Closing Bell - Closing Bell Overtime 7/19/22

Episode Date: July 19, 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 very much. Welcome, everybody, to Overtime. I'm Scott Wapner. You just heard the bells. You heard the cheers. We're just getting started right here at Post 9. Literally moments away now from one of the most closely watched earnings reports of this early season. Netflix about to drop any second now. We, of course, will have the numbers. See what the stock does. There is so much riding on it it given that huge disappointment last quarter which sent those shares plunging all of it coming after today's big rally which is of course our talk of the tape today let's ask vertis investment partners chief strategist joe terranova what's really at stake here how about this move it's a technical reaction to what we talked about monday on halftime nasdaq

broke above the 50-day moving average the significance of not being above the 50-day moving average for such an extended period of time gives more validity to the break above, because now you have fresh buyers coming in, you have quantitative models that are reacting to that move. So all this signals is a tradable bounce that will take the S&P higher, further above the 50-day moving average, maybe

towards the 100-day moving average. And I'll tell you, Scott, yesterday, that Apple news, that was fantastic if you wanted to position from the long side, because the correction that you had during the day, the market, intraday low yesterday for the S&P never took out Friday's low. Now I have a point of reference if I want to be long. Let me hold your thought for just a second or ask you to. As we take a look at Netflix, you can see that it is out and the stock is moving and it is a significant move higher at the moment, nearly 8 percent. The reason being, yes, they lost subscribers and they lost nearly a million subscribers in the quarter. That was half as much as the street was looking forward to. And you remember the last report, which was really a bombshell of the entire season. They reported a big loss. The stock absolutely cratered. Julia

Borsten is looking at this as we speak. Julia, what do you see? But it seems as though the subscriber number better than the street is the reason why the stock is having such a good moment here in overtime. Yeah, we see the stock up 10 percent in after hours trading, and that does seem to be a direct reflection of the fact that instead of losing 2 million subscribers, which is what the company forecast it would lose in the second quarter, it only lost 970,000. I say only because in comparison. So it lost about half as many subscribers in Q2 as expected. But interestingly, looking at the Q3 forecast, the company does see itself returning to subscriber growth, forecasting the addition of 1 million subs in the second quarter.

But analysts, the consensus among analysts was that the company would add 1.8 million subs in the second quarter. So it seems like there's a little bit of a sigh of relief here that not only does the company expect to keep growing again in Q3, but that growth will be a million, though less than anticipated. I just want to get to the top and bottom line results, though, since we are so focused on those sub numbers. Earnings beat estimates. The company reporting earnings of $3.20 per share versus an estimate of $2.94 per share. Revenues meet missed estimates, but not by much. Revenues coming in at $7.97 billion for the quarter versus the $8.04 billion estimated. So the stock's now up about 8.5% on that earnings beat, on the fact that those Q2 numbers are better than anticipated. I'm going to read through this letter to shareholders from Hastings and Sarandos. I'll be back to you in

a minute with more, Scott. All right. Good stuff. I anticipate that we'll hear from you momentarily. Julia Boorstin, thank you so much. Joe Terranova is here with me right now. You got off the Netflix train in November. I did. And one of the best saving trades, I think it's fair to say, that you've ever had. Certainly within the last 10 years. Loss preservation is very important.

Given Netflix where we are right now, you have to think about buying the stock. This is not a value trap. This is now a company that was a growth stock, which is pricing as a value stock. You were worried that it was a value trap. I don't believe I think the street is worried that it's a value trap. I don't think this stock is a value trap. I think this is a stock that is right now exhibiting itself to be a value story, but the growth has the potential to return once again. What's the negative narrative? Potential consumer recession.

Right. And then market softening demand. Don't forget, Julia just told you the expectation was for 1.8 million subs. For the third quarter, they project a million. So that is below what the street was looking at. You do have this sort of post-pandemic normalization that the bears would suggest is still a headwind, along with what you just mentioned, a consumer slowdown, if not a recession. So the guidance is not excellent here.

The guidance isn't good. I'll acknowledge that. They're also talking about currency impact worse than expected. $330 million. Get used to hearing that. Right, $339 million hit. They're also, I think, doing something with an animation studio. But the point I'm trying to make here is I think there has been enough negativity priced into this stock where now you're thinking about it strategically as being classified as a

potential value trap. And I just don't think that's the right way to think about this. The introduction of the ad model leads to potential in coming quarters for there to ultimately be growth. So is this stock, does it belong trading above $300? Probably not. But this is also a stock that doesn't belong trading at $175, $180. I would be more inclined to buy this stock and expect it to rally towards $275 in a better market. It needs a better market also. You just heard from somebody who sold Netflix back in November at like $600. Let's talk to somebody now who actually owns it now.

