Closing Bell - Closing Bell Overtime 2/10/23

Episode Date: February 10, 2023

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, Mike, thank you very much. Welcome to Overtime. I'm Scott Wapner. You just heard the bells. We're just getting started in just a little bit. I will speak to fund strats. Tom Lee, he's bullish on tech. He's bullish on the markets. And he is bullish that the Fed is just about done hiking rates. So we're going to test him on all of that. We begin, though, with our talk of the tape. Just one more trading day now before the next big hurdle for stocks. The CPI, a read that could either confirm this early year rally or very well kill it. So what's really at stake? Let's ask Malcolm Etheridge, CIC Wealth Executive Vice President, here with me at our headquarters today. Welcome up. It's good to see you up from D.C. and here at our headquarters. Yeah, I'm glad. I know you didn't think I actually owned a tie, but here I am. All right. It's good to have you. So markets feel like a little nervous. We've got CPI now looming right Tuesday morning. We got one more day ahead of that. What's really at stake here now? Yeah, I actually think sort of the opposite. I think investors are showing a little bit of over bullishness now. If you just consider what stocks have actually started to

break out, we're and we're seeing crypto make its way back. I think folks are getting a little bit over their skis with this with this market reaction to it, at least so far. Well, the question is, you know, the areas where maybe they've gotten a little over their skis, that's where you've got more nerves, I think, than than other parts of the market. Right. The growth trade. That's right. Which has obviously started the year really well, but lately looks like it's a little shaky. I think you're even being generous calling it a growth trade. I would call it just speculation, wild speculation. And especially since you consider this week, anything big happened this week, anybody who's not currently rebranding their company to include something related to AI right now is worried that they're going to miss the growth train. And so we're getting a lot of

speculation is the reason crypto is on its way back. We're getting a bunch of companies that have no business fundamentals whatsoever that are going to have this resurgence because they throw AI in there. They talk AI in their earnings and throw things out of whack a little bit. I feel like, you know, you you've been pretty negative for the last many, many months, but I feel like you started to turn the corner a little bit and try and get a little more positive as the year ended, as we started now. Are you back to thinking that we're going to go back to the October lows or where are you now? No, I think we definitely have potential to come out of the funk, the fog that we've been in, you know, all of 2022, basically. But I just want to caution investors to focus on companies that actually have businesses, right? The quality

companies that are actually returning cash to shareholders, for example, right? Paying a dividend or doing buybacks or maybe a mix of both and not so much jumping right back to the more speculative names that aren't really doing any business. They're just stock tickers. What's on your short list of best ideas right now? So it's not going to be a surprise to anybody at this point because it's been the talk of the town all week.

But Microsoft, I think, is actually on pace to become the most important company the rest of this decade. If we think about Apple's iPhone moment in 2007, I really think that that's possible for Microsoft with this whole open AI and chat GPT generative AI component. So you're able to separate what you would consider to be more speculative parts of tech and then some of the mega cap techs, because there's been a big question about those too, hasn't there? Oh, for sure. I just said Microsoft, but they're the only mega cap tech that's positive this week, right? So earnings last week really took a lot of the mega cap tech names down and folks started to turn turn away from. And they said, I can go buy a Tesla or go buy a Facebook or something else and see significantly double digit returns. So far this year, why would I own Apple or why would I own Amazon or whoever? Microsoft's the only positive one out of the gang. But I think still we can look at those names and say they really do business.

They really are in the business of doing X, Y or Z. I can't really justify why I might want to own the metaverse company at this point, even though Mark Zuckerberg used the word efficiency 50,000 times in his last public. But you still have to decide what the right price for that is. You know, if these are in your mind, more legitimate, you know, businesses, more legitimate growth engines and cash generators, there's still a price to be paid that's right versus what was allegedly wrong last year. And that's why they corrected so much and why their valuations corrected, too. The jury is still out, isn't it, in terms of whether those valuations have come in enough? I don't know. You hear about this multiple compression that we're supposed to see before we actually turn the corner and the market starts to recover from the bear market of 2022.

But I would argue that the thing that makes that so this situation so unique and tough to make that argument as strongly as you might in the past is the jobs market is so strong that we don't have to have this recession that everybody thinks that we have to have. We don't have to have this multiple compression that goes all the way back down to 15 that people think that we necessarily have to have to have this resurgence. We're probably already turning the corner here. You really think that? So you think in terms of what, like a new economic cycle, a new bull market cycle, as some people have suggested to? Precisely. So just statistically speaking, since 1950, right, so in recent history in the markets, the average bear bear market only lasted two months. We're already 14 months from the November 2021 start of the bear market. That means that history is on our side. And if you also couple in there with the fact that since 1950, the same period I'm giving you, the stock market always moves four or five months on average before the economy starts to show you that things are

getting better we're already feeling some semblance of things are on the mend okay you you use an interesting phrase what's on our side because and i'm writing it down because guess what's not on our side okay right the fed right the fed is not on our side and rates are moving up i see the 10-year today at 375 we'll call it it. You know, they've already, and I wonder if that jobs report of last Friday, one week ago, was a bit of a near-term game changer, if it means that you're going to be dealing with a more, quote-unquote, hostile Fed longer than you thought. But, okay, we have CPI next week, right? It'll tell us a lot. But the components that really matter and have gotten us here so far this year are starting to look good.

