Closing Bell - Closing Bell Overtime 7/18/22

Episode Date: July 18, 2022

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

All right, Sarah, thanks so much. Welcome, everybody, to Overtime. I'm Scott Wapner. You just heard the bells. We are just getting started. IBM earnings, they are imminent. We'll have that report, the stock move, all you need to know in just a moment. Edgar Ardeni will also be here to talk about the markets, why he thinks, believe it or not, stocks can hit new highs next year. We begin, though, with our talk of the tape, the rally, the midday reversal, and what, if anything, it says about where your money is going to go in the months ahead. Well, let's ask Mad Money's Jim Cramer. He is here with me at Post 9. I mean, you heard the cheers. They saw the set. They think it looks great. They're as excited as we are.

Thank you. And I'm so thrilled to be on your show. And I'm sure they'll be first of many, given the fact that I will do my show about, what, 25 feet? Something like that. Within the red zone. Yeah, that's true. We're in the red zone. And we'll get to that in a moment. I want to talk to you more about that. But I do want your take first on what's going on here. This reversal, this Apple story that sort of brought the market down and what it means. I think that we are in a unique opportunity to listen to companies before we take action. So we got unbelievable earnings from Wells. We got greater.

Citi was really extraordinary. We got great numbers from Goldman. Morgan Stanley delivered a really, really good quarter. Bank of America is going to be in there. Did you hear Moynihan with Sarah? I mean, he's positive. He's really positive. On the environment and the consumer. You know what? I spoke to Brian this morning, and I've got to tell you, what really bothers me about people who are shooting first and asking questions later are people who, for instance, got Wells Fargo wrong last week.

There was some headline. It was like the Wells was bad. The stock was down 3%. But bring it back. What I'm saying is that if you're buying stocks here, remember its earnings period, and if you go after a stock like a micron, which reported 53 and cut its forecast, well, you're going to be okay because the stock's down a lot. But if you're going to come in and buy Apple every single day it was up, and then figure you're just going to be

like some genius and buy more Apple, what you end up doing is you're fodder. You're cannon fodder. You're the kind of person who needs to really rethink your style. Because the style right now should be earning season, stop, look, listen. And people are going to make mistakes. People make mistakes in the morning. It doesn't mean that things aren't bad. Goldman was terrific. It means we're now in case-by-case fill. And so stop being—look, if you want to buy the oils and natural gas, I like that.

But other than that, I see no broad wave toward buying things. When you get a reversal like this, it is a reminder that people don't like this rally to begin with. No, they don't. I mean, I've got some stuff that I'm writing tonight with my nephew, Cliff Mason. And what we're basically saying, look, it deserves to be hated. The market should be hated. It should be hated because it encourages people. I think Ed Yardini is going to be very good.

I've known Ed for a long time because he's got a longer-term view about how the market can go up. The short-term view is still encapsulated by Mike Wilson, who did a very good interview today, and some of the things that Mike Santelli just said, which is that, look, it's not bad. It's just not good. I mean, natural gas at a high here? It's great if you're in natural gas. It's bad for everything else.

The trend is certainly not your friend. No. And a great note today came from Jonathan Krinsky, BTIG. I follow him pretty closely. 60 days in a row now that we are below the 50-day moving average in the S&P 500. It's the longest streak since 08. Okay?

And that does not portend things well when you have a streak like that. Let me give you the other side of the trade on that. All right. We are doing much better than 2008. When I listened to the banks back then, they were disastrous. Now, they're just incredibly strong. This is a Fed mandated recession. It's mandated by them, and they can begin it, and they can end it. Did the Fed wait too long? That's the kind of thing that in sports, because I love the name of your show,

we would say, was he some sort of armchair quarterback? When Frank Reich was down by five touchdowns, did he wait too long to start with a comeback? Well, he made it by a minute, but he should have started earlier. I mean, give me a break. What you need to know is individual companies. There are so many ETF ads, people talking about ETF. Do an S&P ETF, but don't think you can time ETFs any better than if you're timing individual stocks if you don't know anything. We're going to get IBM momentarily.

I just want to remind everybody of that. And as we wait for that, because I want your opinion on it once it crosses, Christina Partsinevolo is on the case. I promise you. She's going to have the number. We're going to see the reaction. I've liked what he's doing. You know it's one of only five tech stocks that's up year to date? Well, it should be.

It's got a good yield. Arvind Krishna has done a lot of things to make the growth much faster. He's got to operate. He's got to get the cash flow better. But I've got to tell you, in terms of techs that are on the mend and techs that are doing the right thing, I think Arvind's got that going. I do think that there's always a currency problem these days. You know, I was talking to Mark Benioff this weekend. It is a great time to be a tourist.

