Closing Bell - Closing Bell Overtime 2/15/23

Episode Date: February 15, 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, Sarah, thank you very much, and welcome, everybody, to Overtime. I'm Scott Wapner. You just heard the bells. We're just getting started from post-night here at the New York Stock Exchange, and we have an earnings palooza tonight. Cisco and Twilio, Shopify, Roku, and Zillow all reporting any moment now. Our team of reporters standing at the ready. You'll hear from them and see the stock moves as they happen, as we always show you.

We do begin, though, with our talk of the tape, just how offsides many investors might be in this market, with hardly anyone predicting the types of stocks that would lead the way so far, whether it's some of the names above that are reporting in moments or others in the consumer space, for example. The real question is, will it last? Let's ask Dan Greenhouse, Solus Alternative Asset Management's chief strategist with me here at Post 9. It's good to see you back. Thank you, sir.

Great retail report. Rates go up 10 years at 380, and the NASDAQ leads? What? Listen, Mike was talking a little earlier about how sometimes the relationship between the NASDAQ and rates can break. And on any given day, that's the case. But really, really strong retail sales report and really impressive performance on the part of large cap tech, large caps in general, in the face of what has been a borderline relentless move higher in interest rates. I want to read you something that J.P. Morgan's Marko Kalanovic wrote late this afternoon

about this very issue. The title, Rates, Equity, Disconnect, Geopolitics, and Volmageddon 2.0. He says, quote, there's an old adage, don't fight the Fed. But this behavior is not just fighting, but also taunting the Fed with crypto, meme stocks, and unprofitable companies responding best to Fed communications. The risk-reward of holding bonds at this level of short-term yields looks better than equity than at any time since the great financial crisis. But take this issue. It's almost like stocks are whistling past the graveyard kind of a statement. What do you make of that? Yeah, I mean, listen, I haven't read Margo's notes, so I can't comment on the specifics of it. But I think clearly when you look at the market on an industry level basis,

the performance is, I guess, obviously on a percentage basis, some of the garbage names, if you will, are doing quite well. But it's the semiconductors, it's the builders, it's some of the apparel and retail names. Those are the type of cyclical risk on names that you'd want to lead the market higher. And so that's positive. On the other hand, and I know other guests have made a similar point, at the end of the day, the Fed has raised rates dramatically. They continue to raise interest rates. And I don't think the full effects of those rates are fully being understood or at least appreciated by a lot of the market. I want to know why these stocks are going up. And let me just tell everybody. So Roku's out and we have a whole flurry of stocks that fit into this category that

are reporting in moments. It's Roku, it's Twilio, it's Shopify, it's Zillow. It's all of these stocks that have done so well to start the year. And forgive me, I'm just typing in the names as we speak because I want to see when these reports hit. Roku's out. We're going through it. I see a stock that's jumping, and you do on your screen as well, near 19%. So our reporter's going to come on in moments. We'll continue to watch the stock.

Why is this happening? Why are these stocks leading the way after being the losers of last year? Well, full disclosure, since we don't own any of these names, I don't want to get too deep. Good, then you even have a better perspective. You don't have to worry about anything you say. But in the case of, well, I can't really say anything. But in the case of like a Roku, I mean, obviously, a lot of these names are down 50, 60, still 50, 60, 70 percent off their highs. Expectations have been beaten down to a degree or even a less bad report.

We know that the digital advertising space where Roku is involved isn't great. So if they have some commentary that might be a little better, it's easier to outperform and jump 10, 15, 20 percent when your P.E. ratio is 30, 40, 50 percent off its highs. But what about the positioning issue here that nobody, in quotes, was positioned for this coming into the year? It's like, okay, what worked for you in 22 is going to work for you in 23. The first half could be dicey, and then we'll see what happens. In fact, it's been literally the opposite.

I mean, late last year when we talked when we were out in Englewood Cliffs about how the first half of the year increasingly looks like it might be better, the odds of a recession being pushed off at least in the second half of the year, that was clearly a minority position to the extent that you're making the argument that people were not positioned for a risk-on rally in the first quarter. They weren't positioned for a risk-on rally in these names. No, that's right. And the data bears it out. And so, again, between the depth of the decline from the high and the positioning data and a marginally, I assume,

better than expected report, at least in the case of Roku, based on the performance, you have you have a 15 percent gain. All right. Let's get the specifics from Julia Borsten here as to why this stock is jumping better than 14 percent, Julia. Better than expected results on the top and bottom line, Scott. We have revenues of $867 million, beating estimates of $802 million. Earnings, a loss of $1.70 per share versus $1.73 loss that was expected. Guidance also coming in strong. The company is saying it sees first quarter revenues of $700 million versus the $691 million that analysts had expected. And then that active account number, the company is saying 70

