Closing Bell - Closing Bell Overtime 12/28/22

Episode Date: December 28, 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.

Welcome, everybody, to Overtime. I'm Scott Wapner. You just heard the bells. We're just getting started from post nine here at the New York Stock Exchange. In just a little bit, I'll speak to Dr. Scott Gottlieb on the worsening COVID situation in China, even as that country loosens some restrictions. And now word late today of those new travel rules to come to the U.S. from China. We'll find out what it all means for already nervous investors here. Certainly ask him that. We begin, though, with our talk of the tape. This tough market, one where attempted rallies quickly fade, where once favored stocks continue to fall and with no clear signs of when the situation will

get any better. Let's welcome in Adam Parker. He's the CEO and founder of Trivariant Research, also a new CNBC contributor, which we're thrilled about welcomes good to have you thanks a lot um unfortunately scott you and i had tough session happened more than once this year so i guess this will be the last time this year and then hopefully next year we'll have a a positive synergy and not a negative one in terms of the market reaction sadly we've had too many negative sessions for many to be able to take. And it goes to my first question. So much for a rally to finish the year.

We're just going to go out with a whimper rather than a bang? It looks that way. I mean, I think the idea that people want to sell their losers and kind of reshuffle the deck for the beginning of next year does make sense. I will say this, though, Scott, the overwhelming consensus from everybody I talked to in the last couple of weeks is, hey, we're going to go lower in the first half of the year and then we'll go higher after that once we get more visibility on the Fed being dovish relative to where they are today. And so it just makes me want to think that maybe the opposite could actually happen, that we could get a better than expected first few months of the year rally and then a fade later. You know, I think doing the opposite of what everyone says has been a good idea for much of the last few years.

Yeah, I'm looking at the stock that really sticks out like a sore thumb right now. And maybe you think I'm going to say Tesla. I'm not. I'm going to say Apple. Down 3% again today. Another new 52-week low for that stock. It's a pretty ugly picture. How concerning is that to you? I think it is concerning when you look at the China exposure that these companies have, both from production and the like. So I think one of the questions investors are trying to figure out for 2023 is, do I want Chinese exposure or not? Do I want, if that is a reopening economy, does that mean I could get better cyclical performance, industrial performance, maybe demand for energy and the like? So I think it's tricky because, you know, as you know, there's a huge difference between public health and the COVID virus and stocks and the COVID virus. And, you know,

stocks have thought, you know, COVID was over for a long time, but no public health expert would say that. So my bias is to be a little bit more nervous about China exposure and focus on the, you know, the businesses that can do well without that. I think Apple looks among the worst mega cap techs when it comes to Chinese exposure. We're going to speak to a public health expert, one of the most notable ones, by the way, in just a moment with Dr. Scott Gottlieb. But before we get to him, how concerned are you about the kind of headlines that come out today, this new restriction to come to the U.S. from China, Italy having some similar issues there, as well as a stock guy, a market observer.

How concerning is that to you? You know, one of my, you know, we've never talked about this, but I'm the chairman of the foundation board for the Gillings School of Public Health, which is the number one public school of public health. It's the University of North Carolina's School of Public Health. And their dean, Nancy Messonnier, was the head of the CDC's response during the initial part of COVID. And Ralph Baric, the sort of the main professor there, who's an expert in coronavirus, has had access to these great people for the last several months in my role there. And none of them would tell you that from the public health perspective, it's over. so that's a completely different concept i think from the stock

perspective it was first work from home stocks went up a lot and then got uh destroyed docusign netflix that whole complex uh zoom and then you know the reopening stocks worked i as i look into this year i think you really want to be careful about these reopening stocks that have got started to price in uh improvement whether it's the airlines that worked off the bottom, some of the hotel complexes, casinos, cruises. Some of those stocks really were beat up in the initial part of COVID and then started to recover on an optimism for reopening. I think the estimates probably proved to be a little bit too high for those parts of the market. I actually think what history shows is in years where consumer discretionary stocks were as bad as they were this year, they could be the area that work a little bit better than people think, counter to the actual

fundamentals. So I think that'll be an interesting setup as we head into the middle part of next year. Interesting. AP, do me a favor, stick with me here. I'm going to bring in Dr. Gottlieb now, and we can react on the other side of the conversation I had with him. I want to get to those renewed concerns of covid weighing on already shaking investor sentiment. You heard about those new CDC restrictions for all passengers coming to the United States from China. They have to test negative for covid to gain entry. They go into effect, by the way, January 5th. It comes on top of reports that half of the passengers on two flights landing in Milan from China tested positive for the virus. Italy also mandating negative tests there. What do investors really need to know?