It's a lousy time to be in business services. Right. As you got, wasn't McDermott, I mean, a service now. A lot of people thought he came on the show. I'm thinking of his old gig, his new gig. A lot of people thought he came on the show and literally was using it to be able to soften people's projections. I think what he was saying is, look, you have to understand, the rest of the world's a mess. It is.

I mean, I was talking to my friend Ken Langone, who's my first guest. Yep. And I was saying, you know, why is it that the strong dollar is anything other than, look, the strong dollar is great if you and I want to go to Europe and have a great time. But it's also emblematic of the fact that we're the only place to be. And because we're the only place to be, it's hurting some of our companies. Well, it's hurting a lot of companies, particularly tech. And that's sort of the segue, right? We wait for IBM.

It's really the first to start the ball rolling in tech. You see, NVIDIA today was up 7%, by the way. Well, but it reversed at one point. But look, we want to see IBM generating a lot of cash, so we're not worried about dividend. But we also recognize that this is a company that is starting to become a fast grower. Now, what we don't want to do is we don't want to buy SPACs.

We don't want to buy companies without profits. People call me in the light of that. Those are up a lot, too, by the way. The ARK stocks? Those should be sold. They should be sold. They don't deserve to be up. Unless they're about to become profitable. They're up a lot. Well, that's good. You've got a great opportunity to sell. How fantastic. But that's how you hear a lot of people talk about the whole market. If it's up, it's a great opportunity to sell. There are two kinds of companies. There are companies that should never have come public

that are championed by a couple of growth people, just like 2000. And then there are other very solid companies that are doing well. But we have this confluence of people who don't know Jack, who continue to buy companies that are losing money with very little hope that they'll ever get money. And we have companies that are very solid and they keep being confused with each other. And that's because there's some manager out there with the so-called Midas touch. You know what? very solid and they keep being confused with each other. And that's because there's some manager out there with the so-called Midas touch. You know what? No, there is no Midas touch. So we're going to... Yeah, K-Midas reversed it. I'm going to get your reaction to IBM when it hits, but... All right, well, let's hit it.

Why don't we hit it? It's not out yet. This is the first close. That's why we're not going to hit it. Good point. This is the first close. That's why we're not going to hit it. Yeah, good point. This is the first close right before your new gig down here. I like it down there. The energy is going to really be something. I like it down there. That energy with your energy, watch out. And your energy. Let me tell you why I like it down there.

Because, you know, it started getting too easy again on Friday. I mean, I was gardening, you know, doing some power gardening. I like to have chainsaw music in there when I'm in there. And the next thing I know, I come back and it's like, oh, perfect. It's up so much. Monday, it's going to reverse. It's going to be raining on my show. And sure enough, what's it doing?

Raining on my show outside. But you know what? How about opportunity if you're looking at companies that are doing well? And you know what? I knew we were going to be in trouble when I saw that Coinbase start going higher and I saw the Bitcoin going higher. Because that is the last refuge. Not of scoundrels, but of people insist on making money now. And I don't want that. You're not worried about this Apple headline? Look, Apple's, I want to see the quarter.

Forgive me, I want to see Apple's quarter. I mean, Apple's all over the map. I don't think Apple's going to have a good quarter because China seems like nothing's selling. But I would say I wish the stock were lower in the same way I wish that everything could be like by crime, a 53, really bad forecast, and then the stock goes up eight points. What happens if Apple comes out and they say the quarter was great, but, yeah, we're slowing spending next year?

No, they say things are going to look bad next year. It goes to 135. Okay, it goes to 135. It's a terrific company. Maybe you buy some then. I just am not going to fall prey to the negativity because we've been, we're down 40, 50% on the stock. I mean, I was doing some work on NVIDIA, okay? Which we said was having a huge day.

But it was down 50%. Yeah. It's like NVIDIA, okay, I understand it got to $750 billion. That was probably wrong. We did some selling for the trust. Then it loses, you know, it's cut in half. I don't know. That's probably overdone.

I think it's overdone. How many of those other, how many stocks in that kind of a basket are overdone? I'd say close to 50% of them. They're overdone. Okay. The ones that are profitable. Well, then the market's getting to a point where you can be a lot more constructive. I don't mean you, but I mean the greater you, the investors out there. People, that's why I'm saying you have an amazing opportunity. Over the next three weeks, you're going to see how companies are really doing. So maybe, maybe you just wait to see how they're doing and not roll the dice on some story. Like Apple 150 today. Why was Apple 150?

Well, because other people thought that maybe someone will pay 152 so I can buy it at 150. And then they sell it at 147. That's what they are. All right. And they are not our kind of people. Throw up, guys. Let's look at IBM. Okay.

