Closing Bell - Closing Bell: Choppy session for stocks, OPEC surprises, The bull case for Bitcoin 10/5/22

Episode Date: October 5, 2022

Stocks staged an impressive comeback, with the Dow clawing back from a 430 point loss to finish just slightly in the red. Adam Crisafulli from Vital Knowledge and Mona Mahajan from Edward Jones debate if this week’s market strength is a classic bear market bounce or something more sustainable. Energy was by far the top performing S&P 500 sector as oil rose after OPEC+ announced a production cut. Dan Pickering from Pickering Energy Partners weighs in on how high oil could climb. And D.A. Davidson’s Gil Luria joins to make the bull case for Bitcoin, which is down around 50% on the year.

Stock showing resilience today, gaining background throughout the session with the Dow erasing a 430-point drop. This is the make-or-break hour for your money. Welcome to Closing Bell. I'm Melissa Lee, and today for Sarah Eisen. Let's take a check on where markets stand. We're just about flat. It had been an interesting day, though, really taking its direction for the move in Treasury yields. The Dow is right now up by just a tenth of a percent. S&P 500 up by six one hundredths

of a percent. Thirty seven ninety two is the level. The Nasdaq is the worst of the three, down by just about two tenths of a percent. Check out oil and energy. That's where we're seeing some major moves. Getting a lift today, as OPEC Plus says it will cut production by two million barrels per day. We've got much more on that news straight ahead. Also ahead on the show, the bull case for Bitcoin. It has lost more than half its value this year, but D.A. Davidson says Bitcoin is a valuable asset that is likely to see success. We'll talk to the strategist behind that report. We begin with the markets. The major average is trading well off the lows of the session. Mike Santoli is here with his market dashboard. Mike. Yeah, you mentioned resilience, Melissa. Down about 1.6%, 1.7% at the lows on the S&P 500.

Even that was only about a third of what was gained over the prior two days. So that was not even that surprising or alarming a degree of pullback. Never threatened the old June lows. Remember we used to talk about, are they going to break? Well, they broke last week, but we didn't spend a lot of time down in that area. I think a lot of bulls and bears alike would basically say there's a very strong reflex bounce. The breadth is very strong. We're probably still a few percent, though, from proving as to whether this is anything more than a reflex rally.

Thirty nine ish hundred probably is something that is a threshold that many people are looking at. High burden of proof. But seasonal factors start to work in the market's favor a little bit as we get into the fourth quarter, as well as, of course, that set up with very deeply depressed sentiment going into the end of the third quarter. That's all at least a helpful backdrop. Now, in terms of the speculative energy in the market, here's a look at margin debt. Very long term chart from Ned Davis research of total margin debt in billions. That's not as interesting. I mean, it always curls lower when the market rolls over. But this is the rate of change they's not as interesting. I mean, it always curls lower when the market rolls over. But this is the rate of change they track over 15 months. So essentially, the percentage change in borrowing to own stocks or borrowing in brokerage accounts.

And you see it's just about at this level that's kind of suggested oversold readings in the past, where it's a contrarian bullish signal for stocks. Now, when did it get below that? Right there in those multi-year deep bear markets in 2000 into 2002 and 2007 to 2009. So it's not to say we're at a floor, but this definitely shows you how much of the speculative energy has been kind of deflated, removed from the system. Yeah. You know, Mike, I'm just looking at my screen.

Lots of things are turning green as we head into this last hour of trading, including big cap technology, which had been sort of flat all day, but Apple's sort of making a turnaround up by a half a percent. The semiconductor index is up by more than 1%. And that you would say, I mean, that's a little bit more speculative when it comes to technology and more cyclical. Except you would. Yes, I agree. Except you would also say, well, it's actually been de-risked, as they like to say, and it's traded at a discount to the market. Now, I think all that stuff is what's been beaten down. It's getting left. The dollar index peaked in the late morning. It's come down from there. That's basically when stocks got a bid. All right. Mike, thanks. Mike Santelli. Let's focus on energy. By far the top S&P 500 sector

today. The world's major oil producing countries agreeing to cut their oil output targets by two million barrels a day. That's about two percent of global oil production, despite White House efforts to convince them to do otherwise. That news sending oil higher, giving a boost to oil stocks like Exxon, Halliburton and Pioneer. Joining us now, Dan Pickering, founder and CIO of Pickering Energy. Dan, great to have you with us. I'm a listener. So surprise, surprise, the White House has absolutely no say in terms of setting global oil production. I mean, that's really underscored by today's move by OPEC plus. It sure is. I think that essentially no one's listening to the White House as it relates to energy markets.

