Closing Bell - Closing Bell: Markets Await Powell, Bill Nygren’s Top Picks, Liz Ann Sonders’ 2023 outlook 11/29/22

Episode Date: November 29, 2022

Stocks were range-bound in Tuesday trading as investors awaited a key speech Wednesday from Fed Chair Powell. Oakmark Portfolio Manager Bill Nygren joins with his top picks in this environment, and his thoughts on Bob Iger’s return to Disney. Liz Ann Sonders from Charles Schwab breaks down her brand new outlook for 2023. Meantime the latest housing data showed another slowdown in single family home prices. The CEO of homebuilder Taylor Morrison shares her expectations for real estate demand and her thoughts on the rental market. Plus the latest on Apple, the Kroger-Albertsons deal, and the head of the National Retail Federation on holiday shopping.

Stock stuck in a range as investors look ahead to tomorrow's big speech from Fed Chair Powell. Though Apple once again weighing on technology, this is the make or break hour for your money. Welcome everyone to Closing Bell. I'm Sarah Eisen. Take a look at where we stand in the market right now. The Dow is down 53 points. At the low of the day, we were down 187. So it's been a choppy day of trading. The S&P 500 down a third of 1%. The Nasdaq taking the hit again, down three quarters of one percent. The Nasdaq actually just going negative for the month of November. The S&P 500 remains positive for the month. We've got two more trading days left. Here's a live look at the

S&P 500 sector heat map this hour. Because it is sort of a split market, the pressure is clearly on tech, information technology at the bottom of the list there. That's Apple. Also some other losers in there today like PayPal. Consumer discretionary and utilities are down there. Amazon is weighing on that group. So is Tesla. Both are down almost 2% today. Communication services also weak. But there's strength in real estate, energy, financials, industrials, and materials today.

Real estate was the worst performing sector, remember, yesterday. We've got a big show coming your way. In just a moment, we will talk to Oakmark Portfolio Manager Bill Nygren. He says some stocks look very cheap right now, and he's bringing along his holiday shopping list. And then later, Lizanne Saunders from Charles Schwab will join us with her brand new outlook for stocks in 2023. It is that time of year. Let's begin with today's market dashboard. Senior markets commentator Mike Santoli and this split we're seeing among sectors. Yes, there are mild moves at the index level, very much a divergent market underneath that Apple decline really accounts for

a big chunk of the S&P 500 weakness. The net effect is continued sideways movement over the last two and a half weeks. Matter of fact, where we are right now in the mid 3900s brings us right back to where it stood after that one day pop on the somewhat more mild than expected CPI number that we got back on November 10th. So kind of sideways for two and a half weeks, still holding this little mini uptrend there just on a technical basis, but not by too much. So it goes below 3900.. You're going to have to worry if this is another failed rally. Take a look at this longer term look at the sector weightings and the way that they run in cycles over a longer term basis. This out of Bank of America today. So here we have energy and financials. They were deep in the doldrums there at the peak of the tech bubble in 2000, surged here right into the global financial crisis right ahead of that. And right up here is tech and health care, the growth names that were really peaking there. And so you see this waxing and waning.

The scales are slightly different, but it basically shows you we've started to see this resurgence here in energy and financials over the last year or so. Now, it's mostly a proxy for the growth versus value tradeoff that we get here. One cautionary note is when we got to right about there, you know, this is roughly like a 20 percent weighting in energy and finance. You would have said that's thing. That's what you got to buy right now. You have to buy it for a long term trade. Well, that's the way it kept going right there. So you can't bet on it. Might we argue that health care has longer-term positive prospects that are not just a pure growth trade? Maybe. The point is the tide has started to turn.

But if it's going to go back toward any kind of median area, there's more for this to go, for growth to lose ground and value to catch up. But you could also look at some of the winners as cyclical energy and financials. And with so many outlooks out starting to reflect recessions and saying that's not in the stocks, isn't that a vulnerable part of the market? They outperformed in the early 2000s. We had a recession during and after. So, yes, they are cyclical, but they're often more about the cheapness and whether they are beneficiaries of inflation and higher yields or whether they kind of suffer from those things as as as growth stocks do so in other words not as there are many factors that go into it but that's the atmospheric conditions right now Mike thank you Mike Santoli for more on the market and finding value opportunities that was music to this

man's ears Bill Nygren from Oakmark funds I'm sure you like what Mike had to say about the return of value overall, Bill. Is this market cheap? I'm not going to say that the overall market is cheap if we define the market as, say, the S&P 500. But the spread of PE multiples today is about 40 percent wider than it normally is. So there are lots of expensive stocks and lots of very cheap stocks. And at Oakmark, we're always looking for undervalued names that are out of favor. Those tend to be the low P multiple names. And those are the ones that are hurt the least by highest interest rates. So I think the value trade has got a lot of room left.

