Closing Bell - Closing Bell Overtime 12/23/22

Episode Date: December 23, 2022

A fast-paced look at the after-hours moves and late-breaking news live from the New York Stock Exchange. Closing Bell Overtime drills down into stocks and sectors, interviews some of the world’s most influential investors and gets you ready for the next day’s action.

Happy Hanukkah, Merry Christmas, welcome to Overtime. I'm John Kort in for Scott Wapner. You just heard the bells, but we are just getting started from Post 9 at the New York Stock Exchange. In just a few moments, you're going to hear from one of the biggest bulls on Wall Street. FundShot's Tom Lee just updated his outlook for stocks heading into the new year, where he sees the biggest upside opportunities, yes, upside for your money in 2023. But we start with our talk of the tape. The bulls betting on a big finish to a brutal year. Stocks posting small gains today with the Dow snapping a two-week losing streak.

But all three major averages are still on pace for their worst year since 2008. And with just four trading days left to go, could we see a big burst of buying to close out 2022? Well, let's ask Cameron Dawson, New Edge Wealth Chief Investment Officer. Cameron, great to see you. Happy holidays to you. So what you say to expect a retest of October lows in Q1. So what do you do to close out the year? The folks at home have just four days left, one week of trading left. Should they put their money in dry powder now and wait for those lows or are there opportunities to be had for Santa?

Well, I think it's important not to read too much into end of year trading. Usually volumes are pretty light, so we can see whipsaws. And so then we have to think about when we start January 1st, brand new, where do we stand? And we see a market that had a big rally coming off of the October lows. It hit resistance at the 200 day moving average and resolutely has rolled over and with some momentum. And so that sets us up once we've seen a break of that 20 day low as well to retest the October lows. And so our discipline all through this bear market has been don't chase rallies, mostly as you're getting close to the 200 day moving average, but to be opportunistic for the long run when you get oversold versus your 200-day, it just means that we might not be catching the ultimate low in this bear market, but it keeps us

from selling and getting scared at the lows. And so when you start trading down 10%, 15% plus below the 200-day, that's when you can start accumulating. But we're now only about 5% below the 200-day, so we don't think that we're there yet. Okay so for the folks playing at home want to translate this I mean not everybody is a day trader or managing wealth for a lot of people. So you've got options now on what to do with your money if it's not in stocks all the time. You can you know make four percent on your money. How do you manage that? How do you think about that at a time like this if you're not just jumping in from stock to stock? Yeah,

it's, of course, important because we are long-term investors as well. I think the first thing to stand for is that we have to question if we're going to have higher yields within fixed income. It's fantastic because we can lock in the same return for a lower amount of risk. But investors who are tax sensitive, which all of our investors are, we have to be conscious that if we're selling equities to buy bonds, we would be paying capital gains taxes. So that's the first thing to acknowledge. But we do think that now if you have a set return goal that you have, you can look to fixed income and investment rate and high yield. Now, we would note that if equity markets continue to go down, we would expect credit spreads to widen. So it doesn't mean that we're out of the woods completely within bonds.

But we do see a setup where we're being far more better compensated for our bond investments than we really have been for much of the past decade. Okay, let's talk about the macroeconomy and the signals that we can get from it. You say consumer sentiment can be deceiving. You don't believe that it's an indicator for what the consumer is actually going to do. Why not? Well, it's important to acknowledge that consumer sentiment has been absolutely abysmal since April of 2021. And that coincided with the fall in real wage growth, meaning wages after inflation. That's when real wage growth first went negative. And so even though we've seen consumer sentiment be absolutely terrible since then, We've seen consumers continue to spend. They're finding ways to spend, whether it's spending down savings or turning to credit cards.

So to say that because now we're seeing a boost in consumer sentiment that we'll see an acceleration in spending, I think is a bit too far to step. The other thing to acknowledge is that the big relief we've seen in consumer sentiment has all really been because of inflation expectations, which are extremely correlated to gasoline prices. And gasoline prices have fallen materially since the middle of this year, which has provided a relief to consumers. But if we start to see gas prices climb again next year, that could be a source of upward pressure on inflation expectations, and thus consumers could start to feel a little bit more sour.