Let's bring in CNBC contributor and former FDA commissioner Dr. Scott Gottlieb on the board of Pfizer and Illumina as well. Dr. Gottlieb, it's good to catch up with you again. Thank you for being with us. What's your initial reaction here to this news we got today from the CDC? Well, look, I'm not surprised. I think you're going to see Europe follow suit. They're going to also implement testing for people coming into the United States, coming into Europe from China.

This isn't going to stop the spread of infection around the world. We have plenty of COVID here in the United States. I think the rationale for doing this, if there is a rationale, and I think that these are going to have a limited impact in terms of just reducing the overall spread of infection. But the rationale, if you will, would be that we don't know what strains are circulating in China. China doesn't release genomic data on what variants they have. We have no reason to believe that there is a novel variant circulating in China. We know they have XBB and BF7, which are two variants we're concerned about

because they seem to pierce the immunity that you acquire from getting an infection with Omicron, which is the dominant strain spreading here in the United States. But we already have those variants in the U.S. They're just not spreading in large numbers. So it's not as if China is going to seed the United States with variants that we don't already have. I think the concern is that the lack of insight into what's spreading there could mean that there's a variant spreading in China that we're not aware of that could be more pathogenic.

And until we can get better surveillance in place, that's the rationale for putting in place this testing requirement. There's other things they're going to be doing. They're going to be stepping up genomic surveillance in countries like Thailand and Malaysia. They're probably going to be doing genomic surveillance on wastewater, on airlines coming out of China. So they'll get a better handle on what's spreading in China. I don't expect there to be any surprises, but that's the rationale for putting in place these testing requirements. Until you can have better surveillance in place and more transparency from China, you want to be cautious.

Well, we've heard numbers suggestive of maybe a million cases a day in China, if not more. Does that sound reasonable to what you're hearing from your own sources? That's what some of the CDC officials inside China are saying. I think that there's a perception that China's having a very large wave of COVID right now, which they are. That's overwhelming health care systems. And they're going to get beyond this. I think my concern for China is that they have different variants spreading in different parts of that country, some of which don't provide cross immunity to each other. So, for example, BF7 is spreading in Beijing. BQ1 is spreading in other parts of that country. People who've been infected with BQ1 or BQ1.1 can get reinfected with BF7.

So there's a possibility that they have contiguous waves of infection with different variants in China and don't really get through this quickly. This isn't going to be one large wave and they get through it and then they're on an equal plane to the United States. I think that they can have different waves of infection that are sort of contiguous with each other. And this is a much more protracted event inside China. So when you heard that China was loosening some of the restrictions of people traveling there, certainly the stock market and investors here are paying especially close attention to that. Do you think any loosening of restrictions there will be short-lived? Well, I don't know how they go backwards right now. They don't seem to be reimposing the restrictions,

even as they're dealing with an overwhelming amount of infection. If you read some of the reports coming out of the South China Morning Post, which had good reporting on the ground, it looks like their health care system is overwhelmed right now, and they seem to be bearing it. They don't seem to really have a plan for how to deal with it. So I don't know what their trigger point would be to reimpose certain kinds of measures to slow the spread while their health care system catches up.

You would have you would have presumed that they would have done that already if they were going to do it. So I wouldn't expect it at this point. I mean, our overall, I guess, level of concern with with covid here in the United States has changed. I think we could admit that for a variety of reasons, most especially we have the usage of the vaccine and a relatively decent uptake in that, certainly compared to what we've seen in China. Does that lessen the concern that you have for any considerable outbreak of great concern here? I don't think that China really changes the global equation or the equation for the United States. There's some concern in the background that China could become a hotbed of new variants. But the reality is we have enough global spread of COVID that we

have enough opportunity for new variants to emerge. So I don't think that something's going to happen in China in terms of a variant emerging there, spreading widely, and then coming back into the United States. There is a possibility that China continues to be a source of spread of BF7 and XBB. That could exacerbate the spread of those already known variants back into other countries. So far, those aren't spreading in the West. We have about 5% of our infections here in the United States are BF7. It doesn't seem to be out-competing BQ1. That would be my concern, that we get through this wave of infection we're having right now with BQ1 and BQ1.1. Those are the dominant variants in the United States. And then come the spring, we have another wave of infection with BF7.

We're prepping vaccines. There's going to be a meeting of the FDA after the first of the year about whether or not we prepare some kind of vaccine, at least for very vulnerable people who might need a booster if a new variant does emerge. So I think we're going to be prepared for that situation. We're at least contemplating it. The only thing that would be a game changer is if some new variant emerges in China that's more pathogenic, more contagious. There's no reason to believe that would emerge in China, even with their one billion infections, that it would emerge anywhere else in the world. All it takes for a new variant to emerge is really a chronically infected patient that can't shake the infection.

