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tv   Closing Bell  CNBC  April 14, 2022 3:00pm-4:00pm EDT

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of questions about the bid itself, 5420, very similar to when he mentioned taking tesla at 420 >> the board doesn't seem interested right now ball's in his court. if he thinks he can somehow still get it done around that resistance >> big meeting after the bell at 5 clock. >> frank, it's been a pleasure thanks for watching "power lunch. "closing bell" starts right now. >> the dow is slipping again and the nasdaq is sinking to session lows on the final trading day of a shortened week the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen here's where we stand in the market right now pressure on big tech down 1.85% on the nasdaq, it's the rising rates we got a bit of a reprieve on yields in the last few days, but that's gone higher and that's pressuring big tech. all the big mega cap names are feeling it software, chips, you name it, tesla also not helping it's lower on the elon musk bid for twitter.
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masking strength in fwrups like utilities, staples, and industrials. take a look at the names dragging the most. apple, microsoft, tesla, amazon, and nvidia that's what's pressuring the major averaging as well. the s&p down .9% coming up, we'll talk to the cfo of wells fargo, among the worst performers in the financials after the company posted a mixed quarter before the bell. >> plus, box ceo aaron levie on his stock's strong performance plus his first take on yelon musk's bid to buy twitter. let's get to the top story, there new chapter in the twitter saga elon musk making a bid to buy twitter for $43 billion. the stock popped on the news, has since turned lower it's down about 2% just moments ago, musk did make his first public comments during an interview at the ted 2022 conference listen >> i do think this will be somewhat painful and i'm not sure that i will
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actually be able to acquire it and i should also say the intent is to retain as many shareholders as is allowed by the law in a private company, which i think is around 2,000 or so so it's not like -- it's definitely not from the standpoint of let me figure out how to monopolize or maximize my share of twitter >> joinish us, mark mahaney, cnbc markets commentator, mike santoli, and julia boorstin. since the news broke, there have been a cascade of events, including a major shareholder, saying he's against it, elon musk speaking at this ted 2022 conference bring us up to speed on where we stand right now and hot we have learned this afternoon >> well, it has been a cascade of news. that's a good way to put it, and there's also been a cascade of analyst reports weighing in. many very skeptical and many of them saying this saga is far
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from over. so the latest thing that just happened is that elon musk spoke at the ted 2022 conference in an interview with chris andersen, and he explained his interest in buying twitter and taking it private, saying it's really about his interest in preserving this global town square as a destination for free speech, wanting to really preserve that for democracy. saying that even though it was going to be painful, this was a very important cause that he wants to support now, there's been a lot of talk about the fact that musk has spoken publicly and tweeted about his criticism of the ad-supported model, so there's been this question about whether or not he would be underselling the potential for twitter and if he were to find a financial partner, who that might be if he's more interested in having a subscription business, which would presumably have many fewer users than an ad-supported business here. so still a lot of questions about what exactly this looks like, if he would find a financial partner and what the next steps are, but there's also been some news out about the
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board talking about a poison pill and also this meeting that the company is going to be having with employees that's expected to be at 5:00 p.m., 2:00 p.m. pacific today. >> thank you for bringing us up to speed mike, board considering a poison pill according to the journal. explain what that means and how unusual this is as far as your coverage of big m&a in the past. >> when you get an unsolicited offer, one where it's not at a premium to where the stock has traded in the last year, keep that in mind, it's one of the tools that a board will often reach for if they feel as if the potential owner or bidder is also going to keep acquiring shares to try to pressure their deal what it means is if the bidder does keep acquiring shares, it essentially triggers a huge rush of new share issuance that would di dilite the new share holder. it makes it practically impossible to acquire a much larger stake that's one i think it's an easy no for the
