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tv   Closing Bell  CNBC  March 21, 2023 3:00pm-4:00pm EDT

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announcement, chinese stocks sold off. tomorrow, if we get that announcement, we'll see if that changes the story there. >> great point. we've got china to watch, the fed to watch. >> thanks very much. before we go, tune in at 1:00 p.m. tomorrow. the exchange and powers, we're going to merge like ubs and cs, we've got full coverage, leading up to. i'm supposed to look right there. up to and through jerome powell's press conference. it's the words that are really going to matter. thanks very much for watching "power lunch," join us tomorrow, closing bell starts right now. welcome to closing bell, i'm mike santoli in for scott wapner. we are live from the new york stock exchange. this make or break hour begins with relief, lifting bank stocks and the broad index as well as suspense builds ahead of the crucial fed decision. a group up 5%, a two-day bounce in that sector. that brings us to our talk of the tape. is the market's rebound this week showing underlying
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stability or vulnerability to a nasty surprise that might come. joining us now is jason hunter, j.p. morgan's head of technical strategy. jason, it's great to catch up on all of this. it's interesting market action. we had a scare, the s&p 500 never quite broke down, stayed above the december lows. we're trading right now exactly where the index was before silicon valley bank started to melt down. the volatility index spiked. does that mean we have absorbed a panic and it's resilient or risk of the downside ahead. >> on a near term basis, we pointed to the 39, 50 area. you can look at the last two months of price action, looked like a top. moved down through the wild moving averages, a couple of cta trend following levels in the area, had the potential to trigger downside, risks to the downside there. the move back above that.
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move above 4,000, you'll table the bearish momentum. that got us negative, going into november. that's still there. we think it's very much a limited upside story with asymmetrical risk to the downside. there's that risk as we move forward. >> the s&p is five points from 4,000. i don't know how precise we want to be about the trigger level. the manner it's held together, a lot of talk coming into this week about the large growth stocks. strong balance sheet companies, the old megacaps that did hold the index together. is that a sign of some kind of healthy rotation instinct or do you feel like that's just a narrowing of the market you have to be aware of. >> what you normally see as cyclicals, the first to come under pressure, money rotates into the stable earners, secular growth, and finally the true
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defensive plays. usually that would occur as the old curves head toward inversion. we have been inverted for roughly a year now. so at this point, that rotation into stable earners, you know, quality, we think it's a little late for that, and in fact, some of our modeling, if we think there's limited upside, there's probably more for things like the nasdaq 100 at this point, given the flow we have seen, not just more recently, even in early january, a bit of a position squeeze that drove the nasdaq higher as well. >> you'll hear folks that are, i guess, looking at things half full, and they'll say, look, semiconductors have outperformed, they look pretty good. coming into this phase, you did have cyclical sectors that were distinguishing themselves. it seemed to be sending a relatively reassuring economic medication. whether we can believe it or not, banks falling apart. probably never good in any of these scenarios. i wonder how you read the leadership profile. >> a strategy team, negative
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coming in. when you hear stories about china reopening, not only semiconductors, but basic materials, industrials, deep cyclicals, getting an enormous bid into january. that concerned me. if that persisted and made the case for a pmi cycle bottom, we would have had a problem with our view. as soon as you got into early february, the china centric story started to fade, and more recently with the panic type trading we have had in recent days, cyclicals came under pressure. european autos, you can go down the list with one exception, semiconductors, that not only held the bid, they caused an additional bid, and acted like secular growth. we wrote that semiconductors have a bit of an identity crisis here. there is rationalizing, these are no longer cyclical plays, these are secular growth stories. number one, that story is very stretched on the same modeling that makes the nasdaq overmodeling now.