Right. If you think about energy is up slightly. Sure. But food prices are down. We also have housing is on its way down. OER is actually starting to trickle down. At least home mortgages are already declining in pricing, even though rates are up. So the components of CPI that initially got us to the part where we had to hit the panic button are working in our favor. They're just working really slowly. So the rate cuts are working. And I don't think that Powell necessarily is going to tell us anything that we weren't expecting already. He's been really good about telegraphing where they're going. And I don't see any reason for them to differ from that course. We've learned over the last, you know, week or so that 10 days really that his voice is seemingly the only one that course. We've learned over the last week or so that 10 days really that

his voice is seemingly the only one that matters, even though you get an awful lot of Fed speak, including as we speak. Philly Fed Patrick Harker, quote, surprisingly strong jobs. Data did not alter his view that moving to smaller interest rate rises is a good strategy for the U.S. Flag the prospect of rate cuts in 24 should inflation continue to ease. Remember, it was Clarida earlier in the week. I mean, you know, you had this this huge event with with Disney and Peltz, which was such a marquee event. Let's not forget that there was another big event, and that was Clarida on the network with Sarah earlier in the week, suggesting that you could cut interest rates this year. So that's the part I'm hesitant about.

I understand that, you know, we buy tomorrow's earnings today as investors, but I'm hesitant to fall into the trap that we expect cuts either at the end of this year or early next year because I will say to Jerome Powell's credit, he is on this quest to prove that he's more vulgar than Burns. And so he very clearly doesn't want history to repeat itself and have the backlash that goes along with saying he made it too accommodative too early. And so I think it's unlikely that we see that cut that folks are expecting. But I do think that the pause happens a lot sooner than maybe some bearish folks are thinking. But you can have the kind of market view that you do without a rate cut in calendar year 2023? I don't think that we necessarily have to have a rate cut.

I think we just have to have some clarity on whether we're going to get any more increases in the back half of the year. I think that is going to do a lot of the heavy lifting for the market. All right, let's expand our conversation now, bringing Kristen Bitterly of Citi Global Wealth and Kara Murphy of Kestra Investment Management. It's great to have both of you with us today. Kristen, I begin with you. Just look ahead to Tuesday. Does this all now, this early year rally that surprised a lot of people, does it come down to that print on Tuesday morning? Does it come down to that print? That's an excellent question. Look, I don't think that

the rally that everyone was applauding year to date really has strong legs, because when you look at the composition of that rally, what was really driving it? So you had some of the most heavily shorted stocks from last year, up over 60% this year. And when you really break it down, there's only 10 names that were driving about 50% of that rally in U.S. equities. So we were still playing defense at the beginning of this year. And I think the most interesting thing is when you look at these types of events and going into them, you don't need to either be all in or all out. A balanced portfolio in the month of January actually delivered mid to high single digit returns, depending upon your allocation. So you don't need to chase some of those returns that we saw from tech to still have some exposure and to actually still be defensively positioned going into events like Tuesday. I mean, to your point, Kristen, the 60

40 portfolio off to its best start since 1991 in terms of what you would consider to be the classic balanced portfolio. But at some point, it is going to be right to start playing some offense, as Malcolm was suggesting, is going to be right to start playing some offense, as Malcolm was suggesting, is going to be approaching soon. But what is that moment? What triggers it? I think that moment, Scott, so you said it earlier, we are not fighting the Fed. And so the Fed is still continuing on this path. And I think one of the things that we have to keep in mind is regardless of whether we get another hike, maybe two more hikes, we're still at much tighter financial conditions than we were a year

ago. The cost of capital is substantially higher. So looking at the rate hikes alone, we have 450 basis points. But the Fed has also taken out about half a trillion dollars out of the bond market, taken liquidity out of the market as well. And so when you add all of that up, it is harder to make money in these markets. And so while Q4 earnings were better than feared or better than expected, the one thing that I was paying a lot of attention to is it's all about expense management. So there wasn't a lot of discussion when you really look at the individual companies about the ability to grow top line revenues. It was more about expense cuts, expense management, which that has us cautious because that medicine is flowing through into