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board on the outset because of the price. >> the market is telling you it's a no. >> exactly you don't have really secure financing in this case interesting, too, in the ted interview, musk said he's not interested in the economics, not turning a financial return on this that makes it hard to get a financial partner or go get a bank because this is not a financeable company in a large way in the current valuation >> maybe, but musk plays by different rules. i counted four analysts, your colleagues or competitors that have downgraded twitter stock largely on the idea that twitter is going to say no, musk is going to sell his shares and then the fundamentals come into play and they're not looking great with all of the macro headwinds around the advertising business what's your take >> i think you just nailed it, sara i think that's exactly my take, and i think that's the market's take too this looks like a public good initiative, not a public markets initiative in other words, out of total respesk for elon musk, it seems like what he wants to do is run
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it as an absolutist free speech platform he's on the side of the angels in my book on that, but the devil's in the details for shareholders, what are the ideas that are going to expand the value, the cash flow of the business a subscription model, i think about 10% maybe of twitter users want a subscription business you're talking about half a billion in revenue verses the $3 billion to $4 billion in advertising. the advertising model works. there's a lot of changes that need to be done to improve value. i haven't heard from musk as to what those changes are >> have you heard it from current management, mark because this doesn't exactly, this whole thing casts them, in a very good light? >> no, it doesn't. so in all fairness, you do have a new ceo. i don't think he's yet, and i'll give him six months to come out with what his new strategy is. the company did take the first step in the process in acknowledging they have a problem, that they have not been
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quick enough at product development. both on the yurzuser side and oe developer side that's where the innovation has to go and it needs to speed up they have to better tackle the internet advertisiadvertising. if you want to grow faster, you have to develop performance marketing tools and they haven't done it well enough yet. that's what they need to do. this is right now a side show for what i think the real fundamental changes that need to happen at twitter should be. >> what is the stock worth to you, quickly it's at $45 right now. >> you know, the pitch, by the way, that musk is giving that $54 or something with the pop number in there, the 54.20, the 420 crowd, that number, yes, yes, that's my san rafael neighbors there. that's like six to seven times ev to sale or price to sales that's the average of the multiple over the last three years. if you're a shareholder, it's like where is my big premium, my
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big bid? that's part of the problem with the musk offer and all respect to him, i think that's part of the problem with the offer. >> mike. >> you know, elon musk did just tweet. he reiterated what he said at the ted. will endeavor to keep as many shareholders in privatized twitter as allowed by law. when you remember when he was talking about taking tesly public, maybe they could roll their stake into the private entity this is not the typical way. it would be a way to reduce the dollar amount he would have to shell out, but again, if the economics aren't really there, and it doesn't really have a way to juice the revenue - >> he would have to sell tesla stock, right >> to buy it, yes, but if you're going to say, fine, i'll roll my shares instead of taking your $54, i'll continue to own the private company, you want to have some means of getting a return on that as opposed to just participating in the creation of whatever this idealized platform he has in mind >> market not buying it, down 2%, the stock. to be continued. thank you all very much. have a good weekend.
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>> shares of wells fargo down more than 4%, by far the worst performer of the big banks we'll talk to the company's cfo about the results and his read on the consumer next you're watching "closing bell" on cnbc. dow is down about 29 points. thanks for coming. now when it comes to a financial plan this broker is your man. let's open your binders to page 188... uh carl, are there different planning options in here? options? plans we can build on our own, or with help from a financial consultant? like schwab does. uhhh... could we adjust our plan... ...yeah, like if we buy a new house? mmmm... and our son just started working. oh! do you offer a complimentary retirement plan for him?
