Closing Bell - Closing Bell Overtime 12/6/22

Episode Date: December 6, 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.

All right. Welcome to Overtime. Thanks so much, Sarah. I'm Scott Wapner. You just heard the bells. We are just getting started from here at Post 9 at the New York Stock Exchange. It is the central question right now. Is an end of year rally dead after yet another rough day for stocks? BTIG's chart expert Jonathan Grinsky will tell us in just a little bit. We've also got some housing earnings about to hit. We're going to bring you that, of course. A very timely read on that troubled sector. And the president is about to speak out in Arizona as Taiwan Semi makes a massive investment in chip manufacturing in this country. He's going to be at that podium there. He's touring with Tim Cook and some other big name tech CEOs. We're going to take you live

to Phoenix when we do see the president on what is a very significant announcement for the future of U.S. technology manufacturing. We begin, though, with our talk of the tape. Recession fears rolling the markets. CEOs growing more cautious. Stocks clearly paying the price for that. So is this wall of worry simply getting too high to climb, even in a month that is typically good for your money? Let's ask Joe Terranova. He is CNBC contributor, Verus Investment Partners chief market strategist.

It's been another tough day. It feels like this is mostly about recession worries. You've got the inversion of the 210 spread is even bigger. The worst ever. I could go on and on, but that seems to be the story today. But really nowhere to hide today, Scott. Energy leading sector year to date, down 3%. You mentioned the inversion. We've basically washed away all of the positive technical momentum from Chairman Powell's speech last week. We've washed away all of the sentiment, the strong sentiment that potentially we were setting the foundation for a move higher. What did we hear? 43, 4,400? I don't think that possibility exists right now. So now it kind of falls back upon CPI on next Tuesday. Can CPI early in the morning lift

markets? Can it reignite some of the positive momentum? But even with that, I don't know if there's that. So there's enough there. Yeah. Oil, to your point, is now negative on the year. Who'd have thought, you know, that we'd be having that conversation given where oil was? I think what's troublesome about that is that oil is declining, but yet we're seeing inflation remain sticky. We're seeing an economic environment that as you look forward, we're losing optimism and losing optimism about the economy is never good. You know, there is this developing story, too. I've mentioned, you know, several times this week, it's a very big week for sell-side conferences. There's one for the financials going on today in which Goldman CEO David Solomon, just a short time ago, he's getting ready for a

recession. He said he expects stocks and residential real estate to be lower a year from now, just 35% chance for a soft landing. Caution today, too, from Brian Moynihan, Bank of America, same conference. You heard CEOs from other sectors with much the same story. All right. So potentially there's a message and there's a direct message there for Chairman Powell and the Federal Reserve. The message ultimately is maybe allow the market to catch its breath. Allow the market, allow the economy to absorb, digest the historic rate hikes that we've experienced over the last six months. 375 basis points on the precipice of being four and a quarter. Let's keep one thing in mind, though, within that message.

Chairman Powell can respond to that. He could slow down the rate hikes, but what he can't do is pare back the tightening of the balance sheet. And I think that I heard a lot about that today. I've heard that recently in conversations, taking liquidity out of the market on a continual basis, even if the Federal Reserve pauses on the rate hikes, that means you're going to have persistent and elevated volatility. That means you're going to have a market that doesn't have the nourishment, Scott, of the last 10 years. I mentioned all of this, especially from Solomon, taking place within the last 30 minutes or so, which is why we wanted

Steve Leisman to join this conversation. So pertinent it is, Steve, as we approach another Fed meeting. And here we are with CEOs, you know, gaming it out and thinking the chances are better than not that we are going to have a recession against the backdrop of the Fed tightening into that. Yeah, it's not a good mix, Scott. And a lot of these CEOs, they have to do what they have to do in order to prepare for economic outcomes that they see coming. At the same time, Scott, as you know, that very preparation creates the situation that they're preparing for. So the idea of paring back employment, paring back capital spending, all of these end up being negatives for the future. And you obviously can't ask a guy to say, you know, we're just going to hold the course because of the negative effects. That's not what happens. That's, by the way, what the government and what the Fed are for to replace that animal spirits or otherwise that that negative impulse from companies. But they're interestingly, Scott, this time they won't be around. I'm not ready yet, Scott. As you know, we did a story the other day on the possibility of a soft landing and some folks seeing that happening.