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semiconductors, using expectations, semis are incredibly stretched, and we argue that the 3,200 area on the sox is probably something of a semiconductor index. >> i wonder if that's a read on nvidia being so much bigger and more of a force in the index and the semiconductor index. and it itself is surrounded by secular growth sentiment. it seems like it might be that kind of a profile, the market care dominator in that sector. now, to be clear, you're thinking that we have to go back toward or to the october lows in the s&p. eventually this is going to work down that way. >> that's correct. basically we get a retest of the lows. recession-driven bear markets that's something of a more muted bear market when you associate with the recession, simply retesting 3,500. and what would really, you know, bolster that view and what we have been watching most closely is across the market, when we look at the fixed income market. if we see a continuation of the
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bull steepening that we have seen in recently days as the cyclicals came under pressure, if that is reinforced as equities start to sell off toward that 3,500, ironically, it's the bad that will make the good, a market that looks forward and sees the fed will pivot as we get into the second half, and we'll look for things like cyclicals to outperform, the deep cyclicals that you normally look for. but for right now, the point is we still have to get through the down before we can get to the up and people should be focused on risk management at this point, especially where markets are at this point. >> just to be clear for folks, a bull steepener, exactly what's going on as people are positioned. let's bring in nicole webb into the conversation. you have been focused on, i guess, defense or quality, within your portfolios. so i would assume you're also not really too concerned about upside risk, perhaps no matter what happens tomorrow with the fed. >> i mean, the clients of our
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firm are looking for us to be kind of prepared for various possible outcomes, so when we think about the fed's decision tomorrow, it seems to us that, you know, in either direction, the fed is a bit vulnerable. as we're looking at positioning through 2023, to us, the probability of the economy eroding to some degree is much greater than the probability of expansion. and so similar to the points just made, we expect this range to be tested back to the october lows, a bit to the high side that we've seen this year. some of this growth versus value, who is coming out ahead, some of those duration trades, those themes continuing to be a bit omni present as we watch for more of the data to roll over in terms of the tightening we're seeing in the financial markets, and that's pushing through to bring us to the resteepening of the yield curve and the far side
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outlook of this year. >> what would you say to those, and this has been thrown out there multiple times in the last week or two, which is that all of this upheave l in the banking sector has pulled forward the moment when the fed is done hiking rates. who knows if it leads to cuts down the road, but it's relatively low cost in terms of the damage done in order to get to that point when we were thinking a few weeks ago, fed's got months and months and is going to get up to 6% on the short range. is there any merit to that type of thinking? >> it certainly appears that the market is working in the assumption that the fed is going to become more dovish. i think many of us are more waiting to hear what we hear than what action the fed takes tomorrow. to your point exactly. because there's some question, is the resilience of the market
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thus far for the wrong reasons. if we suddenly pivoted to the lower expected terminal rate without the meaningful progress but instead issues specific to the banking sector, in terms of how quickly rates moved, and some of the underlying fundamental pressures there, that's not the same as seeing kind of meaningful reduction to services inflation, to wage growth, to the structural changes in the labor market. so those issues are still there. but yet we have to factor in the strength and resilience of the financial markets as a whole. it will be very interesting to see how the fed plays through that, especially after watching how the ecb took action last week. >> jason, you mentioned that in bear markets associated with a recession, you expect this particular type of pattern, right? a retest down toward the lows, and maybe we're closer to being in the recession, i suppose.
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what cycle does it seem to be echoing if there is one or various types of instances? >> i would say if i had to pick one, given how much damage has been done already before we've even gotten close to recession data, if i think about how the market is going to bottom and when the data materializes, the early 1990s. if you wait for the recession data to show up, the equity market was rallying. our thinking is it puts it slow, and as we get towards the end of the first half, and our own economists don't think the recession data comes until later. at that point, if the market is efficiently pricing the fed to start pivoting, as we start to see that data in the second half, the equity market reads ahead and rallies out of that. i'd have to pick that one. >> it's a good mental model of how things tend to go in sequence. if you could be more specific about what appeals to you right now in terms of your portfolios
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and sectors and things like that that make sense? >> yeah, absolutely. really starting last year, we started to hyper focus on quality, and to us that specifically was looking at companies with strong balance sheets and consistency of cash flow, and so when you tilt that over into a more slightly defensive posturing, we're looking at health care names. some of those that haven't performed in the same way as others. a name that comes to mind is johnson & johnson. we still like merck, although we have seen a run up in that name, versus over the last six months, how j&j has performed, and just with the consistency of cash flow through various outcomes. we still are holders of longer duration quality bonds, individuals. as we believe that could play out in one of the scenarios in which we do go into a mild recession, and then continuing to barbell growth and value as
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they continue to kind of have these meaningful waves of under and outperformance, relative to where the market is headed. those are our top three positioning plays right now. >> yeah, those rotation swings have been pretty rapid recently in the past several months. nicole, jason, thank you so much. appreciate the time today. let's get to our twitter question of the day. we're asking what is the fed going to do tomorrow? pause, hike 25 basis points, or do something else? head to@cnbc closing bell, we'll share the results later in the hour. let's get a check on top stocks to watch as we head toward the close. kristina partsinevelos has that for us. >> hi, let's start with shares of coin base surging rite now. to start allowing crypto purchases with brazilian currency, the government platform has about 140 million users, but this is about adding further legitimacy to
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cryptocurrency. crypto, bitcoin, up 21%. there's more support for crypto, driving one analyst, to give coinbase, a huge price target upgrade to buy, of course, from 65 bucks to $200 a share. coin base is only at $84.46 at the moment. you can see shares up over 12%. switching gears, for nato realty trust is firmly in positive territory. analysts upgraded the stock to neutral from underweight. they note the market's view is bleak. even though office life is changing, the office isn't going away entirely. we'll keep doing his business. >> reassuring in its way, thank you very much. we are just getting started here. up next, treasury secretary yellen speaking in d.c. on the state of the banks. we are live in washington. plus, how you can best trade the financials where one investment strategist thinks you should put your money to work, despite the uncertainty.