OK, so let's start going through your list of stocks here. You have Capital One on there, which I pick out because financials are doing a little bit better. It was one of the groups that Mike highlighted. But again, the risk of recession, a change in the credit cycle and what that's going to mean for credit losses, is that reflected already in the stock? Well, the consumer lenders have performed really well in terms of credit losses for the past couple of years. The COVID stimulus was helpful, and employment has been really strong, especially

in the unskilled labor end of the market, where they've been getting real increases in wages. And that's what Capital One's market is. The stock sells at about six times earnings. In both the past couple of years, it's bought back 10 percent of its shares outstanding, has a yield that's close to three percent. And we think they are one of the most efficient, technologically advanced lenders out there. So it's a name we like a lot. Yeah, despite higher credit costs and funding pressure

potentially ahead. Bill, media is another area I wanted to get to with you. Charter Communications, also on the new buy list? Yeah, Charter is one of the largest cable operators, and importantly today that means internet providers. Everybody gets worried about video cord cutting but the profitability really comes from providing internet service. Charter sells at less than 10 times free cash flow. They too have bought back 10% of their stock in each of the past two years. I think it's interesting to look at the comparison between Charter and and electric utilities. I think charter is a much better business, but electric utilities sell at about a 70% premium on a PE multiple

basis. I think eventually people will look at charter as an infrastructure play and justify a PE multiple twice where it's selling today. I guess the problem with Charter and the knock against this one is just competition, right? You mentioned cord cutting, cord nevers, the competition with the streamers, the over-the-top players, and also with some of the cable providers like Dish and DirecTV. Well, if you focus on video, there's a ton of competition. But video is not where the profits are at Charter. Charter, as well as Comcast, provide excellent Internet access. It's by far the industry-leading product, gives fastest speeds to consumers at the best prices,

and there really isn't much competition for them. And the more people stream, the faster the Internet service they need. Speaking of media, Disney, I think, was a buy for you guys in the second quarter. How much value do you see there now that Bob Iger has returned? Well, our interest in Disney is because of their assets, much more so than the people that are managing it. We think the theme parks are one of the best businesses in the world and that at current prices, you're really not paying for much else at Disney. Their film library is outstanding, and we appreciate Bob Iger's focus on returning that part of the business to profitability long term. So we think Disney is a cheap stock and we think it's an exceptional business.

Yeah, I mean, it's been trading in part with the streamers. And I think you also own Netflix as a value play, which you were buying before it came crashing down, right? We own Netflix at 250, a little less of it at 700, a lot more of it after it fell back down around 200. We think Netflix is an attractive opportunity today. We don't think the streaming business is going to be a winner-take-most business, that the average consumer will end up subscribing to multiple streaming sources. We think Netflix is a winner. We think Disney is a winner. We also think Warner is a likely winner in that battle. Right. I know you've talked about

that one before. So you're still a believer, even though these stocks have been hit hard, they're getting hit now because of ad concerns, cyclicality, and questions about the strategy and execution. Yeah, I think the faster consumers move away from linear television to streaming, the more we should expect competition. And the leading media companies are all working on figuring out how to maintain their profitability in the new streaming environment. We think the companies that have strong distribution and strong catalogs are the likely winners. Are you baking in a recession in your base case? I know you're investing for the long term and you're just picking up stocks that you like, that you think are undervalued. But what happens to some of these names in recession? Our general economic overlay is that five to seven years from now, we can expect the world

to be normal. And it's very rare that that ends up influencing our stock decisions. Sometimes it does, like in the midst of the COVID crisis a couple of years ago, thinking the world would be normal in five years was a pretty positive point of view. But the amount of value in a company in the next one or two year cash flow is really quite small compared to the long-term value. So yes, if we go through a bad recession, Capital One's earnings won't be as high as they are right now. BorgWarner, which is another company we like, will probably see auto sales decline. So their earnings won't be quite as high.