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wells fargo sinking after the bank reported lower than expected revenue amid a drop in mortgage lending earnings did beat expectations joins us, wells fargo cfo mike
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sant amossimo. >> thanks for having me. >> as for the share price reaction, seems like wall street wasn't that thrilled with the quality of the beat. the fact that it was reserve release related revenues were lower, the drop in fees, the increase in expenses what happened there? >> i think we're continuing to see some good things in there as well, as both the consumer and our corporate clients continue to have high levels of liquidity. people are out spending. we're seeing that in the results. none of the risks that we're seeing from inflation and other factors are driving any risks from a credit perspective yet. and you also saw us continue to focus on our own priorities that we said we distributed more capital bear to shareholders we're making progress on our efficiency initiatives and also starting to or continuing to launch new products and innovate we launched our mew mobile app in the quarter, we launched a new credit card that gives renters the ability to earn
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rewards for paying rent. there's actually a lot of good progress that you saw in the results as well. >> and there were high expectations as the stock has been an outperformer among the financials mike, expenses seems to be the issue and one of the big focus areas especially for a restructuring story like yours they went up, but you did tell wall street that they can remain flat for 2022. how much confidence and how are you going to do that >> yeah, we feel really good about the efficiency plan that we put in place. you know, a little over a year ago. we're continuing to exculate on that, and although we have slightly higher expenses in the quarter, we still feel really good about the ability to do that for the full year and this is going to continue to be a multi-year journey as we build more of the efficiency initiatives into our plan. and it's really starting, it's not only about saving money. it's about improving customer service. so when we do this, you get faster return -- faster turnaround times, better capabilities for clients
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better products for clients. so there really is a win-win for everybody as we continue to drive the efficiencies, and we're confident we're going to be able to keep doing it >> on the fee side, the big pain point for the consumer was mortgage banking, which i think deteriorated almost 50% quarter over quarter what is ahead for your housing business as mortgage rates continue to climb as the fed raises rate? >> well, in the quarter, we saw i think the largest increase in mortgage rates, if not ever, certainly in a very, very long time and that's going to have an impact on mortgage volumes, particularly in the refinance market and you're starting to see that come through, not only our volumes but also the industry volumes. so we would expect that to have a negative impact, at least as we go into the second quarter. but there are still some bright spots in terms of purchase market where we still expect that there's going to be some growth there, you know, this year, as there's still a strong
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demand for new homes >> you see that holding up even with these higher mortgage rates? >> well, it's certainly gotten more expensive as rates have gone up, but there stillappear to be a healthy appetite for new housing out there across the country, so we'll see how that develops over the rest of the year >> aside from mortgages, you are a big net beneficiary of the rising interest rates that helps lending profitability. what's your expectation on that front now that the market is pricing in eight or nine rate hikes this year? what that's going to do to your earnings >> what's clear is the expectations have certainly changed a lot over the last couple months. and exactly how many rate rises we'll see and at what pace, we'll see that together over the coming months. but what's clear is we're really well positioned in this environment to benefit from that and you know, hopefully what it will do is continue to help tame inflation over the coming quarters and we'll see how it progresses.
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but we're certainly going to be a beneficiary from rates that will also have some impact on other factors that could impact our fee lines, but hopefully we'll see that sort of progress over the rest of the year >> yeah, talk to us a little bit about that how do you see it impacting the consumer, which i think as you said this morning is in very good shape you saw credit card spending rides, loans are up. what is going to happen to the consumer later this year and into next? >> well, i think people are starting to feel the impact of inflation. you're seeing these inflation prints come through over the last couple quarters, but so far, there good news is it hasn't really translated into real stress from a credit perspective given the high levels of liquidity that are there, so so far, we're seeing the consumer actually do quite well you saw a little wage growth as well over the last couple quarters that's helped but i think we'll see how it progresses we would certainly expect at some point our charge offs to go
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up and maybe normalize a little bit more, but so far so good in terms of the performance we have seen both in the consumer side and the corporate side >> are you preparing at all for a recession? >> well, you know, i think the actions that the fed is taking will certainly have an impact on growth you know, whether that translates into recession, we'll see. but we're certainly well positioned from a credit perspective as well as a balance sheet to deal with whatever comes over the coming quarters and we're keeping a really close eye on it to make sure we understand how to best be there to support clients but you're seeing not only the consumer spending that you talked about but we're also seeing loan growth across consumers. we're seeing it in the corporate space and our commercial banking space as well. there's still, you know, still a pretty healthy amount of activity in the economy right now that i think should at least bode well for the next couple quarters >> and mike, also wanted to ask you about the hit to capital still in excess, but it's
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certainly not as much of a cushion for higher buybacks in the future what can you tell us about that? >> yeah, we certainly saw the impact of higher rates impact capital really across the industry but for us, we come into this position with a really strong balance sheet, really strong capital position and so we feel like we'll be able to continue to not only be there to support clients but distribute capital back to shareholders over the coming quarters and again, as you mentioned, we'll be a real net beneficiary of an environment like this, so the earnings generation of the company should pick up over the coming quarters too. >> stock is down about 4.7%, but as i mentioned, had been an outperformer mike, thank you for your time today. cfo of wells fargo >> give you a check of where we are in the markets dow has gone positive again. it's been back and forth around the flat line this hour. it's up 13 points. it's the nasdaq underperforming. 1.75% decline. takes the losses for the week to
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more than 2% second week in a row of weakness the russell 2000 and small caps hit hard today, down .75%. strength in energy, utilities, and staples, but the weakness in tech and consumer and financials is hurting >> after the break, what do chips, transports, and banks, speaking of, all have in common? mike santoli will tell us in his dashboard, and later, box ceo aaron levie tweeting his take on elon musk's bid for twitter. i mean, who hasn't worked multiple jobs to save up enough money so they can splurge on their favorite app plus, ox's own product news this week. "closing bell" back in a moment. when traders tell us how to make thinkorswim® even better, we listen. like jack. he wanted a streamlined version he could access anywhere, no download necessary.