the economy and is flowing through into corporate earnings. So, Carol, what's your take, given what you've heard so far from our panel? So we think that the inflation story is largely over, and that doesn't mean that the Fed's job is all done. But clearly, the medicine of higher interest rates is working to bring down inflation. Commodities are down. We have a number of months of decelerating consumer prices. Inflation expectations are down. Yes, jobs and wage data still look fairly strong. So that tells us the Fed is not done. There is some risk there of continuing interest rate hikes. But the bigger question is the lagged impact of all that tighter monetary policy flowing into the economy. There is a side effect to all of that medicine that the Fed has given the economy. That is, final demand has to come down and

corporate earnings have to come down. Now, some of that is starting to happen, which is healthy for the market. If you go back to the summer of last year, folks were expecting corporate earnings to go up 10% in 2023. By the end of 2022, those expectations had moderated to 5%. Today, they're at 3% growth for this year. So some of those expectations are starting to come down. But ironically, it's happened at a time when the S&P has rallied. And as some of the other guests here today have said, you had a reversal of factors where last year you had more defensive names, more high quality names that were doing well. And then all of a sudden in the last couple of weeks, we've had the lower quality names that are really rallying. That tells us there's a little bit of too much excitement in the market

right here. But we're at least doing some of the work to have more realistic expectations for 2023. Malcolm, I'm reminded just what yesterday, if not day before. So Jamie Dimon reiterating can't declare victory yet on inflation. Right. Fed could go above five percent, could hold it for a while. Premature to think that this fight is is anywhere close to over. And maybe people are underestimating that despite the fact that the Fed appears to be near the end of its road. What do you think? I don't know. Jamie Dimon's the same guy that one day was telling us the bank balances were the strongest they had ever been. And the consumer has never been so healthy. They've never seen this many deposits on record. And then a week later telling us a tsunami was coming and everybody, you know, hunkered down.

And so I think, you know, we're getting we're looking for the extremes when we probably should be working with a little bit of nuance. But but but is that so much of an extreme to suggest that why should we declare victory yet? Well, I don't know that we necessarily going in our direction. I don't know that we necessarily should declare victory. I think that's a fair way to put it. But as Kara was just saying, I think the narrative around inflation is less biting as it probably needs to be going forward. I think we all know about the impact of inflation. We all know the work the Fed is doing to fight inflation and bring it down.

And I think it's probably going to be in our rear view mirror here pretty soon. And so we as investors have to start looking forward to what happens next, right? So the inflation narrative starts to fade away. And then what? What do we start to focus on then? Kristen, you know, as somebody suggested

in the prior hour at the very top of the show, the market has never bottomed in history when the Fed is in the midst of a hiking campaign, which it still is. But yet we're we seem to be a little bit quick to think we're about to take the next step forward. Yeah, so the equity market has never bottomed before a recession has officially begun. So if you're in the camp that you believe that all of this tightening could indeed lead to a recession, then there's more downside to come from here. I think what we're watching really closely, to just kind of pull this together, the Fed has a pretty straightforward mandate in terms of price

stability and full employment. And so depending upon which one they're more focused on, that's going to drive their trajectory. Right now, it's around inflation and looking at those cumulative actions, as we've said. But once we start to see some breaks in employment, and let me give you an area where we could see that. So residential construction, when we look at the impact on the housing market that happened last year, we saw a decline 30 percent, 40 percent, both in terms of new home sales as well as existing home sales. That has not flowed through into new home construction. And so naturally, those housing starts are going to come down, and they've started to come down in a more material way. When you look at the employment that could be impacted, that's 200, 300, 400,000 jobs. And those are the types of data points that

we're looking at when the Fed is going to have to start paying attention to the employment backdrop versus the inflation backdrop. Cara, you know, when Malcolm looks at what's happened in the market to start the year and let's let's focus in on tech, because I think it's the most controversial place to look right now, just given where it was last year and what it's already done this year. He makes the distinction between so-called speculative tech and my own word, legitimate tech, right? The Microsoft's and the Alphabet's, Apple's, Meta, et cetera. Do you and do you view those trades differently or similar in the way that tech has started this year? I do have a similar view. You know, if you go back to 2000 during the bursting of the tech bubble, there was the new economy, old economy.

And within tech, we sort of have the new tech and the old tech. There's some areas of tech, like Microsoft is a great example, where you have companies with really proven business models, very diversified different sources and products, and really strong cash flows. And then you have a lot of other sort of areas within tech, and I think crypto is another great example there, that are sort of going on fumes. You know, they're not earning money. Their business models aren't nearly as proven. And we've seen those that are really caught a bid more recently. And that's where I start to sort of question the quality of this rally. Malcolm, I'll leave the last word to you. The other great debate right now as to whether the U.S. is even the best place to be putting your money.