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that is all after the break. the index is after the highs of the day. s&p 500 is (vo) is three hundred and ninety-one thousand four hundred and thirty-four square feet... enough space for your ambition? loopnet. the most popular place to find a space. you'll always remember buying your first car. 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.
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treasury secretary janet yellen speaking today at the american banker's association in washington. kayla tausche joins us with what she had to say. >> she said the banking crisis is stabilizing with outflows flowing down, and the u.s. banking system remains sound drawing a contrast, a stark contrast to the 2008 financial crisis, which touched nearly
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every bank, and while yellen chalked up that confidence to the government's swift and decisive action to keep any systemic risk in check, she said regulators are vigilant and may still need to do more. >> it's our intention to remain vigilant in the days and weeks to come, and as i said in my remarks that means potentially intervening if a smaller bank experiences the kinds of difficulties we have seen that pose the risk of contagion. >> across town in washington, top bank executives are gathers with the financial services forum, that's a meeting usually attended by the senior most government financial officials. that meeting is usually to discuss policy issues and it's been previously scheduled. it does come as executives are keeping first republic bank afloat, and discussing contingency plans for the $30 billion deposit investment,
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mike, and certainly that sale process is underway. but banks want to figure out exactly what their exposure and risk is to that bank, and what they can do to keep it solvent. >> for sure, kayla. and secretary yellen's remarks specifically mentioning if a smaller bank were to have trouble. clearly there's a little bit of a hesitancy to make these broad, anything that could be read as broad guarantee, perhaps because they're not able at treasury to make such a guarantee. >> and she leaned heavily on the systemic risk exception, the fact that the government can intervene if a bank in this situation is found to have systemic risk to the global financial system. that is clearly the determination they made in the case of silicon valley bank in the case of signature bank, and then in a slightly different fashion regarding first republic bank, she stopped just short of suggesting that, you know, she would support this temporary, you know, lifting of the deposit insurance cap, which is
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something that's also under consideration here in washington. >> it certainly is, kayla, thank you very much. >> sure. regional bank shares surging on the comments from treasury secretary yellen. my next guest says the banking industry is well capitalized. let's bring in fed cummings of the elizabeth capital management. it's great to have you. clearly whenever you have banking stress, when you have institutions that fail, and you have fast moving deposits, people naturally are going to wonder, just exactly how pervasive these issues are. how can you offer assurance this is not going to be a game of finding other banks in a similar position. >> well, first and foremost, with investors and consumers need to understand that this is really a crisis of confidence. when you look at the fundamentals of the banking business, the banks have near record levels of capital.