It's a top and bottom beat. And we're going to get to our reporter in just a moment. Let's take a look at what the shares are doing. They're flat at the very moment. All right. So there's something else we have to look at. Nine percent sales growth is what their earnings had. But a constant currency. How about a constant currency? Well, maybe nobody cares today. Today's a negative day. Their revenue growth, obviously,

closely watched. They missed on revenue five of the last ten reports. I think revenue will be good. Like I said, you want to see cash. Cash. Cash is king. Let's go to Christina Partinella. Absolutely. She has it right now. Christina? Like you said, is IBM beating on the top and bottom line? I do have the wrong part there, but EPS came in at $2.31 on revenue of $15.5 billion. That was ahead of Wall Street expectations. What you want to know for this company is it's a defensive play and given its high exposure to reoccurring sales and cost cutting, it showed that it could still

pull forward. And its Q2 report proved no different. But let's focus in on some of those key businesses like consulting, for example, a key barometer for whether companies are spending on IT. And the digital transformation to cloud proved weaker than the street anticipated at $4.38 billion. Overall gross margins. So here's the number two that we were paying attention to. Adjusted gross margins of 56.5 percent. That was lower than what the street anticipated or slightly higher than what the street anticipated at 55.7. And then you had wage inflation, a key driver for the past two quarters. There was no mention in this report about jobs cut, but it is a concern because it has weighed on gross margins in the past.

Then you had infrastructure revenue that returned to growth with the launch of its new mainframe, up 19% this past quarter. But the mainframe was launched on May 31st, so that number is only a one-month snapshot, but nonetheless a strong start. Lastly, this is the concerning part. Given the strong U.S. dollar, the currency impact to revenue was $900 million, $200 million more than the April spot rates suggested. Also a drag on those gross margins, which I had put in at 55.2%, not 55.7%.

Thank you. All right. All right, Christine, I appreciate that very much. Mixed. Mixed. Not good, not bad. I mean, you. All right. All right, Christina, appreciate that very much, Jim. Mixed, mixed. Not good, not bad. I mean, that's all right. I mean, look, we got to hear the call, obviously. Anyone who's trading on it right now hasn't heard the call. Nine hundred million dollar hit from currency. You want to back it in? I don't know whether this quarter we're going to say, hey, what? You know what? We're going to overlook that given the fact that it's not like the dollar started to come down. If the dollar started to come down now, then we would just be buying

the stock at 142. If the dollar, let me ask you this, if the dollar and rates started coming down, would we just be buying the market? That's one of the principal problems is the dollar and rates. It's hard to get bullish about things if the dollar keeps going up and rates go up, right? We don't want the dollar to continue to go up. It's making our companies much less competitive. When you're a caterpillar, it's such a good company, Jim Humplebee.

When you have Deere, I mean, these are companies where there's an analog at other countries. This is just a giant tariff from the United States. And a lot of these countries are doing it. I mean, Japan wants the yen lower. I think they want the euro lower because they're in such a mess. So it's going to be hard for our companies to triumph over that. But I will say that if you're in a non-competitive

situation, NVIDIA and AMD are the only real companies that do high-performance computing. There's still need for high-performance computing, even if you think that Facebook's not hiring. Can I ask you something? Talk to me. All right. So your Facebook, your Alphabet, your Google, you know, Apple to Google, and your Apple. I come to you and I say, you know what? Business is really going to slow. The world's coming to a slowdown.

Shouldn't you be hiring like mad? What would you say to me? Why would I hire when the world is slowing down? Well, no, you see, because you're tech and you're stupid and all you do is hire. You go to Stanford, you give anyone who walks by $500,000, you hope they're enrolled. Not anymore. Right. Well, that has to end. The real inflation in this country is Silicon Valley and its friends.

It's doppelganger venture capitalists. That's where things are bad. I think literally half of the engineering tech staff or whatever is over by your set getting it ready for tonight. Well, they are. I will tell you that the only engineers that are doing well right now are the people who work for Union Pacific. There are a lot of people over there getting it ready. They report this week I'm a little worried about the quarter. Give me a quickie on tonight. Who you got? I got Ken Langone, who's a great friend and has done a lot. Worked with my wife on the board of Bucknell, which is a school he feels passionate about. Done some amazing things at

NYU Langone. And of course, a great philanthropist, great business person. And then I have David Solomon. Remember, Goldman reported a good number. What day was that? Today. Shoot! I forgot after Apple's news or non-news came out. So let's not lose hope, but let's stay in earnings period. Let's listen. So you traded on IBM right now. Do you know you know nothing? Do you know how little you know? You know a thimble like in the Monopoly game?

You're going to do that again? Then you know nothing? Well, no, I don't. Look, I defend J-PAL every day. Actually, that's I don't. Look, I defend J-PAL every day. I actually that's growing tiresome. Make sure you are in that seat on a regular basis with me throughout your journey down here now. I want to see you all the time. Remember, this is this is a crossing pattern. It's not a Hail Mary. These are just crossing patterns. OK, you are welcome on this playing field anytime. I mean, I will do it. It'll be sometimes it's just going to be a pitch out between you.