International markets are in favor from a lot of different corners. What about yours? I think that's a fair question and a fair argument. But I would just point to the fact that at least a third of the S&P companies that are based in the United States do business internationally anyway. And so you'd still get to benefit from a company like, again, to keep using the example of Microsoft or an Apple or Alphabet, somebody like that, who's got tons of international exposure that's well diversified that way without having to go all the way toward finding out what's the right international company to be invested in. So, you know, you could add that to your portfolio if you're an investor that wants to make sure you've got that fully diversified basket of ETFs or what have you.

But even having exposure to the top third of the S&P would get you significant enough international exposure. All right. That's going to be our last word. Good weekend to you. Thank you for being here. Ladies, to you as well. Kristen and Kara, I know we'll see you soon. We are just getting started here in overtime. Up next, the bull case for your money. Fundstrats. Tom Lee is here in the house.

He says stocks can rally 18% by year end. We'll press him on that next. We're back in overtime. Do not be fooled by this week's pullback. That is the message from one of Wall Street's biggest bulls, who says stocks can still rally some 18 percent by year end. Joining me now, CNBC contributor Tom Lee of Fundstrat Global Advisors right here on set with me. It's good to see you. Welcome back. Great to see you. That's the headline we're going to start with, 4,800 by year end. I want you to tell me how.

I think if I had to say market internals, it looks like it's baked in the cake in the sense that markets that make this much progress by day 26, 16 out of 17 have been over double digit returns and with an average gain of 26 percent. So I think that the markets revealed its hand from a fundamental perspective. I think the narrative is inflation is becoming less of a risk to the upside. And from a Fed's perspective, that's a more predictable Fed. I think that allows volatility to come down. I think multiples expand and earnings hold up nicely. And we get, you know, investors buying stocks, buying the dip again.

OK, so I love what the show before us did right off the top. The way they put the debate. Don't fight the Fed versus don't fight the tape. The Fed is still highly engaged. OK, you obviously are saying don't fight the tape. The signs in the markets at this point, at the beginning part of this year, tell you that none of the other stuff matters anymore. Inflation is coming down enough. There are too many good signs in the market to go back now.

It would be unprecedented, Scott. And just in terms of internals, because we've had such a breadth expansion and the market's producing this much upsides in such a short time, it's never happened in a bear market. But when investors say don't fight the Fed, I think that they're forgetting that there's there's not, Fed is not a binary mode. You know, Fed's not just cutting or they're hiking. There's also the Fed that's trying to gradually and be predictable in monetary policy. That's the Fed of the 90s. The Fed was raising rates really for almost 10 years, and the stock market had double-digit gains. So I think predictable rate increases is not the same as the Fed wanting financial conditions to tighten to lead to a recession.

What if they're still unpredictable? Right. That jobs report was pretty hot. What happens if the CPI is as well? What happens if subsequent inflation reads are not as good as we think they're going to be? I feel like things are still a little uncertain to be as Jamie Dimon would say the other day. It's too early to declare victory. You're day. It's too early to declare victory. You're right.

It's too early to declare victory. But there's a difference between the Fed reacting to every data point versus a Fed that wants to be predictable. It took three good inflation reports before the Fed even started to use the word disinflation. But from December to February, they went from zero citations of disinflation to 13. So if the February CPI report is a little bit hot, which we don't expect, we actually think it's going to be another downside read, so that'll be four to five consecutive months,

that's a predictable Fed. We had one somewhat hot jobs report. If the Fed starts raising rates there, that's a Fed that's reactive to data points almost backwards. But they're telling us to this point, aren't they, that they're going to be data dependent now? They're not on some predetermined path like some in the market had feared they were at one point. They actually suggest they're going to be data dependent. Yeah, but there's a difference between data dependent and data reactive. I think

the one thing that's going to be important for the Fed's reaction function to make sense. I think most of us would agree a lot of economic data that they cite, CPI and jobs reports, is backwards looking. I mean, for instance, high frequency data showed inflation was weakening since June, but the first good inflation report wasn't until October, and then it tanked since then. The Fed hadn't even talked about progress on inflation until February of this year, another four months later. I think if they're going to start to talk about jobs reports as the reason to move monetary policy, it is a little backwards looking because jobs is the last thing that reacts to monetary policy. may be backwards, but they're clearly focused on cracking the labor market. Right. The chair himself says it over and over and over again. I mean, service industry inflation

is still much too high for for the Fed. You also use the word unprecedented, sort of making the case that the markets come too far and the signs at this point within it are too good to turn back now. And you're a student of history because you always cite various points in history that have either backed up your argument or shot down others. But it is true that we haven't bottomed throughout history when the Fed is still hiking rates. Is that not a fact? That's actually, that's a misrepresentation of facts, actually, when people cite this. The best way to look at it, I think, is from the date of the first hike till the time they pivot, what is the maximum drawdown you had

during that period? Historically, it's 20 percent because markets usually rally first and then they fall, but the total drawdown is 20. This cycle we had 27%. It's only happened, I think, one other time. But they haven't pivoted. Well, my point is that by the time we get to the pivot, we could actually be rallying into the pivot, because we've already drawn down further than what you expect from the first hike to the pivot.

