Closing Bell: Navigating the Geopolitical Uncertainty 3/12/26

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All right, guys.

Thanks so much.

Welcome to Closing Bell.

Scott Wobbler, live from Post 9, here at the New York Stock Exchange.

This make-and-breakout begins with yet another dicey day on Wall Street.

Oil price is rising, stocks falling once again.

There's a scorecard with 60-to-go, crude, most important.

Look at Brent.

It has settled above $100 a barrel for the very first time since August of 2022.

Not surprisingly, as crude has moved up, stocks have moved down.

Let's show the majors once again, just so we can underscore what's happening here.

We're down almost 700 on the down, almost 1.5%.

Nasdaq down about 1.2 thirds, banks.

The private equity and credit names have been weaker.

If oils off the airlines, the cruise ships, they're all lower.

That's been the story really since this whole conflict started in the Middle East.

We can cycle through some of those.

If you get a look at what the airlines are doing, jet fuel prices are up.

Maybe demand is down over the big picture, certainly, in certain parts of the world.

Flights aren't going, and the stocks are falling.

Carnival's down 7%.

Tech, we showed you the Nasdaq, mostly lower, mega caps have been mostly in the red to

day too.

I did notice at least earlier that Microsoft was green.

It is no longer.

But we'll watch all of that, obviously, over this final stretch.

Let's get the latest on the war and on oil.

We do begin in Washington with our very own Aiman Javers Haiman.

Hey there, Scott.

We got this new statement from the Supreme Leader of Iran, Khameini today.

It's a lengthy statement, but in one portion of it, he speaks directly about and to the

Iranian military.

And here's what he says.

He says, they have been responding to the enemy and they have blocked their way to take

control of our country.

My dear brothers, the nation wants you to defeat the enemy and use the leverage of Hormuz

straight to block the enemy.

So that is the new Supreme Leader of Iran doubling down on this strategy that we've seen

playing out in the oil markets all week of keeping the straight of Hormuz closed, leveraging

the economic impact of that against the United States and Israel and global oil markets.

And we'll see where that strategy goes.

If the U.S. has the capacity at some point to do something about that.

In the short term, though, we heard from the Secretary of Energy today who said that

at least for now, the United States military is not going to be able to do anything to clear

the straight of Hormuz.

Here's what he said.

It'll happen relatively soon, but it can't happen now.

We're simply not ready.

All of our military assets right now are focused on destroying Iran's offensive capabilities

and the manufacturing industry that supplies their offensive capabilities.

We don't want this to be a brush off for a year or two.

We want to permanently destroy their ability to build missiles, to build drones, to have

a nuclear program.

Scott, so a couple of things to think about here.

One is we don't know exactly who issued this statement on behalf of the Supreme Leader

of Iran.

What his physical condition is, what the apparatus of leadership around him might be.

So there's a lot of unknowns here.

And we don't know really what the capacity is of the Iranian military to continue the

fight here.

But if they can continue it in the short term, that presents the Trump administration with

a real conundrum.

Do they have to go in with ground forces to secure the straight of Hormuz in order to

get the global oil markets going again?

Or is there some way using drones and air power, some combination thereof, to bring this

threat to an end?

It's not clear, as we sit here right now, Scott, how this is going to resolve itself.

We've reflected quite obviously and quite dramatically in the price of oil, as we were just

looking at.

Amen.

Thanks for the update very much.

Amen, jabbers.

Come back if needed, obviously, again, reporting for us from Washington.

For more on what's happening in oil, let's bring in Pippa Stevens.

I said Pippa, Brent settling above 100 for the first time since August of 22.

We just were looking at WTI and Brent, and they continue to march higher.

That's right, Scott.

The market is certainly not reassured by those comments from Secretary Wright, or by

the 172 million barrel release from the Strategic Petroleum Reserve, as part of the IEA's

400 million barrel release.

We still don't have any indication of the flow rate or how fast the oil can get out of

storage, and while the DOE said in a statement, the oil will start being released next week,

it will take about 120 days for all of the barrels to be delivered.

So the bottom line is that this does not fill the gap from lost barrels from the Gulf,

and with each passing day, more production is being shut in.

Duration does remain the most important factor, and if demand destruction is what is going

to help ultimately balance the market, analysts say that number is north of 120.

Scott.

Pippa, thank you.

That's Pippa Stevens.

Here with me at Post-9 is Solus' Dan Greenhouse, and C-I-B-C's Chris Harvest.

It's good to have you both with us, seems kind of obvious, oil is what matters most.

For the foreseeable future, is that...

Yeah, for sure.

And I think Pippa just hit a lot of the nails on the head, so to speak.

Chris and I were talking before we came on air.

There's nothing else that matters right now, and the problem is that none of us have

any idea what's going to happen.