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the dow is pacing for its third straight week of losses. it's currently higher by about 19 points. let's go back to mike santoli who is looking at bellwether groups, especially the cyclicals. >> exactly also risk appetite gauges. this would be semis, transports as well as banks over the last 12 months, boy,
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it's really been about one trade. all down about 5%. remember, one year ago, in march and into april of last year, we actually had the end of a real reopening cyclical boom type trade. and we have come off that. just for comparison's sake, the s&p 500 itself is up more than 6% over these 12 months and the outperformance of the market versus these groups is pretty dra dramatic, more than 11% right now. question is, are they maybe tentatively bottoming? they're not plunging to new lows if you look at something like the transports, they have kind of held that general area here airlines have acted better it's a little bit of a dicy proposition. they clearly are not really the leadership of this market, but this is where you would want to look if in fact we come to some kind of collective conclusion that the recession alarms have sounded a little prematurely >> what's interesting is they're all moving so closely together because you would think the banks get a little bit of a benefit of the doubt with the higher rates i mean, there are different factors at work. >> you're right. >> airlines and transports are getting a ton of demand right
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now. >> let's at where banks were at the beginning of the year. they were getting the benefit of rates for a while, and then the rate move kind of tipped over into maybe it's going to be accompanied by problems on growth >> as we just heard from wells fargo cf orc mike, thank you. >> up next, box ceo aaron levie reacts to elon musk's offer to buy twitter. plus how his company is trying to cash in on the future of hybrid work. dow is up 12 points. nasdaq still sharply lower down almost 2% we'll be right back.
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software company box announcing a new collaboration tool for its customers this week it's called canvas a way to allow hybrid work teams to collaborate from anywhere the product will be rolled out later this year. box shares are a little lower today, but they had a strong run lately, up more than 20% in the past month joining us now to discuss is box ceo aaron levie. aaron, thanks for joining me obviously we'll get to the product announcement, but because of the news of the day, and you're following it carefully on twitter where it's unfolding about twitter, the elon musk bid. do you think this company should take the deal? you're an avid tweeter >> this is just my luck. i wanted to talk about canvas, but elon had to blow that up with an s.e.c. filing. so you know, elon musk is obviously one of the top entrepreneurs of all time. one of the greatest innovators
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of all time. i do believe that $54 a share is probably too cheap for twitter his particular take seems to be one about free speech and censorship online. but that does not necessarily mean that is the best path for monetization and building durable value at twitter the compares would be alternative paths that would generate more value for the company over the near and long run. so that will be the question for the twitter board. but it's certainly a lot of chaotic energy going on on the internet right now and good to be on the sidelines of that one. >> and the markets as well so you mentioned the free speech aspect, which is sort of interesting that that's what he wants. you know, as someone very familiar with this product and with clear views about this value, do you think twitter should restrict speech or hate speech less? and some of the other areas where they have had to crack down, especially in this kind of regulatory environment >> this is an incredibly tricky
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topic and it's one reason why very few people probably want to run social media companies these days these are challenging decisions that i don't believe that there's a very clear answer for. what you do want is being able to build safe platforms for people to feel like they can communicate and not be harassed and there's no threats of violence and other types of issues at the same time, people want to freely share their thoughts on different topics going on. that's always an important balance to find when you're running one of these social media platforms. and it's not clear to me that there's a much better way to do it than some of what we have seen from youtube and facebook and twitter. but we'll see how this plays out. >> there's another angle that i wanted to ask you about, and that is during your proxy fight with starboard when you were defending your company and ultimately prevailed, you had kkr come in with some financing and advisory work to help defend the company. they have got silver lake on their board, twitter, that is. is that something that you could see happening here