How many more hikes do you expect? It's unknown, but the break-evens are saying one to two more hikes and then a pause. I would say the bond markets had made these calls pretty right. Two more hikes isn't something that's going to cause the S&P to lose 20%. But see, that's the debate, right? The bond market has moved closer to the Fed after having that be the principal debate for the last couple of months. It's now the stock market that some would suggest is still delusional as to what lies ahead from an earnings perspective, economics perspective. How do you counter that?

Again, I just think people are force-fitting their perspectives. If the stock market believes the bond market, then the P.E. should be multiples of where the tenure is. The tenure is at 3.7 percent. You're still paying close to 30 times for a 10-year bond, and yet you have all these guests saying P.E. should be 12. If the Fed stops sometime this year because inflation progress is sufficient, I think that risk premia will collapse. I think the PE could actually get to where it should be, which would be above 20 times. So I think, again, I think everyone who thinks the Fed's trying to tighten financial conditions is 50 basis points of further tightening, justifying a 20 percent decline in stocks. I mean, I don't. I mean, maybe stocks are flat, but I don't think they give up the gains this year.

All right. Well, you think we're going 4,800. We will see. I appreciate you coming out here. Yeah. All right. That's fun. Strats. Tom Lee joining us right here at our HQ. Let's get to our Twitter question of the day. We want to know, do you agree with Tom Lee that the S&P 500 will hit 4,800 by year end? You can head to at CNBC Overtime. Vote yes or no. We share the results later on in our up next five-star fund manager, Kevin Simpson, ringing the register on two down names. He tells us about his latest moves next. Overtime is right back. It's time for a CNBC News Update with Seema Modi. Hey, Seema. Scott, here's the CNBC News Update at this hour. The White House says President Biden will travel to Poland later this month,

just days before the first anniversary of Russia's invasion of Ukraine. He'll be seeking to rally allies and maintain support for Ukraine's defense. The White House says Biden will also pledge additional assistance for Kiev. Earlier today at the White House, the president met with the nation's governors and said America's economy is growing because of bipartisanship. Biden said they have an opportunity to rebuild trust in the government. I just think that one of the things we have a chance to do this year is just prove that we're just a broken system, that we're divided, we're just based on extremes in both parties, and we can't get anything done.

And the FBI says it found one more classified document during today's search of former Vice President Pence's Indiana home. The search, done with Pence's Indiana home. The search, done with Pence's consent, took five hours. Agents also recovered six pages without classified markings. Scott, back to you. Seema, thank you. That's Seema Modi. Let's get back to the markets now. Our next guest making two moves and two down aims on a losing week for stocks. Let's bring in Kevin Simpson. He is CIO and founder of Capital Wealth Planning. Back with us once again. You're always busy in the markets. You know, I know you've you've largely been cautious, but it doesn't mean you're not doing things.

You sold Apple. Let's start there. It was called away. But just give me the perspective here on that stock. I know it's funny. We can't hold on to anything. I would think it was like three weeks ago, Scott, when you and I were talking about our most recent buy into Apple. And it was at one 126 and change. So you get a big surge of stocks up 15 percent almost in a month. And we don't mind taking profits into strength. You know, I came into this week thinking that markets were a little overvalued.

We didn't really have anything on the buy list at the moment. But taking a profit in Apple at this point was a pleasant surprise. And I'm hopeful that we'll have a chance to get back into it again at lower prices and and for those of you paying attention at home and keeping score this is the eighth time over the past 10 years that we've had apple called away so murphy's law usually goes a little bit higher but i think of the 25 forward pe we may get a chance to get back into it a little cheaper are you starting to worry at all that the market's going to get away from you a little bit? Well, you know, I have a mandate to

be fully invested. So we only have 11 percent cash right now. So we're 89 percent invested. So I'm always hoping when I have a little bit of a pessimistic view and a little bit of a half glass empty view, which has been the case for the past few months, I'm always hoping I'm wrong. I want Tom Lee to be right. But you don't think he is? No, I don't think so. Because why, principally? When you look at the multiples that he's talking about at 20, it just seems a little bit stretched to me with as high as interest rates are. And I also agree with him that 12 is a little bit too low, but maybe somewhere comfortably between 17 and 19. That's a little bit on the high end of the spectrum for us. So if you're pricing out multiples and you're looking at forward earnings,