It sounds like you're saying consumer sentiment, more of a measure of how people feel after they've spent, not necessarily whether they're going to spend or not. Let's talk some specific areas here. You like health care, you like energy, but those have held up pretty well. Why do you think energy in particular is a good wildcard play here in this inflationary environment? Well, it gets back to a similar thing that we were talking about with consumer sentiment, which is that if oil prices rise, we would see pressure upward on inflation. We could see inflation start to reaccelerate. And we would think that that would be bad for other parts of our portfolio. The market would not like to see inflation

reaccelerate. So in order to hedge that risk, we still remain long energy because it is still cheap. It's only trading at nine and a half times earnings. And we think that it's still structurally under-owned, meaning if you look at ETF flows this year, you haven't seen big, huge flows into the energy ETF. You've actually seen outflows. So when we think about names, we're still focusing on the highest quality parts of the sector, but we're getting paid really nice dividends from companies with strong fundamentals, essentially to hedge inflation risk in our portfolios. All right, we're talking bonds and dividends. And I mean, there's a lot of caution here. And along those lines, let's bring in CNBC contributors Greg

Branch of Veritas Financial. He is the founder and managing partner. And Brenda Vangelo of Sandhill Global Advisors, chief investment officer over there. And of course, Cameron, stick around. Greg, I want to set this up now. Tom Lee is coming on in a few minutes. He thinks the Fed might be done hiking rates, like no rate hikes in 2023. You do not think that. You think the Fed's going to end up hiking even more than expected. Why? Let's start with whether or not we're going to believe the Fed.

One of the phenomenons from this year, when we look back on it, is that we haven't listened to them. Let's start with whether or not we're going to believe the Fed. One of the phenomenons from this year, when we look back on it, is that we haven't listened to them. And so, you know, this Fed, unlike any other Fed in history, has taken great pains to actually give us explicit guidance as to what they're going to do. And back in July, when people started talking about a pivot, they were only halfway to their intimated 4% terminal rate. Now they're intimating a 5.25% terminal rate. I do likely think it's higher than that, because as we saw, wage growth continues to be strong. And we know that that's one of the driving forces behind services inflation, which is where inflation is still really hot. But at the end of the day, I just believe what they're saying. And not only the Fed, but the ECB and the Bank of England, et cetera, et cetera. And so to take a position, with all due respect to my colleague Tom, that Tom is taking, you're saying that they're indicating

or that they're wrong about what they're going to do. And that's not a ledge I'm willing to jump out on at this point. OK, if you believe the Fed if you believe Greg and rates are still going higher why buy bonds now? Well I think if you look at bonds in general you know the risk reward in our view has just gotten a lot better especially versus stocks. So if you think about what if the Fed continues raising rates and what that ultimately leads to the recession that everyone has been anticipating this year. I think you're going to get a worse return

from from- stocks meanwhile bonds. In that scenario would likely sniff out a recession coming earlier. And you start to see the yield curve invert even further. Which means that you could have a positive price return from the bonds in

addition to that yield that they're still providing. So when we look at the risk reward, we just think it's favoring bonds more at this moment than it has in a long time. What kind of bonds are we talking here? Like how risky, how far from investment grade are you willing to go? I think you can stick with investment grade and get a really decent yield right now. You know, in our view, municipal bonds are really the most attractive. We manage money in a high tax state of California. And so the tax equivalent yields on many of the bonds we're able to buy is around seven percent. In our view, that is a really attractive place to be right now, especially if we look at, let's say that, you know, that Tom Lee perhaps is right and we do get more upside to the equity market,

we really see it being capped probably around 10 percent. And in a much less risky asset on a tax after tax basis, we think it's really attractive. OK, Cameron, let me let me throw it back out to you for a sec. We're talking I mean, there's a lot of caution in this conversation. So there's got to be some areas where you're taking on some risk to balance that out. What are those areas and how are you screening that risk? Sure. So we are still buyers of quality on weakness and we define quality very definitely with things like strong free cash flow growth, strong return on invested capital,

good balance sheets, and really resilient business models. And so we've been buyers on weakness all year in those quality names across sectors, because when you have quality that goes on sale, as it does in bear markets, it's really the ability to be able to build into positions that you'll hold throughout the next cycle. So that's been our key focus. We do not think that it is time yet to go into risk, very risky beta plays or speculative parts of the market. Those really require liquidity growth to start reaccelerating. So a really easy proxy for that is into money supply growth. Until we see money supply growth really

start to take off again, which would really require an easy Fed, we don't want to be stepping into speculative risk because the risk, of course, is that you round trip any short term gains that you have. Sure, sure. Greg, what about you? Like what kinds of risk are you willing to take here? Are there I mean, I know people often don't want to call out specific stocks, but feel free if you do sectors where you're more willing to do that. Yeah, so I agree with most of the sentiments we just heard expressed. I would to set the context, say, you know, right now the market is trading broadly, the markets are trading, S&P is trading at around 17.3 times next year's earnings.