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they'd have very strong liquidity and entering 2023 at record levels of profitability when you look at return on average assets, and more importantly, we have been in touch with a number of portfolio companies, as well as listening to conference calls with managements across the country. and the message is the same. their customers are not panicking. we are not hearing that the banks are experiencing out-sized deposits, outflows, and that gives us a reason to be optimistic. i think once we get to earnings season, that same message will be communicated throughout, and that should help to restore confidence in the banking sector. >> how do you treat, fred, these estimates that now are making their way around, this new attention on sort of paper losses on the books of banks
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from longer duration fixed income securities and loans and things like that, and stress testing each bank in a sense on our own for whether they can get through this? that seems to have been the game when people were panicking about these stocks. >> yes, indeed, and the number of people who have talked about it, and i wanted really to address misperceptions out there, with regards to banks inability to sell their available -- or sell security portfolios, and remain well capitalized. we looked at the 127 banks that comprise the regional banking. what we found was that if all of those banks owe their entire available portfolio, only nine would drop below the well capitalized threshold, 7%, common equity tier one ratio. that's the low number, and that really speaks to the strength of
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the capital bases of these institutions, and more importantly, the banks are not going to have to liquidate these securities, particularly now that the fed has structured that term, lending facility. but that was a misperception on the part of a number of investors, and so we looked at the numbers, and that's the conclusion, that banks could sell a portfolio, and well capitalized. >> well, we've had this little two-day bounce in the sector, but the selling that led into it was just indiscriminate. obviously if you think this is a more localized problem, and most banks are healthy, which types of banks, i know, you have a long/short strategy are now attractive, based on the punishment they have taken? >> well, we think there are a broad range of things that are
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attractive. one of our favorites is capital bank, a $28 billion bank. they brought in new management in 2021, and he's transforming their culture from a wholesale bank to relationship bank, and we think that stock is going to do very well. we also like banner corporation and washington state. this is a company that's focused on internal profitability improvement. they have a great deposit franchise, and they have very low credit risk. the same can be said for east west bank court, which happens to be one of the most profitable banks in the country, posting a 2% return on average assets. they too have a great deposit franchise, and it's a very well managed institution, and then i also add that we like a small bank here in ohio, people's bank corporation. this is one of the few things that's been able to do accretive acquisitions over the last nine
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months. and they have great earnings visibility as we look out to 2023, but fundamentally, the types of banks that we are attracted to have strong capital bases that very attractive deposit franchise, and we think it's a very low credit risk, and that's going to be the next focus here for many industries, given the fact that the economy is expected to slow in the coming -- >> absolutely. some names we don't often talk to. i appreciate you bringing it to our attention, fred, thanks very much. >> thanks for the opportunity, mike. all right. ytime. ytime. an good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting?
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welcome back to "closing
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bell" pippa stevens joins us with those. >> we are seeing broad-based strengths. there are a couple of notable movers, including canadian solar. the company had stronger than expected fourth quarter results and expects full-year solar module shipment up at the midpoint of its range. so nova is also jumping, several people told me were thanks to investors misunderstanding a filing of the company. to guarantee a majority of the company's loans to lower income customers. importantly this program hasn't yet been finalized and it also had nothing to do with the banking meltdown. ceo john berger telling me, mike, that it was in the works for more than a year. back to you. >> wow, maybe a sign of how skittish some investors are, pip pa. thank you very much. energy stocks gauge today as oil
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prices rebound from 15-month lows and our next guest says there's more up side in store. let's bring in senior portfolio manager of tortoise eco. been a tough run. natural gas had kind of a crash. oil has not really performed as many thought it would with china reopening, and the global economy reawakening. so what's your diagnosis of the issue initially in terms of why there has been this weakness? >> yeah, thanks for having me on. when you look at it, a lot of uncertainties in the market, a lot of discussion about a recession, and now with this banking crisis, is that the triggering event that's going to cause this recession. i think if you have a recession, really commodity price and tradeoff, that's really what we're seeing in natural gas and oil over the past several weeks. now, the question is how deep and how severe is it going to be? that's really put the energy