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either through advisory or financing work, help that company defend itself against musk >> you know, the musk situation is probably so unprecedented just in the sense of the type of takeover approach. it's not clear that this is sort of exactly like an activist coming in as sort of a one-time offer for the company. and obviously, twitter will have to make the case for why they have a better path, more than $54 a share, but whether that requires another bidder or another investor to come in and make that case for them, i -- very hard to imagine, but i'm sure there will be a lot of meetings with investment bankers and law firms. >> a lot of busy ones. let's get to the news of the day, that is box canvas. >> yes, that is what everybody is talking about online. >> so you have got this new tool that you say that your clients demand to help promote hybrid work my basic question is, how is it different, and how is what you're doing and offering different than some of the
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bigger competitors like a microsoft or a google? >> yeah, so it's extremely different. so what we do is we focus entirely on the life cycle around content and that could be the storage, the sharing, the security, the classification, the threat detection, the work flow automation, the data governance. so that's the platform we built out, and increasingly, we want to introduce new and improved ways of working with your content. things like e-signature that we launched last year where box sign is now fully baked into the platform and can offer complete e-signature capabilities built on box similarly with box canvas, we offer a new way to be able to collaborate in a virtual white board or visual collaboration interface where all of that data goes back into box where it's secure and protected for our enterprise customers so box has over 100,000 customers. all around the world they're using us today to be able to securely manage their content and we're going to introduce more and more capabilities that creates the best platform to work with your
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content and collaborate with anyone all around the world. that's the real vision that we have, and we'll integrate with all of the other software that our customers are using, whether that's microsoft teams or slack or webx or zoom or salesforce or ibm technology any other tools that our customers are working with, we want to insure we're embedded d deeply into. >> you have turned this business around, aaron. the stock is up 18% this year when the nasdaq is down 14% on the year unlikely safe haven in the software storm what are you telling investors about how much more upside there is in client acquisitions, in revenue and the growth you have in front of you? >> we just had an analyst day a couple weeks ago we laid out an updated three-year model taking box to 15% to 15% annual growth in that three-year -- at the three-year point, and improved our operating margins to the mid to high 20s from an operating margins standpoint i think we have been able to
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introduce a model which is able to drive consistent and increased growth rates as well as consistent and increased operating profits which we think is a very durable model, particularly in this climate from a stock market standpoint and a macro standpoint we think it is a model that will be durable over the long run as well we'll really excited about that. we believe there's significant upside in the business we announced a share repurchase of up to $115 million in additional share repurchase, and so that, i think, certainly speaks to the confidence we have in the share price going forward. >> aaronlevie, thank you and thank you for bearing with the whoop whoops, which happen at 3:33 on a friday. always fun here's where we stand in the markets right now. the dow is down again, 54 points the s&p 500 down about a percent. that's pretty much where we have been holding throughout the session. strength in utilities and
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up next, a top equity strategist on the recent serge in investor sentiment. plus, a bullish call on nike and semistocks slumping when we take you inside the market zone
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s&p down a percent we're now in the "closing bell" market zone. senior markets commentator mike santoli here to break down the trading day, plus our leslie picker on the big day for bank earnings and scott kroneert on the action the major averages trading lower and for the week the nasdaq down 2% for the week and the dow ontrack for the third straight week of losses. mike, if you look at today's performance, especially the pain on tech, and that's been the theme of the week, you're going to hate this question. but do we need treasury yields to stabilize for the market to go higher? because they're going the other way today, and the last few days when they have come down, that's been a big support for the market >> i don't hate the question >> you don't like the direct link >> i don't like the direct lik as if that's the only determining factor i mean, the valuation compression we have seen in the
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nasdaq obviously has something to do with yields going up corporate yields going up. but we have traded at this level of the nasdaq literally over the last year when yields were at right now 2.8, when they were at 1.8 and at 1.6, so obviously, there are other things going on. i do grew to some degree with the premise that long yields globally, today was a lot about the ecb and long yields in europe going up and releasing u.s. yields higher a resteepening of the yield curve and we're still on alert for the inflation trade. nothing was decided in stocks this week, also the only positive is the absence of a breakdown, that's the way i would characterize it. otherwise, it has been indecisive >> a big down day for the euro, to your point, on the ecb. president lagarde not sounding very hawkish not sounding like powell when it comes to fighting inflation or talking about interest rate hikes on track to end the bond buying program, but nothing really too surprising in the hawkish side so it went the other way