So there's a lot of assumptions about what's going to happen, but the truth of the matter

is, by next Friday, oil could be $125, it could be $150.

I don't know.

And so, in a sense, the release of the barrels from the SPR and the global release is helpful.

Saudi has an East-West pipeline that's going to move a couple of million barrels across

the country, perhaps to Yanbu, and we'll get some barrels that way, but nothing short of

a freeing up of the straight, so to speak, is going to solve this problem.

Which is why, Chris, you have people like JP Morgan's trading desks today laying out

a tactical bearish call, long energy, and energy stocks, and short equities.

Is it that simple?

I don't know if it's that simple, actually, it's not simple at all.

Because the things that you're used to just aren't working, rates are going higher.

Your risk of version assets, your long duration risk assets, such as low valve, not acting

the way they should.

Your opportunity set or your defensive sector has shrunk.

And so what you're looking at at this point in time is, how do I make money in this situation,

especially when the market sentiment is not broken, stocks are not oversold, and at the

end of the day, we have too much uncertainty.

And so I don't think there's anything that's simple.

I think what you have to go back to is some good risk awards.

What we did is we came into this year, a lot more defensive.

We're beginning to unwind that slowly, and what we're looking for is some growthier names,

some growthier beat-n-up tech names that we think can work longer term, and that's the

best we can do right now.

All right, so you're actually trying to play a little bit of offense in some of the

a little bit of offense in the beaten-up names.

That's right.

So what we're doing is we're going out and we're finding stocks where they have good balance

sheets, good stewards of capital, higher profit margins.

But the market is also saying these are not broken stores.

They have positive price momentum.

They may have bent, but they did not break.

And some of those are the stocks that were, quote-unquote, AIID, some in software, some

across tech, some in financials, some in industrials, right across the board.

And I think you slowly want to start taking this opportunity, because it's almost impossible

to handicap the geopolitical, but we can handicap what's mispriced.

I'm going to somewhat disagree, as I'm known to do.

I don't think the sometimes the best thing to do is nothing.

And I would argue that right now, if you're not already exposed to energy and therefore

benefiting from the upward move, I would argue it's probably a good time to do little to

nothing right now.

Some of the reasons I articulated earlier, which is we don't know who the supreme leader

of Iran is right now.

Obviously, the statement was not made in public.

We don't know the degree to which the various IRGC personnel are willing to die, so to speak,

and take this as far as possible.

We've seen ships in the strait get torched, and the longer this goes on, as PIPA noted

in our reporting, the more production is going to get shut in.

And to be clear for the viewer who may not be aware, this dislocation in the oil market

is orders of magnitude larger than anything we've seen since, let's say, the 1950s when

the Suez Canal was shut down.

It dwarfs what happened with Russia Ukraine, the 73 war, et cetera, et cetera, in which

case, by the way, the oil embargo went on for five months in the early 70s.

So I would argue there's too much uncertainty right now to feel, as valid as that view is

about the fundamentals and stepping in when there's blood in the streets, I don't know

that you can do it yet.

There is a view out there too, because I've heard it from people some of whom have articulated

this view on the air of the so-called Trump put, and the lack of a tolerance at 1600

Pennsylvania Avenue for the stock market to get a lot uglier than it looks now.

Well, the stock market's only down 4 percent from its eyes, right?

And I am hearing that from clients, and I think clients are a little bit too optimistic.

Some people are saying, hey, we need upside protection because we think this is done

by the weekend.

I don't see how that occurs, but you do have a section of the market getting a lot more

bullish and saying, there is a taco trade out there, there's a Trump put out there,

and we're going to get more aggressive, and we're going to position for that.

Well, because it's worked.

It has worked almost every time, because people still have their eye on the proverbial

prize of an economy that's still doing well, and you've got all the other reasons earnings

have been good.

I say the same things all the time, in terms of the bullish checklist, because people are

still believing in that.

I think that's all fair, and where we fall out on this is, okay, at the beginning of

the year, risk was mispriced.

Now we've repriced it as the macros come to the fore.

That opportunity is beginning to shrink, and we're shifting to where the opportunity

is.

To Dan's point, we're not doing it aggressively, but the market is telling us to go back

to some of these gross stories, to go back to these broken stories, not broken stories,

these dented stories, because longer term, there's good, secular opportunity there, and

that's what we wanted.

I mean, there's been a lot of stories underneath the surface, certainly, of stocks that have

gotten hit pretty hard.

The financials are among them, in which BTIG's Jonathan Khrinsky today says, losing patience,

breath erosion, and financial weakness, too much to ignore.

Another day as well, another batch of concern about private credit.

We all keep hearing the stories, Leslie Pickers following the money there, and joins us

once again, with the latest, less.

Right, Scott.