That's where the new variants seem to arise, and that can happen anywhere. Dr. Gottlieb, I know you've taken time out of your personal schedule today for us. I greatly appreciate it. Thank you very much. Thanks a lot. All right, that's Dr. Scott Gottlieb joining us there. Let's bring in back Adam Parker, who's been standing by Jason Snipe of Odyssey Capitals with us, Jessica Inskip of Options Play. Adam, I'm going to get your reaction first, because you used to cover the chip space. So you have a keen awareness of the kind of

production that comes out of China when you listen to Dr. Gottlieb, it doesn't seem greatly concerned about impact here and even suggesting that it would be hard for China to go back on the loosening of its own restrictions. Do you think we need to consider when we talk about certain stocks and where they make most of their products that we could have another round of disruptions of some sort? I think it's definitely possible. I mean, look, semiconductors will end up one of the worst

industries in the stock market in 2022. There are certainly businesses, Mike Ron report recently, they have a lot of excess supply now. So certain businesses really caught up and began to overproduce consumption and others were slower to catch up. My sense is semiconductors will be an outperforming sector next year, you know, given how much they've sold off and given how much you need them for virtually everything. And if there's any sense there's some supply issues forming again from China, I think the stocks will go up a decent amount. So the risk reward is probably skewed to the positive, even if people start believing that. Yeah, excuse me, Adam. I'm sorry. Jason, uneasiness about what's happening in China, even if it's of no great concern here in the United States at this point, just speaks to

where sentiment is, right? If stocks seem to sell off a little bit on the CDC news, they stayed lower throughout the rest of the news, they stayed, you know, lower throughout the rest of the session. How concerned would you be in your outlook for how things progress in the early part of the new year? Yeah, no doubt about it, Scott. I mean, obviously the concern, what we were talking about 18 months ago, where supply chains and how inflationary they are is obviously they weren't moving, you know, and freight costs and shipping costs have come down dramatically. And as Adam just mentioned, now we have these inventory bills and a lot of these companies, i.e. the semis and videos and the microns of the world are working off inventory.

So I do believe it's not as challenging, even if there is some slowdown in production. Obviously, you know, it makes me think about Apple, you know, what's going on there and what the price action has been and, you know, shutdowns in China and having to move some of their production and assembly lines to India. And even with them being such a large company, it still takes time to get production up and ramped up and moving again. So for me, I'm lukewarm here. You know, I'm very interested in seeing what policy is going forward. I think there's a lot of demand for cross-border travel. So let's see. Let's see how it plays out in the next quarter or two and see how the role plays in inventory as well.

Jessica, what's this new year going to hold for us? Do you have any level of optimism heading into a new year? I certainly do. And shifting the conversation, even from those COVID concerns, I think it's important to point out what I just heard from that is the testing is going to give us transparency into various variants that are in China that could possibly resurge here. But that transparency is going to be important with the focus on those supply chain constraints. But those are also macro headwinds that we fully have been aware of and have been navigating.

Going into next year, I think seasonality is extra important as you shift focus to the retail investor and that mass influx of inflows that happens in January after the rebalancing and tax-driven selling that occurs in December. So I think there's a lot of opportunities with those beaten up securities that have occurred throughout this year that we'll find towards the the tail end of january yeah adam i mean you you've maintained that earnings need to come down considerably do you still believe that your your earnings number for next year wasn't horrific i mean i was actually kind of surprised when I saw it. It's not so far below, if at all, where most people were for this year. Yeah, look, I mean, in June of 2022, the estimates for 2023 were $252. They're now $229.

So we've come a long way down. I mean, I think here's the case for being bullish, Scott, right? The two big hurdles for the equity market were earnings had to come down a ton and the Fed was going to be hawkish, right? And you just couldn't get past that in Q2. There was no way around, you know, kind of dodging those two arguments. Where are you now? Well, probably the bulk of the hawkishness is behind us. And I think a big chunk of the down revisions are behind us. Maybe the real number is 220 for next year. We think we posted 218 as our best guess.

I've heard top-down gals go below 200. I think that's too bearish. So I think the case for optimism would be two of the bigger bear cases are more behind us than in front of us. And so, therefore, you kind of probably are going to get hard to get incrementally hawkish from here and you're going to have some down revisions, but they're not going to be as massive as the 252 to 229 we already had. That combined with really low price to forward earnings multiples, cheap micro and small cap stocks in particular,

public companies looking cheap to private companies. You started seeing deals back even early November with Emerson, getting some infusion from Blackstone. I mean, there's a lot of data points you could say maybe things won't be as bad. You know, history doesn't show there's that many times where you have back-to-back years as bad as the one we just had. So I'm not saying, you know, I'm not whistling by the graveyard or whatever, but I think the risk towards balance maybe skewed slightly the positive out of the gate into 2023.