million active accounts. That's the number they actually announced in January. But in this letter to shareholders, the company says, despite a difficult macro environment, we made excellent progress building out our platform brand and industry leadership with the addition of nearly 10 million new active accounts. And they talk a little bit about the first quarter outlook, saying they're committed to a path that delivers positive adjusted EBITDA for a full year 2024. So talking about seasonality and some broader challenges here, but committing to a path towards profitability, Scott. All right, Julia, thank you. You come back on as needed. So high growth, unprofitable tech, one for one in overtime. We'll see what happens as we're still waiting on Twilio and Zillow and Shopify. Let me get to the other part of what Marco was talking about with you,

this rates equity disconnect, the idea that rates have moved closer to where the Fed is talking about, but that the stock market continues to move higher. Do you see it as a disconnect too? Is there, does the stock market need a bit of a reality check or not? I want to be careful how I frame this. I think rates should be higher.

The two year is not right. That's been something that a lot of people, myself included, have mentioned, and I think that's still the case. It is unusual to see the two-year meaningfully lower than the Fed funds rate unless you're close to a reduction in rates, which we are not. So I think the two-year should certainly go higher. You could probably make the case that long-term rates need to be higher as well. Are equity markets ignoring that? I mean, listen, it's very difficult. This is an incredibly confusing environment right now. That's right. Because on the one hand, you can say, yeah, they're ignoring this. On the other hand, they can look at the NIHB survey today, the National Association for Home Builders, where sentiment improved for the second month in a row. You can look at the retail sales report, which was a blowout. Obviously, we don't want to make large

decisions from one report, and we should smooth the last few. But the consumer continues to hold up well. So if you're an equity investor or if you're the broad market, you have meaningful positives on which you can latch, including something we mentioned previously, the lack of a recession in Europe and the reopening in China. All right, we've got another stock popping in overtime on earnings. It's Cisco. Frank Holland, what's the story here? Way there, Scott. Cisco shares up just about 8% right now after beats on the top and the bottom line.

Looking into the numbers right now, one thing here that appears the company missed when it came to margin for both product and service. We are still looking through the release, but we are seeing that right now that Cisco is increasing its dividend only by a penny, but it is a sign of confidence in its business, increasing that dividend by a penny right now. We a sign of confidence in its business increasing that dividend

by a penny right now. We're also looking at the guidance right now, just going through the numbers right now. EPS guidance, you know, between 285, 285 EPS guidance right now, looking at that right now. And we'll get back to you with more details on that. But again, shares of Cisco up 8% after beats on the top and the bottom line. However, their margin missed. I was talking about this earlier today, a sign of possible supply chain issues that were a plague in this company a couple quarters ago, still continuing.

Back over to you. Yeah, Chuck Robbins, the CEO, has been real frank about that too on this network about issues in China, supply chain, but the street seems to like the results. We'll have to hear from the call and we obviously are gonna hear from him tomorrow too. Let's expand our conversation,

bring in CNBC contributor, Victoria Green of G Squared Private Wealth and Keith Lerner of Truist. It's good to have you back with us. So, Victoria, this issue, is the market ignoring risks that are out there, or is this move justified? No, it definitely is ignoring the bond market. It's ignoring the Fed. It's ignoring fundamentals. And it's ignoring some of the economic data. All it's focused on is rising on technicals. And this does happen.

Early innings of a bull market, you always see the market run without any fundamental reason why. So if you're looking at the market as a fundamentalist, as a macroist, if you're looking at company fundamentals, earnings haven't been that great. But the technicals support this rally. And so you have to look at this and say, right now we're consolidating 4,100, 4,200. But it looks like this rally does have some legs and you can't fight some of the tape right now. The Fed is saying that they're going to be hawkish, but the technicals are saying this rally is in. And I really don't think we're going to retest those October lows anymore because we've hit some really important technical supports. So wait a minute.

You just said the market's ignoring the fundamentals. That's number one. I mean, the retail sales report, do you see that? I mean, the fundamentals of this economy aren't as dreadful as some people would like you to believe. I mean, parts of it might be, but the consumer continues to hold up strong. And the other thing you said, where I almost jumped out of my chair, because you've been more negative than a lot of others, the early stages of a whole market. Is that what you think we're in now? I know. I know. I know. Hold your beer. It's OK. It's going to be OK. Yeah, I think you actually have some strength in this rally. It happened in 2009 when you hit those March lows. It happened in the March 2020 lows. These early innings are never supported by the fundamental data. And I'm

talking more company fundamentals. If you look at key for earnings, especially mega cap tech, or some of these companies that are rallying, the numbers themselves were not phenomenal. They rallied, especially like a Facebook, they rallied on, hey, we're going to cut expenses, tighten our belt, do more with less. So it's not necessarily that the company fundamentals or the multiples came low enough to make them attractive. It's more that the market is saying, hey, we think there's better days ahead, even if the Fed, and that's what I think is setting up this major clash. We're not going to know till May or June if the Fed puts that third hike in in June. So you have some room for this to run. You have strong economic data in some parts. And so you have these conflicting signals. The only thing that is speaking to you very

strongly are the technicals of this market. You had a golden cross, 50 day over the 200 day. And you hit a couple different levels with that 4,100 resistance that's become support. So you look at some of these markets. And again, you're not seeing companies necessarily have the numbers to support it. Like, let's say, Oroku. They still are operating a loss. And they're gangbusters aftermarket because they beat low expectations. I'm looking at Zillow popping, too, which means those are out, which we're going through as well. So we might have yet another one in this group that is popping on earnings. We'll get down to that in a second. You wanted to say what?