But we don't think that does much at all to affect the long-term business value. These companies that are selling at single-digit PE multiples, double-digit free cash flow yields, where we expect the businesses to continue to grow, we think they're the right spot to be whether we go through a recession or not. A lot of the value players like Borg Warner, Charlie Berbrinskoy of Ariel also, always talking about that one on the show. Bill, thank you very much. Bill Nygren. Okay. Thank you. Of Oakmark.

It's good to see you. Look at shares of homebuilder Taylor Morrison. They are still in the red for the year, but they're up more than 40% from the lows during the summer. Up next, we'll talk to the CEO about her outlook for the real estate market as new data shows a further slowdown in single-family home prices. You're watching Closing Bell on CNBC. The Dow's down about 35 points. New data out today on the housing front. The Case-Shiller Index showing a slowdown in home prices for September, which is the third straight monthly decline. Prices are still up 10 percent from last year, but gains in home prices peaked about six months ago and have been decelerating since then. Joining us exclusively is Taylor Morrison, CEO, Cheryl Palmer, big home builder.

It's great to have you back on the show, Cheryl. Welcome. Thanks, Sarah. Good to see you today. Thanks for having me. You too. So on home prices in particular, what kind of declines, if any, are you seeing and do you expect? Sarah, it's a little different market to market. It's very hard to give you a national statistic. Obviously, we saw appreciation over the last, you know, 12 to 24 months. You know, depending on the market, we could have seen anywhere from 25 to 35 percent. So, yes, we are seeing some of that come back. What happened is you didn't only have the appreciation, Sarah, you then had a doubling of interest rates since early

this year. So you combine the two and that has a significant impact on monthly payment for consumers. So in some places we're seeing some prices pull back a bit. In other places, what we're doing is we're working individually with each of our customers to help them with finance programs that buy down a rate, assist them in closing costs, to really get to a monthly payment that works for their individual family. Your stock has held up remarkably well, given some of the headwinds facing the sector. Cheryl, what has demand been like? Demand's quite different, once again, in different parts of the country. I don't think you ever have a market situation.

You have literally a community by community. But I'm pleased with the breadth of our offerings. We obviously have our per sale business, Sarah, and we've seen demand slow down from peak levels that we saw, I would say, through 2021 and early this year, but those weren't normal levels. We still have good demand in the markets, but it certainly is off the peak. We also have introduced our most recent, most introduced our um build to rent brand yard yard and that's a way to hit uh you know an underserved consumer segment of renters um with really the best offering between single family living and apartments with

private backyards low maintenance living you know a smart home technology. So we're seeing high demand in that with that product as well. I noticed that expansion and it made me wonder, Cheryl, you know, rents have been stubbornly high and a big part of the inflation problem and why it's been so persistently high compared to what the Fed is trying to do. So is it more expensive now to rent with rents having surged or to buy with mortgage rates surging? Once again, you have to look at the individual community and market, but you certainly have seen those get much closer and serving a very different consumer. When I look at rents, we're still seeing continued appreciation. But in both instances, Sarah, we're still very supply constrained. There is just not enough rooftops. It doesn't matter if you want to talk for sale or for rent. We still are undersupplied in this country, I would say shelter units, depending on which

number you want to believe it could be anywhere from one to three million units. Having said that, with sales slowing down, I think we will start to see a little bit of a buildup of inventory on the for sale side. And I think the rental market will continue to be very, very tight for some time. So given the changing market conditions, what are your expectations, Cheryl, as you think about planning for the future and how many homes you want to build

and what the market is going to look like in the next few years, given what rates have done? Yeah, I think as I look into 2023, 2024, you know, as you mentioned, Sarah, the Fed has clearly targeted inflation and has been very clear on his intentions. And I would say homebuilding is, you know, right in the crosshairs. So I think we need to better understand the actual numbers because we're still working a little bit in kind of yesterday's numbers. The Fed

is continuing to fight inflation but not seeing the reality of what we're seeing on the ground. So I expect we're going to have continued tightening as we move through this year. Having said that, if I were to look back two, three weeks ago, we were seeing interest rates that were well into the sevens. And today, I would say we're quoting something before we consider any sort of buy downs to help the consumer, something in the mid to high sixes. So that gives us the ability to really help the customer. So I think when we can find that normalization between pricing and interest rates, there's still strong demand. So I think we're going to get back to what I strong demand so I think. We're going