All right. That's perfectly fine. Do not miss Jim live tonight from the New York Stock Exchange. Of course, it's at 6 p.m. Eastern time. He told you about the great guests he has with him tonight. Ken Langone, David Solomon has a great story to tell about the earnings they posted this morning. So we look forward to that. Best to you. Thank you, buddy.

All right. Let's bring in the overtime panel now. Joining us now is Stephanie Link, Hightower chief investment strategist and a CNBC contributor. Alicia Levine's here to be in Y Mellon Wealth Management head of equities. It's great to see you both staff. A comment quickly from you on IBM, which you were just trimming in recent days. From what I see, it looks like it was pretty good in terms of demand across the board. Software up 6 percent, consulting up 10 percent. That's a little bit better. Infrastructure also up 19 percent.

So total revenues, earnings and revenues beat. The thing I think people are focused on, well, A, it was gross margins, which came in better than expected at 56.2 percent. People are looking for like 56-ish. And the other thing is free cash flow. So they're lowering the guide for free cash flow, just the range. From 10 to 10.5 billion was the range. They're going to 10 for the full year. But that is entirely because of currency.

And also they exited the Russian business. I think this is a solid report. If it's weak, I'll buy what I sold last week. Oh, wow. Okay. I mean, the stock looks like it's trying to figure out which direction it wants to go, though, as I did reference, it's one of only five tech components that's up year to date. I mean, it gives you a kind of story on where tech has been as the sector itself is down 20 some odd percent. Overall markets right now, Steph, how do we feel about this reversal today, the bounce, the bear bounce, if you want to call it that, in and of itself? You can't ignore Apple, but you also can't ignore what Amazon has said, what Meta has said, what Alphabet has said, all about the hiring freezes or maybe even some layoffs.

Apple is 7 percent of the S&P 500, so naturally it being down 2.2% for the day is going to have a negative impact. We are in a trading race, Scott. You and I have talked about this endlessly. The reason we bounced on Friday and then today and the last couple of days is because sentiment was so oversold. And earnings actually have been pretty okay,

especially the banks and especially on the consumer side. Now I know you're going to tell me that in six on the consumer side. Now, I know you're going to tell me that in six months, the consumer can roll over. It certainly is possible. But right now, none of the companies in the bank sector. Well, I kind of think you're thinking that. I wasn't going to tell you that. Well, I kind of think like it's a natural thing to think about, of course. But for the time being, I mean, Bank of America today, I mean, they had the best long growth in three years. There's going to be momentum that carries the day.

Sure, investment banking was weak across the board. That's what we see in the markets every day, right? But some of these companies, many of these companies have net interest income and net interest margins to help protect the other side of the business. I thought Brian Moynihan did an amazing job explaining that very thing. But let's just go back to Pepsi. They didn't see demand destruction with a 12% price increase. So right now, earnings are OK. So that's the good thing. And by the way, there's also speculation China is going to stimulate more. But on the other hand, you do have these issues with currency. You have the other issues with rates and inflation. So we're in this trading range unfortunately alicia i mean you look

at a day like today it is somewhat emblematic of how you feel about the overall market right with uh a head fake intensive environment that's right and i'll just remind our viewers the v-shaped recoveries that most investors got to over the last ten years of quantitative easing. Really only happened only very specific market environments and in liquidity environment. Which is quickly being drained by the fed. And these bear market rallies are very vicious

because if you're short. You want to cover. And if and if you're long you think it's you're all clear and you're buying and they're very very. Difficult but ultimately we don't think the data is bottoming quite yet. And I think it's difficult to buy into the quarter until we hear from the companies and some of the forward guidance here, because we do

think it's going lower. And while both businesses right now don't think we're in a recession, I think it's pretty clear that the Fed is ready to tighten until we get there. And so we think it's just too soon to call the all clear. Now, there are bargains out there that are great, but I think you have to be careful about buying the companies that are making their numbers only on nominal on the inflationary side and not on the unit side, because ultimately, we have have to pay for that as well. But the bottom line, before I let you go, is that you don't think the bottom is in. So if that is in fact the case, how much lower do you think we have to go?

So I don't like trying to call the bottom. And it's a difficult game to really call the pivot. I'd say this. If you're thinking of a Fed pivot, it's far from here. The labor market is strong and the Fed does not think it's going to cause a recession, which means tightening isn't planned. And even though there'll be some signs of softening inflation on the energy side and on the good side, we now have to deal with sticky service inflation

in housing, housing rent and wages that will be more difficult so we do think that you'll get to ultimately a 14 or 15 times multiple on whatever earnings you get right now we're at 16 times on elevated earnings that are not going to hold as earning season goes forward so you can go down a couple hundred points from here yeah we'll see uh as i said i have edardeni later who's going to make the counter argument to what you just had to say. But your headline, Fed pivot, quote unquote, far from here. Ladies, thank you. I'll see you soon. Stephanie Alicia, we'll welcome you back to Overtime shortly, I am sure. We're just getting started here in Overtime. Up next, should you trust the

recent turnaround in technology? The XLK ETF is up more than 7% in just the last month. Tech investor Larry Cordisco sees even more upside ahead. We'll find out directly how he is playing that one. We're back right here in OT in two minutes. Back in overtime now, the NASDAQ dipping back into the red today. The tech-heavy index, though, has been staging a nice turnaround over the past few weeks. Our next guest says the rally can continue as earnings season kicks into high gear. Let's bring in Larry Cordisco, Osterweiss Capital Management, co-CIO of Core Equity.