forty eight hundred would be a stretch unless we get the pivot. If the Fed starts lowering interest rates, you know, then then, you know, get hop aboard the party train. The sky's the limit. I mean, we're looking at Apple and you mentioned where it was and it's had a nice rally along with, you know, all of tech for the most part. You're not a believer in that. Well, I was looking at the Nasdaq and thinking, man, they're really outperforming us here out of the gate. You know, the Nasdaq was up like 14 percent in January. But then it got me thinking about last year and how the calendar can correct a whole lot of mistakes. And if the NASDAQ was down 30, I'm just using round numbers, it's got to go back 60 percent to break even. So 14 percent is a little drop in the bucket. It makes sense to me. I think they were oversold.

There was certainly repositioning, tax loss selling, all kinds of things that would validate a little bit of a spurt here out of the gate. But things can't go up 10%, 14% forever to perpetuity. So I look at it as an opportunity to take a little bit of a profit. We love the stock. We don't always love the price it's trading at. And I think we'll have an opportunity to get back into it at a little bit better level. Merck's another one we need to talk about. Tell me what's happened here.

Yeah, Merck's interesting because we had half of our position called away today, half an hour ago, somewhat to my chagrin, but it's a stock we really believe in. So we only wrote a covered call on half the position, Scott. Merck and healthcare are a theme for us moving forward that we believe in very firmly. But here's a position, here's a name that's up 40% over the past 12 months. So when you get a run like that, it's okay, I think, to take a little bit of profit. And because we love the stock so much, it's OK, I think, to take a little bit of profit. And because we love the stock so much, we didn't want to expose the whole position to the possibility of a covered call, getting the stock called away, essentially selling it. So we were active and aggressive on the call writing. We had $107 call last week. We rolled

it down to $105 call, which ultimately took us out of the position today. But we brought in $4.50 in premium over the past two weeks. So our exit today is $109.50, a little higher than the price the stock closed at. And on any weakness, we'll be back into it. I mean, we love the name. We love the sector. And we feel very comfortable about the dividend, the dividend growth. But when you're seeing a rally and you're taking a little bit of a profit, you never lose money taking a profit. See, what I find so

interesting, though, Kevin, is that you're a nonbeliever on both sides of this market conversation, right? You don't believe the hype in this move in tech, but you also don't believe the weakness that we've seen thus far in health care, which is one of the worst sectors to begin this year. Yeah, well, I mean, I think when it's all said and done, we've got a little bit of a reversion to the mean. I'm just looking for a range bound market over the next really six to nine months. It'll it'll all come down to the Fed pivot. And why they pivot to they pivot because we we had a soft landing and everything worked and inflation is coming down faster than growth and they can take a victory lap. Or are they pivoting because they drove us into a recession and they've got to re-stimulate an economy to get us out of

it. So I think you called me perfectly. I mean, we're just looking for range bound trading and we'll sell into some rallies and we'll add into the pullbacks. But just the nuance and the ebbs and flows over the short term are fun to talk about. But the longer term landscape, I'm really bullish on equities. All pivots are not created equal. That's my takeaway in part from what we've just talked about, too. We'll see you soon. Kevin, you be well. Have a good weekend. I'll see you on the other side, I'm sure, at some point soon. That's Kevin Simpson. Coming up, tech's tough week. The sector's snapping a five-week winning streak. Is it just a blip or the start of something more? We debate it

in today's Halftime Overtime. But first, as we head to break a message from CNBC Control Room Operations Director Horace McBean as CNBC celebrates Black Heritage. What I'm really proud of is how Jamaican folk, we persevere. We know how to survive. We take the small amount of things that we have and we make really big things out of them. Working for CNBC has been great because it provides so much to me and you know, being a director now, I've grown up in this company and be able to have what I have today and be able to give back to my small community back home is just thankful and grateful for that. So always remember that when you make it and you become successful,

try to give back and give back as much as you can. In today's halftime overtime, tech's tough week. A number of mega cap and high growth stocks giving up some of this year's gains with names like Alphabet and Roblox falling nearly 10 percent. According to Jason Snipe and Bryn Talkington, those moves might be overdone. Search is obviously Google's war chest and they'll figure this out. I mean, you know, the AI move. I mean, I get it. But I think it is slightly overdone. They're doing some other things just in terms of efficiency and cost containment. I do like the Roblox platform. And I think Dave Buzuki has done a wonderful job just like continuing to gain traction. So, yes, as I am willing to hold this because I think ultimately they will make money.