OPEC's not. They're cutting production when the White House wants more production. You've got U.S. producers that aren't drilling more. Rig count's flat since the summer. And then you've got the markets that are taking price up when the president's telling us that we want price down. So I think that the reality is that the recession or lack thereof is the driver and OPEC is the second driver. Well, we're seeing the move in WTI and we're seeing the move in particular in Brent today we're seeing the move in particular in brent today dan i'm wondering if you think that that two million barrel uh cut is being reflected so far in the price or if there's some doubt that that cut will actually happen yeah i think if

we look we're up 10 on the price of both brent and ti in the last few days so that's dialing in that will probably take somewhere between half a million and a million barrels off the market. The two million barrel cut, some of that allocation won't be taken up by the OPEC producers. So call it a million barrels a day, maybe a little less. That's still a meaningful number. It's the same amount that the U.S. SPR is taking into the market every day. So we're essentially negating the SPR from now until the end of November. How does all this translate, Dan, into your view of the geopolitics of the energy picture in that, you know, Saudi is basically ignoring the United States at this point.

Europe, the IEA head has said that, great, Europe has a lot of nat gas storage for this winter, but next year Europe is going to be heading into an energy crisis. So it's really testing the resolve of developed countries in terms of this war in Ukraine and the ability to actually stick together against Russia. It sure is. We've got the desire to inflict pain on bad actors as one driver, but we've also got the desire not to inflict pain on consumers on the other hand. And so it's going to be a very interesting dance. It's not going to play out over the next week or two or month or two. It's going to be playing out over the next three, four or five years. Europe's in real trouble. You know, their winter is going to be tough. We'll make it through. But

it's the next couple of winters we worry about. So my expectation is we squeeze Russia out of the market over the next, call it three plus years. But we're not going to do it by pushing oil price to 150 or 200 and taking them out too quickly. So it's going to be a tight rope walk. I think we make it through, but price inflation on the energy side is going to be sticky. What happens for the U.S. consumer, Dan? I think that's what a lot of people want to know. How much will they be paying at the pump because of this cut? Yeah, five bucks a gallon was a serious pain point. We've come back down toward three, three and a quarter. This type of a cut supporting oil price in the low 80s, low to mid 80s, maybe it tacks

on 10 to 15 cents a gallon. We're still going to be under 350 a gallon. I think that's manageable for the US consumer. The real challenge is going to be over the next couple of years, oil's probably going to try and make its way back up into the triple digit level. And that's where you're talking about four dollars a gallon for consumers and a little bit more pain. I don't think this is going to cause a recession. I don't think it's going to help either. The fundamentals for the oil companies. It's great. I mean, that's what ExxonMobil signaled about its third quarter results, even after a record-breaking second quarter.

And they're saying it's NatGas that really improved in terms of the price month on month. It increased on average for NatGas. And so, Dan, I'm wondering, you know, that's great for the oil companies. That's a real push. But the poll, or maybe it's vice versa, is that this really puts another political target on the backs of the oil companies. If there's more pain, especially going to the midterm elections, and they're starting to post these record third quarter results, I'm wondering how you sort of factor that in in terms of great fundamentals for the sector, but the political pain might be there.

Yeah, so there's no question that in the next three months, we're going to see great results from these companies at a time when we've seen an administration that really wants lower prices at the pump. So we've seen windfall profits in Europe. That's been bandied about here in the U.S. I don't think that's going to happen within the next year before the midterm elections. But the reality is these companies are making a lot. They're returning a lot to shareholders. It does put a bit of a target on their back. But again, energy security, how do

you punish companies that are supposed to be providing energy security? So I think at the end of the day, there's going to be a lot of complaining, but not necessarily a lot of negative repercussions for the companies. All right. We're showing your picks, Devin, Schlumberger, as well as which one is a Devin? Diamondback. Diamondback. That's right. All right, Dan, thanks. Thanks for joining us. Appreciate it. Dan, thanks so much. DA Davidson is doubling down on Bitcoin, making the bull case for the cryptocurrency after a big downturn this year. We'll talk to the strategist behind that call about why he sees a bright future for Bitcoin. You're watching Closing Bell here on CNBC. New data shows criminals are getting creative with crypto fraud, using the blockchain to launder billions of dollars in illicit funds.

And that could pose a risk to more widespread crypto adoption on Wall Street. Kate Rooney's got that story for us. Hey, Kate. Hey, Melissa. That's right. Criminals have moved beyond Bitcoin. They're increasingly taking advantage of newer crypto technologies and the thousands of other cryptocurrencies out there. Research firm Elliptic estimates that since the start of 2020, there's been roughly $4 billion in illicit crypto transfers. Most of those are coming from three key technologies. The first is decentralized exchanges, which broadly fall under something called decentralized finance. Some people call that DeFi. Those are designed to work without intermediaries.