You look like you want to say something. Early stages of a bull market. I've been on with Victoria a couple of times, and I agree there's a bit of a contradiction there. I do agree in the early stages of a bull market, equities rally without the fundamental support. That's why you see valuations expand, and that's why the market bottoms before EPS does. And if this is the beginnings of a new bull market, then that would all be accurate. But I don't understand how one would be bearish if you, and I don't mean this disrespectfully, of course, but I don't know how you would be bearish if you thought we were at the beginnings of a new bull market. All right. Well, let's go to Diana Olick because Zillow is out. It's popping. What's the story, Diana?

Well, Scott, a solid Q4 beat for Zillow with adjusted EPS coming in at 21 cents a share versus estimates of 7 cents. Revenues also beat at 435 million versus estimates of 415. Guidance, though, was a little bit weak, with Zillow looking toward Q1 revenues of 420 million at the midpoint versus estimates of 429. Q1 adjusted EBITDA of 48 to 63 million versus estimates of 88. Now, on the failed iBuyer program we all talked about so much last year, all the homes are now sold 10,000 down to zero. And from the letter to investors, they said housing affordability challenges remain front and center as we begin 2023. But as we head into 2023,

we are seeing some early signs of stabilization, albeit at a meaningfully subdued level. We aren't out of the woods yet when it comes to the macro economy and how it may affect the real estate industry. Things continue to be foggy and we can't control what the housing market does. Scott. All right, Diana. So we got high growth, barely profitable in terms of this one with a beat. Stocks running. Diana Olick, thank you for that. Twilio. Frank Holland, what do we see here? Well, Scott, right now you can see Twilio shares are up

more than 9% right now. Revenues were in line. We're seeing adjusted EPS of 22 cents, but that we're not comparing it. However, analysts did expect a loss. We're also seeing more details on Twilio's reorganization plan that they announced just on Monday that includes a 17% workforce reduction

Also dividing the company into two separate business units Twilio communications and also Twilio data and applications the company also announcing a $1,000,000 share repurchase program again shares in Twilio now up more than 9% after revenues in line adjusted EPS of 22 cents. However, we're not comparing that we do want to tell you that analysts were expecting a loss. Back over to you. Yeah, they were expecting a loss of 9 cents. I mean, you're getting a pop in that stock, though. Frank Holland, thank you very much for that. Keith Lerner, my turn to come to you now.

You selling into this strength we are witnessing before our very eyes here in overtime? We are. We actually have used this recent rebound to reduce equities and increase cash a little bit. And listen, I come from a technical background and I understand, I have sympathy for the technical case. We've seen breadth brought in quite a bit. We've seen the market bottom last October on that CPI print that was a generation high. So it all makes sense from that perspective. But I think what's holding us back to kind of validate this move is that, you know, as we look forward right now, the market on a valuation basis is around 18 times. And even if the forward estimates stay where they are, and let's say we give the highest valuation over the next decade, the highest we can get to using math is about 4,300. As mentioned earlier, if you have a 4% or 5% Treasury bill, that's the equivalent of getting to 4,300 or slightly above that

with a lot less risk. And the one thing with the technicals, it is true that you also, the early stages of a bold market, low-quality rallies, junk rallies. But we're just skeptical based on where rates are. And we think the Fed will continue to press against this market over time. And we still go back to the reverse temper trade that we've talked about in the back houses, that if the economy stays strong, the Fed will continue to keep rates high. And that's a hard environment to see multiple expansion. On a short-term basis, Scott, it's about sentiment. It's about positioning and unwinding.

That can go further than any of us think. And that can be uncomfortable. But we also have to remember, what I've seen historically, you keep creeping up. And then in like a week, you could have all those returns come back. And if the only thing you're going on is just the technicals, then when those prices start moving down, people will switch their positions quite a bit because it's not folks that really have a strong conviction in the underlying fundamentals. So that can turn pretty quickly.