Yeah, you can see it in the stock prices of alternative managers and big banks, especially

those with private credit exposure.

Well, they are slumping today, and of course, the concerned juror involves redemption.

Cliff Water and Morgan Stanley reporting redemption rates of 14% and 11% respectively

yesterday.

But the managers only fulfilled about half of those requests, the rest were gated per

the fund agreements, and these numbers come after last week's disclosures from BlackRock

and Blackstone, the latter of which was able to satisfy the redemption requests through

employees and the firm's own capital.

The gates are a feature of these semi-liquid structures, and they exist to prevent forced

asset sales and losses on liquid assets.

However, the fact that we are seeing investors get cut back on their requests means it is

very likely that they try again in the second quarter, perhaps by an even greater magnitude,

especially if they expect to be capped again, Scott.

Yeah, the temperature continues to rise.

There's no question about that.

Absolutely.

Thank you very much.

That's Leslie Picker.

Let's now bring in Ed Yardeni.

He's the president of Yardeni Research Downgrading, the financials today, and is here

to tell us why it's good to see you.

And one of the key reasons why you say in your note today, and I quote, until the fog

of war and Jamie Dimon's cock roaches disappear, we will underweight that sector.

So the disruption within private credit and the narrative around it has been enough

for you to downgrade this space broadly.

I think it's the combination.

I think it's the combination of stress cracks in the private credit market, combined with

a possibility that this war lasts longer and starts to really weaken the economy.

That would come back to create more stress cracks in the private credit market.

I mean, there's basically a run on the private credit banks.

They're not banks, but they're funds.

So the run on these things is unnerving.

And of course, the media is covering it and just creates more uncertainty about whether

people want to invest in that area.

So that clearly is already creating some sort of credit crunch in the private credit market.

And some of the banks see an opportunity and make kind of fill in the missing funds.

But you add the two together, the war and the private credit.

And I think the risks of things going badly continues.

You know, I've been talking about a 10 to 15 percent correction in this market four

days after the war started.

My initial reaction was this will be short, but then I'm thinking about it some more and

recognizing that the fog of war, nobody really knows.

But I'm becoming more pessimistic about how long this thing lasts, because at the end

of the day, Iran is a country of a sponsor terrorism.

These are professional terrorists that are running the government and running the army.

And it's pretty hard to get rid of terrorists just with bombs.

Well, see, I was going to ask you about this because I was going to say, how could you

downgrade the financials, for example?

And at the same time, not grow more pessimistic about the market as a whole.

One goes with the other and you've just laid out.

That exact thesis.

Exactly.

And I started out with a macro, and I'm reverse engineering that into the sectors.

Yeah, I think if you're lucky enough to have enough exposure to energy, I would stick

with that.

I think the Iranians, look, I mean, Trump made declared victory here and he just I think

today said that he's going to define what unconditional surrender is.

When he says that it's unconditional surrender, then they've then they've done it.

While the Iranian regime may not agree with that, and the Israelis may not agree with

that, and the straits of our musk could remain closed because of ongoing fighting.

But then today said that we're not going to leave until the job is completely done.

So the markets are kind of hoping that the administration knows what they're doing.

But the price of oil is certainly signaling that this could last longer.

Yeah, I mean, there's been mixed messaging.

No question, which has made it a little bit more difficult for investors.

Ed, thank you.

I'm going to get some breaking news here.

I'm going to talk to you soon.

That's Ed Yardeni.

We do have breaking news.

As I said out of Washington, Sky News anchor and our colleague Wilfred Frost just spoke

with Treasury Secretary Scott Bessent.

He joins us now with the headlines that he undoubtedly made at a critical time to do so.

Wilfred?

Absolutely, Scott.

Very good afternoon to you.

I sat down with Scott Bessent for a 50 minute conversation.

We began about five hours ago, but only finished about two hours ago because in unprecedented

fashion, the interview was interrupted when the president called on the Treasury Secretary

to make that short trip across from the Treasury building into the White House to join him

in the situation room.

The conversation picked up a few hours later when he was done in the situation room.

Is it a little taste of what we discuss about Iran and specifically what they've been

discussing in the situation room?

Are you starting to think if this does keep persisting as it is that the Navy has to go

into the straight-of-formers to help ships get through, which would have a big effect?

Well, look, that was always in our planning that there's the chance that US Navy or perhaps

an international coalition will be escorting oil tankers through.

There are, in fact, tankers coming through now.

Iranian tankers, I believe, some Chinese flag tankers have come through, so we know that

they have not mined the straits.

And was that where you were just discussing in the situation room?

We were discussing a plethora of things.

And is it your belief that the volume of ships going through the straight-of-formers will

be improving immediately from now?

My belief that as soon as it is militarily possible, the US Navy, perhaps with an international

coalition, will be escorting vessels through.

