Video: AAP Daily Rundown for Tuesday

Bob and Chris discuss the markets, oil, United Rentals (URI) , and Alphabet's GOOGL newest acquisition.

KATHERINE ROSS: Good morning. It is Tuesday, March 8th. I'm Katharine Ross, and I am joined by Bob Lang and Chris Versace. Bob, same story, but different day. We are seeing the VIX still slightly lower than yesterday, but it's still higher. We're seeing the markets start to take a downturn. They were a little bit positive, essentially flat, going into this morning. How should members make sense of this market, and how do you handle today's action versus yesterday's gruesome close?

BOB LANG: Yeah. Yesterday was a pretty bad day for the bulls. And I would tell you that volume levels were elevated yesterday across the board, and we saw extreme readings in some indicators. Yet volatility was only up about 11% or 12%, really, which really kind of surprised me. I thought we'd have a little bit more fear in the markets, but apparently because of the strength in energy names, oil names, that kind of blunted a little bit of that selling and impact to volatility and fear.

But make no mistake, this is a market in distribution, and it has been for about three months now. And what we need to do for our subscribers, and us as well, is just to sit tight and wait for this storm to pass. It is going to pass eventually. And again, continue to look for bargains and some of the names that we've liked at higher prices. We've maybe even sold some or trimmed some. They've come down to some good levels to add. So we did that more recently last week, and we'll continue to do that going forward.

KATHERINE ROSS: Chris, Biden is set to announce a new ban on Russian energy imports, according to multiple reports. This is happening without our European allies. It is largely symbolic, but one that will put more pressure on American's wallets at the pump. With $5 a gallon looming over our heads, how are you approaching the markets?

CHRIS VERSACE: Well-- so Katherine, in our morning comments, we talked about how this persistent rise in oil prices is going to ripple through earnings expectations, so, again, we're sitting back trying to calculate where we have the greatest exposure to that in the portfolio as well as other rising commodity costs. Fortunately, the overall portfolio exposure to Russia is relatively small, and the number of companies in the portfolio that are really reliant on crude and some other key inputs is also somewhat small as well. So we don't see a lot of destruction, if you will, in terms of portfolio earnings expectations.

So that's the first thing that we're doing, Katherine. As far as the other side of it, we are going to continue to monitor the situation. It's kind of a quiet day, relatively quiet on the economic and earnings front. We do have some other news coming out later today with Apple. The other thing we're watching is going to be whether Europe does indeed join the ban on Russian oil and what that might mean.

KATHERINE ROSS: Sticking with you, Chris, Alphabet's Google is buying Mandiant, formerly of FireEye and a $5.4 billion deal with cybersecurity in focus. So what does this deal mean to Alphabet?

CHRIS VERSACE: So if we take a look at cybersecurity, there's a lot of growth in cybersecurity embedded in cloud offerings. We can see that based on the reporting throughout this entire December quarter earnings season from the likes of Fortinet, CrowdStrike, and others. So what we see Google really doing is shoring up its exposure to cybersecurity, bundling that in cloud, allowing it to compete a little bit better with Microsoft, Amazon, and the like. So it's, without a doubt, a smart move.

Members know that we see cybersecurity as a growth market. It's kind of the downside, if you will, of what we think about for 5G, just to put it together real quick. 5G is going to bring about the IoT market, which means more connected devices, which unfortunately means more potential vectors for bad actors to attack. So kind of the yin and the yang, and we think this fits perfectly well with what Google is trying to do over the long term.

KATHERINE ROSS: And, Bob, yesterday you sent your technical analysis into the bullpen named United Rentals. What did you find by looking at this chart, and why did it make it so appetizing to you that you guys decided to actually elevate it to the portfolio?

BOB LANG: So the chart shows a really nice double bottom more recently at around the 285 to 290 level. And it bounced off of that level the second time with some really good strong volume, so it tells us that some big institutions are still coming into the name and buying it down here. It's a strong-- it's a strong chart at least in this area, between the 280 to 300 level, above 310 to 313. This stock has really got some room to get up towards that 350 level. So we like this stock-- this stock chart here.

It's showing some good promise, good relative strength, money flow has been pretty positive, and some other indicators are showing some promise as well, too, so we like this chart. The technicals are good on United Rentals.

KATHERINE ROSS: Jason F noted that it's fairly safe to assume that the Fed will raise interest rates several times this year. That's something that we've been talking about quite a bit on The Daily Rundown. With that in mind, Bob, is now the right time to go short on bonds?

BOB LANG: No. Because, as an asset class, we know that big hedge funds, and mutual funds, and so forth, they do asset allocation. And they do asset allocations, including bonds, equities, gold, even crypto, cash, real estate, other holdings as well too. So no, I don't think it's time to short bonds.

There is going to be somebody-- some banks, and so forth. And dealers just step up, and pick up the pace of buying bonds even if the Fed comes off-- even as the Fed comes off their tapering program, which is going to be happening within days. So there are going to be-- there is going to be some bid out there for bonds. It's not the most attractive area right now, and, of course, bond yields have risen. And when-- of course, we know that bond yields go inverse to the price. The prices have gone down.

So I certainly feel that, unless we do break out on yields much, much higher, I still think that bonds are still a safe haven play here, even during this turmoil that we have going on in Europe and other things.

KATHERINE ROSS: And, Chris, Bobby H noted sadly that his 401(k) has turned into a 201(k) after yesterday's market action and the ongoing action that we've seen through the past week. So they're wondering, do we ride out the market, or do you guys think that we're headed for a recession? Do we have to wait for the war to end before any of this becomes clear?

CHRIS VERSACE: So Katherine, Bobby, that-- it's a great question. It's one that we sit there and we think about quite a bit. As you noted, Katherine, there's a lot of moving pieces that are going on. We have the Fed meeting next week, we have, as I alluded to earlier, downside revisions likely for earnings expectations. Companies are going to be speaking at conferences, input costs are moving higher, so there's just a lot going on here.

So our preference is not to throw in the towel, obviously. We think that the big retreat that we've seen in stocks-- I mean, the NASDAQ is down 17%, 18% year to date. We would much rather wait for some clarity to emerge, particularly on the Russia-Ukraine front, but also on Fed policy.

And we think we'll start to get some of that the middle of next week, and then fingers crossed that we start to see an end before too long in the Russian Ukraine war. As that happens, I think we'll be able to assess the duration of the impact, maybe reset expectations one more time, and then get back to normal as we continue to put the pandemic in the rearview. So Bobby, that's what I would wait for.

KATHERINE ROSS: All right. Bob, Chris, thank you so much for joining us today. And members, thank you as always for tuning in. Please continue to send your member questions in to katherine.ross@thestreet.com, and we'll see you tomorrow.

Action Alerts PLUS is long URI and GOOGL.