The data has been pretty good so far, but I just you can't argue with what's in the book of the CEOs. If they're seeing the orders fall, then they have to be reacting. I will point out, though, that the data in general has led to upgrades to the economy in the last couple of weeks, not downgrades. There's no doubt. It also depends, Steve. And let's be fair and frank on which CEOs you're talking to. Right. Scott Kirby of an airline like United could certainly come out and suggest things are great because he's in the kind of business right now that is doing well. A real estate executive will come out and say things are horrible. And if you almost strip both of those away because they're to the extremes, you find

yourself in that middle swath of CEOs who seem genuinely worried about what's happening in the economy, maybe a couple months down the road and against the backdrop of the Fed perhaps doing too much. I'm wondering how much the Fed is going to be focused on what it's hearing from CEOs. Remember, as you know, they formulate much of their idea about where the economy is by the very conversations they personally have checking in with CEOs from industries around this country. Yeah, that is true, Scott. The extent to which they listen to them is another matter entirely. You know, central banking is some kind of mix of the science and the art and the anecdote and the evidence that's out there. And every central banker has to deal with the idea of, you're right.

I mean, you talk to a guy like Barry Stern, like the world is crashing in. At the same time, Scott, you've listened to as much of this retail commentary as I have, and I can't get a beat on whether or not the consumer is crashing or doing just as well as he or she was doing a year or two ago. So it's a little bit difficult to get that gauge right now. The business spending numbers, Scott, have also not been bad. The investment numbers, you look at the durable goods, the CapEx numbers, they have not been bad. So CEOs are saying something. I guess it comes down to this.

Where is the risk? And a guy like David Solomon, I don't think, you know, probably anybody is better out there at gauging that risk. And he says, is the risk worse that I'm overstaffed and I'm overspending versus the idea that I'm leaving business on the table by not having the staff and the spending to meet it. And I think he's saying that the bigger risk is having too many people. And that's where he's going to make those decisions. And it's going to be one by one, Scott. And that's why a lot of folks have dialed in a recession for next year. But there's some small minority that's out there saying, you know what, we can do this in a soft landing. Yeah, appreciate that, Steve. Thank you for jumping on with us. A developing story, of course, I wanted you to react to. Just yesterday,

we're having a conversation about soft landing chances are increasing. So 24 hours later, we've shoved that in the drawer? No, we haven't shoved that in the drawer. We're making a distinction. I've said this all year. Wall Street's having a worse year than Main Street. Thankfully for that, by the way. And I think a lot of the CEOs that today have given commentary on the economic outlook are very close to Wall Street, very close to the financial services industry and risk assets. So maybe they're feeling a degree of pressure that others outside of Wall Street are not feeling economically. All right, let's bring in our panel today. Alicia Levine of BNY Mellon Wealth Management joins us today, along with Malcolm Etheridge of CIC Wealth.

It's great to have both of you with us. I'll turn to you first, Alicia. You know, lousy outlooks, right? The ones that we just mentioned. There's David Koston also of Goldman Sachs looking for what he calls a flat year, flat earnings growth, flat market. Nothing does anything worth anything. How do you see things? So our outlook is pretty similar to that in that we feel we end 2023

more or less with earnings a little bit down from 2022. The S&P are mid part of the range, about 41.50, not so different from this year. The difference is that we still see volatility going forward. Again, that's become a little bit of consensus, but that's not necessarily wrong. Everyone was negative in March and April turned out to be the right thing. We're not done here. I think one of the risks we're not talking about today and specific to the equity market, it's not just the recession and the earnings risk, which is ahead of us. It's also we may not be done with the rates risk, right? So there's a sense we're exiting the rates risk this year, going into the recession risk.

But as you've said, the data have held up well. Earnings have held up well. And, you know, and workers are getting paid. And if that's the case, we may not be done with a 5 percent or 525 on the Fed funds rate. And that's the other side of the risk, that that soft landing leads to a higher terminal rate. Higher for longer is certainly being discussed. Malcolm, I want you to listen to what Jeffrey Gundlach told me as part of our financial advisor summit that we had for CNBC. Very much an outlook for 2023. Listen, we can kick it on the other side of that.

The question is, what's 2023 going to bring? And with all of the negative market action this year, bonds are down even more than the Dow Jones Industrial Average on investment grade bonds. And stocks, of course, although they've done better lately, like all risk assets are still down, particularly on the Nasdaq, quite a lot. I kind of feel like January could start out as it often does with buying. So I think that it's possible that we see reallocation as we enter 2023, which could, I believe we're going to start out with good returns for both stocks and bonds in January, at least at the beginning of the year, as we get kind of reversal of some of the selling that happened to harvest tax losses. OK, so what do you think about that?