Those earnings estimates, in my view, are likely too high. We have single digits in the first and second quarter jumping to low double digits in the back half. And I think we'll see downward revisions on those numbers. But overall, the market is not necessarily cheap. Now, within that, there are outperformers. And we saw energy and health care as the only two sectors that gave us positive earnings growth in the third quarter. And I think that that will continue into the fourth quarter. We've seen with energy that even when the commodity prices retreat, that the actual equities have continued to be resilient. Not only are they

buying back stocks, buying back shares, they're increasing dividends, they are adding capacity. And so I think that those are places, energy and health care, where we'll continue to see reliable earnings growth over the next couple of quarters, as well as inelastic demand. Very important for that top line. Financials are worth a look, I think, at some point. They have started their provisioning cycles. In the fourth quarter, they are projected to be one of the most significant earnings contractors. And I think that that will become an interesting time to look at them. And you obviously want to, anytime they start to get close to that price-to-tangible book level,

as some of those big names are starting to get close to that price to tangible book level as some of those big names are starting to get particularly if sentiment is off as they're going through the provisioning cycle with down earnings i think that could become very interesting in the fourth quarter as well all right energy healthcare i know uh cameron likes those two uh brenda you see q4 earnings reports which we'll expect to start seeing in mid-january as a catalyst. But what kind of Christmas do you think is priced in right now? I mean, are we going to find out that discounting was heavier, that sales were slower, inventories are actually worse than expected when we get those reports, or are they going to be better? Well, I think it's hard to say at this point, but I will say just based on the earnings reports that we've seen this week. It's really suggestive that there is a lot of bad news priced in and I think certainly if we see a scenario like Nike play out across the consumer sector where things are not perfect but they are able to clear out a lot of the inventory that they've been sitting on. I think that would be a good scenario. But I do think that sentiment really has become quite

miserable with regard to 2023 earnings. And it's not surprising given all the gloom and doom and all of the expectations or talk of expectations coming down from strategists across the board over the last couple of months. So I think what we could find is that maybe things aren't quite as bad as everyone is expecting- but even still if we hold with that to thirty five number for next year's earnings. I still think that upside is likely limited to

that ten percent number even if you know we don't see a degradation. In earnings estimates coming down so hence my view that bonds are still attractive relative to stock in that scenario. But I do think there are opportunities within

the stock market as well I just think you have to look outside of large cap equity and I think in many cases. Valuation back October was near all time lows for other parts of the market like small mid cap as well as international equity. And I

think on the large cap side you have to be pickier I think it's more of a stock pickers market and I think there are opportunities. But I think you have to be pickier. I think it's more of a stock pickers market. And I think there are opportunities, but I think you have to be careful and really buy wisely in that space. Cameron, do you agree that sentiment has been that bad? I mean, in a way, we're still way above the October lows. And I mean, we were soaring pretty high there above 4,000 on the S&P not too long ago. But what kind of reception do you think the Q4 earnings are going to get? And what kind of an impact do you expect that to have

on the rest of the first half of the year? Sure. Well, I think it's going to be really important as well, the guidance that we get going into next year, because we think that the wild card for Q4 earnings and the guidance really is around margins because I think what's underappreciated is just how powerful inflation actually was for driving margins higher because it gave companies pricing power. But we're now in a world where that pricing power is starting to fade as inflation is rolling over. We're hearing reports of companies cutting prices. Look at Nike this week. Look at Tesla this week, which points to maybe there being a softening of demand or pockets where inventories are too high. So in a world where your top line is starting to