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stocks in a position where there's some really good long-term and short-term opportunities for investors. >> yeah, i was going to say, i guess, are we going to be free of those looming recession fears for a while, even if we don't get one statistically, that's going to be the psychology for a while around all investments. >> yeah, well, the reason why we like the energy sector is simple and it's just like the way to dispel or combat any uncertainty, even if it's how severe the recession is going to be, at least for companies, is generate a lot of free cash flow and reduce debt, and the energy sector across the board has really done that over the last several years, and will continue into the future. it's a pretty simple formula, if you generate a lot of cash, return it to shareholders and reduce the debt, that is a compelling investment opportunity, and one that investors can get behind, even in an uncertainty environment, whether it's recession or banking prices or any other uncertainty that's out there. >> you focused a fair bit on
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energy infrastructure type investments, right, pipelines, and things like that. has there been a surge in investment in those areas to the point where, you know, it's going to be some over capacity down the road, or are we not there yet? >> there was a lot. to build out adequate infrastructure, in order to be able to transport a significant amount of increased volume of u.s. oil and natural gas, domestically and globally. that infrastructure has been built out. you're right, there is access capacity. so that's why we'd really like infrastructure, because you can still have oil and gas in the u.s. growth, which they will, but you don't have to -- the companies, the infrastructure companies don't have to spend a lot of excess capital and capx, so effectively all of the cash flow goes back to the investors in the form of higher dividends
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or maybe potentially stop by that as well. when you look at the infrastructure sector, you're getting six, seven, eight, some cases, double digit dividend yields, which in this environment is pretty attractive. >> i noted like energy transfer would be, you know, a name in that area that you might own 10% in dividend yield right now. you don't think that the relative yields look a little bit less attractive, given the fact that you can get 5% in t bills? >> well, obviously the risk energy transfer, but when you look at what energy transfer is doing, and then i would still think that spread and that paying, define energy transfer is still too wide. if you look at the free cash flow for energy transfer, it's more than the 10%. what i mean is that not only provides money to pay the dividend yield, but also buy back stock as well. and so we look at -- you can look at the spread the bills,
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and you can look at the free cash flow yield as a spread to the broader market, and the s&p 500 dividend yield is probably 5 or 6%. the free cash flow yields 5 or 6%. so that spread is too wide from our perspective. >> got you, and could grow over time. rob, good to catch up with you, thanks a lot. >> thanks, mike. all right. up next, nvidia's big ai moment is here. the company holding its annual developer conference. we're breaking down what its latest push might mean versus already roaring stock. is there more room to run? we'll discuss when closing bell comes right back.
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big time. more guacamole? i'm on a roll-ay. how about you? i'm just visiting. u.s. bank. ranked #1 in customer satisfaction with retail banking in california by j.d. power. 22 minutes in the closing bell, the s&p 500 just under the 4,000 market, up 1.2%. the dow up 267, the russell 2000 outperforming up 2%, and the nasdaq keeping pace, just about up 1 1/2%. shares of nvidia have been on a wild ride, up more than 70% year to date. how much room does that stock really have to run from here. kristina partsinevelos with more on the stock on the back of its annual conference. >> it's hard to find anyone who's not bullish on nvidia
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because of its contribution to ai. touting the importance of capitalizing on that trend. listen in. >> we are at the iphone moment of ai. start-ups are race to go build disruptive products and business models, while incumbents are looking to respond. generative ai has triggered a sense of urgency in enterprises worldwide. >> today's big announcement was around a new dgx super computer that would allow companies to build and train their own ai models with new partnerships, announced in oracle, microsoft, adobe, and the goal is to have all of these partners and users be able to access these super computers you're seeing on your screen, just from a regular web browser. there are other announcements, gpu graphics processing unit, and complicated lighting processes to design chips, and that will make an even more
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powerful two nano meter semiconductor, resulting in more collaborations with tsmc, asml, and synopsis. but investors are watching nvidia. why should we care? well, it further entrenches nvidia into the semiconductor manufacturing supply chain. the stock, like you mentioned, moving higher year to date over, what, 80%, up today ever so slightly, 1.7% versus the stocks which is up 24% year to date. and nvidia is on track for the best quarter. >> it's a $650 billion market cap right now. it dwarves everything else in the semiconductor industry. just multiples of amd at this point, and, you know, it's almost as if the market only really bestows that kind of market value on companies it thinks are more than hardware. they have to have some kind of recurring and defensible
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ecosystem around them. clearly that's the piece of the message for investors. >> we saw that with announcements made today. this is about becoming a cloud service company, so it's not just a chip name. it's going to transition and maybe even, you know, five or ten years from now, more than 50% of nvidia's revenue is actually going to come from software reoccurring subscription models and all of that. it's no longer just that semiconductor designer, and gpu provider. >> trying to escape from that idea of the quick cycles in hardware. 60 times forward earnings, we'll see if they can justify that. thank you so much. >> thank you. a quick programming note, don't miss the ceo of nvidia. that is tonight on "mad money." last chance to weigh in on our twitter question. twitter question. we asked, wha t 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.