And then you have something called coin swaps. Those let users transfer crypto without opening an account. As Elliptic puts it, it caters almost exclusively to a criminal audience. And then finally, bridges. As the name suggests, those act as a bridge for trading assets across different blockchains that aren't always compatible. And crypto transactions are mostly traceable, although they are anonymous. And that digital paper trail has really helped law enforcement in some cases. Colonial Pipeline is the big one.

But it is a lot harder to track that money if it's moving across different blockchains. They call that chain hopping. And the Treasury Department pointed to this chain hopping, as they call it, as a key risk in its report on financial stability out just last week. Melissa, back to you. Kate, thanks. Kate Rooney. Let's stick with crypto here. D Davidson out with a note today titled the bull case for Bitcoin saying it's a valuable

asset that is likely to continue its success. The analyst behind that note Gil Loria joins us now. Gil great to see you. Great to see you Melissa. So as a monetary as a as money you say one percent chance.

So we're going to put that aside for now. Store value. That's what you to put that aside for now. Store of value, that's what you think its current main application is. Has it really been a great store of value? It seems so correlated to the NASDAQ. Well, absolutely. It has been over the last 12 years.

Obviously, there was a very high correlation during the hyper liquidity area. We measured it at about 0.75 R squared to the Nasdaq during the two, three years where there was hyper liquidity from the Fed. But even just the last two or three months, you can see that correlation go back down. It's down to 0.6. It was nothing to negative before the hyper liquidity era. The fundamental drivers of Bitcoin have a lot to do with adoption which is very adoption of bitcoin and crypto as opposed to the fundamental drivers of the rest of the

economy. So inherently fundamental wise they should be uncoordinated. You say trading is the second most important application what does that mean just the trading back and forth of bitcoin. That's right. Trading is something. Purpose line. That's right. I'm trading something on purpose

though. Just just gains. Well that's right. Humans gamble on everything and they bet on everything. And it happens that including stocks bonds real estate sports etcetera. And turns out the big coin has the deepest liquidity. It has twenty

four seven trading it's digital so you can connect very sophisticated trading tools. And a lot of people have made money in it. Those are a lot of things that are attracting more adoption as people want to trade it and make money trading it. It's actually been one of the top applications and continues to be one of the top applications of Bitcoin. That seems to be counterintuitive to the notion that it is a store of value, that its second most useful application is that it is a trading vehicle, Gil. We're saying this as, by the way, we're hitting session highs for the Dow as well

as the Nasdaq. It can be both things. And in fact, Bitcoin is a lot of things to a lot of people. You talked about it as a store of value, as a hedge against inflation. We also talk about the fact that it could potentially be all of money for some people. It could be a payment network. And it's a cultural phenomenon for people that have a deep distrust of current institutions, government and corporate. So it can be a lot of things to a lot of people. And in fact, it is. When you take a look, though, at what is going on around the world, Gil, and sort of what's going on in the stock market, you would think that this lays the groundwork for

Bitcoin to reach, I wouldn't say new highs, but to be doing very well, better than it has been doing. And I'm wondering if there's sort of a, how come it hasn't done better in this environment? Exactly when there is, you know, questions about the credibility of institutions like the central bank. There's questions about political stability around the world. There's questions about the stability of assets in the stock market. You would think that all these things lay the perfect groundwork for a bull case for Bitcoin. Well, I would argue that the anticipation of institutions failing and the fact that institutions have been failing to some extent since the financial crisis is what got Bitcoin

from zero to twenty thousand. And if more institutions fail or if more people believe that these institutions will fail, as is happening in some places around the world, that will cause the next wave of adoption, at least in terms of retail and consumer adoption for people that are failing and don't believe that institutions are failing and believe they'll fail more in the future. Let's talk about the stock picks, you know, associated with this note, Gil. One is Coinbase. Do you think that this company has done enough cuts to sort of weather the storm? Yes, this is a company that made a tremendous amount of profit last year during the bull market, has access to the capital markets,

and is doing what all the large technology companies are doing right now which is lean up to get through the winter to get through the tough times coinbase has a very diversified business across crypto it has been well managed it's weathered storms in the past and it's positioning itself to do well when we get to the other side of crypto winter all right gil great to speak with you. Thank you. Thank you. Gil Loria of DA Davidson.

Let's check the markets, because as we had just mentioned to you, we're at session highs right now. Look at that in the green for the Dow, the S&P, as well as the Nasdaq. The Dow is up by four tenths of a percent. So is the S&P and the Nasdaq eking out a quarter percent gain. After the break, today's stealth mover could be an appetizing addition to your portfolio. We'll reveal the name next. And later, we'll discuss Elon Musk's ambition to turn Twitter into the app of everything

and why so-called super apps haven't gained traction yet in the U.S. And as we head to break, check out today's top search tickers on CNBC.com. The 10-year yield is on top, no surprise, followed by Tesla, Twitter, the S&P, and two-year yield. Closing bell, be right back. Let's check out today's stealth mover. It is Lamb Weston. Investors liking this stock a lot key today. After the potato supplier beat earnings this morning, the company reported large increases in net sales and net income for its fiscal first quarter. The company says they are on track to deliver the higher end of their fiscal year financial targets. Today's move, no small potatoes.