Netflix shareholder Shannon Sikosha is with us, SBV private chief investment officer. We're also joined today by the big technology founder, Alex Kantowicz. Both, of course, are CNBC contributors. Shannon, you first. Your reaction. Yeah, I mean, I think if you look at the surprise

on this quarter and then to your point about consensus for next quarter, basically nets out to the same amount of subscribers. And so I think, again, I think you called this a sigh of relief. I couldn't agree more. After two really disappointing quarters and fears of, you know, not just a consumer recession, but a streaming recession, I actually think this is not just important for Netflix, but through all of the streamers that we may own. I own Disney. I know Jim owns Paramount. So if we think about what that looks like over the course

of the next six to nine months, I don't disagree with Joe. You know, I bought this stock right around $300. I wrote it up. I trimmed a bunch of it. And now, you know, there's an opportunity to potentially add to my position. I do think that we need to see from Netflix what they're going to do about content over the course of the next few quarters. That's how you drive new subs is through content. And so I think the call will be particularly interesting with management tonight. So, Alex, does this at least remove in some respects this big fear of the so-called great cancellation that everybody had too many subscription services during the pandemic. Now you're coming to the other side,

as I suggested, this period of normalization and that you're going to cut them back. Maybe we're not going to cut them back as much as we feared we would. Yes, absolutely. I think that's the right way to look at it. I think if you think about all the different streaming services, Netflix is likely the last one people cut. It's the household name in streaming. People have been using it for years and trusting it. And so you just don't see Netflix as the company that goes first. Also, I love the term normalization. And that's exactly what I think we're seeing with Netflix. In the pandemic, I think people lost their minds a little bit, you know, and they valued it at 60%. You know, it's lost 60% from its high. And right now, I think that's really a rational move because it had no

business being valued as a tech company. So I think this new normal for Netflix is good. Slow and steady growth still in the game, but not valued in a way that's going to make the expectations impossible to match. And that's exactly where you're going to want to be i told all of you i anticipated that we would hear from julia borsten again in fact we are right now jb what do you have yeah so many different points to hit here from the letter to shareholders one is that the impact of foreign currency headwinds is uh is growing between the second and the third quarter it was a four percentage point impact in q1. It is, I'm sorry, a six percentage impact in Q1, then a four percentage point impact in Q2. And they anticipate it being a seven percentage

point impact from foreign currency headwinds in Q3. So that would be a growing impact from those issues. I also just want to give a little detail here on the ad supported service that the company is working on. They stress in the letter that the lower priced ad supported offering will complement the existing plans. They say those will remain ad free. They bold that line in this letter and they talk about the importance of now giving a consumers a choice for a lower priced option. They give us a little bit of detail here, but not specific details on pricing.

They say they'll start in a handful of markets where advertising spend is significant. Like most of our new initiatives, the intention is to roll it out, listen and learn, and iterate quickly to improve the offering. So they're making it very clear that they want the ad business to evolve over time, saying it will look quite different in a few years than it looks like on day one. So making sure when people open up the new ad-supported app, they don't get confused or think it'll be a permanent fixed system. They say it will take some time to grow our member base for the ad tier and the associated ad revenues. Over the long run, we think advertising can enable substantial incremental membership through lower prices and profit growth through ad revenue. So really interesting. They're trying to make it clear they see a huge opportunity down the line, not immediate, and it's going to be an evolutionary

process. Shares now up about six and a half percent, Scott. All right. All right. See you again soon, probably, Julia. Thank you so much for the update there. Shannon, I love the words that we're using here because they tell two distinctly different stories, I think, in terms of the time frame that you have to have if you're an investor like you are. Normalization. This is what's happening now. We're on the other side of the pandemic. Netflix is figuring out ways in which it can continue to grow in the next couple of years, let's say, at minimum. So you have to have your eye on that ball. The word that Julia used, though, is evolution, is a longer period of time that Netflix has to become a different kind of company, perhaps, than it was over its first part of its lifetime. Can you feel comfortable if you don't own the stock today,

or even if you do, buying it under both scenarios as you look out in the near and then longer term? Yeah, I mean, I think there's still going to be some pressure here on the consumer basket, Scott, whether or not we believe that inflation has peaked, which I do. I still think that we have a couple of quarters here where consumers are going to be very, very frugal in terms of their discretionary spend. And if they've canceled Netflix, they're probably not adding it unless there is, again, some really transformational content that's coming out. I think you make a great point on where this company evolves. Here in the U.S., absolutely, ads are the way to go. There needs to be a lower