I thought what stood out to me there is that the Iranians haven't mined the straits

that ships are passing through, even if sporadically, and the very clear implication there

is that the US Navy, possibly with international support, might be going into aid, the passage

of ships going forward into the straits of Hormuz.

He also revealed to me that the cost of the war for the United States so far is $11 billion

when asked if there was a number that would lead him to knock on the door of the President.

Mr. President, we can't afford this anymore.

He said, absolutely not.

It was a wide-ranging 50-minute conversation on the master investor podcast.

It should be live in the next couple of hours with many topics covered from the background

of his investment career, his outlook for the Federal Reserve, inflation and interest

rates, and very much more.

As it relates to the current war, we'll offer a couple things.

As soon as militarily possible is what the Treasury Secretary told you, which underscores

that they don't really know or have a timeline as to when that could occur to sort of calm

what's happening within the energy markets, I also thought notable that he underscored

twice to you that it won't be just the United States Navy, but a coalition as well.

So this will not be in his thoughts, apparently, right now, the US going at this part of this

conflict alone.

I agree with all of that, Scott, and I think what also jumped out to me is this interview

was interrupted for him to go and discuss all of those things.

The day after the US and its allies made quite a few big announcements to try and ease

the oil price without the need of sending the Navy into the straits of all moves.

Of course, this comes the day after huge announcements for the IEA and the US about releasing

oil reserves.

And yet, oil prices, of course, still remain significantly elevated, and I think it's

interesting that, therefore, the conversation is the following day about what could happen

next.

You step back from all of this, that what could happen next isn't, should the US back

down, what can the US do in a more offensive way to allow them to pursue their aims and

ease passage of ships through the straits of all moves from here.

So I didn't get a sense across the broad conversation that the US president is in a sort of calming

down mood in any way.

Yeah.

Well, he said as much himself through social media today will stay as long as it takes.

So we shall see.

Wilford, thanks so much.

Appreciate that.

My pleasure, colleague again, and the Sky News anchor, Wilford Frost, joining us with

the highlights from his just finished interview with the Treasury Secretary.

You guys want to Chris first comment on what you hear from Wilford?

Not so much Wilford, but I just want to comment on credit, right?

There's lots of talk about private credit, lots of issues with credit.

If you look at the IG market, IG market's holding up much better.

There's a bit of nervousness about it because if you're hedging credit with treasuries,

treasuries are not acting the way they are.

And so that's causing some volatility, but the overall IG credit market functioning and

functioning quite well.

But what about the implication of what the Treasury Secretary told him as soon as militarily

possible?

That suggests to a market participant that maybe you're not going to wake up in the morning

or the following morning and have a resolution to this issue in Hormuz.

Those are great words.

And I hope that happens.

And I hope we get resolution.

I hope diplomatic resolution comes in.

But you can say a lot of things.

Now we have to prove it.

Now we have to go forward.

There's still a ton of uncertainty.

There's still a lot of unconventional warfare out there.

And there's a lot of wild cards.

So I'll see it when I believe it.

It's great that they're making this progress.

These are great words.

And again, I want to see some diplomatic solution as well.

And the coalition is fantastic.

But there's still a lot of uncertainty.

And when you're dealing with a military action, there's few things that you can guarantee.

The energy secretary already said this is going to happen at the end of the month.

So we sort of knew going into this interview, which I'm sure is fantastic nonetheless,

that it's going to take a little bit of time to get assets in the region, in the straight

in order to start escorting these ships through.

I think the bigger question that I have is, why Iranian ships getting through the

straight?

This is a separate conversation.

But we can track the data.

Everybody knows what's getting through and how.

How are we letting Iranian ships getting through the straight?

I haven't been able to get a straight answer on that.

But that's a conversation for another day since I don't have the answer to today.

But like Chris, I want to turn back to private credit, which was the genesis of this conversation.

Right.

Before we went to Wilford, we were discussing as Leslie Picker was.

That's right.

So basically, every day about the issues that exist, which more people are talking about,

maybe more gates are going up to prevent people from being able to get out immediately.

I just want to make an important point that Leslie touched on, but I want to drive home,

because we hear the word gating.

Just to be crystal clear for the viewer who may not be familiar with the way that some

of these private credit funds, the BDC's work, it is in the agreement you make by investing

in some of these vehicles that you know, in any given quarterly period, redemptions will

be capped at 5%.

This is not something that was done serpitiously or illegally or on the side.

Like this was well known, it is a contract that you effectively sign saying redemptions

will be capped at 5%.

So when you hear redemptions put in, we're 14%, they're only meeting 5% because they're

gating.

You continue to downplay this entire issue.

I do.

You do.

But just to be clear.

Sure.

I have unquestionably one of the more positive takes on what's going on with private credit.