to get. Back to what I would call a new normal we haven't seen that. In a number of years with COVID and then the. The you know. Tremendous demand that we've seen for the last two or three years. Still under supply. Out of quick need

but certainly not at the peak levels we've been operating at for the last 18 months. Cheryl, it's great color on the market. Appreciate you joining me today. Thank you. Good to see you. Bye-bye. You too. Cheryl Palmer of Taylor Morrison. Let's show you what's happening in the markets. We're down 22 points or so on the Dow. Again, lower the day was down 187. We were higher earlier in the day, up 84 points. Though the losses are moderating right now. We're down less than two-tenths of a percent on the S&P

500. It's because you're seeing strength in groups like real estate. Energy today is higher by about one and a half percent. Financials, industrials, and materials all strong. It's tech that's getting hit hard. The Nasdaq is down a little more than half a percent. The CEOs of Kroger and Albertsons are testifying right now in a Senate hearing about their proposed mega merger. Up next, we'll break down the arguments for and against that $24 billion deal. And as we had a break, check out shares of Chinese internet company, Bilibili, surging today on strong earnings and a 25% increase in daily active users, up 22% or so.

But I have to say, all the Chinese Internet names are rallying hard today. JD.com up 7.5%, Pinduoduo, Baidu sitting right at the top of the Nasdaq. We'll be right back. What is Wall Street buzzing about? Merger politics. The CEOs of Kroger and Albertsons are on Capitol Hill today, right now, facing what are likely to be tough questions from skeptical senators on their $24.6 billion deal. Expect bipartisan bashing here as issues of food insecurity, food inflation, unions, competition. They're all political hot potatoes.

But remember, legislators don't get a say, it's the regulators that do. Up to the FTC to sign off on this deal. That process, I'm told, has begun and it is still in the early information gathering phase. Now, they may be the country's two largest standalone grocers with a combined 22 percent of market share of U.S. grocery sales, according to KeyBank. But Kroger will argue that the landscape for buying groceries in this country has changed dramatically in the last 10 years. You've got the big box stores like Walmart, Costco, Target, not just pure play old school grocers. And there's also the digital grocery players as well, with Whole Foods, Amazon, one of the biggest. On food prices,

I'm told Kroger will argue it's already significantly invested in keeping prices low, which has hurt margins lately, and is putting another $500 million into that investment as part of this deal. I'm also told on the union issue, which I expect the Democrats will focus on, Kroger's CEO will say today it is committed to not close any stores as part of this deal, protecting the jobs of 700,000 associates, something the FTC will likely require, too, if they do sign off. But the market has its doubts. Albertson stock is still a long way from the deal price of $34.10, including the special $4 billion dividend. Today's performance on Capitol Hill may be an early test of how the executives sell it to the public and to the regulators. Rodney McMullin, Kroger CEO,

will be on this show on Thursday to discuss this and earnings, which are out that morning. When we come back, Lizanne Saunders from Charles Schwab joins us with her brand new outlook for 2023, just hot off the press today, including why she sees a sunnier forecast for the back half of next year. We'll be right back. Stocks are off the lows from earlier today, but still negative on this session. Nasdaq actually turning negative for the month of November today. Our next guest just published her 2023 outlook, says weaker economic trends are likely for next year. But a mild recession could set stocks up for a better second half. Joining us now, Charles Schwab, chief investment officer. Lizanne Saunders almost sounds positive,

Lizanne, which I haven't heard from you in a very long time. But we still have to wait until second half of next year. Explain. Well, I don't know if it's so precise to the second half. It's really just trying to gauge when some of the headwinds, which I think the market is still facing some of the obvious ones, including inflation having started to come down, but certainly not anywhere near the target for the Fed, keeping their foot on the brake a bit longer. But, you know, relative to a year ago when we wrote the 2022 outlook, when the market had a lot of speculative excess in it, we were trading at all time highs. There was really no consideration of weakness coming in the economy. The Fed hadn't lifted off the zero bound. That was a pretty poor setup for the year. at the recent lows, you had not only just the S&P down 25 percent, but the average S&P member