Right. A lot of gloom and doom out there. And, you know, he's not necessarily one to be positive on where we go. He still thinks, in fact, we're going to have a recession next year, but says you could still get a decent start to the year. It just flies counter to how people feel over the last couple of days at minimum. Well, I think that's actually the main point here, Scott. It's the fact that sentiment has broadly been accepted negative. And when the majority of the people you talk to are negative

on the markets, that probably is a good signal that it's about time to be turning positive with your dollars and actually looking at this as the moment that the market is starting to turn, which you've heard me say probably for the last three or four weeks at this point, trying to find that inflection point where the market is so broadly negative. And now here we go with all the bank, the CEOs from the big banks stepping in to confirm that they feel negative on the markets, which, again, to me should be seen as a decent signal for the bulls out there. Anytime the bankers are coming in and telling you that they see a market signal, it means that the signal has already been out there for months because banks are traditionally prudent and they're the very last ones to the party to acknowledge that something is happening. So when I look at somebody like Morgan Stanley announcing, you know, they're cutting something like two percent of their

workforce, they've got like 80,000 employees. So if they really think that there's a storm brewing for next year, wouldn't they be cutting something more than two percent of that workforce trying to stay on the right side? So I see these cuts. David Solomon is another another one. Brian Moynihan. I see these cuts as nothing more than them trimming fat that they had already intended to trim following Q3 earnings, where all the banks came out and told us revenues are great, but net profit was down. How do we get that net profit number to turn positive? We get rid of some of the headcount to do the same business. So can we look, Alicia, through some of the storm clouds that look to be on the horizon and say, I mean, the sun could actually stay out for a little bit throughout the remainder of the year and into the early part of next year before we have to happen in the first quarter, which makes the job of a strategist infinitely more complicated because it's not on our doorstep.

I'd say this. It's very hard to believe that the Fed could tighten 450 or 500 basis points in 12 months and not have some very tough effect on the real economy and on earnings. And I think if we escape here with the market down 17 percent in the largest regime change that we've had in a long time, I think it just doesn't pass the sniff test. And I think we probably have another leg down here within the next three to six months reflecting all those risks. There's some calls today. I saw one, Joe, from Wolf today, 25, 30 percent decline from here in the market. What are you preparing your clients for and the way you're thinking about this market? We're communicating that we're in the middle of a valuation recession.

We're trying to understand the depth of an economic recession. We're trying to understand the depth of an economic recession. And more importantly, we are focused on will there be an earnings recession? The market will have a stress test in the month of January. That is when earnings will be delivered. We will see the resiliency of equities based on what companies are reporting at that time. And we will understand if there will be an earnings recession. You think there will be? I mean, at some point you have to game it out and think like there will be. You know, I'm going with the Koston thing from Goldman Sachs, saying just no earnings growth at all.

That's basically an earnings recession. There's a distinction, and I'll credit Adam Parker with pointing this out. Back in June when markets were at the low, earning estimates were higher than where earning estimates are now. We've lowered the earning estimates. I think a soft landing has been built into earning estimates. I don't think the hard landing has been built into earnings estimates. For 23, that's where the earnings recession presents itself. Okay. So what really caught my interest, Alicia, is something that I read from the notes that

you gave us today. And you clearly sound, and all of our viewers would suggest, I'm sure that you sound pretty negative on the outlook for the equity market. Yet, and you're not the only one, by the way, who likes cyclicals here. I'm trying to get my head around liking cyclicals in an environment in which I'm worried about the economy slowing down. It does not make conventional sense to me. It does not make sense. But if you're looking for the place where you want to add capital, we're in a defensive posture now, it would be cyclicals because the cyclicals have already reflected the recession in ways that other sectors have not. So even if you look at the semis,

boy, those earnings are crashing down. And for the most part, they're holding where they were in June and in September. And I'd say that that is the place you go. If you're going to add any kind of beta, it would be small caps and it would be cyclicals. Are we too early here? Yes, we don't play tactical games here, right? So we invest for the long term. But I would add incremental capital to cyclicals for that reason. We have so much money coming from the government to the industrial sector for infrastructure in the Inflation Reduction Act. As investors, you want to be partnered with the government when the government is giving money. You mentioned the semis. The president is speaking now out in Phoenix. Again, that big investment from Taiwan semi.

Let's listen in to President Biden. That when I first became president, they said Biden is so slow he doesn't realize there are no seats out here. Anyway, thank you, Mark, for the introduction. I appreciate it very much. Your company's commitment to building, as you put it, a vibrant semiconductor ecosystem in the United States. That's what we're doing with your help. Thank you to everyone at TSMC, especially Morris Chang, who founded this company in 1987 and grew it into a global giant. But the most significant thing about him is his wife Sophie. I tell you believe it or not Sophie worked

in my first senatorial campaign when I ran for the Senate. True story. So I owe an awful lot to this company. We had a lieutenant governor named S.B. Wu and his wife Kathy around my staff, and they got her involved. And so I want to thank her very much for that. Mayor, thanks for welcoming us to your city. And Gov, you and I are different sides, but we see and share the same vision as Arizona is a hub, literally a hub for tech — for technical change that's going to take place. And that's well underway. Governor-elect Hobbs, is she — Governor-elect Hobbs here? I don't think — Gov, congratulations. Congratulations. Congratulations. Well, I tell you what, you're starting off in the right place.