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mike, what can we expect, are we going to continue to be at the mercy of fed speak and macro reports to see whether inflation has peaked >> you know, to a degree, obviously, we will it's going to get howeverier on the earnings side going into next week. we're going to be free of the sort of tax deadline/options expiration of today. so maybe it's going to be a cleaner view huge drop in retail investor sentiment, at least by the aai survey almost fluky how low it is, like a 30-year low in bullishness that to me at least insulates the market from something nasty and lasting on the downside, but it's corporate earnings and we're still not at that point where we can really with any real conviction say inflation has peaked and therefore the fed can ease back slightly >> take a look at the financials among the weorst performing, fou big banks. wells fargo haweaker than expected mortgage lending. we talked to the cfo about it.
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meantime, citigroup, morgan sacks and morgan stanley beating expectations thanks to strong trading revenue. leslie picker joining us leslie, if you take some of the threads from all of the conference calls and all of the bank earnings today, what were your big takeaways >> with four banks reporting, i think we listened to six hours worth of calls today, and there was a very key thread among all of the ceo commentary, which was we are concerned about the risks, the uncertainty that lie ahead. goldman sack's david solomon highlighted seeing an increased risk of stagnation and mixed signals on consumer confidence wells fargo noted they will likely see an increase in credit losses from historic lows, of course, and they did say they would be a net beneficiary as they benefit from rising rates jamie dimon, this was yesterday, but he mentioned there's almost no chance you won't have
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volatile markets jane frazer talked about how the macro outlook for the rest of the year can only be described as complex and uncertain you pull all of those comments together and you really do have a concerned ceo group about what lies ahead, and it's important because bank ceos do have so many touch points within the economy that you have to listen when they sound the alarm. >> i'm curious your thoughts about wells fargo. i don't know if you heard our conversation with the cfo just a few minutes ago. jim cramer suggests execution problems the fact that they're not taking advantage more of their scale and lending more and that the misses came on things like fees and higher expenses what is your take there? because this one, there was a lot of hope as this was sort of seen as the value play in banking, the one with the restructuring turnaround story >> yeah, i think part of it, too, is the fact that wells fargo was the one bank going inturnings today that was actually beating the s&p 500 and was actually positive for the
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year every other large bank that we track was in the red for the year so investors were looking for any potential slip-up from earnings, as youminatmentioned,e fact fees were higher, the market has been a headwind as there are fewer origination, they were down 33%with mortgag o origination, and wells fargo has the most exposure to that. part of it is valuation and part was that investors were able to be a little pickier because the stock had run up so much >> leslie picker, thank you. one of the best performers, in fact the best performer in the dow is nike. also one of the best in the s&p, rallying 5%. a slew of analysts out with positive notes following an event hosted by top nike executives jpmorgan, jefferies, and ubs all reiterating their buy ratings on the stock. highlighting optimism for nike
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to deliver sequential improvement in china especially matt boss of jpm highlighting the china story, despite the fact we have lockdowns. it's hard. nike gets hit when there are macro concerns and then you hear from the company, you heard from the cfo, and everything seems to be going just fine talked a lot about the brand heat smin of the new releases. how does nike stock look overall for a brand that does have pricing power but also gets whipsawed by the macro >> it's been a little bit in the penalty box. i think it's largeby because it did have this amazing run. a lot of the elite global brands did through the pandemic it's still 20% off its high, so it's been holding in this range. it first got to this price in late 2020, like around thanksgiving of 2020 so it's really been long sideways i do think it's going to trade at a premium the question is how much of one. it's like 35 times forward earnings well down from where it was at the peak i do think any relief, as you say, on the macro issues, it does tend to get penalized when