had had a 35 percent drawdown, even bigger for the Nasdaq, 35 percent at the index level, 50 percent at the average member level. So a lot of pain has already, I think, been digested by the market. I think what's still ahead is further downward revisions to forward earnings and further deterioration in the labor market. Well, that's sort of what I was going to ask, Lizanne, which is how far do you think the market has gone toward pricing a recession, which you do expect? Yes. In fact, I think we're already in a version of recession. We've been talking about it in the context of a rolling recession. There are pockets of the economy that are undoubtedly in recession territory, housing, certain segments of the goods side of the economy, the stay-at-home types of

areas within the economy, absolutely in recession, CEO confidence, consumer confidence. But we've had the offsetting positive on the services side. And that's rolled its way through the inflation data as well. I actually think it's probably going to roll through the earnings deterioration from a sector to sector standpoint. So I think the answer to recession is yes, it may just be more of the rolling variety than your more standard sort of bottom falls out all at once. So if you like the setup better going into next year than last year, would you be interested in technology, which is one of the most beaten down parts of the market? NASDAQ down 30 percent this year, S&P only down 17. I'd be really careful about just a monolithic call on tech as a sector. As you know, Sarah,

we've talked about on this program, we have been more focused on factor-based investing as opposed to just broad sectors, looking for the characteristics that we think will work in this environment. Healthy balance sheets, strong free cash flow, positive earnings revisions, positive earnings surprise. So those are the types of factors I think you want to look for. It's certainly possible you'll find them in the tech sector. I just wouldn't make that blanket call. I think we're in an important shift, maybe somewhat secular, away from mega cap tech, techie type names to sort of the average stock with the return of something that's actually a risk free rate. I think that pricing distortions or lack of price discovery

meant as an investor, you could look at things monolithically. Passive did really well. Now, equal weight is outperforming cap weight. Active is operating on a more level playing field with passive. So I think maintaining that factor approach and screening for characteristics as opposed to just making a sector call, I think makes more sense. I guess the big risk here to the forecast, Lizanne, is that we don't have a mild recession, that we get something potentially deeper and uglier and that the Fed goes too far or inflation doesn't come fast enough and they're going to have to keep going? There's no question. Are you confident it's going to be mild? No, I'm not. I think to me, the best case scenario is more of the same,

where recessions roll through, where you get pockets of weakness offset by pockets of strength. But there is a risk that either because of what the Fed is doing, they overshoot. Now, that's not necessarily a bad setup in the sense that that would probably lead them not just to pause, but pivot sooner versus a more benign scenario, especially if you don't see the deterioration in the labor market that to some degree they're looking for as a backdrop for a better sustained inflation environment, then I think you have the risk longer term. So I don't think that there's a perfect scenario here, certainly not in the first half of the year where everything just lands beautifully for the Fed. I think it's sort of more pain near term, a little less later or vice versa.

Lizanne Saunders, thank you very much for sharing the fresh off the presses 2023 outlook from Charles Schwab. Take a look at where we stand right now, down 14, 17 points or so in the market, a little bit of recovery down two tenths of a percent on the S&P 500. Technology is still under pressure, so are utilities and consumer discretionary. But you've got the strength in real estate carrying the market. Energy today, financials having a strong day, industrials and materials all working. It's why the small caps are having a strong day as well, up four tenths of one percent. A lot of exposure there for financials and materials. So nearly 200 million Americans turns out shopped online and in stores over the Thanksgiving weekend. That is new data from the National Retail Federation, and it sets a record.

Up next, we'll break down the key spending trends with NRF President Matt Shea. Check out today's stealth mover. It is AMC Networks. Investors are cutting the cord on this stock today after the company announced earlier that Christina Spade is stepping down as CEO. She was only in the role for less than three months. Significant layoffs also expected to happen at the company, according to a memo sent by AMC Network's chairman, James Dolan, which was obtained by CNBC. The news knocking down the stock nearly 6 percent. Trouble in streaming world. When we come back, Apple's rough month getting even rougher today as a key analyst raises a red flag about the iPhone 14 Pro.

That story plus the NRF's president on holiday sales and why crew stocks are sailing higher when we take you inside the Market Zone. We are now in the closing bell market zone. CNBC Senior Markets Commentator Mike Santoli here to break down these crucial moments of the trading day. Plus, we've got Steve Kovach on the latest Apple concerns and NRF President Matt Shea on holiday retail. We'll kick it off, Mike, broadly here with the market sort of standing in place at the index level. But as you pointed out earlier, it's all about the sector. And there's rotation into energy, financials, real estate, industrials today, technology, not so much. I did want to also mention the consumer confidence number that came out from the conference board today. It was a beat, but another decline in November.