Well, that's really interesting. Jason, does that sort of meld at all with what you're thinking? I mean, you said you're lukewarm. If I recall correctly, you've been pretty cold. So maybe you are getting a little bit warmer to a better environment for equities in 23? Yeah, I'm still concerned here. It's all about the price you pay, right? So if I'm looking at the S&P multiple anywhere between 16 and 17 times, historic average below that around 15 times. And we have a Fed that's obviously engaged, but closer to the end of the cycle, the hiking cycle, let's say we do 75 more basis points in movement, maybe 50 and bring the terminal rate above 5 percent. I mean, at that stage, you know, what what is the appropriate multiple? So I know Adam just mentioned 229 is where earnings are.

I do think there's there it needs to be revised a little bit lower. Even if I was looking at the guides, you know, 65 percent of companies in the public market mentioned that, you know, there was a negative guide there. So for me, as I really look at earnings, I think earnings is the story going forward. And I'm still hesitant to be, you know, bullish here, you know, knowing that there probably is some skew to the downside, you know, with the multiple and obviously where the terminal right is going. I have to be honest, Jessica, I'm a bit surprised that you like some tech plays here. No one seems to. You like Salesforce and Microsoft. It's been such a tough place to be.

And the consensus is that that environment is not going to shift anytime soon. Why are you warming up to tech? So specific places within tech, and we've been talking about this quite a bit, and that has to do with those key inflationary concerns in the red hot labor market. Too many job openings, not enough people to fill those jobs, and the Fed cannot print people. However, automation can certainly help. CRM, Salesforce helps with efficiencies and drives that. They had a reorganization as the executive leadership shifted around. And they also stated in their earnings calls that procurement is taking longer than anticipated. But working on procurement and deals on that side, I know that if they're longer than anticipated, they're also bigger corporations.

And some of those bigger corporations make perfect sense. So that tells me that that should translate positive into revenues. And those macro headwinds will certainly be tailwinds. Microsoft, I think, is interesting. There was a really great report I read about how they are higher in revenue produced per person. So they have high productivity within their own personal labor, but they also have a huge exposure into AI. And that chat GBT is something I've been seeing everywhere. And it's extremely interesting to me. And Microsoft has a huge exposure to that technology. So therefore, I think it's going to thrive based on the labor market, really.

All right, guys, we're going to leave it there. I appreciate it so very much. Wish everybody a happy and healthy New Year. Yep, you as well. And we'll see you on the other side many times, I'm sure. All right, that's Adam Parker, Jason Snipe, Jessica Inskip joining us there. Let's get to our Twitter question of the day.

Apple hitting a 52-week low for the second day in a row. And we want to know, is it a buying opportunity? You can head to at CNBC Overtime on Twitter. Cast your vote. We'll share the results

coming up a little later in the hour. We're just getting started, though, here in overtime. Up next, the darkening skies in Silicon Valley. Instacart cutting its valuation again, raising major questions about the future of the IPO market. What's at stake and what could it mean for investors? We're live from the New York Stock Exchange. Overtime is right back. Welcome back. Dark skies getting even gloomier in Silicon Valley today, following news that grocery delivery company Instacart has marked down its valuation again to $10 billion.

It was nearly $39 billion a year ago, underscoring just how much the private market still needs to reset. For more on what's going on, let's bring in platformer editor Casey Newton, also a CNBC contributor. Welcome back. It's good to see you as always. I guess this is just another reality check for what's going on out there. What do you make of it? Well, look, I think one of the big unexpected surprises coming out of the pandemic was that e-commerce didn't maintain its strength, right? We sort of thought in 2020 people are never going back into stores, but guess what they are. And so a lot of these delivery businesses in particular have seen huge declines this year in investor interest. You know, DoorDash lost two thirds of its value this year on the public markets. And I think that had a huge effect on what you saw Instant Car do today. We know that the private markets

operate with a much bigger lag, obviously, than the public markets. So it's not a surprise that we would see news of this magnitude today. I'm wondering how much more you think valuations out in the Valley need to come down. I thought it was interesting last hour that Alexis Ohanian, of course, a Reddit founder, told Sarah he's telling founders, and I'm paraphrasing here, basically to hunker down and prepare for a longer lasting storm of sorts than many have ever witnessed? Well, I do think that next year is going to be rough for a lot of these startups, particularly the ones that don't have a clear path to profitability, right? I think in the past, investors were willing to give these companies a really long leash and assume that they would get there eventually. But what we've seen more recently is that it isn't always the case. So if some of these companies