tier product. Internationally, though, is also going to be a driving force for growth for Netflix. And you're seeing, again, constant currency. We're seeing that currency impact. But I think that's actually the longer tail here for Netflix. I think that there's going to be multiple tiers here in the United States. I do think that there's going to be a core of streaming services. I still think that there are going to be winners and losers in that space over the next two years. But this very short term time period, perhaps a headwind, longer term, I think streaming is here to stay. And I actually think streaming with ads will become a standard practice amongst some of the winners because you need to have that lower tier to be able to capture more users. It's interesting, AK, you know, they've got to evolve their business model, which they

clearly suggest they're going to do. At the same time, they have to continue to spend on content. I'm looking at Stranger Things numbers here, obviously a runaway hit. 1.3 billion hours viewed in the first month that it was available. All right, great. This is a very much what have you done for me lately business. One hit doesn't necessarily make the next one a hit, too. They have to spend on content because the competitive landscape is greater than it's ever

been in this industry. No doubt. And by the way, this is why I love the move to advertising. Think about all those hours you talked about with Stranger Things. You know, I know there's a kind of practice where people will sign up for the streaming service that they want to watch a show on and then binge the thing and be out in a month and get way more than their money's worth, you know, from the service and move on. When you move to advertising, all those folks start to become people that Netflix can make way more money off of. And it's really important because Netflix has 6 percent of total tv time and a lot of advertisers are drooling at the idea of trying to get these out these uh consumers you

know their message because the advertising industry call these calls these people the unreachables they can't get them on tv they're hard to find on the internet they're sitting on netflix you got 1.3 billion hours watched you know put an ad in front of them it's a major growth opportunity for netflix and it will give them more money to spend on content as you move forward. Yeah. Yeah. I mean, their inventory is going to be incredibly valuable. We know that. Can we, if nothing else, Joe Terranova, who's sitting next to me still at Post 9 here at the New York Stock Exchange, can we at least take these numbers and say that the worst is behind the company rather than ahead? Or is it too early to make that

leap? I think you could say that we have priced in the worst except if we have a deeper recession. And I think that's the point on the entire market, right? And it applies to Netflix here as well. We understand we have an economic contraction. That's going to impact Netflix's customer base. We've already priced in the worst. Now what we're pricing in again is that this company is going to impact Netflix's customer base. We've already priced in the worst. Now what we're pricing in again is that this company is going to grow again. It's going to grow its subscribers.

It's not going to grow the way it did in prior years. We'll have that robust growth, but it's going to grow again. Well, then it's never going to have the multiple that it had before. It should. No. Right. It'll be a different kind of company. It's not going to have the hyper growth that it once enjoyed. Now, it was, as Alex Kantrowicz would suggest, it had a multiple evaluation of a company that was going to grow from here to eternity at that same growth rate. It's no longer going to have that. But because that was an abnormal environment that we were living in at the time. Now we're normalizing the entire environment, right? Monetary policy, society and the equity

markets themselves. So as you move forward, you have to think about this as a pure growth opportunity at a much more reasonable price and a company with some strong free cash flow. Julia Borsten, speaking of cash flow and the company wanting to not lose out on some of the subscribers who are sharing passwords, which I think are many, as the company has obviously admitted, has new details on that as well. Julia? Yes, but I'm actually going to start off with layoffs. Netflix disclosing in this letter to shareholders that it took a $70 million charge for severance costs in the second quarter. This, of course, as it adjusts its model and it streamlines in light of the subscriber declines

that it's seen in the past two quarters. So we've reported on several rounds of layoffs, including a layoff of about 300 employees in June. So noting that 70 million layoff piece. The other piece I would note here, as you just mentioned, is password sharing. This is a company that wants to make it clear that password sharing is a huge opportunity for it. And some commentary here in the letter to shareholders that they're working to monetize the 100 million plus households that are currently enjoying but not directly paying for Netflix. And they say they are experimenting with two different approaches in Latin America to learn more and

that they are going to find an easy to use paid sharing offering so you can share the service and generate perhaps incremental more revenue, if not a whole nother subscription fee. And saying that they're encouraged by the early learnings and ability to convert consumers to paid sharing in Latin America. So early signs of progress there. And one, just one clarification on the foreign exchange, the currency impact for Netflix. The first quarter and second quarter both saw a headwind of four percentage points. The third quarter, they're forecasting a headwind of seven percentage points. So they anticipate currency being a larger problem moving forward. Scott? All right. All right, Julia, thank you

again for yet another important update there. Let me pose the question, Alex, to you that I just posed to Joe. That being, are we able tonight to suggest that the worst is behind Netflix and that better days, in fact, are ahead rather than the great fear that they drop another bomb on this market and that this company is super challenged in the years ahead? I think so. I think for sure. I think part of what we've been seeing has been this post-pandemic hangover. You remember two years ago in 2020, Netflix had 192.9 million subscribers. You know, for that to jump in the way that it did by 30 million is a natural symptom of us being shut inside our houses.