It's good to see you right here at the Stock Exchange. So you think it can continue. It's had a nice move. It feels like it might be wavering a little bit. There are caveats, right? There always are. Bring them. Well, I think, first of all, valuation matters and we're seeing high multiple stocks under more pressure. I think IBM is going to be a really interesting tell how that responds, because overall that earnings report looks really good. The one nit is foreign exchange. And Microsoft's talked about it.

ServiceNow has talked about it. So I think if you're a higher multiple company and you run into that headwind, you're probably gonna have a bigger problem. I mean, it sounded a little bit mixed. Yes, it was the headline beat, good top, bottom, et cetera, but you really gotta get down the margins and things like that.

The stock is right now, let's take a look at it, guys, as we have this conversation here too. We just saw it's moving a little bit lower, but it has had one of the better stories to tell this year. It's a new relatively new name for you. When did you buy it? We bought it during the quarter. Okay. Why? I'll tell you why. Because the fundamental turnaround there, the transformation in that business, we have a lot of confidence. If you look at how they're leveraging Red Hat, which is the point of the spear for this company, they are going to do very well. It's an incredibly important company to managing multiple clouds,

and it's going to bring a lot of consulting business for them as well. See, if I'm a tech investor and I look at the move that a lot of these stocks have made over the last few weeks, I don't know how I feel about that. And maybe I don't feel great because I'm like, do you really want those stocks to move up to the magnitude that they did into the actual earnings report? Doesn't that raise the bar further and further now, given the stock moves? Yeah, well, absolutely. We think the market's sort of pinned in this range, this call of $3,800 to $4,000 range. Anything above it, you start bringing the Fed back into play. Things are so good, the Fed's going to stay hawkish.

You know, below it, sentiment's been pretty negative. And you look at what happened with bank earnings. Boy, if you were short ahead of that, that was no fun place to be, right? So I think it probably stays in this range until we have more clarity. I saw Kramer just now saying, let's see how the earnings season goes. I think that's right. I think we're going to learn a lot

about how stocks react to the earnings season. Which is also hard to buy these stocks now before they report, right? That's right. Why buy before you see? I understand. Now, a company like IBM is a little bit different. It's so cheap.

And I think there is so much disbelief about the three to five year story there that this is not a bad place to be building a position. But it's not a place or time that we'd be chasing really high. Again, I'm back to this high multiple stock thing. But that's where you're going to see vulnerability. Yeah. Let's go through a couple of quick names before I let you run. AMD, you like it? We still like it a lot.

Own it? Yes, we own it. It will be taking share from Intel for years. And all the worry about AMD, most of the worry about AMD is that the PC market, they make something like 20 to 30 times the gross profit dollars on their server chips than PCs. That production is just going to shift from PCs to servers. I'm very confident of that, or we're confident about that. Google Alphabet is another one you really like.

Yeah, we like it. It's our largest position. Look, I'll be honest, there's cyclical challenges there. If they have a hiccup with YouTube, I think people are going to be really nervous about TikTok as a competitor. I mean, digital advertising, shouldn't we be worried about that right now? Absolutely. But it's trading at about 15 times free cash flow. A lot of this has been discounted. The market's done your work, right, in making this a little cheaper.

If you're a long-term investor, these are the times you should be thinking about scaling into a Google. Before you leave, can you tell me why you don't own Apple? For many, the crown jewel of this entire space. Yeah. Why not for you? Because they are coming off the largest iPhone cycle since 2015. And now that we're seeing how broad-based the COVID pull-forward was, was that iPhone cycle because of the product or because of COVID?

We think there's an air pocket that we don't want to be in front of. You don't own Netflix either, by the way, which reports tomorrow. We do not own Netflix. This isn't a company training at 60 times free cash flow. They're undergoing a massive business model transformation that we just don't think you want to be ahead of. And there's a lot of metrics you can use on how much advertising load, how much money they can make in advertising. We think it's going to be a little harder transition than what's priced into the stock. Good seeing you in the house. Thanks for having me. It's great to be here. All right. Larry Cordisco joining us now. Let's get to our Twitter question of the day. We want to know which of these beaten down tech names look

most attractive right now. Is it Netflix, PayPal, Meta, NVIDIA? As we said, a nice day early, a little bit of a reversal has been cut in half. Head to at CNBC Overtime on Twitter. Cast your vote. We'll give you the results later on in our show. It's time now for a CNBC News update with Shepard Smith. Hey, Shep. Hey, Scott. From the news on CNBC, here's what's happening. Some potential relief at the gas pump.