want to IPO, they're going to have to convince investors that once they get out there on the open markets, they're actually going to start turning a profit. Well, how would you describe the move out mood out there? Right. I mean, you talk to enough people between the valuation reset, the come to Jesus moment that founders must be having on a daily basis. And then you pile what are expected to be even more layoffs than we've already heard on top of all of that. How would you describe what you're hearing from people who are running businesses and the rank and file employees who are out there? Well, I think there's definitely a lot of fear out here,

and you see it in the layoffs that have taken place all year long, right? For the past decade, these companies were in a growth-only mode, and now they're starting to look at that money they have left in the bank, and they're wondering how long it's going to last. At the same time, this is Silicon Valley. Optimism reigns supreme, and I don't know anyone who doesn't think that we aren't going to come out of this with the tech industry healthier than ever. So the real question, I think, in 2023 is just how long is this current downturn going to last? What do you think the prevailing thought on that is, that you have to get through another year of tumult before you can see some blue skies? Since that's how we started with the dark skies getting even darker.

Do they think the sun's going to come out anytime soon? Well, you know, in my experience, opinions about this are kind of all over the map. But again, I think the fundamental question for these companies is, can they get to profitability? I do think we're not going to see the same sort of outrageous multiples that we were seeing for tech companies again anytime soon. But I do think for the companies that are able to show that clear path for profitability, there's still going to be huge investor interest, in part because these VC firms, they still are sitting on billions of dollars of capital and they do need to deploy it.

Interesting thought. Casey, appreciate it as always. That's Casey Newton joining us here in overtime from the private markets now to the public ones where valuations have already undergone a serious reckoning. The question is more to come. Let's ask George C. of Annandale Capital. He owns Google, Meta, Amazon and Apple, as well as several semi names. Good to see you again. Welcome back. What do you think? You think tech's going to turn around in 2023? I do, Scott. I think it's going to turn around at some point. I think it's there's more pain ahead for investors, though. So I'd strap going to turn around at some point. I think there's more pain ahead for investors, though. So I'd strap the helmet on and be ready for some more bumpy weather before it gets better. But I do think it's going to get better in 2023. What does that more pain look like

in your mind? A lot like today. I think the markets are going to take some more hits and go down further and investors should just nibble away. I think that there's a lot of stuff right now that's attractive at these current valuations, but I'd hold a lot of dry powder and ease your way back into the market with the dry powder you do have. And be patient. It's going to take time. I mean, I feel like you just walked into what my next question should be then. For somebody who owns Apple, we started our program talking about the fact that it's a new 52-week low today. What is it, 126? Are you out in the market buying more of a stock like that today? I'm going to buy it tomorrow, to be frank. I was just thinking about that before

someone on your team asked me about that specific name. I'm going to be buying it tomorrow. But I'm going to save a lot of dry powder and ease my way in there. I've already started buying Amazon and Google. So I think it's time to start nibbling away. And if the market goes down another 10, 20, 25 percent, which it might get really, really aggressive if it goes down that much further. Wow. So, OK, so you're going to buy Apple tomorrow and you've already been buying Amazon and Alphabet on the dips that they've had. What about Facebook, which I see you also have meta, of course, now? Have you been buying? I mean, it's one of the worst of the big ones. Have you been buying that, too? I've been shorting puts on meta and on Tesla recently, both. But I've been shorting puts way out of the money and earning a lot of income

in the interim. I have not been outright buying the stocks yet. I'd like to see them get cheaper before I did that. I don't like those companies as much as Google and Amazon to be frank. I hear you. I hear you. Do you think the overall market is going to have a good year next year if you're willing to step in on some of the larger stocks within the S&P 500? I mean, the stat that I read earlier today on the halftime report and that you may have heard yourself, you've got $10 trillion worth of stock losses this year and something like 50 at least percent of that is due to seven stocks, the mega cap ones, many of which you just mentioned. You know, a lot of your guests, Scott, may give you a very

strong opinion on where the market's going and what they're going to do about it. But I view my opinion and 50 cents will buy you a bad cup of coffee. I don't think anybody has any idea where the market's going next year. If I had to make a guess, I would guess we go lower and that you need to be aggressive when the market goes lower. I would expect the market to be pretty flat next year with a lot of volatility. It's going to go. I think it'll go down. It'll come back. You know what that saying is, though, George, right? Money talks and you know what walks and you maybe are voting that answer with your money, buying some of these stocks on the dip. I appreciate your time. Yeah, I'll see you soon.