And so of course some of that was going to tail off. And then you add in the fact that they pulled out of Russia and you start to deal with some serious issues which we've seen come up over the previous couple of quarters. OK now as you mentioned we're moving into a more normal period for Netflix. I don't think this is a mass give up of Netflix. I think Netflix still has a very compelling product. Stranger Things like we've talked about is big. They got this new movie coming up this week. And I can't mention as opposed to, you know, going out and spending that money on dining. I feel like Netflix is something you keep in that situation.

Hey, I'm going to make a quick turn here before I let you go, because you've been dancing with us every step of the way here on the Twitter story. This this ruling before I let you go, Alex, by the judge, they're going to have this expedited trial. It's not what Musk wanted. It is what the company wanted. What's it mean to you? There's multiple steps in this case. First of all, it's definitely a win for Twitter, but there's multiple steps in this case

where we can see it go on and on. We have this initial ruling that we're going to see from the Chancery Court. We have the Supreme Court, and then we have enforcement if Musk loses. I listened in today, and I couldn't believe how silly Musk's lawyers sounded defending his position.

And I think, you know, that's the given. We've all known from the very beginning that Musk has violated his agreement to buy Twitter. And then the real question is remedies. What is the court going to do about it? And even more importantly, what do both sides think the court is going to do with it so they can factor that in when they think about a settlement? A faster move to a trial is worse for Musk. So it probably ends up being favorable on Twitter's side if you think about a settlement.

But every lawyer that I spoke with recently, especially many practicing in Delaware, believes this thing is going to settle. My belief is it's going to be somewhere between that billion and 10 billion, and it won't go all the way and have the judge enforce specific performance. So ultimately, I think this was in Twitter's favor in terms of where that settlement goes. But I still don't see Musk being forced to buy the company by this court, although who knows? I couldn't let you go before I asked you about that. I appreciate you guys are great. Thanks for dancing with us here on this breaking story. Netflix earnings and certainly that stock move. Shannon, I'll see you soon.

Alex, I know I'll talk to you as well. Joe's going to be back before the end of our program today. It's down, by the way, Netflix 67% this year, which leads us to our Twitter question of the day. We want to know, are you buying the pullback following tonight's results, even with this little bit of a pop here? You can head to at CNBC Overtime on Twitter. Cast your vote. We'll give you the responses, the results later on in our program. Up next, one of the most important charts in the market. That's what one top technician is calling this name, why he says it could hold all the clues about where stocks are heading following today's big rally. And later, more reaction to that

Netflix quarter. Another shareholder, he's been buying the stock on the way down. We'll find out what he's doing now after that report. The stock's up eight and a third percent in overtime, which is back in two minutes. Welcome back to overtime. Stocks surging in today's session. All major averages gaining more than 2% at least. Let's bring in Mark Newton now, Fundstrat Global Head of Technical Strategy, to break it all down with us. It's good to see you as always. This seemed to have everything that a technician would want. You got 90% volume upside. You got broad base, transport, small caps, etc., etc. Rallying, does that mean that it is something to build on? I think it can be built on in the short run, Scott. I think we probably have another three

to five percent on the upside near term. And then we'll wait and see, you know, in terms of the pullback. But I think, you know, increasingly, you know, you really want to trust this rally and not be it's not one to fade right away. That's interesting to hear you say that, because I believe you've been suggesting that the stock market was going to go lower throughout the remainder of July before it was going to be a good buy. Have the have the bulls front run you a little bit? Yeah, no, to be clear, look, there's a lot of uncertainty as to whether stocks need to make one final low or not. And I think today's move makes me a little less certain that that needs to happen.

My second half forecast was for the S&P to really recover a lot of its losses. So to be clear, you know, my target initially was for the S&P to get to 38.15 in June and then reverse and move higher throughout the second half. But yes, I did actually expect that we could have a, you know, a final pullback that would test if not undercut those lows. That's right. Yeah. No, I keep up with everything you say, my man. And by the way, what you're saying now is that Apple's incredibly and increasingly important to this market. So it's always been important. It's one of the highest percentage stocks within the S&P and the Q's. And, you know, it's had a stealth rally of about 16 percent off the lows at a time when many investors are sitting around the dinner table, you know, mentioning the R word, you know, wondering whether the Fed is going to hike 75 or 100.