But I sort of caveat it last time I was on and I will do it again.

I'm not apologizing, so to speak, for the fact that 15 to 25% of loans were done to software

companies.

Among the private credit companies, they're going to be disproportionately more highly rated

than the public equivalents.

I'm not saying there wasn't malinvestment or bad loans or any of that.

I'm not saying that.

What I've been arguing is some of the narratives around the systemic nature of private credit

and BDCs, some of the narratives around some of the activities that they've been engaged

in, have been framed in the most nefarious and negative ways.

I'm, as someone who is sort of involved in the credit space by virtue of what we do

with Solis.

I'm trying, and I know Anastasia and Sionali also being tangentially or directly exposed

in private credit are doing the same.

I'm just trying to provide an alternative viewpoint here that is not all doom and gloom.

You can have significant issues within part of the private credit business that are still

not systemic, but are worth keeping your eye on and could have a dramatic impact on certain

parts and various asset classes.

Absolutely.

That's a fact.

No one is ignoring that fact.

I guess to summarize it, what I would argue is that the issues going on in software

now are akin to the sectoral issues that we've seen over the last 20 years, whether it's

retail or energy or let's say telecom in the 2000s.

And it's much more likely to be a sectoral dislocation than something broader systemic

or economic.

All right.

You have a quick, very quick, very quick.

You have a point.

I agree.

What you want to watch out for with leverage is the economy.

As long as the economy is okay, it's not a systemic issue.

It's easy to use some credit.

All right.

Guys, it's good to have you here.

Thank you.

Chris and Dan, we'll see you soon.

In the closing bill, up next, new developments in the ongoing battle between Anthropic and

the United States government, what will it mean for that company's plans to go public?

We'll ask First March's Rick Heizman next.

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Welcome back to Trump administration defending its designation of anthropic as a supply chain

risk.

A move the company is now suing over.

Here is the undersecretary of defense on Squawk Box this morning.

The truth of it is we can't have a company that has a different policy preference that

is baked into the model through its constitution, its soul, its policy preferences, pollute

the supply chain so our war fighters are getting ineffective weapons, ineffective body

armor, ineffective protection, and that's really where the supply chain risk designation

came from.

Our Kate Rooney has been following the fallout here as you know as anthropic does hope

to go public we think later this year, Kate.

Yes, Scott.

That is what we're hearing, but Emil Michael has been sort of the spokesperson, point

person for the government on this topic, defended that unprecedented move to label anthropic

as supply chain risk.

He argued that as you heard subjective moral guidelines that the AI company he says built

into their technology is why the government does think it's a risk.

There had been this debate around that he does also argue that open AI, who they did partner

with, is not designed that way.

Calls Anthropics claims about autonomous weapons and mass surveillance, those red lines we've

heard about, a marketing ploy and a red herring, Michael also said, this isn't meant to be

punitive.

He dismissed anthropics claim that the government has proactively reached out to other companies

telling them not to use the technology anthropic though, on the other hand suing the administration

calling the move unlawful anthropic says in a filing or did this week that it is being

harmed irreparably and that hundreds of millions of dollars worth of contracts outside of

the government are now at risk at the same time anthropic though, it's very business

as usual announcing earlier that they're going to be spending a hundred million dollars

on a new partner network to help get other companies building on cloud, that's their

AI model, Scott.

All right, Kate.

Thank you for that update.

That's Kate Rooney.

Rick Heitzman is the first Mark Founder and partner joins us now back at Postlines Good

to Have You Back.

Especially as we see the fallout from this ongoing drama, do you think the fight with

the government will hurt anthropics plans to go public?

I don't.

I don't.

Their metrics are amazing, so they were adding almost five billion dollars a quarter

in revenue and the fundamentals of their business will be sound and my guess is they'll resolve

this before any time they go public and given the flip flops we've seen in the administration

it wouldn't be surprising to put them back on the right side of history by the time

of public financing would happen.

Even if you wipe out whatever perspective revenues you were going to get from the government

were not insignificant, it's not going to have a material impact.

It won't have a material impact and also you're hopefully continuing to grow with your

direct consumer cloud product that I think there's so much fundamental groundswell belief

in AI, the models and consumer demand that it shouldn't be a big issue.

I mean the things have changed so much it feels like in at least it's sentiment given

what's happening in the world.

You were on in January you told us the IPO and the M&A pipelines were going to be strong

this year.

Does this upset that?

It clearly does.

It clearly does.

I've changed my perspective, you know M&A is still pretty strong, not for mega M&A

and IPO is between you know everything that's going on in the current war, uncertainty

what AI does is traditional software companies and basically there's a coming huge pipeline

of mega IPO.

So you're going to see two of the four, right?