Happy New Year to you. Happy and healthy. We'll see you on the other side. All right. Thank you. Don't miss CNBC special report taking stock 2023, focusing on the tech sector. That is tonight at six o'clock Eastern time. It's time for a CNBC news update with Seema Modi. Hi, Seema. Hello, Scott. Here's what's happening at this hour. A not guilty plea from the man who allegedly broke into the house of House Speaker Nancy Pelosi and beat her husband. David Popp faces six charges, including attempted murder. He's being held without bail. Doctors are still keeping a close eye on the retired Pope Benedict.

The Vatican said this morning that the health of the 95-year-old had recently worsened. Just before that, Pope Francis broke from his prepared remarks to say Benedict is, quote, very ill and asked the faithful to keep his predecessor in their prayers. And Avatar, The Way of Water has raked in $1 billion at movie theaters around the world. It only took 14 days, making it one of the five fastest films to hit that mark, and only the third to gross a billion dollars this year. The strong sales come despite weakness in China. So far, the box office taking their take there is just over 100 million dollars about what was expected during the opening weekend alone. Scott, I'll send it back to you.

Seema, thank you. Seema Modi up next. Top picks for your portfolio. One money manager is breaking down some under the radar marketplace as we head into the final trading days of the year. That is next. Ring in the new year by joining CNBC Pro. Invest like a pro in 2023 with a special year-end offer. Go to cnbc.com slash pro new year or scan this code now. Welcome back. Markets ending the day lower, further dashing hopes of a year end rally. Our next guest says not to chase bear market bounces in the new year. He does have three picks, though, for your portfolio to weather the current volatility. Joining us now is Troy Gajewski. He's the chief market strategist of FS Investments.

Good to see you again. Welcome back. It's going to be. Thank you. You too. It's good. It's hard to get people to want to put new capital into this market. Why should they right now? Well, I think you want to continue to be very cautious because the Fed continues to drain liquidity at a record pace. We've actually never seen money supply contracted this rate before in history. And so you should really try to protect capital, favor alternatives like senior secured commercial real estate lending or multi-strategy solutions that have a chance to make 6%, 7%, 8% in a year. Those are the things you should really focus on, strategies that did well in 22 that have a better opportunity going into 23 relative to 22. And fortunately, since alternatives are now democratized, the average investor has the same

choices or at least very similar choices to a Yale endowment or a Soros family office or a CalPERS or a Saudi sovereign wealth fund, Scott. So that's what we recommend for the time being, focused on Northwest quadrant and efficient frontier strategies, very little risk of loss and ability to make 7%, 8% or 9%. Well, why did you come with stock picks then? I mean, you're still telling me to buy a Philip Morris, an Annalie, or a Ferrari. So you just told me all the reasons why I want alternatives to the stock market. Start with number one. Why Philip Morris in the kind of environment in which you just described? Yeah, well, Scott, as you know, you guys asked for three stock picks.

So these are some of our three favorite names right now. Oh, we didn't pry it out of you guys. I mean, you come on now. We didn't arm wrestle you for them. You know that. I mean, if you're if you're if you're recommending these things, you must you must believe in them. Despite what you think, better opportunities may exist elsewhere. But why do you like these?

Yeah. So in the case of Philip Morris, it's really straightforward. It's a great defensive, a great meat dollar staple. You know, the dollar we think is getting close to topping out here. You have the match deal. You have the Icos, you know, smokeless or, you know, non-ignitable nicotine delivery system. And so we think of that dividend yield well above the 10-year. It's a great defensive to hang out in. And then if you look at Ferrari, it's a little bit different, right, where, you know, you have tremendous out-year growth. And ultimately, it's not about the next year's growth, but it's about incredibly resilient demand. And when you think about the uber-rich, not guys like me and you, scott but guys a lot richer you know they're incredibly

you don't need to tell me that troy i already knew that at least at least as it relates to me yeah they're incredibly inflation resilient and they're incredibly recession resilient so you look at the last 18 months demand has been remarkably stable because the uber rich don't care about inflation and when we ultimately go into recession next year great guess what the rich don't care about that either you know and then go into a recession next year, guess what? The rich don't care about that either. And then lastly, if you look at Annalie, what's interesting about that is that is a very juicy way of playing what are now close to record-wide agency RMBS spreads. So if you look back over history, they've been a little bit wider two, three weeks ago or during the global financial crisis. And a lot of that was driven by Fed QT.