It hit a fresh 52-week high in the session. It's up by 4.6% right now. After the break, is this week's market jump a classic bear market bounce or the start of a more sustainable comeback? We'll debate that when Closing Bell comes right back. Stocks staging an impressive comeback today with the Dow climbing back from a 430-point loss in the S&P and Nasdaq, moving into positive territory. That adds to the sharp rally to start the week, the strongest two-day gain since 2020. So is this a classic bear market bounce or the start of a broader comeback? Joining us now, Mona Mahajan from Edward Jones and Adam Crisafulli from Vital Knowledge.

Good to have you both. Adam, you actually think that there could be more gains ahead. Why? I think there could be. I think that you're seeing some important shifts in the underlying economic data, trends that are moving in the direction that the Fed really wants to see. You're seeing evidence of disinflation appear throughout the economy on a variety of different fronts. And the Joltz report yesterday, I think,

contains some very encouraging news for the Fed. It's not going to shift on a dime, but I think you are seeing the overall economic landscape move in a way that it's going to allow the Fed to take its foot off of the tightening gas. And that should relieve some of the upside pressure on

yields, in which case you're going to see equity multiples stabilize. That's really going to be key for the market. So I think you can get another 100 points out of the S&P or so before you start to run into some more multiple resistance. I would assume, Adam, that you have to believe that the outlooks given during those Q3 conference calls are going to be decent. Or do you think that the market pullback was simply factoring in lowered expectations for earnings? I think to an extent. So I do think you've obviously had a number of pre-announcements and you've had a number of pretty disappointing August end reports just last week. CarMax and Nike were both pretty dreadful. But I think in terms of the equation of price of earnings times multiple, the multiple really is going to factor in, I think, to the market more than earnings.

So there is, I think, a lot of I think expectations are very subdued for the upcoming season. But even if you do see companies take down their outlook, if you see yields drop, the multiple will more than make up for that. So the yield multiple interaction, I think, is going to be really the determinant factor for the market over earnings. Yeah, you know, Mona, I'm sure that a lot of people in the equity markets are paying much, much, much more attention to yields these days. And so key to this whole thing is that yields will remain tame, that the volatility will be more muted going forward in order for the markets to go higher. Where do you think we stand on where

yields are? Yeah, absolutely. You know, look, historically, yields have had an interesting relationship with the Fed funds rate. They tend to peak actually a couple of months ahead of the final or terminal Fed funds rate. So if we think December is the last rate hike or maybe it's February- really the yield picture starts to stabilize perhaps peak in the weeks ahead. So the good news is we're probably getting closer to that point where we could

call- maybe the start of a new bull rally or the start. Of at least positive returns on a more sustainable basis- but I think we still have to see. That you know all encompassing inflation figure that we've been talking about all year start to really come

down in a more consistent way. We start to see the fed- talk about pausing or at least you know taking a pause to assess what's happening in the economy. The good news is the data we got this week. Does show that you know if you look

the ISM prices paid index both services and manufacturing. Inflation is. Heading downwards I think overall what does show that, you know, if you look at the ISM prices paid index, both services and manufacturing, inflation is heading downwards. So I think overall what we're seeing is the backdrop is setting up nicely for a more sustainable rebound, but we'd likely need to see one or two more data points to kind of confirm that trend. Yeah, and CPI could come to the rescue or dash everybody's hopes next week. Mona, you know, the word peak is a funny word because we've all bandied about peak when it comes to peak inflation. But what we have learned is that, for one thing, inflation did not peak. And second of all, even if you hit a peak, does it come down or does it remain elevated?

So when you say peak yields, does that assume that there is a coming down of yields on the other side of it or that yields remain elevated? And does that matter in terms of the backdrop for equities? Yeah, it's a great point. You know, on the inflation picture, you know, the Fed needs to see inflation head towards their 2 percent target. And what we have seen historically, when inflation does start to roll over, it rolls over pretty consistently. It does take anywhere between 12 and 24 months to kind of get back to trough levels but i think once um once we start to see that trend in motion hopefully it'll stay there now what we are seeing headline you know of course we are seeing uh oil and energy commodity prices start to come down we'll see what happens after

the opec news but on the core side it's still been sticky and I think we need to start seeing the core side start to level off and roll over as well. What we know is though that the underlying fundamentals in housing and even potentially the labor market are softening and so at some point perhaps

with the lag. We'll start to see that reflected in the CPI as well. At your point I think yields you know we saw the 4% on the 10 year- we would start to need it we would start to see or need to see that to stabilize and eventually come down back towards the 3%, 3.5% level. And, in fact, we saw that in June to August when yields went from 3.5% to 2.5%. And we saw what happened in equity markets then in ICE rally.