They maybe get taken out at some point. Joining us now, Douglas C. Lane, Surat Sethi. He is a shareholder in Alphabet and Roblox. He is on the phone. Thank you for joining me. You are the winner or not so much this week because both of these stocks had bad weeks. Let's take Alphabet first. How concerned are you tonight? I'm not actually. I mean, the stock's back to where it was in the middle of January. And I think, if anything, Scott, this is a wake-up call. This is a wake-up call to Google management to say, you know what, you're getting fat and happy. We knew that on the pop side, and now we know that on the AI side.

And you've made a fool of yourselves, you know, on the live demonstration. So we know you have the technology there. We know you have everything there. So it's time to actually, you know, focus on the company, focus on AI, focus on your search, get it better. And I think, you know, Microsoft really is a shot across the bow. So the market value drop, I don't think was commensurate to kind of what happened, but, you know, these things happen to the market. And you saw what happened to Microsoft on the other side. In fact, you saw what happened other than today, but NVIDIA, you know, also went straight up. So I do think the opportunity there, you know, also went straight up.

So I do think the opportunity there, you know, Microsoft, Google is a core holding of ours. And, you know, I would take the opportunity if I get new capital to add to it at these positions. Well, you don't think it's a game changer moment? I don't. I don't. I think there's so much ahead. I mean, you know, even for Microsoft, it's still in beta. There's still a ways to go yeah it's going to be competitive but but Google has such a lead in search

and the other three other divisions that Google has in there including YouTube and and you know cloud are so profitable I think it's an opportunity for investors to go back in if they hadn't been in the first place what's your read on roblox fourth straight negative day It's the longest losing streak now since the fall. Yeah, I mean, I like the product. I like what they're doing. It's got a very strong balance sheet. They don't have any debt.

And they said this year they're going to be spending more money into improving their product. So I think in a time like now, at least for the next few weeks, with the Fed raising, it's not a stock, you know, if you're a short-term investor to be in, I like the long-term trend here. It's a one-stock position in our portfolio. You know we're value biased, but I think this one longer term is going to be quite fruitful for investors. It's just very volatile. But again, strong balance sheet, great product. They're spending money to grow.

In an environment like today, people want efficiency and cost cuts. So if they can show revenue growth and they can actually show some return of invested capital, I think they'll be okay. But this is a wild ride for the stock. You feel trapped in a name like this? I mean, I ask you that because I look at it's down 72% last year.

And yes, it's had a pop with the rest of those types of stocks to start this year. But I mean, I don't know. Do you actually think it's going to be able to get anywhere close back to where it was? I don't think you're going to see a three digit number in front of this for a while unless it gets taken out. You know, we did some tax law trading around this. It is definitely, you know, a part of our portfolio. It's not a huge part of our portfolio. It's a smaller position. But I do think the upside here for the next couple of years

is quite a bit if management gets skewed. And execution is going to be the word for these guys. They've got to expand their total addressable market and bring out good products. But it's one of these stocks that I think has growth in it, and they have the money to spend on it. They don't need to go to capital markets to do this for a long time. All right, Sirat, we'll leave it there. I appreciate it. Thank you, Sirat Sethi. Have a good weekend.

Thank you, sir. All right, still ahead, we're wrapping up another big week on Wall Street. Christina Parts and Nuvola standing by with your rapid recap. Christina. Well, the winning streak is now over for all indices, but one energy name is trading at levels not seen since the 29th president was in office. Can you name the year and the president without Googling or looking on the Internet? Details next. We are wrapping up another big week on Wall Street. Christina Partsenevelos is back with our Friday Rapid Recap.

Christina. Well, let's start with the bad news. All three indices posting losses for the first time this year as investors digested the most recent rate hike, economic data, as well as commentary from Fed speakers. So there are three important sectors, though, of the S&P 500 that really had a tough go this week. Communication services was down about 6.5 percent, dragged by News Corp and Live Nation. Those are the two weakest on the week. Then you had consumer discretionary down about 2%, tech down about 1%.

And those three sectors I just named make up nearly half of the entire S&P 500, which is why they're so important. Within big cap tech, you got Apple that broke its four-week winning streak. Parent of Google, Alphabet closed, what, almost 10% lower. And it was the worst week for Amazon since last November. There was a bright spot, energy. Oil prices continue to climb today after Russia said it would cut oil production by half a million barrels per day, or about 5% of output.

And this is going to happen in March. Names like Philips, Diamondback helped push the sector about 5% higher on the week, while Exxon hit an all-time high dating back to 1920 when Warren Harding was the president. Did our viewers guess correctly? I hope so. Scott. All right. Christina, thank you. Christina Partsenevelo. Still ahead, the big money on the big game. We are breaking down the staggering stats behind Super Bowl Sunday's supersized bets. Next. All right, the betting lines are being drawn ahead of Sunday's big matchup between the Kansas City Chiefs and the Philadelphia Eagles.