And the expectations component in particular was weak. Lowest expectations since I think summer of 2020 during the pandemic. What all that means for the market? I don't know if bad news is good news or what mode we're in following the Fed. Yeah, in that context, I don't think that super depressed consumer confidence is necessarily inversely good news because it doesn't directly feed into, at least not right now, into the Fed easing its posture or anything like that. Consumer confidence has been one of those things in that bundle of data or indicators that are pre-recessionary. I mean, they look like it.

Liz Ansato was talking about CEO confidence as well. That's in there. You put it together with the yield curve, and you understand why collectively people are bracing for a higher probability of a recession, a statistical recession of some kind next year. The pushback against that is simply that the starting point was unusual at a very high level of overall activity. And so you're seeing the kind of mood shift due to inflation that is dramatic,

but it's not necessarily translating into employment losses and broad suffering at the consumer level aside from prices. Yeah, true. Let's hit Apple because it is a big weight on the Dow, the S&P and the Nasdaq taking a hit again today. Two and a half percent after a closely followed analyst published a note saying iPhone 14 shipments will be 15 to 20 million units less than expected after protests at a production plant in China. Steve Kovach joins us. Steve, yesterday we heard a report that there could be up to 6 million shortfall in iPhones due to protests. So how do we make sense of all of these estimates, none of which I should point out are from the company? Yeah, that's right. And Sarah, just to be clear, Apple hasn't given an update on this since these protests started. The last we heard from them was early November when they said they just expect to sell fewer of these iPhone 14 Pros. But look, the estimates are all over the place after those protests at the Foxconn facility last week that we saw that appear to be impacting supply.

Like you mentioned, Ming-Chi Kuo, who's the independent analyst who's so right so often about all things Apple, he's estimating 15 to 20 million shortfall in iPhones. Barclays, up to 20 million. Loop Capital, about 10 million. Evercore is on the lower end here, 5 to 8 million. And this is all a result of just this uncertainty around this Foxconn facility. Can they spin up production? We know for sure they're not going to be able to do it in

time for the holidays, but can they do it in time to get people to continue buying at least into January? I would also note that the Barclays note expressed some pessimism that they think a lot of the demand is just going to fall off a cliff after the holidays, meaning if people can't get their iPhone 14 Pro in time for Christmas, they're just not going to buy it at all, which would be a bad sign. And going into this quarter, Sarah, you know, analysts were expecting on a unit basis sales to be flat for the iPhone. And now they're saying it could be 20 million lower than that. So 70 million iPhones. And without being able to sell those 14 Pros that are so supply constrained, it's going to be really hard for them to beat revenue targets, Sarah. Mike, the stock is down more than 8 percent so far this month, in a month where the S&P 500 is higher and

the NASDAQ has just turned negative. It's still down only 20% for the year, so it's outperforming the NASDAQ, but it's really gotten crushed here in the last few weeks. It has, but I do think that's the key point, is that it's giving up some of the outperformance and the valuation premium that it has maintained. So there is a lot of money in Apple that's there because of its haven status, because of the great balance sheet, because of the buyback, because of the Buffett effect, and because of the steadiness, perceived steadiness of the upgrade cycle for their products and services being very consistent. So all those things together are why Apple got where it was and why it's been a net beneficiary relative to the rest of the Nasdaq. So there's probably more to give up. It trades at 22 times forward earnings. It's down from the peak around 30, but it's up from its average before the pandemic.

I don't see, you know, why shouldn't it trade at 19 to 20? That would still be a healthy premium over the market, right? That's one of the arguments for why it's tough to expect a whole lot unless you do get a reacceleration on the fundamental side from the stock, unless it is just because people want to pile in and say this is a safe bet in a storm. Or maybe, Steve Kovac, it's the Twitter fight that Apple and the Twitter-in-chief Elon Musk going after Apple. We talked about it yesterday, but again today, taking some jabs at the company. Does it matter? Yeah, I don't see how this could impact Apple, because if Twitter's not necessarily a revenue generator for Apple,

they have that subscription service that maybe generates a little bit for them, but they're not going to lose out if they decide to kick Apple off the App Store. But like I've been saying all day, Sarah, on this topic is Apple has really shown no sign that they would remove an app for the things that Elon Musk is doing. He would have to really take it a step further and purposefully and deliberately try to break the rules for Apple to want to do that. And then we get into a big battle. But right now, it seems like Twitter is not going to get yanked from the Apple Store anytime soon, no matter how much Elon Musk complains about it. Yeah, some trash talking. Yes. Thank you, Steve Kovach.