decelerate, but your input costs of things like labor costs, and we know wages are still running at about six and a half percent, that would mean that there could be outside pressure on the margins. So even if growth holds up a little bit better in the overall economy, what we really don't know is how much downside to that EPS number could come from just margin compression. Yeah. Greg, finish out with that thought. I mean, if there is this big inventory overhang, despite the return to some pretty extreme discounting that we've seen this holiday season and demand has waned over that period, what does that mean for EPS in the first half of 23? So right now, again, I think consensus is too high. Fourth quarter

expectations started around 8% mid-year. They were around 3.7% September 30th. Now we're at almost negative 3% for the fourth quarter. The first quarter is sitting there at about 1.5%, if I remember correctly. And I do believe that that's too high. At the end of the day, while it is great that consumer sentiment has rebounded from the mid-year lows, we went from 50 to around 59. And by the way, that means that some of what the Fed is trying to accomplish is actually getting done. At the end of the day, one of the reasons why they went a draconian 75 basis points four times in a row is that they wanted to root out the systemic, the expectations of inflation becoming systemic and structural and therefore breeding more inflation. And so

seeing consumer sentiment tick up is promising in that regard. But at the end of the day, I'm also been watching the consumer balance sheet deteriorate throughout the year. We had a 2.3% savings rate, right, last time we saw. And so we had a record credit card application every quarter. And so I do believe it's going to be a negative. Yeah, they're getting heavy. Greg, a lot of defense. Playing a lot of defense, but it makes sense given where the market is. Cameron, Brenda, thank you. Now, Jim Cramer just did a bunch of buying following this topsy-turvy week and you can find out what was on his shopping list by signing up for the investing club newsletter

you can scan the qr code right there on the screen bottom left and get the newsletter now let's get to today's twitter question we want to know which of these 2022 losers do you think has the most upside in the new year? Intel, Salesforce, Disney or Nike? Head to at CNBC overtime to vote and we will share the results later in the hour. Now we are following new developments on the collapse of FTX. Kate Rooney has the details. Hey there, John. We have some new details around the plea deal of Sam Bankman-Fried's top lieutenants. A transcript of Caroline Ellison and Gary Wang's court hearings

were just made available today. We've been going through a copy of some of those. Ellison was the CEO of Alameda. That's the trading firm founded and majority owned by the FTX founder, Sam Bankman-Fried. Wang, meanwhile, co-founded FTX. Ellison, let's start with her, apologized in court this week as she pleaded guilty to fraud and multiple other offenses. She told the judge that she and others did indeed conspire to steal billions of dollars from FTX customers and misled investors and lenders. In that transcript, Ellison says that she's sorry for what she did. She says she knew it was wrong at the time. And she implicates CEO Sam Bankman-Fried, former CEO, and says, quote,

I agreed with Mr. Bankman-Fried and others to provide materially misleading financial statements to Alameda's lenders. She also admits to conspiring to use billions of dollars from FTX customer accounts to repay loans at Alameda after the fund was taking some pretty steep losses from its risky crypto bets. Allison said that she understood that many FTX customers invested in crypto derivatives and that most FTX customers did not expect that FTX would lend out their crypto holdings and deposits to Alameda in this fashion. Gary Wong, meanwhile, says that he, quote, agreed to make certain changes to the platform code and knew those changes would give Alameda special privileges on FTX. We also now know that the federal prosecutors here had asked to have these temporarily sealed, these documents sealed in connection to Ellison and Wong's plea agreement so that Bankman-Fried would agree to extradition from the Bahamas. They had asked the judge to keep some of the details of his cooperation sealed until he arrived here

back in the U.S. And John, this does not bode well for Sam Bankman-Fried's legal defense and his claim that he didn't knowingly commit any fraud. Back to you. Yeah, these people very close to him, not leaving a lot of room for ignorance and errors if they're saying we knew what we were doing.

Kate, thanks. Thanks, John. We're just getting started here in overtime. Up next, positioned for a pause. Fundstrat's time Lee says there's a chance the Fed won't raise rates at all in 2023. And that if that's the case, it would trigger a massive rally. We're going to press him on that bold call. And later, five-star stock picks, one top-ranked money manager is opening his playbook as we head into a new year.

I'm going to tell you the names he's betting on, so don't go anywhere overtime. Live from the New York Stock Exchange, we'll be right back. We are back in overtime. One of Wall Street's biggest bulls out with a bold call heading into the new year. Fundstrat's Tom Lee says there's an outside chance the Fed might not raise rates at all in 2023. And if that happens, stocks are going to rally in a big way. Tom is a CNBC contributor and joins us now. Tom, good to see you.