And meanwhile, technology has been one of the best performers off the lows. So we see stocks like Apple and Netflix and Amazon, they're all up to the highest levels in more than a month. And so technology, you know, I think is kicking back into gear. And in the second half, we see rates start to pull back. That's just going to fuel that growth trade even more. These these 50 day moving averages that we talk about, whether it's the Netflix, I'm sorry, the Nasdaq, I've got Netflix on my brain for obvious reasons, the Nasdaq getting back there, you know, the S&P, these things that are knocking on the door or finally we're able to get over. Are they as meaningful as some

would suggest? They're not the 200 day moving averages, which may have a more definitive message, technically speaking. But how about that? Yeah, personally, I don't utilize these tools as trading tools on my own methodology. I would look at trend lines that are now being broken, three to four month trend lines on the S&P, also the Dow. The Russell is very close to breaking down trends. Those are more important in my view than looking at a 50 day moving average per se. The fact that structurally, prices are now above those July 8th highs, which is right near 39.18, I think, in the S&P and in late June highs. So we've managed to make some structural progress today that had been lacking for quite some time. So sentiment and cycles gave us the clue that

markets should be bottoming in June, July. Now we're seeing some structural progress. So it's all starting to add up that, you know, investors yet again are getting caught flat footed at a time when technicals are suggesting that markets are slowly starting to improve. 39.36, that's what I'm looking at, right? A 2.75% gain today. What's the number to you? 4,100 I see tossed around, 42. You're not afraid to make more than that, are you? I use a lot of Fibonacci in my work.

So 40.50 to 40.65 is the initial target on this bounce. But if everybody is looking at 4,200, that's really the big line in the sand. I'm not sure that's tested right away. I think over the next few days that we do accelerate and move higher off today's movement, potentially the ECB or we'll see what happens with Russia and Nord Stream. But, you know, in general, you know, my thinking is after the Fed meeting is when we really should start to accelerate up in the month of August. So I like being bullish and buying pullbacks. Forgive me. I wasn't trying to wrap your leg. Didn't mean to step on your toes there. Mark, I appreciate your time as always. Thanks, Scott. Take care.

That's Mark Newton, the technician over there joining us here in overtime. Up next, we are all over the OT action in shares of Netflix. The stock is higher on earnings. We have another shareholder standing by with instant reaction to the quarter, plus the one thing he wants to hear on the always important earnings call. And don't forget, you can always catch us on the go by following the Closing Bell podcast on your favorite podcast app. Overtime is right back. We are back in overtime. It's time for a CNBC News Update with Shepard Smith. Hi, Shep. Hey, Scott.

From the news on CNBC, here's what's happening. The White House says it has intelligence that Russia is laying the groundwork to annex more Ukrainian territory. They're calling it a direct violation of Ukraine's sovereignty. The National Security Council spokesman John Kirby says the Russians are using the same playbook they did when they annexed Crimea back in 2014, installing Russian proxy officials in areas it controls inside the country. Kirby says the U.S. and its allies will respond swiftly and severely with additional sanctions, making Russia even more of a global pariah. A protest for human, for I should say for abortion rights, landing 16 members of Congress under arrest today for blocking traffic in front of the Supreme Court. Capitol police say Democratic lawmakers and others refused to move after three warnings. And all clear at the

Hoover Dam after a fire there today. Look at this. Smoke and flames seen shooting from a building at the base of the dam. Officials at the Bureau of Reclamation, which runs the dam itself, say blown transformer was to blame. The cause still under investigation, but the Bureau says no injuries, no risk to the power grid. Tonight, record heat, deaths and raging fires around London. Plus, Twitter wins a round in court against Elon Musk. And the Top Gun pilots train the next generation of airline pilots. On the news right after Jim Cramer, 7 Eastern, CNBC. Scott, back to you. All right, Shep, appreciate it.

We'll be there. Shepard Smith, thank you. Netflix shares, as we've mentioned, they're higher following earnings a little bit earlier this hour. Joining us now for Instant Reaction, Netflix shareholder George C. He is chairman and founder of Annandale Capital. It's good to see you, George, and I'm sure you're happy to be here on a night like this. What's your reaction?

Thanks, Scott. Great to be with you. And if you're a shareholder and have watched this stock go down 70 percent this year, and a good news for a shareholder is them losing 900,000 subscribers in one quarter. It just shows how washed out and beaten up this stock has been. And it's euphoric on that semi-bad news and the news they say they're going to return to growth sooner than I think most anticipated. So it just shows how badly this stock's been whacked that it is rallying so strongly on less bad news than expected. Yeah, that's true. It certainly is a sign of where we are.