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issue. let's get the results of our twitter question. the majority of you saying, 75% probability. that matches the bond market's probabilities of what's going to happen in a day. up next, we're counting down to nike's numbers, the re
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we are now in the closing bell market zone. here to break down the crucial moments of the trading day. and phil lebeau on tesla's big move, and what he's watching and nike's earnings right after the bell. eric, good to have you here today. we had the market actually making new highs for the day, going back about a week and a half in the s&p 500. seems like there's some comfort building or at least a lack of fear as to what the fed might do tomorrow. what's your best guest on their decision and what are the immediate implications do you think of what they do? >> the fed is grappling with whether they're going to be arthur burns and inflation is high, or whether they pull the full jean claude and hike into a
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banking crisis. we think the fed will take the next step, a 25 basis point increase, but probably wrap that in dovish language, indicate their close to the end if not at the end, and in a way, it doesn't matter. it's priced in, and at this moment, what's most important is the broad liquidity being provided, you know, through the fed's balance sheet and some of the programs they put in place and liquidity they provided last week. on the one hand. also, on the other hand, what we do expect to see lead to considerable tightening as banks change their posture in this more challenging environment, and that's the part that we think is going to have the biggest negative impact on the economy. >> and negative impact on the economy to the point where it causes a significant downturn or simply moderates the growth, because, again, we were just talking a month ago, it looked like things were overheating, too hot for the fed's taste. the conversation's entirely
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changed and what's your confidence level that we will get a recession or something like it? >> so certainly recession risk has increased. we came into the year saying it was better than 50/50 odds of recession. we'd say that's still the case within the next 12 months. the markets are partying like it's 2009. like we're going back to the kind of post gfc play book of easy money, low and negative real interest rates, low inflation. and we think that the next five to ten years is going to look quite different than the five to ten years after 2009. we're likely to get stickier inflation, and the market isn't fully accounting for that yet, that the fed is projecting that they're going to, you know, positive 2% real yields. they may not be able to do that much given the news we've had, but they're going to stick with the notion that they're going to go back to positive real yields, not going into a negative real yield environment. that's going to be challenging for the economy. we do think the economy is going
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to slow. recession risks are high, and we don't think that's priced into equity markets yet. which lead us to underweight equities in our multiasset portfolios. >> so in favor of fixed income, you know, with all of the yield volatility we've seen. >> sure. short duration, fixed income, and cash, frankly. you know, cash is yielding 5%, comparable to the earnings yield on the s&p 500, a very strong competitor from an asset allocation standpoint. we're overweight cash, underweight equities, and what we like in fixed income is high quality, shorter duration credit. we added duration, to 4% on the ten-year treasury. frankly we're looking at trimming duration at this juncture, our fixed income team has been trimming duration in this environment. but there is really interesting opportunity in shorter duration credit, in mortgage-backed securities and structured product where you can pick up pretty attractive yields with a
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lot of mitigated risks in this environment. >> yeah, certainly providing a buffer if nothing else. eric, great to catch up with you. thank you so much. >> thanks a lot. >> phil, this move in tesla, it's been kind of eye catching today. what seems to be behind it? >> well, if you're looking for a catalyst, and it's not a huge one, and ordinarily, it would not be a catalyst that would have this kind of impact, take a look at what moody's did today regarding the debt rating for tesla. raised it out of junk status, baa 3 following the move from standard and poor's. this ordinarily wouldn't have a huge impact. they cite strong deliveries growing. crude financial policy. put that together with the anticipation that we might see a pause or perhaps the beginning of the fed lowering rates down the road, and that gave all of the ev stocks a nice pop today, tesla by far, the most action
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today up, what, 8% on the day, but there you see the rest, lucid fisker, lordstown. back to you. >> elon musk doing his share to try to whip up enthusiasm for a potential rate cuts down the load. calling for half a point. but, you know, rivian was also an interesting one here. we got comments out of adam jonas out of morgan stanley, the stock trading at cash out of the books. >> right, that's an interesting point. we're looking at a situation where people are saying, what does the future hold for rivian. everybody you talk with on wall street will tell you the same thing. they like the management team. they like the product and they like what they are hoping to do in the future. the question is how do you get from here to there, and in between, there's a lot of hurdles that need to be overcome, and that's why i think a lot of people are saying where do you go with rivian. do you see this as the base, mike, or do you look at this and say it's going to be choppy waters at best over the next