Happy holidays. So wait a minute, though. OK, if if the Fed doesn't hike at all in 23, doesn't that mean that the economy has deteriorated, maybe even fallen apart to the point where stocks will, too? Hi, John. I think that's people's first conclusion if they think the Fed's pausing. But I think another reason the central banks can actually pause is if inflation is indeed tracking lower than they expected. Last week, the December FOMC, their projections for inflation at the end of this year was 4.8 percent. That's using PCE. They had raised it from 4.5% in September. We just got November PCE. And if November, which was a tame number, is the same in December, year-over-year inflation is going to be 4.2% versus what they expected to

be 4.8%. That's 60 basis points lower than what the Fed expected. So if you had to say- Do you think they'd really pause entirely with that though? Or just go to 25 basis points? Well, John, one thing to keep in mind is inflation for the last three months has annualized at 2% a month.

If we get December, that's another month of that at 2%. And housing, as we know, is starting to soften. So in fact, 60% of core inflation, which is housing, is softening. I actually think the run rate for inflation into the first half of next year could be even below 2%. I don't think investors are going to want the Fed to be raising rates in that environment. In fact, the bond market, I think- I mean, I don't think investors want the Fed to be raising rates in that environment. In fact, the bond market, I mean, I don't think investors want the Fed to be raising rates this much even now. But don't you think the Fed still will? I mean, really, do you think they'll pause even if we hit those those numbers that you said? It's a great question, John. I think one thing to point out is the bond market is already assuming the Fed may indeed not raise rates next year.

I'm sure a lot of your prior guests have noted the two-year is actually exactly where the midpoint of Fed funds is. So it's kind of saying the Fed isn't going to raise rates. But before the next meeting, which is at the end of January, February 1, you're going to get a couple of inflation prints. You're going to get CPI of inflation prints. You're going to get CPI and PCE. You're going to get jolts. And if the labor market is softening and we get another tame inflation number, I think it's going to be hard for the Fed to say, well, inflation was 60 base points lower in 2022. It's continuing to be pretty soft, but we still want to raise rates. I think that's one scenario that we need to keep in mind. The Fed is becoming data dependent. It's not in a hurry anymore to raise rates. Okay. All right. So this is the uncomfortable part because you were wrong about 2022.

April, you said the lows were in. July, you said the bear market was over. I think you said Bitcoin at one point was going to hit 200,000. We'll see if it ends at 17,000. So I got to ask you, what did you learn in 2022 that makes your 23 predictions better? Well, I mean, 2022 was a tough year because inflation indeed turned out to be a lot more ferocious over the course of the year. But inflation peaked in the middle of 2022. And we know central banks have actually had to act with some urgency. And as you know, when you got inflation, you got the Fed acting hawkishly, of course, it's tough for markets. The question you're asking, which I think is correct as well, in 2023, are we going to have the same set of conditions, right? We've had a hawkish Fed and a surge in inflation, and the market was down 19%. So if the Fed is becoming

more predictable, which it is, and inflation now is running at 2%, I think that there is, you know, in the bigger scheme of things, the question is, well, why should that mean stocks go down next year? You know, if you look at strategist forecasts, out of the 25 forecasts, only three of them think stocks will do better than cash. Well, volatility is probably going to collapse next year. There's also the possibility that stocks don't just don't do much at all, which is in a way scarier because when things move, people make money. But I got to ask you before you go about crypto. What about crypto? What does it move on?

Why did you think it was going to get as high as you thought it was going to get? It didn't. So where does it go from here? John, great question. You know, the forecast for crypto come from Sean, who's our head of digital asset research. And at the start of the year, he thought it would get to 200,000. He quickly changed that. So those are still and it's actually incorrect to say we said 200,000.

We didn't change that forecast. That's like holding someone to a January 1 number and never letting them change it. He's changed it multiple times. And this target is around 15,000 for Bitcoin, which is where it is now. But does Bitcoin do better next year? It's going to be dependent on whether financial conditions loosen. So I think the central banks will have a lot to do with how crypto performs. But our bet is that we've passed peacockishness for the Fed.