What about where we're going? Do you still have great belief in this company now that the worst may be behind it and it can, over some near-term period of time, return to the kind of growth that you once expected? I think you've got to really tip your hat to management this quarter. They really under duress, really performed super well. But it's a long story. And, you know, the saturation argument is pretty strong in this space. Netflix is clearly the 800 pound gorilla. So if you're going to pick one streaming stock, you pick this one. But it's kind of trapped in no man's land between deep value stock and growth stock. It's kind of a prove me stock on growth. So if I'm an investor, you know, I certainly don't sell the stock, but I make it prove itself before I get more confident about it. And I save some bullets

so I can shoot at the target if it has another deep sell off at some point, because it's hard to believe that we're over this quickly with a potential recession and a potential bear market. It just seems a little too easy and fast. It's interesting when you suggest in the landscape of to believe that we're over this quickly with a potential recession and a potential bear market. It just seems a little too easy and fast. It's interesting when you suggest in the landscape of stocks, of streamer stocks, if you want to call them that, that this is the one you would pick. The problem is in the landscape of streaming services, people are picking everything because there's more competition for Netflix than there ever has been in the past. And obviously that has very wide reaching ramifications for the company itself. Got to have more hits, which means you got to spend more money and you got to keep people from leaving your service to go to others that they, you know, deem that they like their

content better on this day. Yeah, and I know this is optional entertainment and people can of their own volition choose what streaming services they want and how many they want. But this industry is starting to feel eerily to me like a public utility, a lot like an AT&T, Verizon, T-Mobile, where it's just so competitive and price becomes an ever larger and larger factor and people have to cut back because they get overwhelmed with the options. And that's not really healthy in terms of stock price multiples and what the market will pay for stuff like this. So I think investors have got to keep a close eye on that and they've got to demand enough growth out of Netflix that they want to stay in the stock.

It's funny, I literally, as you were mentioning like a utility, I wrote down the word multiple because all I'm thinking is you don't want this to have a utility multiple on it. No way. Yeah, you're not going to see a whole lot of multiples on your original investment if it gets that kind of PE multiple. There's no doubt about it. So I really would still put this in the prove me category and I still own it and I'm sticking with it. And I've shorted some puts against it out of the money right now. And I like it is because just because it got whacked so badly. But whether management can continue to operate in a stellar enough fashion to earn back a higher multiple is yet to be seen.

Yeah, we'll leave it there. George, I appreciate your time very much. We'll talk to you soon. That's George C. joining us. Annandale Capital. He's the founder and the chairman there. Up next, the ultimate buy signal. The one thing Joe Terranova is watching now to signal an all clear for stocks. He's back for halftime overtime. He'll tell us next and later our two minute drill where one money manager sees big upside in the chip space. We're back right after this. In today's halftime overtime, an important level for the Nasdaq, the index closing above its 50day moving average for the first time since early April. Yesterday on halftime, Joe Terranova made the case that that level was the signal for more gains.

This is important because quantitative models will move capital back into the market based on that. And I think we're set up here to move a little bit higher, as the technicals are suggesting. All right. Different day, different suit. Same person is here. The Nasdaq says to Netflix, thank you very much. Exactly what I needed. Yeah, indeed it does. And it also says thank you very much to Apple, because yesterday you got a correction in the middle of the day. And what was significant about that is if you're looking to assume risk, you're always saying, where's my point of reference? Well, yesterday's intraday low never took out Friday's intraday low. Now the market overnight goes higher. We come in in the

morning. We continue to move further higher and higher. And you have a great point of reference at yesterday's low and Friday's low. So the break above the 50-day moving average for the NASDAQ, without question, that is significant because the market has de-risked significantly. Pessimism still prevails, and that provides an opportunity for fresh buying to come into the market. You're also going to see the same effect in the S&P, which is actually going to lead to more quantitative models that are going to go in and begin to take on some more risk. So I'm the investor at home and I say, Joe, we both know this is not going to last. Why shouldn't I sell this rip like I've sold every other one and done pretty well doing so? At some point, potentially, you want to do that. But I think Mike Santoli on Halftime

said it perfectly. This is a market where you could only see 100 feet in front of you. And you have to take what the market is giving you. Right now, the market for the first time is building some positive momentum to the upside. Pay attention, as we just heard, towards Apple. It is very significant. Apple cleared the 50-day moving average before anything else in early July. It's now approaching the 100-day moving average. I heard Josh talking about the 200-day moving average. The 200-day moving average is sitting a little bit above 158. That's

not so far away. So watch Apple. That's also a critical indicator. But go back and apply exactly what Mike said. This is a market. You're looking for trading opportunities 100 feet in front of you. And right now, there is some fresh capital that's coming back into this market and certainly going to do it tomorrow morning after the Netflix numbers. No dangerous moves there ahead of earnings? I mean, as the market seems to be understanding of the currency issue, we've heard it from enough people and you're going to hear it throughout that week, especially. Market's OK with it because it knows what to expect? Absorbed it pretty well. I also think the market gave you an opportunity to do a little bit of rotating in commodities. We'll talk about that on halftime tomorrow, what I did.