Our Contessa Brewer has been following that money, joins us now with the details. Tell us. Survey says 50 million Americans will bet in some form this Super Bowl Sunday, Scott. And FanDuel tells us that 78% of the money bet on the spread so far has come in on the Eagles. DraftKings tells us it's 70%. Philly is currently the favorite to win by one and a half points. But this is so interesting.

They moved from underdog status right after the odds were released, after a slew of big bets came in on the Eagles. So now they're the favorites. The over-under currently stands at 50 and a half. And the most popular predicted score, 37-34 Eagles. Now, while Chiefs tight end Travis Kelsey is the favorite for MVP, BetMGM reports that somebody put down $2,500 on Kenneth Gainwell. He's the Eagles running back. That would mean that person wins down $2,500 on Kenneth Gainwell. He's the Eagles running back. That would mean that person wins $312,000 if it happens.

And also somebody bet a million dollars on the Eagles money line, they would take home $800,000. What do you think of that bet? If you're more into the halftime show than football, there's an over under on the number of songs Rihanna will sing. And one more for you. Rapper Drake is grabbing headlines, tweeting out all his receipts from the sportsbooks. He's plunked down 700,000 big ones on the Chiefs, Scott.

So the prop bets, I mean, the prop bets, as you know, have become so much fun and equally as interesting as betting on the game itself. Whether it's how many songs or what the first song is going to be, who's going to get the MVP. And the interesting thing about the prop bets is that you're not gambling against the sharps, right? These guys who know so much about sports and they've got all the computer algorithms and they've designed it, they have the edge, even against the sports books. You know, whether coin toss is heads or tails,

and right now the favorite is that it's going to be tails, that's really just chance. It's all a matter of luck. And I mean, even somebody who doesn't follow sports can guess that one. 78% on the Eagles, though. That jumped out at me. All right, Contessa, thanks so much. Have fun.

That's Contessa Brewer. Sure. All right, last call to weigh in on our Twitter question. We want to know if you agree with Tom Lee's call from earlier in our show that the S&P will hit forty eight hundred by year end. You can head to at CBC Overtime vote yes or no. The results plus Santoli next. All right. So the results of our Twitter question, we asked you if you agree with Tom Lee's call that the S&P 500 will hit forty eight hundred by year and the majority of you saying no. I mean, still, you know, kind of close. We'll call it that. Santoli joins us now with his last word. It's a bold call from a person who doesn't shy away from making them, Michael.

Absolutely a bold call, although very well within the range of the kinds of things that happen in markets. I always talk about how no individual calendar year, rarely do you get the average historical return. If you have an up year, up years are more likely to be 20 percent than single digits. So that's just historical. That's not based on the current conditions. And I would not myself, with confidence, project that we're going up 17% in less than 11 months, which is what would be required to get back to the all-time highs. But it's within the realm. I think you probably need the immaculate

disinflation scenario to play out. But, you know, you never know the plot points in advance of what drives, you know, a move like that. For sure. Is CPI on Tuesday morning, do you think, the real moment of truth for this early year tech trade? Yes. I mean, it's the one that's foreseeable, the one right in front of us. We're a little bit too far from the next jobs report. And I don't even think necessarily

just for the tech trade. I think just for the general mood of the market, which has already tried to set as a premise that inflation is something that is already more or less going in the right direction and we don't have to worry about it so much. It's interesting this week and in the past two weeks, really all the data have been on the hot side in terms of the economic activity. So we're getting more confidence that the economy is stronger than the Fed's really acknowledging right now. So, yeah, I do think there's high stakes there. What's interesting to me, though, is you can already see the market getting hedged up in advance of it. And this happened before the December CPI as well. You know, you basically have everybody already, you know, kind of bidding up

the options and trying to bring risk down a little bit. So it's hard to predict what kind of reflex move we get off of even a surprising number on Tuesday. I feel like we are. We are. You know, once again, I've looked at the bond market and treasuries today at least six or seven times to see where the 10 year was. Yeah. And it's you know, it's been rising again. It has been. I mean, the December highs in the 10 year yield, you know, in the 480. So we're not that far away. It seems like we put in a pretty good low. The yield did not want to go below 3.4 a few times in the last several months.

So obviously, you got to keep an eye on it. There's always something to worry about. You got to look left and right. It's a two-way street right here. So as we cross, you can't just be looking at the growth picture and the Fed. You have to watch the yield side too. So that's where we are and that's where we've been.

All right, great stuff. Good weekend to you and all of you. Fast Money begins now.