Yeah. And if I could just pivot off what Keith had to say, it wasn't that long ago, I'm sure Keith and Victoria both remember, where people were saying that there's never been a 50 percent rally off the low that's eventually retraced. And that's exactly what happened for the first time ever that this technical observation was refuted. So I am inclined to agree that while the technicals right now, and again, I think an important point to make here is the S&P 500 got something like 6% above its 200-day moving average, a level that in previous bear markets had never been achieved without

the end of the bear market. While the technicals should give you some confidence, at the end of the day, what differentiates this market right now from previous bottoms is the Fed had already cut for 500 basis points. You already had had a recession. You'd already had a deeper earnings recession than what we've had, at which point companies, when they start to give you some light at the end of the tunnel, so to speak, you've already suffered meaningfully more weakness than we already have. Let's just throw history out the window sometimes, too, that not everything has to correlate with some other moment throughout our history. I mean, if we truly have bottomed, well, I've heard people in the last couple of

weeks come on and say, well, the market can't bottom because the market's never bottomed throughout history while the Fed is still hiking rates. Well, if it bottomed in October, that's exactly what would have happened. Which is why so many people would say that this is, myself included, this is as confusing a market as I've been in, I think, in my career. Which is why not many people are positioned for the Shopify's of the world and all these names that have been running. Speaking of, Kate Rooney, Shopify is out. Oh, but it's bucking the trend here in overtime. It's down. What's going on? Hey, Scott, so it looks like it might be the Q1 guidance here that's weighing on Shopify. We'll start with the top

and bottom line here. EPS, 7 cent profit despite the street expecting a loss here. Analysts were looking for a 1 cent loss, 7 cents there. Revenue coming in at 7.3, excuse me, 1.73 billion. That was up 26% for the quarter. Better than expected there. Gross merchandise volume, that's a key metric here for Shopify. Came in at $60 billion. That was better than expected. It does look like Q1 revenues are going to be up in the high teens versus a 19.6% expected growth rate. A statement here from Shopify's president talking about persistent macroeconomic challenges and some of the dynamic changing e-commerce landscape. We heard the same thing from PayPal and Amazon, some of the slowdown there. Stock had been higher heading into the

print. It looks like it's down. It's got more than 3%, 4% now after hours. Back to you. It's only up 37% over the last month. It's okay. Okay, Rudy, it's all right. We'll continue to follow that. Thank you very much for that. So, Victoria, given your view, if this actually is the early stages of the next bull market and your opinion of things has clearly changed a bit, are you looking to buy stocks now? Yeah, I am. I'm looking to add on any dips. I still look at quality. I'm boring. I can't buy the junk. I'm sorry if you don't have earnings. I just can't touch you. I know they're running and there's some things that are up 40, 50 percent here this year. But I still want quality and growth of earnings and a reasonable balance sheet.

And the problem is sometimes being rational when the market is irrational is just not a fun place to be. And you have to trade a little bit right now without some of the data to support it. If you were to say, oh, but multiples are high and E. And are we going to get this EPS recession a little bit? You are taking a leap of faith right now that the technicals are going to guide you at least short term until we get the Fed that says, hey, yeah, we are going to hit that five and a half, six, dare I say that guy that called that 8% Fed funds rate. You know, that's when the market can disconnect. I think you have to look at buying right now. You don't want to do FOMO. You don't want to put it all in.

You don't want to chase too hard. But you have to be reasonable. Look to buy dips. I think we're going to, if we do consolidate and retest a little bit lower, I think it's going to be a higher low. I think you've got some good floors in there. So I do think investors need to consider what their stock positions are and take a reasonable amount of risk. Every beginning rally is a hated rally, and this is a much hated rally because it doesn't make sense. It's irrational, but it can stay irrational longer than you think it can. So, Keith, at what point do you say, you know what, I think Victoria might be right? What do you need to see to move to that camp? Yeah, well, it's a good question. One of our key theses this year, because of how unprecedented

this environment is, to keep an open mind. And I think the things we'd be looking for is, one, we want to see earnings revision start to move up. And the other thing is, I do think broader tech, because, you know, if you think about discretionary tech and communications, that's more than 40% of the market, you need to see really improvement in earnings there. But I will say, you know, when I looked on tech just before this call, you know, tech's rebound has been all PE expansion. The relative valuation of premium for tech relative to the market is around 30 percent. That's around the highest level over the last several years. So you're really baking in a lot of good news for that area. But again, to be fair, I mean, new leadership in that area and earnings revision

would be two of the things we would be looking for to become more positive than relative today. But again, I think to get positive beyond just the technicals, you have to make some assumptions. Either one, we're going to treat it at a new paradigm as far as valuations, which we've only seen the last 30 years during the tech bubble or during the pandemic, or the earnings will be much stronger than the forecast. And listen, a lot of folks are thinking earnings are going down. I mean, just earnings being flat would be a change in the narrative overall. You know what? So last word to you, Dan Greenhouse. Keith makes a good point. It has been multiple expansion. So you're either going to have earnings needing to beat expectations because a lot of people still think they need to come down more.