But also looking at the financials, Goldman Sachs is a position that I took early this morning. I already own Morgan Stanley. I'm back in Goldman Sachs. You're back in Goldman. Back in Goldman. I sold Goldman in April. You're dropping some news on us here. I sold Goldman back in April. OK. A little back in Goldman. Back in Goldman. I sold Goldman in April. You're dropping some news on us here. I sold Goldman back in April, a little bit higher than where

it is now, but it's a trading environment. That trading revenue from Goldman Sachs was fantastic. Trading environment's not going away. Even as the market rallies with the absence of liquidity from monetary policy, liquidity is going to remain diminished and volatility is going to remain persistently high even as the market moves higher. So remember, this is probably more of a trading range than anything else. But within trading ranges, you have bounces that you can take an opportunity towards. And this is signaling that. OK, so you dropped a Goldman one on us. You're going to save the commodities one for halftime tomorrow.

Twelve o'clock. I was going to pull that one out of you. But since you gave us the Goldman one, I'll let you slide. Halftime tomorrow. All right. We'll see Joe. You'll see Joe tomorrow. Joe Terranova on the halftime report. We'll see you.

Thanks for being here. Thank you. All right. Up next, we're tracking some big moves in the OT. Christina Partsinevolo standing by with that. Christina. Well, earnings season is back in gear, and I'm ready to talk about more cage-free eggs, streaming platforms that aren't Netflix, and retail traders who aren't trading.

I'll have the details after this short break. We are back. Netflix, there you go, in overtime is up nearly 7%. Subscriber losses, yeah, there were some, about a million, but that was about a million less than the street was anticipating. The stock has been up ever since that earnings report came out. It's been down 67% this year, which leads us back to our Twitter question of the day. We want to know, are you buying the pullback following tonight's results? You can head over to at CNBC Overtime, cast your vote,

give you the responses that you had later on in our show. It is time now to track the biggest movers in overtime. Christina Partsanovalos does that for us. She's here now. Christina. Shares of the largest producer of eggs in the United States, CalMain, are climbing right now after reporting record quarterly revenue. If you're wondering why it's a record, because egg prices continue to climb and that company continues to increase the prices. The company also plans to spend $55 million to convert existing hen homes into 1.5 million cage-free ones. The company also says they're going to be paying a cash dividend of $0.75 a share on August 16th. So you can see shares are ever so slightly in the green right

now. Switching gears, JB Hunt Transport Services' Q2 earnings are also out after the bell. Revenue came in higher than expected at $3.84 billion, with an earnings per share of $2.42, which was a big beat. The street was expecting $1.61, I should say, a share. And shares right now, though, are falling in the OT down 0.8% at the moment. And then you've got shares of retail trading platform Interactive Brokers. And they are also in the red, down over 2% right now in the OT. Weaker trading action, of course, amid lower markets. You got Q2 total daily average trades that went from $2.5 million

to $2.1 million. Net interest income did increase 27%, but not because of lending activity, which declined actually, but because of higher interest rates and customer balances. Lastly, they also took a $158 million hit on foreign exchange conversions. And Scott, since you talked about it, Netflix lost fewer subscribers than expected in its latest quarter, and that's having a trickle-down effect on other streaming platforms. Take a look. Walt Disney, up. Warner Brothers, up. Paramount Global, also up, falling in tandem with Netflix, which is climbing over 6% higher. Back over to you. Yeah, we see a theme developing there.

Christina, thank you. That's Christina Partsenevelos with our overtime movers. Up next is our two-minute drill where one money manager sees big opportunity in a chip stock that's been underperforming the rest of the semis this year. We'll give you that name when overtime returns. All right, welcome back. Time now for our two-minute drill. Joining us now, NFJ Investment Group Chief Investment Officer John Mowry. We'll get to your picks. It's nice to see you. But first, a thought on this rally, whether you think it is sustainable in any way or

not. Great to see you again, Scott. A couple of things I would say about the rally. We have been bullish on the equity markets, as you may recall from our last conversation. A couple of things I would say, you know, the Fed has now moved into QT and they're going to ramp up to $95 billion a month in terms of the bonds they're going to buy back. What's interesting about that is it'll take five years for them to take off the $5 trillion they pumped in since the start of the pandemic. I don't know about you, but I'm pessimistic that they'll get that far. So when you think about the fact that it'll take that long for them to pull out all that money and you've already wiped off 10 trillion from the capitalization of the equity market, we think we do have a floor here. And secondarily, I would say that if we do come out with a negative GDP print, I would personally like to see that because I think that markets will get more incrementally positive because you'll probably see the Fed have to tap on the brakes if that occurs.