The credit quality of agency RMBS is excellent right now. So if you can tolerate the vol, and that's the key, because we just talked about we're in a bear market, there's going to be more volatility. That's one way of earning a tremendous dividend yield, which is over 16%, and eventually playing for agency spread tightening. So that's why those are our three highest conviction names right now. But in general, be careful, protect capital, don't be a hero, focus on strategies, do well in 22 and have a better outlook in 23. I hear you. I was just having fun with you at the top. And in all seriousness, before I let you go, I mean, do you think 2023 is going to be another year where other things outperform equities? Yeah, I think it's almost a certainty, Scott.

Look, if you ignore everything said in the financial press or that people discuss on great programs like your own, the number one golden rule for risk-taking is money supply growing fast with nominal GDP like it was in 20 or 21. And when it is, you can take risk and take risk with confidence. But when money supply is actually contracting at record paces, it's very hard to have a sustainable bull market. Yes, you can have bear market rallies. We've already had three.

But it's very hard for assets to inflate. And so that's why, like, if you look at real estate, you want to be senior in the capital structure. You want to be the bank, not the bricks. If you look at multi-strategy funds, you want to take advantage of volatility, interest rate volatility, or agency RMBS spreads. There are so many things to do now in alternatives. And the beauty of it is, you don't have to be a you know, a multibillion dollar endowment or foundation to do it anymore. The asset class has been democratized through the efforts of firms like ours and others. We'll leave it there. You lost a few points at the

beginning, but you gained them back at the end. Those nice comments about our program. Happy, healthy. We'll see you on the other side. You're the man, Scott. Talk to you soon. All right, Troy, be good. We'll see you later. All right. Up next, big opportunities, big buying opportunities after a rough run for stocks in 2022. Investors looking ahead to the new year for fresh ideas. Halftime committee member Jason Snipe is back with us. He's got his top picks for 2023. We'll do it next when Overtime comes back. In today's Halftime, Overtime charging ahead with stocks set to close out one of the worst years in recent memory. Aries Asset Management's Carrie Firestone is searching for potential buying opportunities. One name near the top of her list, American Express.

Sells at 13 and a half times earnings. It's been an outperformer. It's down only 9% this year. We've owned it all year. Benefits from travel, which of course people are doing more traveling. Bank has a lot of deposits, makes more money because of interest rates going up. We think at this price, it should be a great stock for next year. All right. Well, Jason Snipe is back with us. He owns American Express. Do you agree with that? You think it's going to be a great stock for next year just because you own it doesn't necessarily mean you think it's going to do great next year. Great point, Scott. Yeah, I do think AXP can work. You know, to Kerry's point, I mean, it's trading at 14 times roughly earnings, you know, which is a discount to the market.

Revenue was up 24 percent in the last quarter. Network volumes were up around 23 percent. So what I do what I do agree with here is also, you know, cross-border travel, cross-border travel. There's a lot of pent up demand there, you know, and they cater to a wealthier consumer. So even though we're concerned about the consumer here, you know, where they work and where they operate, I think they could still do well here. So I do like AXP. I think it could work in the environment going forward. What about Palo Alto Networks if we look at other 2023 opportunities of your own? That's on your list.

I think you own that, right? I mean, there's a lot of buzz around the space for obvious reasons. Stock's still down 27 percent over a year, though. Why is next year going to be any different if you're in still an uncertain economic environment? We're probably going to be talking about enterprise spend or the lack thereof a lot. You're right. And here's the thing with Palo Alto. I mean, they provide mission critical service. I mean, unfortunately, even in a slowing economy or or macro environment, that's not super favorable. You know, that doesn't mean the cyber issues don't they stop. Right.

So Palo Alto continues to be a stalwart in the industry. You know, they had really nice EPS growth of over 52 percent, you know, last quarter. Revenue growth close to 30 percent. So and they have a long term growth rate of about 30 percent. So I think and it's an expensive stock. I mean, I get it's trading at 37 times, you know, at the peak, you know, it's trading, you know, earlier this year, about 74 times. So the multiple has come down dramatically. I know it's an arena where expensive stocks are tough, difficult to navigate through and pick the right ones. But I do think just by nature of the critical service that they provide, I think it can work here. And I like it.

I continue to like it. You like UnitedHealth as well. And it's more expensive than it was. More richly valued is probably a better way of saying it. Right. I mean, P.E. of about 26. It looks to me it's had a good year relative to the market. It's beaten. It's up 5 percent over the last 12 months. We know what the stock market itself has done. Too expensive here or no? No, I don't think so. You know, health care as as a whole has performed well this year, especially relative to the market. I think UNH and other health care names in this space, I mean, these are the types of names that you'd like to own here. I mean, UNH has a free cash flow yield above, you know, 6.5%.

