Stock Market Sell-Off: Why Disruption is a Good Thing | Pivot

Stocks worldwide are tumbling as investors worry that the U.S. is headed into recession. A weaker-than-expected U.S. jobs report caused the panic. That seems odd. Um, at the time of the taping, the DOW was down 4.3% in the last five days, the S&P down 4.8%, and the NASDAQ down 6.5%. Outside of the U.S., big plunge, the Nikkei, uh, i- in Japan dropped 12.4% overnight, its biggest fall since 1987. That's a long time. In Europe, the Stoxx 600 index is down 2.5%. That's not so bad. So what was happening here, Scott? You were just saying, you know, there was uncertainty with tech earnings 'cause they're a little disappointing, although they've been going like gangbusters. I guess they stopped gangbuster-ing. Um, w- we can, uh, you know, just so people are aware, at the time of the taping, Amazon's stock is down 13% in the last five days after missing expectations on revenues and sales. Also to blame, Amazon says it plans to continue spending big in AI at the expense of short-term profits. This is everybody. Apple beat expectations for net sales and income, but revenue in the China region declined. China is seeing a real s- uh, problem with consumer spending as the company faces local competition and bans on governmental use also. Intel had the worst trading day in 40 years, announcing it would be cutting 15% of its workforce and suspending dividend payments as part of a restructuring plan that, uh, uh, the guy who's running it, Gensler, is having a real, um... I think that's his name. Um, is having a real, uh, issue, uh, catching up in AI. Um, tech stocks have overall seen their steepest three-week slump in two years, but they were getting a lot of profit-taking in that regard. Um, I don't know. Sc- Scott, big thoughts?

Again, I think this is a little bit, you know, CNBC or whoever it is or the DOW or name your digital-

Mm-hmm.

... media company, wants to get as many clicks as possible. As we stand here, the DOW is down, uh, it's down 1.9% and it's plummeted to levels not seen since July. I mean, this is not... It's not that big a deal. There, there's some company-

Scott says calm down, but go ahead. Go ahead.

Well, it, it, it's just true. It's had a historic run. I think this is, I think this is a bigger deal in Asia. They're worried about, uh, um... I mean, what's interesting, Pankaj Ghemawat, again, another one of my colleagues, uh, at NYU, always talks about trade is much more regional than people think. Our biggest trading partner is Mexico. I think our third, after China, is Canada. Basically, compa- Countries almost always have their biggest trading partners based on proximity. And when China's going in... When the second-largest economy's going into a slowdown, it's just gonna impact the entire region. The weird... The... If you look at the data, unemployment has ticked up. The jobs report, new jobs report was disappointing, so the market seems to believe that we may be going into recession. The other thing, quite frankly, is just stocks are, um... We're expecting a rate cut and there's a fear that the rate cut has not come soon enough and, uh, the, the expectation of a rate cut had been built into stocks. But if you look at what's really gone on here, it's just not... It's more, it's more s- spectacle than significant. When you s- drill down on some individual stocks, what I think you find is, is just some incredibly, um, interesting stories. So for example, Intel, I mean, just to give you one stat, Intel is now worth... Or okay, let me put this another way. NVIDIA is worth 20 times what Intel is worth right now. Intel, in the last five years, has lost half its market cap. I mean, this is a company, when I was in, graduating from business school in 1992, the two premier jobs that everyone wanted to go, uh, get at companies were Intel and Dell, which is g- It kind of marks the age. And Apple was a shitty company that might not come back. It had kind of lost the script and everyone said it was underpowered and overpriced. But everyone wanted to go to the best company, in terms of reputation for growing management and had just kept killing it in terms of the stock price, was Intel.