Appreciate it. How about the cruise lines? They are popping today after Carnival said Cyber Monday sales exceeded 2019 levels. That rush of demand, certainly a welcome rebound after a challenging pandemic stretch. Seema Modi joins us from, I would say, challenging pandemic and even post pandemic. It's been bumpy for this group. Yeah, across travel, cruise lines have recovered the slow, the most, I guess, slowest pace compared to other parts of the travel world. This 50% jump in booking, Sarah, compared to 2019 levels is a big number. But in context, the context here

is that the company is, of course, offering promotions, also a $50 onboard credit that they can use once they're on board on activities. But in general, I think this number is reflective of what we're seeing across travel, which is this pent up demand. And now the question is whether this bookings number they released will continue to get stronger going into the holiday season. And if it will stop or lower the risk of the company going back to the debt market. About two weeks ago, it did launch another convertible debt offering, and the stock tanked about 10 percent here, recovering some of those losses. But that continues to be a big overhang for the stock year to date, still down about 52 percent. And that's been sort of the broader concern in general for these cruise stocks.

Yes, recovery in bookings, but will that stop these companies from raising more debt? So what do the analysts say, Seema? Are these good buys? So Stiefel has a buy on Royal Caribbean. I think it depends on which cruise line you're talking about. Others seem to be more bullish on Norwegian, which really has a pulse on the luxury traveler. So each company sort of has their own unique offering. Less positive on Carnival, I would say, of those sell-side analysts we track on Wall Street. Mike, what do you think about valuations here and just what is being factored in as far as return to any type of normal cruising environment? Generally, pretty badly impaired balance sheets. They obviously are the kinds of stocks that were so at the epicenter of the COVID crash and the pandemic period. And just as a general principle, those are not areas of the market that tend to get toward recovery very quickly.

So if you look at the declines from the highs, it's pretty severe. in a mode of trying to, you know, preserve whatever revenue growth they can just really to keep things from worsening on the balance sheets. It obviously differs from carrier to carrier. But, you know, I don't think this is necessarily an area that is too tightly tied to the overall forces of the economy just because of what had to happen to their balance sheets in the last couple of years. Yeah, good point. Seema, thank you.

Well, it was a record-breaking weekend for Thanksgiving shopping. That's according to new numbers out from the National Retail Federation. Here with an exclusive look at the data, Matt Shea, CEO of NRF. So what broke records exactly, Matt? Well, Sarah, it's good to see you. Everything broke records. Our forecast was that we'd have 166 million people out shopping this weekend. We actually had 196 million. That's 20 million more than a year ago. It shattered our expectations. And I think it told us a couple of things.

One, it told us that all of us as Americans are looking to get back out and be engaged in social activities to go back to some of those pre-pandemic behaviors we missed the last two seasons we saw that we also saw big promotions big sales so we know consumers are coming out looking for those kinds of opportunities and the retailers are delivering great benefits to them and they're finding deals I mean because I was so it's the traffic numbers that are that are most surprising I wouldn't be surprised to hear that Americans spend more because we're paying more, even with the promotions. Right, Matt? That has to be reflected somewhere here.

That's part of it, Sarah. But, of course, there are different measures for inflation and the inflation measures that get used. We use PCE, as the Fed does, but that also includes services. And depending upon what kind of customer you are, if you're paying for gasoline, if you're buying a car, if you're paying for food, we've seen a lot of inflation there. But on apparel and other items, there's not been as much inflation. So there are real just had Lizanne Saunders from Charles Schwab said, we're in a recession. We're enrolling recessions. That's because the Fed is tightened and that's what we're feeling. But it doesn't sound like that's what you're seeing from the consumer.