Databricks and throttpicks and open AI, SpaceX, probably not stripe this year but two

of the four will go and they're going to need to raise $50, $75 billion and that's such

a gravity that everyone from the bankers to the buy side to the sell side are waiting

for those numbers and care less amazingly about $10 billion value companies.

Okay so you think that the upset and software and the destructive narrative I guess you

could call it around that has had a profound and material impact and effect on how we should

think about and how these companies themselves and others and investors and venture is thinking

about these businesses moving forward.

It's completely true and there's also especially given the amount of news cycle around the

war and oil and everything else there, I don't think investors have taken a time to

sift the babies through the bath water so they're not being really specific on the companies

that are going to continue to thrive, who have proprietary data, systems of record, have

very strong vertical presence versus workflow software which are going to be hurt and they basically

said hey all legacy software is going to be disrupted by largely in the coming models

and therefore we don't really want a part of them in the public markets for now.

If this war persists let's just say for the sake of this conversation for many months.

Yes.

You think we have the potential of seeing any of the hyperscalers cut their spending, they

get a little more defensive or is that full speed ahead no matter what?

I think it's full speed ahead, everyone it's a game of chicken currently.

I think it's going to want to be the first person to say I'm scared, my model's not working.

This AI strategy which I've put hundreds of billions of dollars behind over the last four

years might not be working because that's the way to cut your stock price 20% today.

All right Rick thanks for being here I appreciate it very much around a lot of breaking news and

we do have more now it's Rick Heitzman of First Mark let's bring Steve Leesman in for that

because Steve we asked you to come on to react to a social media post from the president

in which he says a few moments ago where is the Federal Reserve Chairman Jerome Tulate

Powell today he should be dropping interest rates immediately not waiting for the next meeting.

It's interesting the timing it's not new of course the thought and the idea from the president

that the Fed share should cut rates we are now talking about a hundred dollar oil though

so it's a different conversation today than maybe it was months ago.

Yeah and it's a curious conversation I'm assuming the president knows that the Fed is meeting

next week and it's curious on two counts the first count is the theoretical one Scott where

most people who are looking at the Fed think this is a really important time for the Fed to pause and

not do anything engage the impact on inflation gauge the impact on growth wait to see how long

this lasts the second and maybe more interesting thing is the president is alone on this in terms

of where the market stand if you look at what's happened today Scott with Fed fund futures they have

dramatically backed off their outlook for rate cuts this year here's here's the latest data

and what we're looking at here is the probability of a single cut remember we had a two cuts

priced in I'll get to that in a second but the probability of September cuts got going down

to 41% and again by way of background that first cut had been built into June and now that's gone

of course and I look at that we're teetering with the idea of a December cut a single cut this year

being right around the flip of a coin so not not only is the the theory against the Fed cutting

here in a lot of the thinking of Fed observers but also Scott the market is not banking on this

and they are backing off calls for cuts here well before I let you go I'm going to lean on your

expertise for a moment help us understand how in times of either war or periods of oil spikes how

does the Fed typically judge all of that and how it thinks about its monetary policy so Scott I've

been studying the history of this and what we did this week is we looked at all 10 instances where

oil prices year over year were 25% a higher for six months or more and what there was Scott is

before 1980 or so there's a pretty automatic reaction of tightening rates since then there's

been a much more nuanced reaction depending upon what's going on in the economy and I'll give you

some examples for example in 2008 well oil prices spike but what else was going on the great

financial crisis so the Fed ended up easing there's no automatic response what should have happened

to 2022 you had an oil price spike well the Fed stayed easy probably should have tightened made

a mistake there so there's a lot of reason Scott why the Fed is going to take a step back and try to

not react according to any particular playbook here it's chasing by the reaction from 2022

in the pandemic and it's going to it's not going to it's going to try to not make that mistake again

the other reason Scott remember we're coming off a tariffs inflation is above target and there

are people who believe that if the Fed were to so cavalierly look through this oil price spike

well then the commitment to the 2% target will be called much more seriously into question that

it has been already it's got to keep its eye to on on financial conditions whether they become

tighter or not and credit as many are talking about now as well Steve thanks so much Steve

Liesman our senior economics course yeah yeah we'll have this chat again I'm sure of that

Steve thank you up next one of this country's top wealth managers Chris Tumey Morgan Stanley

tells us how he is advising his clients right now Instagram Tina counts default teens into

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men are struggling with their mental health that some of the highest rates we've ever seen

but most aren't getting the support they need and that needs to change I'm Dr. Guy Winch your host

for season 3 of the visibility gap presented by signal healthcare this season we're focusing on