The White House economic adviser, Jared Bernstein, saying today that barring any unforeseen market disruptions, he expects prices to fall below $4 a gallon in more areas in the coming weeks. Today's national average, according to AAA, is $4.52. The suspect in the Marjory Stoneman Douglas High School massacre in court today, the penalty phase of his criminal trial beginning, it's expected to last for months and include testimony from survivors and victims' families and to provide details of the shooter's personal history. The suspect already pleaded guilty to murdering 14 students and three adults. Jurors will recommend either the death penalty or life in prison without parole.

And as temperatures hover around triple digits across swaths of the country. England is under its first extreme heat warning ever. The high today around 102 in London. Forecast for tomorrow, 104. The heat wave also settling across Europe with hundreds of heat-related deaths reported in Spain and Portugal. Wildfires are raging there and in France. Tonight, outrage grows and investigations accelerate in Uvalde. Steve Bannon's criminal contempt trial begins. And a CNBC investigation into crypto lender Celsius.

On the news right after Jim Cramer, 7 Eastern, CNBC. Scott, back to you. All right, Shep, appreciate it. Thank you. That's Shepard Smith. Up next, a bear market bottom or a new bull market. That's the big debate playing out right now on Wall Street. Ed Yardeni joins us with his take straight ahead.

Welcome back. Stocks could hit new all time highs by late next year. That is the bold call today from our next guest, Ed Yardeni, the president of Yardeni Research. He joins us now. Not new to be more optimistic than most. I think people, I hope, have listened to our conversations over the last few weeks. But a new bull market may be underway in a few months. That is a bold call. And then some, Ed. Well, what I think is that for the next few months, we're going to probably be moving sideways. And I think over that time period, a lot of the bad news that's been widely anticipated is going to occur. We're going to get

two hikes by the Fed, 75 basis points each. And that's, I think, pretty much in the market. But I think along the way, we're going to continue to get evidence that inflation has peaked, at least in the commodity markets. And then along the way, I think we'll see that some moderation in wage inflation. And then I think we're actually going to see CPI and consumption deflator inflation moderate. And a lot of that could be led by weaker commodity prices, particularly food and energy. So again, the bad news, I think, has been discounted. I think the market would like to see some good news. I think last week, it was amazing how well the market held up in the face of disappointing CPIs and PPIs. I think the market is looking past those. I mean, this comes with big ifs, right? You

have to have inflation. Yeah, of course, you have to have inflation peaking, not being protracted. Right. Because then if and you can't have a recession either or anything really around the margins of that, too, if the market starts to sniff some more of that out that you got a problem. Yeah, well, it's kind of like walking on a tightrope where one end is being held by the bulls and the other one is held by the bears. And there's sort of you're in the middle of a tug of war here thinking about where the market's going to go from here. Yeah, but the bear is shaking the tightrope now, right? The bear is like shaking the tightrope. Anytime it anytime it feels like it's nice and smooth, bears like start shaking the tightrope and you're like wobbling all over the place in the market. I think you could see that on a day like today. It doesn't take much to get the market to wobble.

But I think, again, June 16th, I think we made an important low with a lot of ifs, as you said. But the big issue for me is inflation. And I think that we are going to see moderation in inflation. I noticed that the New York Federal Reserve survey for July, which is the first business survey that's out so far, actually did show a moderation in both the prices paid and prices received indexes, significant moderations, and also evidence that the supply chain disruptions are really abating. So you basically see this whole episode as nothing more severe than a mid-cycle slowdown. Am I right? At this point, you're absolutely right. I changed my mind along the way. But from what I see now, we've had a very strong labor market. The payroll numbers remain very strong.

On the other hand, last week, we had retail sales down two months in a row and industrial production two months in a row. And yet the market looked past that as well. So again, I think the market is increasingly tuning into a potential for a mid-cycle slowdown. It will look like a recession by some measures, but I don't think it'll ever make the official books as a recession with inflation. It feels like you're declaring victory in the game and we're only in the first quarter. No, I would never do that. We got a lot of game. We got a lot of game to play. And the opponent, inflation and the Fed is formidable. I would never declare victory here. The market is all all knowing more often than not. And so I'm I'm certainly aware of all the risks that are out

there. I'm just pointing out that the market has discounted a lot of bad news. And over the next, the rest of the year, some of the bad news will play out, but it's already discounted. And there's probably going to be some good news on the inflation front. So I'm, by no means am I being, you know, arrogant here and claiming victory. Quite, quite the opposite.