Well, consumers are clearly aware of inflation and price increases. They tell us that in their surveys. And yet, for 30 consecutive months, we've had increases in year-over-year retail sales so consumers keep finding ways to power the economy and they keep staying out there shopping and as long as the labor market remains as tight as it is with 10 million jobs unfilled 5 million people self-identifying as actively looking we've got almost a two-to-one ratio of open jobs to unemployed people that's going to keep wages up that helps helps consumer confidence. If we can avoid a self-inflicted wound like the rail strike

that brings our economy to a screeching halt, I think we're still in shape for a good holiday season. Consumers have only done half their shopping. They started with a big weekend. There's a long way to go. I think we're still in pretty good shape for the rest of this year. We stand by our forecast six to eight percent. OK. So I was going to ask about the rail strike. It looks like Congress will move to avert this. We'll see if we can get a bill. It looks like there's bipartisan support. What would, if they can't and we do see this take effect, what would that mean for the retail industry? Well, I think for the economy broadly, certainly for the retail industry, it's going to mean there are going to be some goods that aren't in the places that we need them to be.

It's going to drive up shipping costs as shippers look to move things off rail and to other modes of transportation. But I think the impact to consumer psyche, to consumer confidence, we've seen this before with government shutdowns, with the fiscal cliff over the last decade. It takes a real toll on consumers and it'll have real effects. We could see plants idled. We could see furloughs, layoffs in manufacturing. We've got food insecurity issues if we can't get fertilizer and food transported. So there's a whole range, I think, of knock-on effects, all of which would have the impact

of really damaging consumer psyche at a critical time for the economy. So we feel pretty confident based on our conversations with members on Capitol Hill. They're going to get this done. We're certainly glad to see President Biden come out yesterday and last night and give his strong support to congressional intervention. And I think it'd be the best thing for the economy to just remove the uncertainty as quickly as possible. But just to be clear, it doesn't threaten holiday sales, does it, Matt? Because isn't that inventory already in stores, in stock? It's not necessarily going to disrupt that near term, would it? Yeah, I think a lot of the inventory is in distribution centers.

It's in stores. It's in transit in places where it can be accessed via trucking and other modes of delivery. People are going to go to stores and pick it up. But if the rail lines shut down and all that freight's got to get diverted somewhere, it's going to go on to trucks. And that's going to push off the other inventory that's there. That's going to drive up prices for everyone. That's going to get passed along throughout the supply chain. And Secretary Buttigieg has done a lot of work on this and talked at length about the kind of recovery we've seen in the supply chain. The last thing we need to do now is put more pressure on the economy in

that way. And I think really just driving up the challenges consumers feel as we get into the end of the year. Matt Shea from the NRF, thank you very much. Appreciate it. We've got just about two minutes to go here in the trading day. NASDAQ is still getting hurt the hardest, but we're off the lows, Mike. What do you see in the internals? Actually, decidedly strong underneath the surface, Sarah. So we talked about the weight that Apple is having on the S&P 500, but look at the up versus down volume in the New York Stock Exchange. It's almost three to one, advancing to declining. You have the equal weight S&P is up almost four tenths of one percent. So basically, you have traction below the surface, even though not much happening,

again, at the indexes. And you do have that weakness in the NASDAQ. Take a look at the two-year note yield. Fed Chair Powell with a speech tomorrow. The yield has just gone flat for about six weeks. We're where we were on this yield about mid-October. That's when the equity rally got going when we bought on there. It suggests, at least tentatively, that we've priced the Fed path OK, at least to the market satisfaction at the moment. Don't think Jay Powell is going to be outright dovish tomorrow,

but right now it seems like the Treasury yield is pretty comfortable in this spot in four and a half or so. The VIX backed off a little bit, still over 21, up off the lows, but not yet really aggressively reversed from the bottom end of this range, which has really prevailed for the last seven or eight months there. 375, the yield on the 10-year. So a little bit of a sell-off in bonds today. The dollar is a little bit firmer as well as those higher yields. Mike, thank you. As we head into the close, S&P 500 actually climbing toward the flat line here. It's recovered nicely. It's only down a tenth of 1%. There's the Dow, just going positive, up 10 points. So some buying here into the close. American Express, the biggest contributor to the Dow games. Actually, I'm

going to correct myself and say Boeing. Boeing's adding 23 points. American Express adding 22 points to the Dow. Biggest loser is UnitedHealthcare and Home Depot. S&P 500 getting a boost from real estate, energy, financials, industrials, and materials, but being weighed down by technology, utility, and consumer discretionary stocks. The Nasdaq is going to close with a decline of about half a percent. So it's down a little more than 2% for the week. For the month, it is flat, with one more trading day left in November after today. The S&P and the Dow are still positive for the month. That's it for me on Closing Bell. See you tomorrow.