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several quarters? >> we remember how difficult and uncertain it was when tesla was traveling that road, sub scale and trying to ramp up. they're starting from a little bit behind. phil, thanks very much. appreciate it. omar at ever core, what are we looking for in nike's numbers today? a little bit of a run in stock as consumers flocked back to the quality names in consumer? >> we think in this judicious consumer environment where consumers aren't spending willy nilly on anything and everything, certain franchises are being able to separate themselves from the pack. nike in our mind is one of those franchises, plus, we're still amid a sneaker boom. tonight i think there's two key questions as we look at the earnings. china, the china reopening, nike has obviously been beneficiary, huge growth in china at the
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time, been a drag during covid, given the shut down happening there. it's going to be one of the first data points this long after the chinese new year. the other question i think nike's underlying margin, and showing through a lot more now that the market head winds are easing, whether it's elevated costs, as well as some of the markdowns they have to work through on the inventory that built up in the u.s. >> obviously inventories have also been a bit of, you know, in focus. you mentioned that nike had some big investors in to detail about their strategy and things like that. what's your read on that? this is going back, i guess, a couple of months. >> i think there's a couple of things going on. many companies were a lot more quiet during covid, within the company and external players and investors. they took the opportunity to take key shareholders, bring them in, reintroduce them to
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management teams they haven't met before, and show products as well. usually a good sign when nike is bringing some over. i doubt a decision they would make ahead of a series of challenging financial times ahead. i think, really, you know, nike has put a lot of hard work on the inventory, as well as building the underlying digital ecosystem and product pipeline, and local consumer connections in markets from china to north america. and everywhere in between. i think that's, you know, what we're going to see in the numbers play out tonight, and it's going to come in quarters as well. >> you mentioned that they were still in a sneaker boom, and what has that meant for nike in terms of market share. obviously everyone is interested in all of the kind of newer fashionable models, but it seems have they reaped the benefits, so to speak from adidas's struggles already. or is that still, you know, in fact future as well? >> this is a great double-edged
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question. on the one hand, struggles, and certain markets including china. but on the other hand, consumers are wearing sneakers more, they're wearing through them more. a lot of sneakers are white. and people are wearing on more occasions, which means they want to have more pairs in their closet. we're talking about billions and billions of sneakers and feet out there that need to be clothes with sneakers, if you will. nike to me is the biggest potential beneficiary. obviously in this kind of rioting tide, there's a lot of boats being lifted. you hear companies, stock is up huge on great numbers and a very strong demand outlook. brands hike hoka, foot locker yesterday, new ceo mary dillon stepping in. that's another company that's positioned to benefit from the sneaker boom. nike is the biggest player, has the largest supply chain, the biggest pipeline of innovation, the strongest marketing machine on and on and on. they're probably the one that's going to reap the most reward.
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entirely built up, digital ecosystem. consumer sneakers directly. a lot of factors they have put nike at the center of the sneaker boom beneficiaries. >> not a cheap stock, kind of never is, really, but what's your upside target and what does that imply for the multiple? >> i think this is a company, really about the margin unlock that we know there's kind of very strong long-term demand for athletic active apparel. these are replenishment in an market, and now there's this, you know, theoretically this big btc margin unlock coming. if you think about nike as a high margin company, you're talking about $8 of earnings if it can hold the 30s multiple, you know, which as a digital consumer or hyper growth mega cap global stock, 30 multiple, you see that a lot. estee lauder, for example, nike, some of the fast growing tech
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companies, nike fits in that group. >> see if it can stay on that path after the close. let's take a look at where we are. the s&p 500 looks like it's going to go out around 4,000, that's a two-week high. also up nicely. participating as well at a 5% rebound in the regional bank stocks ahead of the segment tomorrow. that's going to do it for "closing bell," now to "overtime" with morgan brennan and john fort. >> risk on the market, that's the score card out of wall street. welcome to "closing bell overtime," i'm morgan brennan with jon fortt. dow component nike, and game stop, those numbers are just moments away. >> plus, adobe goes deeper into ai, we're going to talk to ceo about how th

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