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men face every day and why opening up can feel so difficult join us for the new season wherever you

stream your podcasts welcome back stocks are weaker yet again as crude oil remains the most

important thing investors continue to watch Chris Tumey with us of Morgan Stanley private wealth

he's here post nice good to see you it's obviously this is the the focal point of everybody now you

suggest to stay risk on unless or moves effectively closes hasn't it effectively closed I think it's

for a longer duration so I think if we see an issue for two to three weeks I think you go back to

that geopolitical situation where 12 months from now typically the markets are up 10 to 12 percent

we're probably in a better place just given kind of the tailwinds that we had going into this oh

so you're still trying to look through this current conflict and focus on the tailwinds which we

talked about at the top of the program yeah it allows you to sort of do that I think I think

look the the big tailwinds that we saw that everyone saw was kind of those three pillars of

prosperity monetary fiscal and deregulation I think we're right now in a period where you've

got kind of three pillars of pain right you've got the AI build out you've got private credit

which you spend plenty of time talking about in this energy situation I think the energy

situation is the thing that we're most concerned about to put in a perspective if you think about it

20 million barrels go through the straight of your moves every day COVID we lost 10 million

barrels so this is twice as bad as COVID right I think if we can if we can manage this process over

two to three weeks I think we get back into our base case if this goes two or three months that

becomes a real problem you think about just the basic math you look at the reserves that the US

halves it's 460 million so there's not a lot of wiggle room given the size that we're seeing and

here's the thing that's the most concerning this is a supply side inflation issue it's not a

demand side demand side would be we've got too much growth we're in a situation where we need to

raise rates growth is too much and we need to take it back if this is a demand a supply side

situation we're in a situation where prices go higher and then a lot of these things that we have

for the pillars of prosperity start going away right you can't cut rates fiscal spending has to

become a problem and then you probably go into the midterms where there's a situation where you

could have a regime change in Washington which could affect regulation so you're getting clients

that call you up and they say Chris you know this this looks like if you get pretty bad like I see

oil at a hundred what what should we do you're predisposed at this point to tell them you know what

I think we should actually buy some stocks so I think right now it's too early to say buy stocks

I think we kind of stay the chorus right now look we've we've been in a fairly defensive posture

last time we were here we talked about the fact that everybody was expecting the market to go

higher which is a concern for us because usually that means the market's going to go the other way

and so one of the benefits of having kind of a diversified portfolio focusing in alternatives

focusing in on ways to diversify that risk is we're in a position where the market does get weaker

we can take advantage of it and buy some of the companies that we thought might be a little bit

too expensive to take advantage of when they were there let's talk about alternatives then since

say that a private credit how concerned are you so I'm concerned structurally with what's going

on not fundamentally so I think if you look at it there's a reason why these things are called

private credit right these are instruments that are typically very liquid you're putting them in

semi-liquid type of structures there's a concern that people aren't going to get their money they're

going to run for the door and that's obviously going to put pressure on the sector but I mean if

you go back to what we historically said as rates were coming down as competition was coming

into the market it wasn't a very attractive market to begin with and we were actually rotating

money out of private credit into things like ABS and infrastructure now although if you look at

the fundamentals and you're looking at what's going on we're not necessarily seeing a tremendous

pickup we don't think it's a systematic issue with the overall sector we think it's an issue with

regards to asset liability mismatch with regards to people that are buying into the sector so we

think companies are okay we think they're in a situation where they've got plenty of liquidity to

make some of this but I think the concern is is that there's a lot of head headway and noise in

this which potentially makes this become a detractive investment in the future what about

financials which you say you're overweight I mean that that group obviously is not done well

at all in part because of private credit no I think that goes back to our original base case which

is the economy is going to do well earnings are going to be at 17 percent you're going to have a

better issue with regards to leverage within the system and and the financials should benefit

if we do have a situation with straight-of-our-mouse if we do have some inflation we don't have rates

coming down that could totally change us I think we already have a situation it just depends

on how bad it actually gets in for how long that's right and so look I think if you're thinking

and you're concerned about what's going on in the market you look within fixed income fixed income

you want to be short duration with regards to equities you still I think want to look for secular

growers so some of these trades whether they're in software whether they're in AI that get cheaper

that becomes a good entry point and they shouldn't necessarily be a sensitive with regards to

energy prices all right good stuff Chris thank you for being here that's Chris to me back at post-9

we'll be right back

we're now in the closing bell market zone Mike Santoli and Renaissance macros Jeff to graph

breaks out in these final moments of the trading day plus Christina parts and level is

watching Adobe that company reporting in overtime Michael begin with you your first words what

well I mean the declines are kind of grudging and orderly I'm not sure if that's necessarily

a good thing at this point we are going to make likely a new closing low in the S&P for the year

you can you know look elsewhere and look at ways the market maybe it's making it harder to give

it the benefit of the doubt you keep highlighting the action in the financials the consumer-leverd

companies also continue to to leak lower down like 2% credit is starting to notice this stuff so

it's not so much that there's something new the market is building in I think you also maybe