So I think there is a pretty strong correlation right now. And that peak in yields will be critical. But so will that inflation rolling over both on the headline and core. The 100 points to the upside, Adam, on the S&P 500. When does that happen? Does that correlate with seasonality or does it happen even throughout earnings season? I mean, have we been been through enough in terms of the warnings that have come out to say, you know what, expectations are so low that we're poised to beat expectations at this

point. And that will be the catalyst for that 100-point upside. I think that's going to help to a certain extent. So you have seasonal tailwinds. I think you have subdued earnings expectations to act as a tailwind as well. But I think the more powerful upside driver will be economic data continuing to move in the direction, again, pointing to a softening in the unemployment market, pointing to a higher participation rate on Friday. I think the participation rate is probably going to be the most critical factor of this Friday's labor report. The CPI next week, if that shows further disinflationary trends. You are seeing the disinflation evidence appear throughout the economy. You're hearing about it anecdotally

from companies. Supply chains are normalizing back to where they were before. Pandemic inventory levels are still very elevated throughout the retail economy. That's gonna lead to price pressure in the coming quarters. Even the auto market, which has been such a driver of inflation, new and used auto prices, that's starting to soften as well, as CarMax last week suggested.

So I think all of that, all of those trends are gonna make their way into the official government data eventually. next last week suggested. So I think all of that, all those trends are going to make their way into the official government data eventually. And that's going to give the Fed some comfort to, again, not pivot aggressively, not pivot 180 degrees, but certainly just slow the pace of tightening and reach that ceiling sooner than people were thinking just two weeks ago. All right. Adam and Mona, thanks so much. Great to see you. Thank you. Take a check once more on where the markets stand in terms of the comeback throughout the session.

We're up by just about a third of a percent on the Dow. S&P 500 up by a quarter of a percent. NASDAQ is trying to stay positive. It's up by about 11 points right now. Some mega cap tech bellwethers starting to lag their peers, and that could provide clues about the market's next move. Mike Santoli will return with his analysis. That's next. And throughout Hispanic Heritage Month, we are celebrating our CNBC teammates and contributors. Here's Jessica Ramirez, Jane Hawley & Associates Senior Research Analyst. I grew up being bilingual. Spanish is my first language. I learned English in school, and I've been very privileged that I've been able to travel and improve my language skills. And until today, I still struggle with some of it. But I think the idea of making your obstacles, your strength really

works more than people knocking you down. There's going to be more people who recognize how hard you're able to work and are looking for that. Welcome back. The tech sector stocks turning positive today and tracking for big gains on the week. Mike Santelli is back this time taking a look at the recent performance of mega cap tech stocks relative to peers. Yes. So, Melissa, almost all stocks are down. Most of them are down a lot. But the very largest stocks have not provided shelter. If anything, the average stock has lot. But the very largest stocks have not provided shelter. If anything, the average stock has outperformed the very biggest mega caps. That's different from what happened last year.

And take a look at Tesla. The consumer discretionary sector is very, very top heavy. Between Amazon and Tesla, it's like 43% of the market cap weighted consumer discretionary sector. Here's the equal weighted consumer discretionary sector. You see that year to date. Boy, this is since the NASDAq peak in November of last year. You had a five percentage point almost spread between the performance of Tesla, which had held up relatively well, as you can see, parts of this year. And now it has succumbed. Take a look at Alphabet, which I think still remains below its June lows and really has buckled compared to the equal weighted

Nasdaq 100. Here, it's a less dramatic spread, but still under performance by best in breed versus the overall flock. And it really, on the S&P as a whole, the equal weighted still has a very strong advantage on a year to date basis. So if the excesses were in the very biggest stocks, that's where a lot of the dead weight is coming from. It could be a little bit of a bright side story as the average stock outperforms. Mike, thanks. Mike Santoli. Jeremy Siegel is back on the record with a new warning for the Fed, saying he is disturbed by one particular aspect of the central bank. That story, plus the latest on Twitter and why GM is stalling. We take you inside the Market Zone. Welcome back.

We are now in the closing bell market zone. Dan Nathan from Risk Reversal Advisors is here to break down these crucial moments of the trading day. He's also a fast money trader, by the way. Plus, Steve Kovach on Elon Musk's ambition for Twitter and Phil LeBeau on the automakers. But first, I've got to get to stock staging a major comeback today. All three major averages holding gains as we approach the close. Dan, stocks had every reason to sell off and not rise into the close. And here we are. What do you make of it?