This is going to be an incredible asset to the state of Arizona. A special thanks to the incredible Arizona Democratic members of Congress who flew out with me today from Washington. Senator Kelly, you deliver for Arizona every single day, including on the Chips and Science Act, which will bring jobs to this state and would not be law without you. And that's not hyperbole. Arizona is lucky to have you fighting for them for the next six years. And Gabby Gifford, a great friend, is here as well. When I gave Gabby the Presidential Medal of Freedom this summer, I said she was one of the most courageous people I've ever known.

People of Tucson elected her to the Congress three times because they trusted her, they believe in her, and she's the embodiment, the embodiment of that core American trait. Never, ever, ever, ever give up, and she never does. And I want to thank Senator Sinema, who can't be with us today. She's in Washington working out another major piece of legislation, a tremendous advocate for the people of Arizona and a leader in so many issues important to this state. Four of Arizona's representatives are here with me, Ruben, Greg, Tom, and Raul. And where are you guys? And we flew out together. They're still

talking to me. Anyway, thank you, gentlemen, very much for all you've done to get us here today. And champions for the constituents working to build an economy that doesn't leave anyone behind. Doesn't leave anyone behind. Gina Raimondo is an outstanding secretary of commerce, a fierce champion of U.S. industry, especially in semiconductors. I want to thank you to the business leaders here today. Tim Cook of Apple. Where are you, Tim? He buys a few of these little chips. And he's a small customer here at this outfit, between 25 and 35 percent of them. But anyway, I hope they're treating you well.

And Sanjay of Micron. Sanjay has represented more than two dozen tech and manufacturing companies, and you're here because you're seeing what we're all seeing. American manufacturing is back, folks. American manufacturing is back. I recently took a trip literally around the world, starting in Egypt and ending up in Guam and finally coming home, ending with a meeting in Indonesia with the G20. The country is with many of the largest economies in the world. And what was clear in those meetings is the United States is better positioned than any other nation to lead the world economy in the years ahead if we keep our focus. There's a strong sense from many, from all the world leaders of the

resiliency of the American economy, and we're seeing it here at home with investments like the one we're talking about today. Together, with the help of your elected leaders here today, we've had an extraordinary two years of progress. We passed the American Rescue Plan, keeping tens of thousands of cops, firefighters, teachers, first responders on the job in all 50 states when revenues dropped because of the nature of the economy. We fully vaccinated more than 220 million people. We're rebuilding our infrastructure, fixing our roads, our bridges, our airports, strengthening American manufacturing by creating 750,000 manufacturing jobs just since I've become president.

What I'm most excited about is people are starting to feel a sense of optimism as they see the impact of the achievements in their own lives. It's going to accelerate in months ahead, and as part of the broad story about the economy we're building that works for everyone, one that grows from the bottom up and the middle out, that positions Americans to win the economic competition of the 21st century. When we grow it that way, the poor have a shot, the middle class do well, and the wealthy do very well. My dad used to have a saying.

He said, you say, a job is about a lot more than a paycheck, Joey. It's about your dignity. It's about respect. It's about being able to look your child in the eye and say, honey, it's going to be okay. It's going to be okay. The thousands of Arizonans are going to be able to look their kid in the eye because of what you're doing here today and saying, honey, it's going to be okay and mean it. Back in April 2021, I met with Mark and other industry leaders. TSMC had made a $12 billion investment here in Phoenix to build the first fab to make semiconductors in the United States. Now the equipment is ready to move in. Next year, commercial operations are going to begin. And today, TSMC has announced a second

major investment. They'll construct a second fab here in Phoenix to build chips, three nano chips, the three nano chip, chips that are three nano. And you know what I'm saying. Nano no, no, I don't know. But look, these are the most advanced semiconductor chips on the planet. The chips will power iPhones and MacBooks, as Tim Cook can attest. Apple had to buy all the advanced chips from overseas. Now they're going to bring more of their supply chain here home. It could be a game changer. All told, TSMC is investing $40 billion here in Arizona, the largest foreign

investment in the history of this state. Over 10,000 construction jobs and 10,000 high-tech jobs will be created. And I want to thank everyone in this company for making this happen. You know, I know our hosts won't mind my pointing out that America invented the chip. Morris Chang was a pioneer in the era of graduating from MIT and getting his start at Texas Instrument. Federal investment helped reduce the cost of those chips, creating a market and an entire industry that America led. Over 30 years ago, America had more than 30 percent of the global chip production. Then something happened.