And I think that's actually good news for Bitcoin. But it's been a tough year. I mean, a lot has happened in crypto that's been bad. Yeah, we were just talking about some of it. I get you revisions, but 215, that's a heck of a revision, you got to admit. Tom Lee, always good to talk to you. All right. Time now for a CNBC News update with Bertha Coombs. Bertha. Hey, here's our news update at this hour, John. The massive winter storm is also causing flooding from Maine to at least as far as south as New York. Near Boston, the wind is pushing huge waves ashore in In Boston itself, some downtown streets have been flooded. Yikes. In Ohio, meantime, several crashes involving up to 50 cars have

closed parts of the Ohio Turnpike in at least three counties. Ohio State Police say at least one person died in the hazardous conditions. At least nine people have died in crashes related to the winter storm since yesterday. And the harsh weather also impacting the energy sector. More than a million barrels a day of refining capacity has been shut due to the cold. Oil and gas wells are also getting frozen. Natural gas output has fallen to a nine-month low. Power outages are starting to ease. About one and a quarter million homes and businesses, though, still without electricity. has fallen to a nine-month low. Power outages are starting to ease.

About one and a quarter million homes and businesses, though, still without electricity. According to tracking poweroutage.us, that's down from a peak of about one and a half million. Happy holidays to you and your family, John. I'll see you in the new year. And to you and yours, Bertha. Thank you. And up next, believe it or not, we are going bargain hunting in tech. You're going to find out where you can find the biggest upside opportunities in this beaten down sector.

Don't go anywhere. Overtime, be right back. We are back in overtime. Energy, utilities, staples and health care all holding up better than the rest of the market this year with energy, the only sector seeing gains. So my next guest continues to see opportunity in two of these sectors for 2023. Let's bring in Kevin Simpson of Capital Wealth Planning and get right to the specifics. Kevin, I love it. So, Devin, Energy, talk about your approach to energy, why you think that's going to continue to be important, and maybe talk about what you're doing with Duke Energy as well. Yeah, I mean, I love all four of those sectors that you just teased up there, but consumer

staples and utilities have, you know, been a place where a lot of folks have been hiding, so the multiples are still a little extended. Energy was the best performer by far. And I think it will continue to just rally on as we look at the massive cash flows that they're generating and the cash flows that they're distributing to shareholders. So we've been owners of Duke buying it for a long period of time. I actually wrote a covered call on Duke Energy early December, which is tough to do. But the idea of Devin Energy is just so exciting because of that variable dividend. They have a fixed dividend, and then they're paying out a variable dividend based on their profitability. And they're willing to give up to 50% of the free cash flow to shareholders on that variable dividend. So it's conceivable that you

could get somewhere, John, between 7%, 8%, maybe 9% on that stock. And healthcare, to pivot over to another sector that we still like, it's getting a little extended on multiples. But we put a new position in the portfolio this week, and we bought Amgen. Now, we've owned Amgen in the past over the years. This is a stock that probably will continue to be volatile with the rest of the market as we enter into 2023. But the number on the multiple for next year is around 14 or 15. The dividend is over 3%, approaching 3.5%. They just raised it by 10%. And over the past five years, they haven't had an average dividend growth of 15% per year. So we like the stocks.

Let's go back to energy, though, and specifically Devin and Duke. Tell me why. You could have bought anything in the space if you like energy. What was it specifically about those stocks, what you were looking for, what you were screening for that had you zero in on them, especially considering, yes, energy prices might stay relatively high, but also demand is weakening? Yeah, well, let's talk my book, because we own Chevron for the past decade. We still have that in the portfolio. Duke, we've had in there for a long time, a little bit more of a utility than an energy name. The reason we went with Devin, John, is because we had Marathon Petroleum in there and we had a covered call on Marathon. It got called away into some really, really strong plays with the energy names. They've rolled over quite a bit and we've been

able to reenter this Devon Energy position really on price action. You could look at ConocoPhillips or Devon or Marathon, which we sold. I think they're all really, really attractive at these levels. But there will be continued volatility, just to your point on demand. And I think we'll be able to continue to buy them, probably at lower prices in the first quarter. To me, markets are pretty stretched right here. We're active managers. We need to be fully invested as best we can. So we're looking for opportunities. And I think when you look at Devin, you think about multiple compression in the broader markets. This is a single digit PE, you know, five, six PE. So if we see rates going

higher, multiple compression across the board, I feel very comfortable and very safe looking for value in companies, which everybody talks about, but I define it very specifically with valuations. Well, that is a valuable peek into your thought process. Kevin Simpson, thank you. Thanks, John. Happy holidays. Happy holidays. And we are about to close the books on another big week on Wall Street. Our Kate Rooney is standing by with your rapid recap. Kate. Hi, John. One commodity having its best week since October, while another high profile EV stock is having its worst week since the early days of the pandemic.