Yeah, it is pretty remarkable, especially after those two consecutive gains that we saw Monday and Tuesday after what was really a horrible close on Friday at a new 52-week low for the S&P 500. Look at where we are right now. We are 2 percent off this morning's lows. And we're doing this in the face of the 10 year U.S. Treasury yield up. The dollar is up. Crude oil is up. It just shows you, I guess, in this new month, turn the page and people want to buy after one of the worst months we've seen in many years. The setup is interesting because it's not like we have no

news coming up. We're in a vacuum of any kind. We've got jobs. We've got CPI. We've got earnings kicking off next week with the bank earnings on Friday, Dan. I mean, there's every reason to not be long this market. And yet, you know, people are getting in. And so the question is, have we de-risked enough in terms of, you know, factoring in that maybe earnings won't be so great? We've lowered the bar enough. Yeah I think that all that makes sense I mean the sentiment was so bad into the end of last month in the end of

last quarter also we think about the fact that those callous that you just mentioned coming in a very short period of time I mean if that. Jobs number is a little cooler than expected if next week's CPI number is a little cooler than

expected. If we do get earnings that are decent enough we talked about it on fast money last night mail you know jp morgan did what it kind of needed to do from a technical perspective it filled in that gap from all the way back to november 2020 near 104 and when you think about that psychologically that's really important that was the date in which we got the vaccine news, right? So it round-tripped that entire move here. And so maybe the expectations are basically well in line with what the company is going to be able to put up. And on that next Friday, October 14th, we're going to have Wells Fargo. We're going to have Citi, some major components of the XLF.

So could that be something that we rally into? Sure. But I think the big ones that we really got to keep an eye on are going to come in the next couple of weeks. And some of those are those major mega cap names where we know that the dollar is a huge issue. China demand, but also supply chains, European demand, all the above. Yeah, all the tech names for sure. Let's get to what Jeremy Siegel had to say. The Wharton professor had some pretty strong words for the Fed on Squawk Box this morning, questioning if there is enough diversity of thought in the ranks. The only thing we have to do now is kill inflation, no matter what the cost. It disturbs me. There's not more dissenting voices at the Fed. That's what

the Fed was designed to build with the bank presidents and the members. We're just not getting it. It is interesting, Dan, that when you talk to various market watchers, there are differing opinions. Some people think that the Fed should pause. Some people think that the Fed has got to kill inflation at all costs. And yet when the Fed speakers come out, they are a united front in terms of where the Fed should go. Yeah. So if the professor wants to say he should join finance Twitter because he'll have but no shortage of that

and I listen. Those are all great points but at the end of the day I mean listen this is a fed. Where there was plenty of dissent in around whether the inflation was going to be sticky or transitory you know we went through all of that in

twenty twenty one and I think it wasn't until we had a couple curveballs this year where they all kind of got in line and whatever they are seeing they're particularly worried about and so again i wasn't around during stagflationary periods in the 70s and the early 80s but it wasn't a great return environment It wasn't a great time to be buying homes and the like, and the sorts of things that keep our economy going. So I get it. They really want to see some of these kind of stickier parts of inflation come in

before they take their foot off the pedal. So for all those people that argue, yeah, they made a policy error last year, and then they're going to make a policy error this year. And, you know, I don't't know maybe two negatives cancel each other out and they make a positive I'm not playing for a soft landing right now but I don't think the worst case scenarios are in the

cards even with the lack of the you know dissent around what they're gonna do about inflation right now. All right let's talk Twitter here on we may have learned a bit about Elon Musk's possible plan for Twitter must tweeting last

night by Twitter is an accelerant to creating X, the everything app. Super apps, very popular in China and other parts of Asia, essentially a term for an app that could act as a one-stop shop for things like ordering a taxi on the same app where you text. Let's bring in Steve Kovach. Steve, super apps, they aren't a new idea. Why haven't they taken off in the U.S.? Yeah, well, that's not for lack of trying, Mel.

Everyone from Facebook to Uber, even FTX, the crypto exchange, has talked about being some version of a super app where you just live in there and you can do everything you need. And as you mentioned, this is really popular in Asia. And I'll just give you one example here. WeChat is probably the best example of a super app. It's huge in China. And two years ago, when Donald Trump's administration tried to kick it out of the U.S., there was a panic and an uproar because Chinese Americans use that app to talk to their friends and family over in China. It's kind of this digital link between the East and the West. And that demonstrates how locked in people can get into these super apps. And that's what Musk

is chasing. But here in the U.S., we'd like a separate app for everything. You probably use Instagram for photos and Uber for hailing a car and maybe Apple Pay or PayPal to make payments and buy stuff online or physically in stores. No one has yet figured out a convincing way to get people in Western countries like the United States or Europe to start using an app that has everything all in one, this kind of gated, closed-off app from like a mini Internet, Mel. So there's been a lot of attempts at it, but clearly the investors that Musk has roped in together,

they believe he can be the one to pull it off. A couple of points here, Dan, and I know that you've thought about these. I mean, as a citizen, I would not want all of my information centralized into one super app so that if it gets hacked, everything in my life is hacked. And I would think that there are tons of antitrust issues also associated with building some sort of super app, especially in this day and age. Well, I mean, think about it. Where does it work?