American manufacturing, the backbone of our economy, began to get hollowed out. Companies moved jobs overseas. Today, we're down to producing only around 10% of the world's chips, despite leading the world in research and design of new chip technologies. But folks, where is it written? Where is it written that America can't lead the world once again in manufacturing? I don't know where that's written, and we're proving it can. Not just here in America. Micron is investing $100 billion to build semiconductor factories in Syracuse, New York. Intel is investing $20 billion. Do the same in Ohio. IBM is investing $20 billion in Poughkeepsie, New York, or this one up there. These investments

are helping us build and strengthen the supply chain here in America. I want to be clear. As we build a stronger supply chain, our allies and partners are building alongside us as well. Some of the companies here today are customers that are going to buy these chips made here. Some are suppliers that are going to help make these chips. And they're all, they all depend on a strong supply chain. That's why we're doing what we're doing here in Arizona matters across the country and around the world. Folks, as we see here in Phoenix, the United States is a top destination for companies across the globe looking to make investments because we have a world-class, highly skilled, committed workforce, union labor. And more than, you can

clap for that. More than 3,000 union workers. All right, on that applause line, we're going to take it back. Of course, still monitor those comments. The president today in Phoenix on what is truly a historic day for the future of technology manufacturing in this country. That new Taiwan semi-plant, the first of two, a massive investment said to be one of the largest direct foreign investments ever in the United States, some $40 billion. Saw the president there also shouting out Tim Cook, the CEO of Apple, Micron CEO as well. Jensen Wong of NVIDIA is there too. Christina Partsenevelos has been following all of that for us on a historic day.

It's not only the largest, it's the largest definitely in the state of Arizona, but this is a big deal. The fact that the president just finished saying that equipment is already being moved into that first fab, TSMC's first fab, the second one, construction is going to be underway with the chips possibly being made by 2026. President Biden went on to say that we are leading in R&D in the United States. Where is it written that America can't lead in manufacturing? And so that's the whole point of this and the point behind the Chips and Science Act, to bring back manufacturing here in the United States, especially to diversify the supply chain and have less of a reliance on Asia. That's the situation right here, which is why some of the customers like Apple,

Apple is the biggest, largest customer for TSMC, why Tim Cook is there, he spoke. He touted the event. And this is a historical moment. The same thing from NVIDIA's CEO calling it a miracle what TSMC is doing, given that they're the largest chip contractor in the world. So you have big CEOs there supporting the initiative that's being put forth by TSMC. And it's not just TSMC. You have Intel, Micron, Samsung, IBM, all committing billions of dollars

to build here in the United States. Important to note, though, this is not going to happen overnight. And they're still going to have a lot of difficulties growing, especially when it comes to gathering the talent here in the United States. Yeah, yeah, a reasonably small percentage

as well of the overall manufacturing by these companies, Yeah. A reasonably small percentage as well of the overall manufacturing by these companies, too. Important to note that as well. Christina, thank you very much. That's Christina Partsenevelos. But American manufacturing is back. That will be the headline taken from all of this. A comment from you, Joe. And some, look, you know very well, people like Jim Labenthal, one of our investment committee members, basing their long term bull case in part on the onshoring of production of semiconductors like the ones that we're going to see coming out of Phoenix. This is a very small step. You could base your long-term thesis on the concept of onshoring, but that's a very long-term thesis. I don't want to dismiss

what we've seen here in the moment because it's critical. Semiconductors, Scott, as you know, are the nucleus for all the products that drive this new economy. And it's incredibly important that the economy does not go through the stress that we went through post-pandemic, where we were reliant on sourcing those supplies from outside the U.S. So this is a good step. We've got to leave it there. Appreciate your patience and understanding on that breaking news. Alicia, thank you. Malcolm as well. We'll see both of you soon. Joe, we'll see you back here in just a little bit. Let's get to our Twitter question of the day. We want to know what's going to outperform in 2023. Trying to take a cue from our conversation with Jeffrey Gundlach at the F.A. event we had today. That summit stocks or bonds. What's going to be better next year? Head to at CNBCime on Twitter. Cast your vote. We're going to share the results a little bit later on

in our hour. We do have a news alert now on Pinterest. Pippa Stevens has more on that and the culmination, I suppose, of an activist battle that we had going on, Pipps. Yeah. Hey, Scott, we'll take a look at shares of Pinterest jumping about 3 percent after announcing a partnership with Elliott Investment Management. The social media company said it's a long-term cooperation agreement with Elliott, which will also see Elliott's senior portfolio manager, Mark Steinberg, join Pinterest's board of directors. Elliott's investment in Pinterest was first reported back in July. The firm has said that Pinterest has a significant potential for growth. Scott.