I remain humble in front of this market for sure. I understand. But if you truly believe that this is nothing but a mid cycle slowdown in in some respects, in essence, you're declaring victory that we're not going to have a recession and thus your thesis can play out. That's kind of where I was going. That's my all I'm declaring is that's my opinion of where we are right now in the likely outlook for the economy. There's a lot of people who think we now in the likely outlook for the economy. There's a lot of people who think we're going to have a hard landing, a significant recession. So, no, again, by no means am I saying that I'm right and they're wrong.

I'm just expressing an opinion that given what I see today. All right, we lost Ed. We apologize for that ending, but you got the crux of his argument in a case that he has made today. We'll have him back soon. That's Ed Yardeni, of course. Up next, we are tracking the biggest movers in overtime. Kate Rogers standing by for us. Hi, Kate. Hi, Scott.

Coming up, a big trial balloon from Netflix that could lead to you paying more in the future. That's coming up next. We are tracking the biggest movers in the OT. Now, Kate Rogers doing that for us today. Hi, Kate. Hey there, Scott. We are watching shares of Netflix in the OT. Netflix customers in five Latin American countries will reportedly pay extra if they want to watch in more than one household. Reuters saying the at-home feature will initially launch in Argentina, Dominican Republic, El Salvador, Guatemala and Honduras. The company reports earnings tomorrow after the bill. And as you can see, shares are just fractionally in the green

right now. The political turmoil in England impacting the planned IPO of chip company Arm. The Financial Times reporting SoftBank has put the public offering on ice for now after the resignation of top business and investment ministers earlier this month. The company was said to be aiming for an IPO sometime in the next year. And finally, one more check here on shares of IBM and the OT. After the earnings crossed earlier this hour, the stock is lower by more than 2.5 percent, and the company's call kicks off at the top of the hour. So much more to come. Scott, back over to you.

All right. Good stuff. Kate Rogers. Thank you so much. Up next, Delta is soaring after striking a deal with Boeing to buy 100 MAX planes. Got a favorable call today on the street to halftime committee member Jim Labenthal. He owns it, which means he is coming on to tell you how he's playing it now and later. A health care pick for your portfolio. A lot of people have those these days. We've got one for you in our two-minute drill. OT is right back. In today's halftime overtime, we're ready for takeoff. Delta shares closing higher after a bullish call from Citi.

They say the airline could see, quote, important upside risk over the next few months. Serity Partners' Jim Labenthal, he owns it. He joins us now. I guess they're telling us what you've been telling me for a while. Well, well, thanks, Scott. And good to see you in the afternoon here on the overtime. You know, the crux of the analyst position is the stock is trading where it was trading at the heart of the pandemic two years ago, same exact level. And if we think about it, at that point in time, air traffic was down 90%, 9-0%. Now we're within 10% of 2019 levels. And, you know, we're generating at Delta's case, $1.6 billion in free cash flow in one quarter. And the analyst rightly says, what's going on here? And I think the simple

answer is, you know, what if you threw a recession and nobody came? The stock is trading as most airlines and travel and leisure stocks are trading. It's trading at a recession level. But there's a lot of indications, including CEO comments over the last few days that indicate there's no recession in the near term. Yeah, but it's trading at a recession level at a time where travel is booming, literally booming. I mean, you're the one who tells us about that every single day. So why is the stock trading at a recession level when business hasn't been better in years? Yeah. And I think the answer is simply people really have bought into the negativity of this is going to be a big recession. You know, I think it was pictured very nicely by Surat and Steve today.

Surat was getting very spicy with Weiss. I like to see it. You know, on the one hand, you've got Steve saying, we're going to have a recession, we're going to have a recession, air demand is going to go down. On the other hand you have Surat, myself and Ed Bastian the CEO of Delta saying look the consumer is strong and the demand from consumers is strong while at the same time and this is Mr. Bastian saying that international and business travel is now picking up which is great for the airlines. Again I say rhetorically what if you had a recession and nobody showed up? And I'm going to leave it rhetorically because everybody's got their own answer to that. Fifteen seconds and I got to go. The Boeing order is news in and of itself for you because you own Boeing, too. Just give me a

quick thought on that. Yeah, stock was up, I think, about five percent before it trailed off with the rest of the day. What I really want to see is 787 deliveries approved by the FAA. The head of commercial aircraft says we're in the ninth inning of that, so it should be any day. All right. He is Farmer Jim joining us in overtime. We'll see you soon, Jimmy. Thank you. Thank you. Up next, our two minute drill where one money manager sees big opportunity in the retail sector. That name when overtime returns. Back in overtime, time for a two minute drill now. Joining us is Cap Trust Director of Investments, Christian Ledoux. Christian, welcome. It's good to have you on. Quick thought on the market reversal, what your takeaway from that is. Then we're going to get into some picks. Hi, Scott. Good to be here. Good afternoon. Yeah, we're seeing a lot of strength in the