It works in China, where mean, think about it. Where does it work? It works in China where they have the great firewall. So it's maybe by design the way the government wants it to happen here. And so I do agree that there is an opportunity for multiple, you know, more functionality on some of these apps that we're spending a lot of time on. And, you know, this is what Facebook tried to do, right? As they started to piece together, they had their main page. Then they bought then they bought WhatsApp you know they basically moved into copy you know Snapchat and TikTok obviously so they're trying to do this sort of stuff but in America at least here I guess in the West you know we're happy and maybe it's some of the sentiment Mel that you suggest is that we're happy to have these separate apps. We have great hardware. I will tell you this,

that in China, if you think about it, iOS, Apple devices, they're number five. They have like 13 percent market share. But Apple has much higher market share here. And maybe that has to do with what Apple is offering their customers through the integrated integrated- you know software hardware solution one last thing on the X. thing that that must be saying. If you buy into that. And you also agree that he overpaid for Twitter if he does buy it by let's say twenty or

twenty five billion dollars. Then you have to look at a snap and say. If super apps are going to be the way forward. Then this is a really cheap asset with a seventeen billion dollar enterprise value versus what he's paying for Twitter, especially because all of these other competitors, they're not just going to lay down to see what Musk is going to do with

Twitter. So to me, I think there's some other interesting plays in and around this Twitter take private. Yeah. Steve, are you getting a feeling that analysts are starting to impute some of that Twitter valuation, even a small percentage, even if it's a small percentage higher that Snapchat should be valued at because of the Twitter takeout premium, then the stock should, in fact, be higher? Or is it just completely such a separate situation there that you can't impute anything? Well, it's always been such a different thing, Mel. Like, Twitter has always been a different animal than the rest of social media. For its size, only not even 300 million users, it has this outsized influence.

And I think that's kind of what Musk wants to tap into and where he sees the value. Look, he talked about doing this when he talked to Twitter employees in a town hall over the summer. He mentioned WeChat as an example that this is something he thinks that he can build. And look, it's going to be different than Snapchat. It's going to be different than Facebook. It's going to have to be in order to convince people that this is the finally we have a super app for the West.

At the same time, just to go back to the regulatory stuff that Dan was talking about, you can bet the EU as soon as he starts turning Twitter into this, they're going to look at this. They're already pressing down on payment platforms, especially on Apple and Google. They're already pushing back on app stores. And the last thing they want to see is another mega platform get started. All right. Thanks, Steve. Good to see you, Steve Kovac. We got some news crossing on Ford this hour. The company is planning to raise the MSRP, the price, on the 2023 F-150 Lightning Pro due to supply chain constraints by nearly 11 percent. The new price will be just shy of $52,000, but those who have already scheduled their orders will not be affected. Let's bring in Phil LeBeau. Phil,

I feel like we've had price increases on this model before. We have. We had one in August, at the beginning of August. So this is the second one in what? Basically nine, ten weeks that we're seeing from Ford. And it's not surprising. They basically are blaming the supply chain as well as raw material costs and a number of other factors that all kind of go under the umbrella of inflation. And look, we have seen this from other automakers when it comes to their EV platforms. So we should not be surprised that Ford is now raising the price again on the F-150 Lightning Pro. Works out to about a $5,000 increase in the base price of this vehicle. That has not stopped shares from moving higher, in part, Melissa, because you had

Adam Jonas from Morgan Stanley making a valuation call today saying, hey, we think that it's time to go overweight on Ford. Our price target stays the same at $14 a share. If you read this note, Melissa, this was not exactly a got to get out there, got to buy Ford, got to buy the other automakers. This was purely a valuation call. At the same time, he cut his price target on General Motors. Yeah. Corporate restructuring is also one reason why he upgraded Ford. So, Phil, do you think that GM is going to face the same sort of issues in terms of having to hike price? I wouldn't be surprised. Look, it's everybody. This is not a Ford specific issue.