All that and a lot more right after this short break. We are wrapping up another big week for your money. Let's get to Kate Rooney with our rapid recap. Hi, John. So we had lighter than usual volume today as investors got ready for the long weekend. The major averages closing higher, but all up less than 1% today. For the week, only the Dow closed in the green, up 0.8%. The big sector winner this week was energy, higher by more than 4%. And the

next best performer, utilities, gaining about 1.5%. Energy was also boosted by rising crude prices. West Texas Intermediate, WTI, saw its best weekly gain since early October, up about 7%. Meanwhile, at the other end of the spectrum, discretionary. That was the big laggard off more than three percent. Technology, meanwhile, lost about two percent on this week. One stock weighing on the discretionary sector, Tesla. The EV maker shedding nearly one-fifth of its value this week. And that, of course, coming as some investors worry that CEO Elon Musk's stewardship of Twitter is taking up too much of his time. John, back to you. Kate, thanks.

And still ahead, we are going to discuss whether a Santa Claus rally could be in the cards for the last short trading week of the year. And speaking of Santa, coming up at the top of the hour, the Fast Money crew is handing out some stocking stuffers, stock picks, to close out the year. Stick with us. Overtime. Be right back. Hey, this is the last call to weigh in on our Twitter question. We want to know which of these 2022 losers has the most upside next year. You can head to at CNBC overtime to vote and we will bring you the results.

Intel, Salesforce, Disney or Nike. Plus, you're set up into the final trading week of the year. That's next. All right, time's up. Let's get the results of our Twitter question. We asked which of these 2022 losers has the biggest upside next year. Disney, the big winner by more than 10 points, 34 percent of the vote. Intel and Salesforce tied for second. Nike running fourth. Ouch. The S&P 500 and Nasdaq, meanwhile, wrapping up their third straight week of losses. So what's the setup for the final

trading days of the year? CNBC contributor Gunjan Banerjee of The Wall Street Journal is with us. Gunjan, yeah, I want to talk about the last trading days of the year, but also in the next year, given what you're seeing with what retail investors are doing with margin and with options compared to what they were doing, I don't know, nine months, a year ago, what's the impact? Right, John, great to be here. It's been such an interesting year for retail, as we have discussed before. A lot of a lot of these investors have kept buying. I think one big trend to watch is that some of them have pared back on how much risk they're taking in the markets, kind of getting more cautious about what's going on out there. We saw margin debt levels

hit the lowest level since July 2020. So that just shows you people aren't willing to take those, you know, big, bold bets on the market. They're not looking to turbocharge their investments to the extent they were in 2020 or 2021. And that just shows you how cautious people have gotten kind of going into the final week of the trading year. So, Gunjan, how much of an impact did that retail activity, the kind of Robin Hood-driven, you know, borrowing-driven risk have on the trajectory of stocks like Tesla that we now see in a downdraft? I mean, the fact that they're not, at least for now, taking on that kind of risk, is that going to have an impact on some of these stocks' ability to get back where they were before? Look, that's one key thing to watch,

especially because the types of trades that were favored by a lot of individual investors, they've been hit the hardest this year. Think Apple, Amazon, Tesla, ARK. Some of these are at their lowest levels since 2017, 2019. Amazon erasing all of its pandemic gains. That's a key thing to watch going into the last few trading sessions of the year and also next year. Additionally, do individual investors keep buying ETFs, keep buying the broader market? Because that's been a key source of support for markets, even during a terrible year for the S&P 500 this year. So do they keep buying? Do they provide that support for the markets? Key to watch. That is particularly interesting, given that

there's so many people saying stock pickers market, that would mean not as much on the ETFs and mutual funds, although with the indices down as much as they have been, Gunjan, now might be the time to go back to some of those. Gunjan Banerjee, thanks for being with us. And that'll do it for overtime. Fast Money starts right now.