The stock is up 6%, very steady earnings. They've beaten EPS on 20 of the last 20 quarters. There's momentum in their Medicare and Optum business. There's margin expansion. So I think these are names that also has a very strong balance sheet. But these are names I could test. They're tried and true that work in environments like this. So that's why I like health care and particularly UNH. All right. Appreciate the time, Jason. Thanks for sticking around. That's Jason Snipe of Odyssey with us. Coming up, we're tracking some big stock moves in overtime.

As always, Christina Partsenevello standing by. With that, Christina. Bird flu helped sales soar for one firm, but stock is down. And a new report says Chinese tech firms are happy listing only in the United States and not Hong Kong. I've got the juicy details next. We're tracking the biggest movers in overtime. Christina Partsenevelos is here with that. Hi, Christina. Hi, Scott. So let's start with shares of CalMain Foods.

Down 5% despite sales soaring. 110% in Q2 versus last year. The CEO saying the, quote, current environment is characterized by record average selling prices for conventional eggs, primarily due to reduced supply. And why is that? Bird flu infected over 57 million hens this year in the United States. Shares of Heisen Motors are surging in the OT right now, up 15 percent after its zero carbon subsidiary entered into an agreement with a Chevron subsidiary to build a waste-to-hydrogen production facility in California. Important to note, though, Heisen Motors, which makes hydrogen-fuel-cell-powered vehicles, has a much smaller market cap, around $300 million.

And a new report from the Information, there's that juicy report I was talking about, says Chinese Nasdaq-listed tech firm Pinduoduo has paused discussions about listing shares in Hong Kong, while New York, or the NYSE-listed firm Full Truck Alliance, scrapped plans completely to list in Hong Kong. That happened earlier this month. All of this, though, was listed in the information report based on anonymous sources, but could be a sign that these Chinese firms aren't as worried about future regulatory drama between China and the United States. Pinduoduo was the second worst Nasdaq 100 performer today, though. Scott. All right, Christina, thank you. Christina Partsanova still ahead. Santoli's last word. We'll find out what he's watching as we head into the final trading

days of 2022. We're right back. Last call to weigh in on our Twitter question. Apple hitting a 52-week low for the second day in a row. We want to know, do you think it's a buying opportunity? You can head to at CNBC Overtime Vote. We'll bring you the results and Santoli's last word next. To the results of our Twitter question, we asked you with Apple hitting a 52-week low for the second day in a row,

is this a buying opportunity? The majority of you saying no. 55%. Mike Santoli's here for his last word. That's kind of surprising. A little bit. It's a close call, as you can see right there. But I think that the accelerating decline is the thing that unnerves people. And again, this is a stock that people,

if they were still in it or buying it until the last several weeks, it's because they felt like it was going to be a source of stability. And then it's proven not to be that at least right now. Although, again, all it's done is catch down on a year-to-date basis

with what the NASDAQ 100 has already done. It just hasn't been able to resist that pull anymore. The big stories in the market all have a China element. You know, it's the CDC restrictions now. It's Apple, to some extent, given, you know, the supply issues there. Tesla was the other one on my list as well. It's all linked. It is. And it's not easy to get a linear sense of exactly what it's going to mean, what the implications are. To me, the immediate impact is we already have this kind of recession anxiety that's been building up for good reason.

You see all the leading indicators in the U.S. And it felt as if like there's sort of one or two things that just can't go wrong and still have us avoid some kind of a harder landing. And one of those things is if China does not end up being a source of growth in the world at some point soon, net growth. So that obviously compromises that picture a little bit. I still think it's very tough to get a sense of what the market is suggesting and pricing in right now in this week when it really seems like mechanical stuff, trends just extending themselves over the course of the year. A lot of the technical breakdowns that are happening are independent of really what we're

reading out there in terms of the economy. Does how you finish have any bearing on how you start? It's hard to say. I mean, look, I think 2022 was an anomaly in the sense that the script completely reversed from 2021. January 3rd, one trading day. That's your peak for the year. Tech leadership on the way up completely goes the other direction. I think everything that you were led to believe going into 2022 was disproven quickly.

I doubt that's going to be the case this year. And if you look at weeks when you have had a really bad December stretch, like 2018, look, 2019 was a good year. Everyone's going to say, well, that's because the Fed pivoted. Well, who knows? We'll see what happens next year. Maybe get some stabilization in Apple to help answer that question. Yeah, wouldn't hurt. I will see you tomorrow for your last word. That is Mike Santoli does it for us.

Everybody have a great evening. I'll see you back here tomorrow.