So earnings need to be good and rates have to stop going up. Right. I mean, that has to be part of that story. Well, listen, two things. One of two things are going to happen. Either this is the start of a new market and earnings will start to inflect sometime around the second or third quarter. And in retrospect, you will look and say, oh, this made perfect sense. The technicals bore it out, and now the fundamentals are as well. Or, as virtually everybody in the bearish camp articulates, 500, 525, 550 basis points of Fed rate hikes. Right, eight hikes and counting.

Are going to eventually have a deleterious effect on the labor market, which is going to weaken consumer spending, the balance sheet of which will be depleted by the end of this year. And then the broader economic weakness beyond housing and manufacturing will materialize. And sometime in the back half of the year, equities will sniff that out. Hence the resurgence to the downside. All right, guys, that was fast and furious and it was action packed. I enjoyed the conversation. Thank you, Victoria, Keith, and of course, Dan Greenhouse with me here at Post 9. Let's get to our Twitter question of the day. Now, we want to know which sector will be the top performer this year.

Technology, consumer discretionary, which is leading now, industrials or health care. You can head to at CNBC Overtime on Twitter to vote. And we will share the results a little bit later on in the hour. We are just getting started here in a very busy overtime. Up next, we're trading today's resilient retail data. The number one retail analyst, Matthew Boss, is breaking down his top picks for that space. That's after the break.

We're live from the New York Stock Exchange. Overtime is right back. We're back in overtime. Retail seeing a really nice rebound to start the year with monthly sales jumping 3% in January. The XRT retail ETF pushing higher and adding to the sector's outperformance over the past few weeks. Let's bring in top-ranked retail analyst Matthew Boss from J.P. Morgan. Welcome back. It's good to see you again. Thanks for having me on, Scott.

So I'm going to read something you told me after the December retail sales report, okay? You said, quote, retailers and the consumer picture in the front half of 23 is going to be a pretty rough ride. The back half of the year, I think, is where there's potential opportunity on the horizon. Man, I mean, have you underestimated, like many people have, the resiliency of the consumer? Look, I think the consumer is resilient. You have to be careful with January. There was a tremendous amount of promotional activity. You also had perfect weather.

And third, you lapped Omicron in terms of a year-over-year basis. I think the three-year picture shows a resilient story, but not quite the same strength, meaning January three-year basis was more or less in line with November, better than December, slightly worse than the October through or August through October period. So I think what you're seeing is smoothing out the data. You're seeing a resilient consumer. You're seeing a stable consumer. But I think there's a lot of different puts and takes as we move into 2023. That's fair.

I mean, nonetheless, though, the consumer is hanging in there. I mean, I guess the biggest question is how long can it last? Yeah, look, I think in terms of the back-end weighted year, you know, what we've pointed out is input costs. That's a back-half weighted opportunity. The freight side is a back-half opportunity. Look, the consumer in the second quarter and into the back half of the year, that's where they were really changing their budget tied to some of these inflationary pressures. So look, I do think the

shock factors year over year, gas prices, which last year skyrocketed as the year progressed, food inflation. I mean, this is opportunity. That said, the flip side is middle income and the aspirational consumer, the employment picture is not quite what it was a year ago, as nearly every company comes on your show and talks about layoffs. So I think there's puts and takes. Our view is value, convenience, off-price retailers, I think, stand at the top of the list, and best-in-class brands, the Nikes of the world, the Lulu lemons. I want self-help and I want larger total addressable markets. That's where I'd rather focus on the fundamentals. I mean, tapestry is one of your picks. It's one of the best performers year to date. I was looking at a list of discretionary names that had done well to

start the year. It's on it. So who gets squeezed? Then the middle high end does well, lower end does well. And then what does it mean for everybody else? I think it's the middle, meaning, look, our approach so far into into 23 is more of a barbell. Low income consumer has a job. Their wages are up mid teens relative to 2019. I think that consumer stable. They rebudgeted, like I said, middle of last year. Some of the shock factors are not quite as aggressive in 23, likely as they were in 22. High end has the nest egg. Luxury, I think, is fine. It's the middle income consumer that I think did not have these wage increases. If anything, is facing the potential of layoffs. That's where we're seeing a lot more pressure. That can create trade down, though. That's why I like these off-pricers, TJX, Ross Stores, Burlington.