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those things are front and center so hard to say that the stock really looks like it's about to take off, but it's gone sideways for a good long time, digested the huge gain at 2020. >> so hard to know what to do with some of these retail stocks xrt had a good week and had a nice run, although well off the high, because all you hear is the consumer is reat, even the banks say right now the consumer is in great shape. credit card spending is up, everything is up but we're not so sure about the medium term and long term. and you just wonder how much of a cushion is out there in terms of the strong jobs market and the strong consumer to withstand some of the shocks we're dealing with >> everyone seems also to be anticipating this and maybe it's already very much under way, this transition away from goods into services. a little more limited ways to play that in the market. and it has been hanging over some of these areas. although i wouldn't say nike is one of those companies where it's been the boom in durable goods demand is going to go away it's much more steady and it's a
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perennial buy. not like whirlpool which has been terrible because the appliance market looks like it's challenged >> let's hit the chips those stocks taking a hit again today. nvidia, taiwan semi, amd earlier on squawk box, andy jazz jassy warping the supply chain faces major challenges listen >> there are certain items that are very difficult to get. you know, we all have a lot more demand for chips than there is supply right now, and because we design our own chips and buy a lot of chips for the things we do in aws, in our devices, even in our vehicles, we get a fair share of those, but still it's not fast enough and it's not enough i think some of the issues happening right now in china where as there are variants and as they're being very conservative and locking down production, creates issues in getting products as fast as we need and it still is more expensive
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and more time consuming to get products into the country. >> let's bring in kristina partsinevelos. even though it is time consuming and costly, are companies doing enough to boost the domestic chip supply? >> it usually takes one to three years for these foundries to be created here in the united states, you have intel, taiwan semi-conductors that are doing so, but it's going to take time, and the united states is already behind the curve to echo the point, yes, there needs to be a little more done if we're talking about taiwan semi-conductors another issue too is the equipment needed to build these foundries. the lead time could be well beyond a year. well beyond 12 months. they even said in their report today that they have issues with tool delivery, so there's tool delivery problems that they have been seeing since the beginning of this year not just now so this is going to boon an ongoing problem, and they also warned too that inventory levels remain elevated. why? because people are stocking up just in case this chip shortage continues. and this is not just about the actual chips and the wafers and
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everything that goes into it, also the equipment as well this could continue well into 2023 >> there's also the fight for market share and the competition. you have got some new data >> yeah. >> on who's ahead. >> this is gardener, they just put this out today revenue for semi-conductors jumped 26% in 2021 but intel was dethroned. intel was dethroned by samsung elec electronics. it's now number one, the first time intel has been pushed off the list -- moved to second place, since 2018. you can see right there the top four, micron number four >> kristina, thank you kristina partsinevelos >> citigroup crossed into euphoria territory this week joining us to talk about investment sentiment is scott kronert. i thought all of the sentiment readings were down in the dumps. you're saying euphoria >> yeah, the index is comprised
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of roughly ten inpults, and they're moving in different directions, but i think versus the past week, we have seen a pickup in a couple of the inputs that have trirg triggered to inx back into modestly into euphoria territory after being in a more neutral range for the past month or so. we're keeping an eye on the inputs, but to underscore the conversation in the last few minutes, the market has been fairly resilient since the fed's first rate hike a while back so we just need to be prepared for ongoing bouts of volatility in response to this. >> right so your argument is, and you're looking at it really near term, so just in the last week, the resilience of the market is making people feel better about it and therefore that's a warning that there's more downside ahead is that the takeaway >> yeah, i would say look, we're still moderately positive for the rest of the year we think we can get to 47 in the s&p. think earnings will gee the driver of that, but along the
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way, we have a lot of inputs that we need to factor in, both geopolitical, economic, and of course, from a monetary perspective. so i think this notion of volatility being with us is i think probably the important takehome message here, and the index just gives us another way of reading this and preparing for it, particularly as we head further into the earnings reporting period >> 1% on the s&p had industrials turn red now it's staples, utility, and energy higher. have you changed your views at citi about the sector performance and where you want to be in the market more defensive perhaps, less cyclical, given all the changes we have been going through >> so, what we have done is through a factor lens, we have really highlighted quality as the factor that we want to be attentive to and essentially what this does is give us means of navigating sort of a mixed value versus