All right. That's Pippa Stevens with the news. They're sending shares higher by a bit more than 3 percent. We're just getting started here in overtime. Coming up next, trouble in the charts. Top technician Jonathan Krinsky. He sounds the alarm on stocks where he sees the biggest downside risks. He's talking numbers.

The numbers you need to know next. All right, the alert, because Toll Brothers is out, stocks popping a couple percentage points. We're going through it right now. Obviously, a tough sector, but our reporters going through that and we'll try and bring you exactly what you need to know from that report, what's causing that move. Let's talk about another move, the one in stocks. Pulling back again today, our next guest sees even more downside ahead. Let's bring in BTIG Chief Market Technician Jonathan Krinsky. It's good to see you as always. I mean, we rely on you at these moments to tell us where you think we're going. We failed to stay above the 200-day, and I suppose that was a fairly ominous sign. You know, I think what's remarkable about the market this year is just how much it's respected, you know, pretty basic

elements of trend and resistance. And I think if we go back to the August rally, it almost seemed too obvious that the S&P was going to rally up to the 200-day fail and move back down. That's exactly what it did. And then here we find ourselves again in a similar situation, back to resistance. The VIX got down around 20. And, you know, anecdotally, I heard more people saying it was too obvious, and therefore we couldn't just, you know, it wasn't that easy to get up to the 200-day fail and move back down. But that's what's been working. And, you know, the downtrend is still intact. And the other point I'd add is I think there's kind of this narrative out there that, you know, the market always rallies in December and seasonality is always bullish. And I think we talked about this with you last time we were on the show.

If you look at years since 1930, when the S&P is down 15 percent or more through November 30th, like we were this year, December has actually averaged a negative 2.16% return. So it's a bit different setup this time around than traditionally when you're in kind of a flatter and up market. So specific numbers matter to you and to our viewers. They like to have an idea about if you think there's going to be downside, to what degree do you think it's going to be? What kind of numbers to the downside are we talking about on the S&P and what kind of time frame do you see it happening within? Yeah, I mean, look, you know, there's there's definitely some support levels we're watching. You know, obviously, thirty nine hundred and thirty nine twenty five kind of where we bounced off today.

And then below that, you're kind of looking thirty eight hundred thirty eight and a quarter. I think big picture, though, you know, we can't rule out a move to new lows. Now, it's probably not going to happen in December. That would be pretty dramatic. But I think, you know, structurally, nothing really from our work has changed. And so the downtrend is still intact. We're actually seeing signs, you know, some some indexes like the most short index hit its second lowest close of the year today. Amazon, you know, very close to new 52 close. So there's signs that things are continuing to deteriorate. And then I'd say the biggest warning sign that we saw the last two days is in the financials, the banks. The banks, relative to the S&P 500, hit their lowest relative performance since December of 2020. So pretty rough action there in the financials. Oil negative year to date. I mean, that move has been an eye opener for certain. You continue to see downside risks in energy among some other sectors?

Yeah, you know, energy, we've kind of played both sides this year. It's obviously been the year to date leader, but there's been a couple of times you could call back in May, June. It kind of just got ahead of itself. And, you know, what's interesting is, you know, the market, the narrative is starting to shift a little bit right from the inflation concerns to maybe some more economic contraction concerns. I think, you know, if you look at the action yesterday, S&P was down 1.8 percent. Bonds, as judged by TLT, were also down. And then today, the S&P down about the lower rates equals good for stocks to lower rates maybe is a sign of economic contraction.

And in that scenario, energy is going to probably start to underperform. And then you just have a positioning situation where it's, you know, it's up 50% on the year when every other sector is down on the year. It wouldn't take much to just get a little mean reversion there. So, you know, structurally energy maybe is still OK, but tactically, we still see some downside risk there. Yeah. You pick your day and you decide what the news means for that particular moment. I think we're learning that lesson well. Jonathan, thank you. Jonathan Krinsky, BTIG. We do have more now on those Toll Brother earnings. The stock at last check was up a couple percentage points. Diana Olick, of course, has the details, everything you need to know. The stock's still up, not quite as much. Di,

what's the headline here? Right. Well, it was a strong beat, but some of it is a little bit unclear. So you have revenues coming in at three point five eight billion. That's a beat on the estimates of three point one seven one billion. Now, EPS at five dollars and sixty three cents a share versus estimates of three dollars and ninety five cents. That's the part that's unclear because we don't know if it's related to $138 million gain related to a settlement over a natural gas leak in 2015. But I really want to get to the color here. CEO Doug Yearley saying in the release that many home buyers are on the sidelines waiting for clarity on the direction of mortgage rates and the overall