Now, it's getting highlighted today because it's the second price increase on the Lightning within the last, what, nine or 10 weeks. But the fact of the matter is this is what we can expect from the EV sector. Generally speaking, I would say at least over the next six months or a year, we're not seeing the raw material prices or anything that goes into the batteries, all of those costs. we're not seeing them coming down anytime soon. Yeah. Phil, thanks. Phil LeBeau. You bet. Phil had just mentioned the Adam Jonas note. Dan, just quickly, Adam Jonas did a would you rather Ford or GM and said Ford. So what would you rather? Yeah, probably Ford. I think they have some momentum around some of those EV models there

and their ability to kind of raise prices twice as as Phil just said in. You know a handful of months here- that cut does speak to the demand for this product and they get the supply chains- you know back. On schedule here it should be fantastic for them as

they kind of move. You know a greater part of their fleet you know versus- let's say but here's the one thing you know you tell me what rates are going to be right and we see what's going on here. There's two fold right's the one thing you know you tell me where rates are gonna be right and we see what's going on here. There's twofold right

for the ability for people to finance these cars that's gonna be an issue- and that cost is gonna be greater for them just to own these sorts of cars was specially with these I. increases and then for Ford itself why does the stock trade

where it does. You think of all that debt and their ability to finance that debt with rates where they are so. It feels a bit like a value trap it's down forty percent of the year, 60 percent from the highs in January. I'm not like stepping in. And from a technical standpoint, man, oh, man, back that out a few years. That looks like an epic head and shoulders top right there. Let's get to banks here. Parabank stocks getting downgraded today by Atlantic equities, taking Goldman Sachs underweight from neutral Morgan

Stanley to neutral from overweight, citing declining investment banking activity. Trading estimates, they say, are still too optimistic. Atlantic Equities also noting banks tend to perform poorly early in a recession. Goldman, by the way, the worst Dow performer today. You like the action in J.P. Morgan. Do you like the action either of these two, Dan? Yeah, you know, we've been talking about the investment banks versus the money center banks and where they make money. And you think about for Morgan and Goldman and all the areas where they do really well here. These are not areas that they don't have these massive balances that the money center banks do. They're going to be able to benefit from net interest margins expanding.

So to me, I like the franchises. I like the idea that at some point in twenty twenty three the business cycle is going to turn and those two are going to be very well positioned but given the recent out performance I don't really see a need to buy them right

here in the next week and a half we're going to get results from all the major banks money center investment banks and I think if you really see good quarters and guidance which I don't really think you're gonna do then you chase them but I don't think you really have to be and guidance, which I don't really think you're going to do, then you chase them.

But I don't think you really have to be there ahead of time, especially if they rally into those reports. Yeah. And sort of a tangent of a trade here, corollary. Dan, I noticed in today's session Visa and MasterCard are very strong. Doesn't seem to be any news in particular, but I'm wondering where you stand on Visa and MasterCard. I mean, they're not they aren't expose to credit in terms of credit quality their transaction processor so it's very different animal but still yeah I think that again you know under any environment recessionary or not they're gonna benefit from the secular trend of you know digital payments the one thing

I would just say we talked about it all the time on fast money I mean the valuation disparity between them and some other areas within financials sticks out like a sore thumb in an environment like this, especially in a rising rate environment. So if you're not also that hot about the consumer in the near term, you know, these are areas that, again, I'd wait until they're down and out. I wouldn't really be chasing them right here. All right. We've got two minutes left in the trading day.

Loss of it este interest. We're back in the red across the three major averages. Dan what are your thoughts here. We we tried to finish positive. Yeah I think it's pretty constructive. You think about the two days that we had in the market on Monday and Tuesday and the fact that it looked like we were going to give some of that back. You know there is a gap from that Monday opening in the S and P five hundred that would bring you back towards thirty six hundred if it fills in that gap this week let's just say that we have a very hot jobs number on Friday and then we're on our way through those lows that we made on Friday you just don't want to be long stock so if you caught that rally and you bought some things that are basically trade better than the market, right, they have a better beta, then that's probably what was going on here.

The market was up 5 percent. I was along a couple of stocks that were up 13, 14 percent in just two trading days. So it depends what your time horizon is. But that gap to the downside that, you know, if that gets filled, watch out below on hot numbers, because that means the Fed is going to be sticking around a bit more. Just quickly, Dan, tomorrow is the last day you can use to position yourself ahead of the jobs report. What do you think the action is going to be like tomorrow? Yeah, listen, I think that it's going to be furious a little bit. I think that if yields continue to move higher, I don't see how equities move higher into that. So keep an eye on that 10-year U.S. Treasury yield. Also, the dollar back on its course. So to me, I think you want to be cautious into that point.

Nobody needs to be a hero into a number that could be a binary outcome. All right. Dan, thank you. Dan Nathan, a risk reversal. A heroic effort to turn around on the day, but we're finishing the day in the negative right now with the Dow down by just about 82 points on the session. That does it for us here on The Closing Bell. I will see you tonight at five on Fast Money. Let's send it over to Mike Santoli in overtime.