That also creates value focus, which I think is your dollar stores, Dollar General, Dollar Tree. It's those middle-income-focused retailers that I'm worried that you do not get the high-income trading down like you did in 08-09. And those retailers are searching for the catalyst in terms of that incremental dollar. Who's the best name in your universe that nobody talks about from your outperformer overweight list? The best one that no one talks about? Look, I think as we move throughout the year, one of the trends that's going to come back strong is casualization, athletic, active. So there was an overhang on

this coming out of the pandemic and that people said that, you know, people were stayed at home and that was an over pandemic bot category. I think you're seeing a normalizing trend. Nike and Lulu, I think, will be strong beneficiaries, multi-year of a trend towards this casualization, including return to work in terms of what's acceptable today on the lifestyle front that maybe wasn't three, four, five years ago. So Lulu, which is flat nearly two years now of performance, Nike, which went through issues tied to the supply chain. I think those could be strong performers from a multi-year basis, which backs into my buy the best in class brands here for the multi-year. All right, good stuff.

Matt, I appreciate your time very much. That's Matthew Boss, JP Morgan. He's the number one ranked retail analyst on Wall Street. Time for a CNBC News Update with Bertha Coombs. Hi, Bertha. Hey, Scott. Here's what's happening at this hour. Within the last half hour,

FDA advisers recommended that Narcan, the nasal spray used to treat opioid overdoses, should be available over the counter. The final decision is expected to be made at the end of next month. America's red ink is getting deeper. The Congressional Budget Office is now projecting the U.S. will add almost $19 trillion to its national debt over the next decade. That's $3 trillion more than the previous forecast, as tax receipts are increasingly unable to keep up with rising costs for Social Security, Medicare, the military, health care for veterans and interest payments. Responding to questions, a question from CNBC's Becky Quick at the annual meeting of a company where he is a director. Charlie Munger, Warren Buffett's longtime business partner, said he thinks it's very important, but there is what he called a lot of crazy hype on the subject. Not sure what the subject is. Meantime, Raquel Welch,

described by her management company as a legendary bombshell actress of film, television, and stage, has died at the age of 82 after what is being called a brief illness. She was an icon indeed, Scott. Back to you. Yep. All right, Bertha. Thank you. That's Bertha Coombs. Let was an icon indeed, Scott. Back to you. Yep. All right, Bertha. Thank you. That's Bertha Coombs. Let's get back to Frank Holland. Has

more for us tonight on Cisco. Frank? Well, hey there, Scott. Shares Cisco up just about 8% right now. Again, a beat on the top and the bottom line profit, two cents above estimates. I do want to correct myself for the OT audience, however. Earlier, I said that Cisco missed on margin. They actually beat on margin, gross margin of 63.9% compared to the estimate of 63.4%. Again, also raising their dividend by a penny. Also want to mention they're raising their full year guidance. Full year guidance now in a range of 373 to 378 versus the estimate of 3 and 355. So again, a beat on margin.

I do want to correct myself for the OT audience, but beats on the top and the bottom line, and also raising the dividend by a penny, also raising full-year earnings guidance. And tomorrow, CEO Chuck Robbins, he's going to be right here on CNBC on Squawk on the Street at 9.30 a.m. discussing this report, and I'm sure a number of other things.

Scott, back over to you. Yep, no doubt. Look forward to that interview. Thank you, Frank Holland. It's been a busy afternoon for earnings. Up next, we are breaking down Shopify's results. That stock is falling after just reporting a few moments ago. We bring you the instant analysis from tech investor Eric Jackson just after the break. Overtime is right back. All right, we're back in overtime.

Take another look at Shopify shares down by more than 6%. The company reporting a beat on the top and the bottom lines. They did give first quarter revenue guidance that was below Wall Street's expectations. The stock is a top holding for EMJ Capital's Eric Jackson. He joins us now on the news line. I mean, you had the only one tonight, EJ. That's down in overtime. What do you make of these earnings? Actually,

I was pleased, Scott. I mean, I think the name of the game for Shopify in 2023 is going to be price increases and profitability. And in fourth quarter, they had a big beat on the adjusted EBITDA for the quarter, which was a surprise. I think they're going to do the same for this entire year. And I think they're just being conservative with their Q1 guidance and their full 2023 guidance. So they took their medicine in early on compared to a lot of the tech companies. They laid off 10% of their staff last July. They have a new CFO that started back in September, a new COO as well. So they're focused on being efficient, something they haven't been up until now. They've just been a growth, growth, growth company. So, you know, I mean, I think, you know, we'll see how the call goes.

We'll see how it trades tomorrow. But I was pleased with the results. I mean, is it conservative or simply just the reality of where we are? That's the kind of decision that you have to make. And I guess the pressure is a little bit higher to make it when you have a stock that's up 44 percent this year alone. For sure, they've had a great run. I think that people have been sort of getting back on board. They haven't been well loved by the street. There's not a lot of buys on the name. And so I think people sort of are now adjusting to, OK, we know this stock got washed out in 2022, but, you know, where can it go from here? I think people are going to continue to warm to it,

