bit of a different feel, almost a 2022 feel, kind of repricing stocks a little lower in the face of those much higher yields versus a few weeks ago. what i find interesting is it's the worst day since december 15th and there's a lot of -- we were kind of going sideways for a few weeks into mid-december. we basically went down 2.5% that day. we continued lower and chopped sid sideways people thought that was it it seems like a similar setup, only 100 points high owner the s&p versus what we were then i don't think you say all of a sudden the entire start of the year was a mirage, but this was the pullback we built up the cushion for coming into february >> the question is how much more pain is ahead. according to our next guest, there could be more. erin brown of pimco says the higher likelihood of a no-landing scenario for the economy to keep the pressure on wall street, joins us now. a catch-22, right?

economy is probably better than you thought it would be at this point. that only provokes the fed to do more, doesn't it >> i think that's exactly right. i would agree with your poll showing 59% think that the strength is in for the market and that we might see lower prices from here there's been a real dichotomy between what the fixed-income market is pricing in and what the s&p is pricing in over the last month and a half. you've seen yields move higher and equities also move higher as well the market isn't pricing in the fact that fed tightening still has a ways to go in terms of working its way through the economy. so the stronger the economic data is, the more potentially the fed's going to have to tighten rates. and that puts equities in a position where they're vulnerable right now >> i find it so interesting. it feels like the bulls have had the upper hand, and now we've had a few bad days and all of a sudden, erin, it feels look it's

over are we too quick to say this is done >> no. i don't think we're too quick to say that it's done there's probably better days ahead for equities but i think that's likely going to come in the second half of the year after we've seen downward revisions to earnings, after we've seen the fed truly go on pause, and after we see bond market volatility subside we're not there yet. we have estimates too high, bond markets which are too volatile and yields moving higher, none of which is a good environment for equities >> mike, it brings to mind how very much. this rally is viewed as guilty until proven innocent. >> yeah. >> and it underscores how quickly sentiment can change in an uncertain and uneasy market >> it's also interesting because the two clusters of high conviction, if you went back a month to the start of the year, one was, look, the breadth of

this market technically speaking got liftoff. we might be in in v a new bull market it looks like you have to trust the tape the other not of conviction is all the lindications of recession, continued high-pressure economy, running higher, stickier inflation, better growth, tight labor market where the fed has to do more that challenges both for now but it's happening at higher equity levels. it's happening at a higher base of earnings. the earnings in the s&p in 2019 were .60 a share doomsday going down to 200 if it continues sliding lower. it's negative but in a range >> erin, you've been a nonbeliever in the things that have gotten us to this point of this year. do you expect that we're going to go back to the 2022 playbook, if you want to call it that, stay with what led last year, don't believe the hype of any of this stuff going on to start

this early year? >> so, i think that you're going to see a change in sector leadership for sure. defensives have outperformed the cyclicals have been the junkier names. i am a disbeliever of that rally. i think what you want to stick to is the high quality names, the health care sector, utilities, consumer staples that have good, solid earning growth will not get hit hard on margin pressure the names that have rallied year to date, the consumer discretionary names in particular, up double digits, to me there's risk in those names when you're hearing from companies like home depot and walmart about the increasing pressures they're dealing with from higher labor and higher interest expense and higher taxes. to me, i think there's going to be a real rotation in sector leadership, and i would stick to the high quality companies that are defensive in nature and able

to weather the storm of potentially a cyclical down turn >> tough day for depot erin browne, thank you very much jonathan, you told us on friday that may be a critical signal as a turning point. okay here we are. we're barely hanging on to 4,000 on the s&p what are the charts telling you now? >> it's a continuation of thursday western with you. it's that over the last 18 months there's been this lead effect where rates have bottomed, started to move up, equity is to some extent ignored the move-up in rates for a couple weeks, then equities kind of follow suit and follow bonds to the downside. i think that's what we're seeing now. it's coinciding with broad-based momentum that's rolling over on the s&p, similar to what we saw in april and august and december of last year

so, you know, as far as absolute levels, you know, we take away the evidence approach. everyone's got their levels. that's less meaningful to us but, you know, the next levels we're watching kind of around the 3,940, 3,979 range of the s&p. a confluence of the moving averages >> we're at 4,001 on the s&p let me ask you plainly if we close below that level, is that meaningful to you >> it was 4,100 earlier that was important because if you think about the rally at the start of the year, we broke above that and consolidated there for a couple weeks that led to a bit of complacency. i think the market has shown in bear markets these bullish consolidations or bullish patterns have a propensity to fail, right. so we had several weeks above 4,100, couldn't push above it. 4,000, it's a nice, round number

but doesn't hold as much significance >> mike santoli, as we trend lower again, very well will have the worst day of 2023 for the three majors you watch the technicals as well as anybody >> i would say very similar thought. i think there's a lot of attention on the round number strike prices for a lot of the short-term things out there. people have leaned on the idea that matters and kind of the tail wagging the dog but i do agree the 5% to 7% off the highs which gets you to the 200-day average is what you would define as a normal pul pullback i understand those types of routine setbacks have not played out in a bullish way for a little over a year right now, but right now it's too early to say it's game over in december, if things looked like they were getting momentum, the downside didn't get there. >> looks unsettling to see 3,999. we are walking you right up to