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growth circumstance. and what you get with quality, those types of company that presumably have more pricing power against inflationary backdrop and we think that this is an appropriate approach for navigating this ongoing period of volatility. as we're watching the extent to which the fed goes down its more hawkish path >> mike, what do you make of the quality trade as sort of a related call to a defensive trade? >> yeah, it absolutely almost everything that you would look at in terms of where we are in this cycle and the latest side, where we are in terms of the profit trajectory feeds into that idea. you want companies with better balance sheets, more resilient profit margins, things like that the bit of a trap, as we talked about earlier this week, is a lot of the quality screens really surface a ton of nasdaq mega cap growth and tech stocks. so there's a way to obviously mitigate that. you could look into other sectors. you could basically look at things like shareholder return,
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buyback and dividend strategies which have done relatively well. i guess you kind of have to set along your definition of quality, but it generally does make sense and has been working modestly >> what about that, scott? and what about tech and its setup into earnings as we get knee deep going into next week >> yeah, so i guess what i would say on that, the setup for tech obviously, we're of the view that you're going to see generally speaking a more normal positive surprise circumstance across the board obviously, what's going to come into question are outlook commentaries from a variety of different sectors. when you look at tech specifically, yes, it does tend to carry a positive quality attribute to it. but what i would also point to is as we talk about this real rate discussion, and we look at where the sensitivity to real rates is, just keep in mind that rising real rates is more of a headwind for growth type tech than it is for other areas more
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defensive and economic sensitive in the market. so we have to keep an eye on this toggle between the fundamentals are telling us, the quality attributes as a way of navigating this, at the same time, rate direction is going to have, and particularly real rate direction is going to have a big impact on how the near term trading. >> scott, thank you. have to go into the close from citigroup, as we deteriorate a little bit nasdaq now down well below 2%, what do you see in the internals? >> the downside of the index since about 2:00 has mostly been, again, about the nasdaq and the big growth stocks. it's pretty broad now. you see more than 2 to 1 declining to advancing volume. that was much closer to 50/50 in the morning, so definitely been some distribution here in the market around the 4400 level of the s&p. that's around the floor you would want to see hold to keep it out of that kind of sloppy zone near the lows take a look at the equal weighted s&p against the market cap weighted version year to date still a lot of outperformance by the typical stock.
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almost four percentage points year to date from the equal weighted s&p that shows you it's largely been the mega caps that have been the drag it's been the opposite in a way of parts to the prior two years. the volatility index not doing a lot. we're ahead of a three-day trading weekend. we're down near 22 still not raising a whole lot of stress hormones in the market just yet >> session lows, maybe some selling into that three-day weekend. never know what the news is going to turn up over three days dow down about 100 points. 116. it's microsoft, salesforce, disney caterpillar, nike, american express adding the most. the s&p 500, you have weakness there, too but communication services, consumer discretionary, financials, real estate, health care, materials, staples, utilities all gone red energy is the only positive sector with a 2% gain in the price of oil nasdaq hit the hardest, down more than 2%
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nasdaq 100 on the week is down about 3% so another brutal week for tech stocks down 2% overall for the week on the s&p. happy passover, happy easter everyone that's going to do it for me on "closing bell. now i'll send it into "overtime" with scott wapner. >> welcome to "overtime. i'm scott wapner you just heard the bells we're just getting started here. we'll get to the still volatile market in just a few the talk of the tape today is no doubt the musk maneuver to take over twitter whether it will succeed and what it means either way. we could get some clues in less than an hour from now when twitter reportedly holds an all-hands meeting with employees. that is going to be very interesting. in the meantime, let's welcome in our two guests. alex canterwits and casey newton alex, i'll start with you. even musk says he doesn't know if this is g


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