OK, so your thesis is very much built on the great pivot that the Fed is going to make. I hear you. A lot of people think the same way. Let's do your picks. Skyworks, interesting place to be right now. Yes, we like the semis. A couple of things I would say, you're getting Skyworks eight times earnings, over a 2% dividend yield, healthy dividend growth. And their biggest customers are Apple and Samsung. So they're tied to that smartphone market. A couple of things I would say that is really interesting about Skyworks is that the majority of their profits and revenues actually come from the emerging markets. And we're actually bullish on the emerging markets. China actually is easing, not tightening, one of the few large economies that's doing that. And in addition

to that, Scott, you're getting the emerging markets at the steepest discount to develop markets in 25 years. You've got to go all the way back to 98 and 01 to see emerging markets this deeply discounted. And the long dollar trade is long in the tooth, I would argue, and that emerging markets will benefit. And so will Skyworks if that breaks. What about Alexandria Real Estate? I don't think we've talked about that ever. ARE is the ticker. I like it. I picked one you hadn't seen. That's great. So it is an office REIT. So who likes office REITs? No one goes to the office anymore. In addition to that, it's a biotech office REIT. So it has biotech, life sciences, but there are many of the customers

you might know, J&J, Amgen, Moderna. What's fascinating about it is, is many of the biotech stocks have been pelotoned over the last year. And AMGEN, excuse me, and ARE has been caught up in this. ARE, what's so interesting is that they have very high collection rates. Their clients can't move easily. They have to be in strategic locations close to universities like San Diego or Boston. And you can't just pick up and move a lab because of the protocols and procedures needed to run those laboratories to another office building. So they have very high collection rates and with a 3% yield and an attractive FFO, we see this as a buy. All right. And lastly, Garmin. Tell me why about that one. Garmin. Garmin is a company I love because it's a great example of an evolution of a traditional

company that was predominantly GPS devices on a car when you went to go rent one. Today, it's marine, it's aviation, and it's fitness, smartwatches. And if you look at this company, you're getting a company that has a lot of elasticity of demand because of those customer segments. And the fitness segment in particular, Scott, is actually growing quite quickly. It was up 50 percent year over year. The company just initiated a $ million dollar buyback program, sports nearly a 3 percent dividend yield. So we like Garmin.

And the last thing I would say is banks have come out and said, hey, the consumer looks a little bit better than we thought. That will also benefit a name that is squarely in the consumer discretionary sector. All right. We've got to bounce. I'll see you soon, John. Thank you. That's John.

Thanks, Scott. Up next, Santoli's here with his last word. Welcome back. Let's get the results of our Twitter question. We asked, are you buying the pullback in Twitter or not in Twitter? Why does it say Twitter? In Netflix. After tonight's results, 24 percent of you said yes. Seventy six percent said no. All right. Nonbelievers. Mike Santoli is here for his last word, but they don't want to get on the Netflix train. You could understand the wall of worry. I mean, they're basically this huge wall on the chart that goes from 300 down to 200. So I think

relief makes sense after this report. You know, you're netting more subscribers over the past quarter and the current one relative to expectations, even though the guide was light. Not enough probably to get it really out of the penalty box just because it's in this kind of busted growth stock zone where you really have to prove that there's a new run rate of growth. Free cash flow is fine, but not that impressive relative to the market cap. I do see it. It's not a bellwether really for other stuff. But look at a PayPal where it also crashed a similar degree to a similar valuation, a similar situation where you have an earnings decline this year expected to get back up to 2021 levels next year. Those are the kind of stocks where you really had a ton of faith at the highs.

And now it's a show me situation. I was going to ask you if it gets the market out of the penalty box or maybe a little further away from it. I think it gets people look taking a fresh look at things that are down a ton. If you look at the stocks that didn't work today off of earnings, J&J, IBM, they are the ones that outperform coming in. The ones that really were blasted, that have low expectations, people are not really expecting much of. Yeah, there's a chance that you have further follow through. It's going to be hard to place a bet either way before the big tech earnings of next week, right? We just had Taranova talking about, you know, the NASDAQ getting over the 50 day.

Yeah. OK, those are all great signs. But now it's a show. By the way, those moving averages are all moving down. So it still takes a while to turn the trend. But I do think that there's plenty of room to have more relief and more belief before it becomes kind of a real moment of truth situation in terms of make or break on the levels. Even the technicians feel like I feel like they're on the crux of breaking and getting positive. Almost. I think it's going to be a high burden of proof there. They're going to still say, you know, energy is the only leadership group. And it's going to take a while because it should. You have to have the market prove it to you. But, you know, I think the only leadership group. And it's going to take a while because it should. You have to have the market prove it to you.

But, you know, I think the June lows are looking interesting as possibly holding. This was a good one today, though, right? Really broad-based, 90% upside. Those kinds of things we've cited on the downside. And two out of the last three sessions you had that kind of breath. All right, good stuff. Thank you. That's Santoli with his last word.

He'll have it again tomorrow. I'll be back at the desk, too. Fast Money begins right now.