some critical earnings in "overtime," coinbase preparing for results. dan ives of web bush securities, has an outperform rating and $75 is the price target on the stock. good to have you on "closing bell." the stock is up 80% coming into this report. really >> the street is expecting a rip the band ai-aid off quarter there's some stabilization for 2023, and i think this is a big quarter for coinbase i view them as a fork in the road in terms of how they navigate that call >> yeah. what about competition i've got a lot of things on my list, right, of worries, theoretically, that don't seem to be worrying you with the outperform i got competition. talking about fidelity and others regulatory crosshairs. and by the way, the surge in

crypto to start this year, the word on the street is that hasn't been led in any way by the retail investor, which would play right into coinbase's hands. it's been the opposite you have no to concerns about any of that? >> oh, clear concerns. there are dark clouds everywhere you look, right? for them it's really can trading start to come back they've cut costs. they've had stabilization in terms of cash per share. then you have the other businesses that are starting to ramp up. i think those are the bigs for 2020 no doubt, there's still a lot of wood to chop here. our call was it was way overdone you each had a huge rally to start the year no doubt it's a prove-me stock in a seminal quarter >> down 85% last year, up 80 to start this year. and how much of how you view this company is tied to where crypto goes in the near term >> well, look, i think crypto is

clearly key in terms of levels we're seeing there obviously, i think what i view as sort of going forward, they need to prove not just from a trading perspective but institutionally as well as their other businesses so, it's about blockchain in terms of the broader strategy. i think that's why 2023 is going to be a significant year one way or the other for coinbase. we're more optimistic, but no doubt there's clearly some tough days ahead here they have to navigate >> i hope you don't miss our interview tomorrow speaking of coinbase legendary short seller jim chanos will join us in the "closing bell" tomorrow. cannot wait for that interview we'll see what coinbase has to deliver and what he has to say about it we're walking you up to palo alto networks. it's been your, quote, unquote, table pounder out of the cybersecurity space. what are you looking for here? another stock that's gone up a lot to start things off.

>> yeah. scott, cybersecurity has been the rock of gibraltar sector in terms of spending. i think palo alto could be 25%, 28% billings ings growth. i expect positive guidance it's a double table pounder. this is our top security name with others. that's what's proven during earnings cybersecurity is a massive area of strength despite the skep tings going into the year. >> i know you like it, but frankly, i mean, how can anything be a table pounder in this environment doesn't that sound dangerous to you? >> oh, yeah. i mean, look, i think it's been a dangerous market for the last six months when oi i look at the free cash flow, i look at the threat levels we're seeing around the world and how palo alto is, a stock much higher over the next

three, six, nine months in cybersecurity, it's an underestimated sector and that's why it's our favorite subsector with cloud >> are you worried if there is a pullback in these more throaty names that have run a lot, that this is will get caught up in the down draft, shoot first, ask questions later sort of market >> clearly that could clearly happen. our view is not to the next day or the next week where is the stock in the next 9 months, 12 months. palo alto has been a favorite of ours for many years. it's still discounted relative to the growth opportunities. >> i'm going to let you run. we'll see what happens in a matter of moments with coin and palo alto. dan ives of web bush joining us. we'll finish things up with

santoli as we look at the dow jones industrial average down by 700 points going to be the worst day of the year for all three major averages what are you thinking about? >> obviously, the crosscurrent of concern about what the fed's going to have to do to the economy at the same time that big retailers talk about, you know, being really careful about margin expectations, came together in a pretty tough way for the tape today what i do find interesting is we've seen early cycle leadership for months. u.s. steel is up today you've seen this weird combination of heavy machinery and raw industrial metals working and consumer cyclicals having hesitation. existing home sales today underscoring that as well. the market is not sure about how this goes. there's a case to be made that we front ran the fed tightening because we started going down hard before they even hiked

once we kind of front ran the implications of the recession. maybe now it's time to figure out whether we've take than a little too far in front running that we're not going to hit a recession problem. i don't think it's easy on a one-day basis to figure out where we've gone except for repricing in accordance with what the 10-year is doing. the yield is looking stretched in the short term. see if you can get relief on that after the mid-3.90s >> do we get too excited about the theoretical strength of the consumer that's given people the idea of soft or no landing i bring it up because discretionary is down today and it's been the best sector year to date. >> i don't know if we got too excited. the narrative did shift, to january was a powerful consumer momentum, we had the jobs, the retail sales we could look back and say there was seasonal adjustment and warm weather,ing so be careful e

extrapolating that >> is tech the most sensitive? d nasdaq down 2% as we head towards the close here we're watching that. the worst day of the year. dow down about 700 or so "overtime" begins now. ugly day on wall street. welcome to "closing bell overtime." i'm jon fortt with morgan brennan. we have results from coinbase, palo alto, and toll brothers and jpmorgan's chief market strategist joins us. >> and the ceo of norfolk southern after