market recently just because I think people are starting to bake in some of these negatives. The recession is probably a foregone conclusion here. It's probably going to be mild. But at CapTrust, we're thinking, what can the next six to nine months bring us? And there's some opportunity with some cheap stocks. And we monitor the kind of stocks that are under 10 times earnings. And there's a lot of those nowadays. Yeah, they're getting some of these stocks get less cheap, the more people recommend them. And then those who go out and buy them like

a CVS. Everybody seems to love health care. I've said that on this very program multiple times. And in the last many days, CVS has been a pick in the last few days right here as well. Why should I continue to take a look at that one if not buy it? Well, yeah. And I heard your viewer on Friday putting out the case, and I'll add to that story a bit. So we recognize the obviousness of their defensive quality. Health care during a recession is still a necessity. But I think what people are underestimating is a few things. The minute clinics that they're rolling out, they're really going to add a whole new service level

and take some share from those urgent care clinics around the country. They'll also be running clinical trials out of those minute clinics, another excellent opportunity for additional revenues. But I think the real value here is the data. They've been collecting data throughout the vaccine rollouts, and they'll collect some more through the the clinical trial business and that can be extended to other things speaking of minute clinics i've got less than a minute left in this segment amdocs number two 10 million 10 billion dollar market cap excuse me why that one yeah so amdocs is a telecom services provider outsourcer uh they've been doing kind of three to four percent revenue growth for years, but they have an opportunity here to grow about 10 percent plus over the next three years

as they roll out 5G services for their customers, move the businesses to the cloud, and picking up some new outsourcers like Verizon. William Sonoma quickly is our last one. Why? William Sonoma is the furniture retailer, even though they have the kitchen name to them. Mostly furniture online, high margin. A lot of people don't like furniture now saying it's coming off the steam from the pandemic. We think that's built in. Plus, they're share gainer. And the real gem is that they're starting to do business to business where they outsource the the outfitting of a hotel lobby or a conference center. They even did the Golden State Warriors new arena. All right. We will leave it there. Christian Ledoux, Cap Trust director of investments. I'll

see you soon. Up next, you know who? It's Santoli with his last word. Well, welcome back to Overtime. Let's do the results of our Twitter question. We asked, which of these beaten down tech names looks most attractive right now? You answered, well, the winner is Netflix. I mean, excuse me, NVIDIA. I don't know where to look. We're in a different room. I'm like figuring it all out.

58% of the vote for NVIDIA, which, by the way, Mike Santoli, who's here for his last word, had a reversal. I mean, it's kind of a squirrely close. Yeah, without a doubt. It's a twitchy market. It's illiquid. We know that in every way. Also, semis have been kind of out of sync with the rest of the Nasdaq. It took when they bottomed, which was early July, and then they've managed to have a little bit of a run here. But yeah, it's very squirrely. I mean, the Apple move gets a lot of attention. Last Thursday, you and I spoke about how Apple had made a new all-time relative high versus the S&P 500. And it often means that there's a lot of people crowding onto that narrow strip of, you know, of dry land that they perceive Apple to be. And then today, what you see is,

you know, what would otherwise be an innocuous kind of headline knocks it back a little bit. You take 2% of a 15 one month game back it is a big strip of land though it is huge huge right you're not like on a little raft here i mean that's why you feel it when when when people get their ankles wet when they're standing on apple they don't like it i don't know if it means much for the absolute for the overall market in the very short term except that we got back up to the high end of the range if there was anything about the decline today um that was surprising I don't know what it would be because we were so conditioned to say, well, we're going to rally up to the downtrend line. And then you can't really bet

on anything beyond that. We'll see. That pattern is going to get broken at some point. I kind of like the fact that very few people think the June low is going to hold, but it is only 5 percent below here. So what about the the Krinsky note that I referenced earlier in the day, this 60 days in a row now under the 50-day for the S&P, longest streak since 08? He thinks that's an obvious sign of a weak trend. And despite some stories that people want to tell, like the apples and maybe the financials,

the market trend is still bad. Without a doubt it is. And that's actually objectively undeniable, that the trend is what it is. But it's the same as saying on January 3rd of this year, hey, it's a bull market until it proves otherwise. And it was. And it took a while. It took weeks for the market to buckle,

for those downtrend lines to take hold from uptrend lines. And so, yeah, I do think you have to say you keep it on a short leash, and it's kind of guilty until proven innocent. I mean, it's 100 points higher. It's literally like 100 points higher than it is here. It's going to take some work to get there. No doubt about it, yeah. And the 50 that you made, yeah, absolutely.

Yeah, yeah, yeah. Not even there, yeah. Yeah, yeah. All right, we'll see you tomorrow. That's Mike Santoli with his last word. I'll be back here as well on the desk tomorrow in overtime. It doesn't for us. Fast money begins right now.