economy. Obviously, we saw rates spike over 7 percent in October. Now they're down in the 6.5% range. So that's what we were waiting to see what that would mean. What he's saying, though, is our net signed contracts were down 60% in units and 56% in dollars in the fourth quarter with no discernible change nearly halfway through our first quarter. So that's really showing going ahead that these mortgage rates are really having

an impact even on tolls luxury buyers. So again, going forward, he still says they still have a very strong backlog and well positioned for 2023. But again, in the last quarter, he said things were looking better because rates had come down a little bit now and they were up again. Now down, he says they're not looking quite as good as they were in August. Back to you guys. Yeah, maybe even if they come down in the very near future, then you have people like that worrying about the future of the economy, too. So it's a tough place to be right now. Diane Olick, thanks so much for the latest there, the earnings from Toll Brothers.

A double upgrade today, meantime, for one big bank. We'll debate that in today's Halftime Overtime. We're back right after this. It's time for a CNBC News update. Let's get back to Christina Partsinovalos for that. Christina. Hi, Scott, again. Here's what's happening at this hour.

The Trump Organization has been found guilty on all 17 counts it faced in a New York tax fraud trial. The jury convicted the company of helping its executives avoid income taxes on perks like rent-free apartments and luxury cars. The Justice Department has expanded its search for evidence of former President Trump and his allies seeking to overturn the 2020 election results. Special Counsel Jack Smith has subpoenaed election officials in Wisconsin, Michigan, Arizona and Pennsylvania. Maryland is banning state agencies from using TikTok and some other Chinese and Russian platforms. Governor Larry Hogan announced an emergency directive declaring their use a cybersecurity risk. And Argentinian Vice President Cristina Fernandez de Kirchner has been found guilty in a billion dollar fraud case. She has been sentenced to six years in prison and a lifetime ban from public office.

However, she is unlikely to serve any prison time soon because her current government role gives her legal immunity. Shucks. Scott, back to you. All right, Christina, thank you very much for that. Up next, a double upgrade for Jamie Dimon. One Wall Street firm out with a big, bold call on J.P. Morgan. Joe Terranova used to own it. Does he wish he did today? I don't know. We'll talk about it next. In today's Halftime Overtime, the big, bullish call on J.P. Morgan today. Morgan Stanley double upgrading it after a near 25% rally in the fourth quarter, saying there is still more upside ahead.

Surat Sethi agrees with that call, says it's not too late to buy. This thing has not performed well. But if you look at J.P. Morgan's businesses, I mean, you've got net interest margin improving. If you look at kind of where asset management, M&A activity, capital markets, all troughing. So I think this is a really good call. It's a solid balance sheet. I buy it for new clients and I make sure I have a 2% position in it. All right, Joe Terranova is back with us. Up 25% from the low and now you double upgrade. Is now the time to buy? Did you hear Krinsky talking about the negative setup for the banks too?? I did. And, you know, this is this

is a business that's that's borrowing short and lending along. There's a lot of challenges ahead for financials. I own JP Morgan, sold out of it. That trade looked like a really good trade early in October. It's had a significant rally since then. Personally, my holdings are Bank of America and Morgan Stanley. I'm doing better with financials in my ETF because in the ETF, we're only owners of M&T Bank and Regions Financial. The other side of that is we basically own insurance companies. So I don't have the signal yet for financials to go in and buy banks. The banks are sending a message to you, though, that trading revenue is really strong. So I want to buy Goldman Sachs. I want to buy the exchanges, whether it's NASDAQ or CME.

I want to buy companies like Charles Schwab and Raymond James because the trading opportunity is there. I'm not ready yet to go back into J.P. Morgan. I already have Bank of America. So I still have a strong economy. I have the prospects of higher rates for longer. Yes. I've got balance sheets that look pretty darn good. Maybe the best that they've been since the crisis. OK. All of these things lining up. If you're a longer term investor, the case that Mike Mayo made to us yesterday, albeit with a stuffed Grinch on the desk at the same time, that these are the places to be for the long term.

OK, tell me that you're going back to the plan for buybacks. I want to be able to have the buyback authorization, the implementation and the action within the market. Wasn't Moynihan today talking at the conference about the buyback? So that's specifically what I'm speaking towards. Brian Moynihan saying that they're slowing down. They're still buying back their shares, but they're slowing down the pace given the environment. I understand why he's doing the right thing as a CEO, but I want my banks to authorize a buyback plan. I want them to implement it. I want them to implement it at the fullest capacity. Yeah, you do have a pretty split analyst crew, if you want to call it that, on JPM. You got 15 buys, 11 holds. The average

price target's 142. Not everybody, you know, there was a point in time where you thought, okay, everybody was on the same side of the boat, maybe not so much because of the issues that you just talked about. Very large global footprint as well. I think a lot of the geopolitical challenges of 2022 need to begin to resolve themselves to gain a degree of conviction and comfort where JP Morgan's got a clear path ahead. Yeah. Net interest margins, a big deal to keep an eye on, too. You heard something about that from Moynihan, too. And they're all going to be talking about and looking out to what that's going to look like.