you know, as the year goes on. You know, put the drop in context. I mean, they had a phenomenal day today. So they're basically back to where they started this morning. So, you know, I'm not too worried about it. Big thing I'm going to be watching as this year rolls on with them is, are they adding merchants back on the Shopify platform? In 2022, they saw the first shrinkage with merchants year on year for the first time. So can they start with some of those small, medium-sized businesses back? And you've told me in the past, I think as recently as, I don't know, a handful or so, 10 days ago, that you think this move in these, you know, higher growth, more speculative, no earnings or little earnings names, the move is justified. And you really still believe that? I think those were the most, they've gone through the most pain for basically two years. So they were the first to kind of go down and show the signs that inflation was really getting

out of control two years ago. And therefore, so much pain has been administered to them, and the multiples have been compressed so much that I think there is a logic and that they will be, you know, there is a justification that they would be the ones to kind of show us the way upwards out of this kind of two-year period. So I think it's a real rally. It's different than last June's rally. And, you know, we've moved past the Fed talk from a few days ago. We've continued to see tech unshackle itself from Fed commentary and interest rate concerns. Interest rates have moved up, and yet tech has continued to have a great run over these last, you know, five days or so. No, I hear you. I mean, I said at the top of the show, right, you've got a 10-year at 380.

And what happens? NASDAQ leads the way today, and many of these stocks keep moving higher. And we'll see if this one reverses as well. Eric, I appreciate your time so very much. That's Eric Jackson, EMJ Capital, joining us up next. The semi slide Taiwan semi slipping on the back of Berkshire's big move out of that stock. Is there still opportunity in the chip space? Is this a sign of worry? We'll debate it in today's halftime overtime next. All right. In today's halftime overtime next. All right. In today's halftime overtime, chipwrecked shares of Taiwan Semi sinking after Warren Buffett's Berkshire Hathaway disclosed in a 13 F filing that it dramatically cut its position in that stock during the fourth quarter. The move weighing on the broader semiconductor space, which has been surging this year. However, according to Jason Snipe, investors can still find upside in that space. I still like semis, you know, as it relates

to the growth trade and tech in general. I just think that there's still opportunity in space, and I actually like it more than large cap tech. All right. Our big question, is this big move out of Omaha a warning shot for the chip trade? Let's ask Serity Partners' Jim Labenthal. That's the first thing that came to my mind because they only got into it in the prior quarter and it was some $4 billion investment. So why get out now? Yeah, Scott, it does raise the question. I acknowledge that as analysts, we're supposed to take data and draw conclusions from it. I find it hard to draw a conclusion from this piece of data. We just really don't know why he sold it.

I could come up with a very reasonable argument that he's long a lot of cyclical companies, right? Occidental Petroleum, Burlington Northern, Precision Cash Parts. He may have just wanted to dial back on cyclical risk. We don't know. But my conclusion is, I'm with Jason Snipe on this. You know this. I think the economic cycle is still intact. The no landing or at worst, the soft landing is what we're looking at. And that should benefit the chips. So I don't like this data point, but it doesn't throw me from the train. You said soft landing at worst. Wow.

So you're not even considering the possibility of a recession anymore? Well, you know, as a firm, we're at a 35 percent probability of the hard landing. Thirty five percent. You know, that's still a number. Right. But that means two to one. We think we're going to get through this thing in pretty good shape. So I'm not going to be so rash as to say a hard landing is off the table. Nothing's off the table. And I think this raises a good point. Any conclusion that any analyst or portfolio manager draws has to be taken with a considerable amount of salt. It's just a very uncertain environment right now.

Yeah, it's certainly got, you know, a lot of people talking because it's just unlike Berkshire to be, you know, to establish a reasonable position of four billion dollars, nothing to sneeze at for Berkshire Hathaway, obviously, and to get out of it or 80 some odd percent of it so quickly just was an eyebrow raiser. Let me ask you about Cisco. What's your early read and your take on what they just delivered? Early read, really breathtaking numbers, both the results and the guidance i think again grain of salt here we know that they were constrained last year by supply side constraints those are easing so they're doing a little catch-up with that and this speaks again to the degree of certainty in the economic output yes i am still bullish but if cisco's beat and guidance is based on supply chains

unclogging, that doesn't say anything about long term demand. Still, I'm quite optimistic, both for Cisco and the overall economic environment. I mean, but if you know, if you raise your outlook, you know, I suppose you could surmise that, you know, they can't be that worried about demand. Right. Yeah. Scott, you know me well, and I'm not trying to, you know, cover my behind. I'm very optimistic. I just have to acknowledge that last year was tough for these guys in supply constraints. I do agree with you that you generally don't get bullish as a company unless you feel pretty good about the demand environment. But speaking to the muddle that we're in, how do I put this up against Salesforce?