can say hey crude's making these new highs or near new highs and the stock market isn't going

down kind of commensurately tick for tick for it I don't know if we can really take heart in that

or not but that is where where we leave us I wonder if you just have to wait for the market to get

a little more oversold and then have some headline excuse to test the upside well that's what

something you need to see a big spike even higher than it is now what he got over time for us

well among all the other top of mind issues we are going to delve pretty deep into Adobe

after its results we also do have an investor that has been nibbling there oh interesting

all right we'll see you in mail top of the hour thank you Michael Christina tell us more

actually about Adobe this stock has just done horribly so there's a lot to try and prove tonight

no tea yeah horribly down roughly 22% this year under performing the S&P 500 even under performing

the software IGV ETF as well as Wall Street just really worries about AI tools from the likes of

Canva Google and open AI just eating into Adobe's creative software dominance there's three things

to watch though total annual reoccurring revenue ARR Adobe's key subscription metric and that's

where the street is going to be looking for roughly 11% growth investors will also be zeroing in

on AI influenced ARR last quarter more than a third of Adobe's subscription revenue was tied

to AI adoption and then the second part is the key question is whether firefly it's an AI

creative street is actually driving enough paid upgrades to keep that number moving higher

and finally any changes to full your guidance currently calling for up to $26 billion in revenue

but the really big question hanging over this name right now is whether Adobe can actually prove

it's monetizing AI rather than being disrupted by it and whether that's enough to turn sentiment

around Scott all right Christina thank you we'll see what happens obviously in overtime Jeff

to graph and bring you in douse down about 727 731 735 so we're close we're going to close around

the lows it is clear and you suggest we're not oversold enough yeah look at 20-day lows today

I mean this is a couple hours ago but it was only at 24% that was actually a lower number lower

than where we were back on Monday you want to see 20-day lows expand you want to see him really

suggest that it's indiscriminate selling and that risk is being taken down the other thing I would

just say Scott is most of the sentiment measures that we go through aren't bearish enough yet

you can see skew skew is rising so that's the difference in the pricing of volatility front month

versus three month and I think people's expectations around what's happening in the golf it's going

to be a short-term war therefore that premium makes sense but we'll get back to normalcy in three

months maybe maybe not and I think the put-call data just shows that complacency that there's

just not enough there so I think we've got a little bit more ringing to do I think we'll probably

have some more bad news the good news is we're still in you know kind of this neutral trend so

oversold conditions should should hold but we're not there yet what levels are critical on the S&P

to keep our eyes on 6500 is a big one you know that'll be important but for us it's going to be

more the internals anything else so even if we in fact I wouldn't even mind seeing a break an

important level because that might force some selling get those internals where we want them get

the sentiment where we want it and then we'll start going after it there hard to feel better about

this market as long as financials we're looking at the screen here we just cycled through some

names but Goldman was one on the list down almost 5% the group just hasn't traded well at all it's

making people uncomfortable yeah it isn't I think it should it started in the the private asset

managers right the private credit guy or the private equity guys that basically morphed into private

credit and then it's just kind of snowballed we lost consumer finance this week the regional banks

actually act better than the big banks so that's that's a little noteworthy because you know they

tend to be more broadly economically sensitive less financially engineered sensitive so I like

that I think one of the more interesting things though Scott is is gold right gold is not

responded well we we called gold a bubble back in the fourth quarter of last year you know I

think it can have a big correction and you kind of have to ask yourself what in the world would

have to happen for gold to make a new high if this isn't enough right and so I think there's

going to be more pain in the gold market before this is all said and done why are you trimming energy

and adding the materials now right I've lost my mind right it has to be the case look the the

sentiment in energy if we look at where the retail is if we look at where the option activity is

if we look at where the ETF inflows are they're just excessive they're they're pricing in a lot of

of of upside for energy that by itself doesn't make it a sell I think you want to just trim some

of those at the same time if you kind of compare the economic cycle with energy and materials they

tend to be birds of a similar feather and so if you have none it's oversold one it's overbought

one that's got a lot of hype in it and one that you know people are concerned about we just

need to make sense to take a portion of the energy gains here book them move them into the oversold

conditions and materials yeah I mean you just you just seem to think that that space is oversold

and maybe deserves a look I'm I'm going to let you go I appreciate you joining us here

as we count down to the finish the bells are going to ring in just a moment it's going to ring us

out as we said just about at the lows of the session equities obviously only one part of the

story and you know the the Dow's down one and a half percent S at P is as well Nasdaq's taking

a little harder today too as technology sells off let's show crude though as we go out here because

we had said that Brent had settled above a hundred for the first time since August the $20.2

in close to last WCI is on the move back to the hundred as well as long as that remains

the dynamic you're going to have a problem with that's what he's off to tomorrow

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