Stay in the insurance companies for now. Thank you for staying around. All right, that's Joe Chernova. Coming up, we're tracking some big moves in overtime. Your OT movers are after this break. Let's track the biggest movers in overtime now. Christina Parts and Nevelos is back yet again. Yet again, three times today.

Okay, shares of MongoDB. Let's start with that surging right now in the OT. You can see just climbing higher after posting earnings. The document database software firm reported a beat on the top and bottom line and better than expected fourth quarter guidance. MongoDB also raising its guidance for the full year. But despite this pop, you can see the full year shares right now are for the full year. It's down about 65% this year.

On the other end of the spectrum, though, we've got Dave & Buster's falling after reporting third quarter results. There was an earnings and revenue beat, but operating margin came in slightly lower than consensus. And that's why you can see shares are down about 5%. Lastly, MasterCard shares are moving higher after raising its quarterly dividend and announcing a $9 billion share buyback program. This new repurchase plan will kick in after the company completes the remaining $4.1 billion left in its existing buyback. Shares are up by half a percent right now. Scott.

All right. Good stuff. Thanks for all your work today. Thank you. Christina Partsenevelos, appreciate that. All right. Last call to weigh in on our Twitter question. We're asking, which will outperform in 2023, stocks or bonds?

You can head to at CNBC Overtime. Cast your vote. We'll bring you the results. Plus Santoli, his last word is next. To the results of our Twitter question, we asked stocks or bonds, which is going to be best in 2023? Stocks went out two thirds, 67 percent. Interesting. Mike Santoli is here with his last word. I mean, yesterday it was like, OK, soft landing possibilities creeping up because the data was pretty good today. It's like, oh, no, we're going into a recession. Yeah. And the fact that you have this sort of plausible, very extreme two sided debate, I think, is what has the market caught in the middle. The Atlanta Fed GDP now another update,

three point four percent. And so you have some people who would fixate on that and say, well, the Fed's going to have to essentially nuke the economy to get control of inflation. I think it's fascinating that the market continues to obey, you know, I had Jonathan Krinsky on, this downtrend line from January 3rd. It seems almost too pat that it would roll over exactly at that spot, as it did twice before, and then hit a new lower low. I mean, that would be the extreme situation where it's just like, that's it. You have nothing to worry about except obeying the trend. I do think there's a chance it can get a little more complicated than that right here.

Market's showing on a couple of low-volume decline days. It didn't really fall apart today. So we'll see. You're still a week away from all the relevant stuff in terms of Fed meeting, CPI. And then the second half of December is when you have a little bit more of a seasonal tailwind. The pressure's really on the Fed chair next week in his wording, not so much what they do. I'm just thinking about, you know, OK, the economy is strong. He's got to toe the line, stay aggressive.

But then you've got the commentary that we got late in the day today from the likes of Solomon over at Goldman Sachs and Moynihan today earlier, Jamie Dimon, et cetera. And he knows that he, the Fed chair, if he does too much, he's going to tank this economy. He does know that, but there's just absolutely no way the Fed is going to anticipate potential weakness coming from white-collar layoffs. You know, they're not going to try to get in front of that. And they've told you just exactly that much. They have to see it in the numbers. But I do think this idea of go half a percent, take it from there, that's probably acceptable to the market.

And I think that you get yields in this zone right here where they're not threatening, 3.5 percent on the 10-year, actually looking a little stretched to the downside, and, you know, topping out at five, maybe we can live with that and have that just be the frame of reference for stocks going into next year. What's your take on oil now? Negative year to date, which is kind of a surprise given where we were and what the broader implications of that are. I have to say, it obviously says it's slowdown. It's a weak macro message. But I also find it really interesting that almost everybody who wants to talk about the divergence between crude oil and energy stocks says that will resolve by crude going up, not energy stocks going down. So I'm

on alert for energy being a little bit of that reflex crowded trade going into the end of the year. I guess you knew that the risk this week was going to be tough just because it, as we've said all week long, such a busy week for those sell side conferences. What was the commentary going to be coming out of those? No one's surprised there. And now maybe you have a bit of a quiet period, so to speak, until you get the real action with CPI and the meeting next week. And we'll see you back tomorrow. See what fills the vacuum. See what tomorrow holds. That's Mike Santoli. I'm the judge. We'll see you tomorrow. Fast is now.