Which you know I sold, right? But you know, their demand picture going forward doesn't look anywhere near as good as Cisco. That's been the case, by the way, for a few quarters now. I'm very much in Cisco's camp, that's why I own it and not Salesforce. But at the same time, it speaks to this muddle of, it's not clear. It's not 100

percent certain what the outcome is. All right. Well, we'll get more certainty, I suppose, tomorrow morning when Chuck Robbins himself is on with the gang on squawk on the street, I think around 930 or so in the morning. And I know you'll be watching that. And I appreciate you being here. That's Jim Labenthal joining us in overtime. Coming up, we're tracking some big stock moves here as well. Christina Parts andenevelos is standing by with that. Christina. Well, remember how cold it was in December? That winter storm hurt Insure AIG, but only to a certain degree. And one chip designer warning of weaker times ahead. Details right after this break. We are tracking the biggest movers in overtime. Christina Partsinovlos, as I said, is here with that for us tonight again.

Christina. Well, bad weather hurting Insure AIG. Profit actually fell over 20% in the fourth quarter, although they did beat estimates. The freezing temperatures in late December, which I know a lot of people want to forget about, increased AIG's costs since they had to cover property damages. AIG, though, was not alone. Travelers also reported a drop in profit last month because of that winter storm. The stock was moving flat now. Known for its electronic

design automation tools, Synopsys posted a Q1's earnings beat, but revenue fell in line with expectations. So you got mixed results. The company reaffirming its full year guidance, but its Q2 earnings guidance actually came in light. And that's concerns for the near term when you're comparing to estimates. And so that's why you're seeing the stock down almost 5 percent, down 4.6 percent. Last but not least, keeping it in the family, AMC Network's executive chairman, James Dolan, has officially announced his wife, Kristen Dolan, will take over as CEO of the cable TV network, not the movie chain. They've been looking for a new CEO since November when the last chief left after only three months on the job. Mrs. Dolan, who already sits on the AMC board and runs a data analytics firm, will take over as of February 27. So just a point, it's AMC

Networks, not AMC Entertainment Holdings. All right. We got you. Thank you, Christina Parton-Navalo. Still ahead, Santoli's last word. And coming up at the top of the hour, what Ford's issues could mean for the broader auto space. The fast money traders will break that down. Do not go anywhere. We're back in two minutes. All right. It's the last call to weigh in on our Twitter question. And we want to know which sector will be the top performer this year. Tech, consumer discretionary, industrials or health care? Head to at CNBC Overtime.

Please vote and we'll show you the results in Santoli's last word next. The results of our Twitter question, we asked which sector will be the best performer this year. And you said tech. 51%. Mike Santoli is here for his last word. I mean, that's the sign of the times. Yeah, it is. What do you make of this, though?

I think the market is getting a little frisky. There's a bit of a bear hunt going on. You see some of the old favorites, Airbnb the old favorites, you know, Airbnb turning profitable on a bottom line basis and the stock rips. It's a heavily shorted stock. Coinbase, a heavily shorted stock up to even outside of today in earnings. Roku, Roku, Twilio, Zillow. Exactly. And not to mention Paramount, non-tech during the day today was racing. So this is where we are in the rally, I think, where you're starting to have confidence build or at least have a momentum chase on some level.

Even in the context, interestingly, of the overall indexes not doing a whole lot, it really is happening outside the headline indexes because the stable parts of the economy are actually not, you know, of the market are actually kind of sitting it out. High beta over low volatility, those two styles, 22 percent for high beta year to date versus 1 percent up for low vol.

You study this stuff so intently. I mean, you you've seen so many markets. I mean, does this make you more nervous about the rally? Does it make you more skeptical about the rally? What does it it's honestly it looks so similar as to whether it's a head fake or whether it's the real thing. But this is a phase you're going to go through when you have the start of a new, durable advance, right? So I thought you were going to say when you have the start of a new, dare you say, bull market. Well, I mean, that's kind of what I mean. It's kind of what I mean.

I think it's kind of semantics at some point. If you're 20 percent off the low over four months, you can start to say the low is probably is more likely in than not. But does that mean it's a bull market? Does that mean we're racing back to the highs? Probably not. What I am comforted by when I look at a lot of the frothy stuff starting to get reactivated in the market is the credit markets are completely calm. And you can say that that's also, you know, maybe irrational enthusiasm. I heard you say that earlier. Right. Spreads are real, real tight. Amgen sold twenty four billion dollars in debt today to finance an acquisition. They were going for under 20. The spreads were tighter than they initially indicated.

The point is people wanted the paper. And so something has to break for you to say that this was a pure kind of built on nothing rally so far. And I guess, you know, the reality is we're not going to know for some time whether the Fed is in the process of breaking something. It just hasn't shattered yet. Absolutely. Which could just be a range, right? And maybe we're toward the top of it for equities right now. But yes, you're going to have days when you wake up and it looks like they're going to nail the landing.

Other days, looks like the risks are more front and center. It is some market to watch. I appreciate you being here as well. That's Mike Santoli. We'll see you tomorrow. All of you as well. Fast Money's now.