Closing Bell - Closing Bell Overtime 8/30/22

Episode Date: August 30, 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.

Welcome, everybody, to Overtime. I'm Scott Wapner. You just heard the bells. We're just getting started. CrowdStrike earnings, they are imminent. We're going to get you those numbers, the stock move that follows, and everything you need to know. We're also going to hear from StarTech analyst Dan Ives today on what Elon Musk's latest move means for the future of his deal for Twitter, that drama taking a new turn today. We begin, though, with our talk of the tape, the fight over stocks. That's what it is. It's a battle that begins and ends with the Fed, and whether it will follow through on Chair Powell's promise to crush inflation or back off under the weight of a sure to sag U.S. economy. Let's ask Virtus Investment Partners chief market

strategist Joe Terranova joins us now. It's good to see you again. Is that that's what this really feels like, Joe. It's a battle. Either you believe the Fed or you don't. And you know, and you don't want to fight it or you do. Yeah, I think what happened today, Scott, is that we lost the technicals as the leading catalyst for which way the market is going to go. You had the green light in the middle of August from technicals, that green light quickly over the last several days since Chairman Powell's testimony. It was flashing yellow and now you've got this red light. So it's not the technicals anymore that you're paying attention to. Now it's fundamentals, strong consumer confidence, strong jolts. It elevates in terms of priority Thursday's ISM manufacturing report and Friday's non-farm payrolls report. With each of those economic

data releases, markets will be gauging 50 or 75. Which way is the Federal Reserve going to go? 4,000. Looks like we're getting below that here at the close. So that's where we stand in overtime today. Significant or not? As I said, you lose. There is no technical catalyst any longer. You cannot rely on technicals in the market. You lost 100 day very quickly. You lost the 50 day very quickly. You now break below 4000. I don't think that means you're selling equities. I don't think that means you're buying equities. I think you're in this place of purgatory. And if you're able to find a select few individual stories where the technicals still look good, like an apple. Well, you want to take a take that as an opportunity. Will you tell me why the technicals still look good in Apple?

Because I could easily make the case if you think that that that the Fed is going to follow through on what it suggests it's going to do and rates are going to rise like they did today on better than expected data, that that's going to be negative for Apple. It's no surprise that Apple closes down under 159 today. It's a loss of one and a half percent. Why wouldn't that slide continue in this environment? Completely fair. But a lot of what I do, Scott, it's non-discretionary, it's rules-based, it's take the emotion out of it. And if I'm studying right now the technicals in Apple, they still look good. They're probably flashing that yellow traffic light signal, warning you that potentially you're going to need to stop, but we're below the 200-day moving

average. The 50 is above the 100 day moving average. The technical formation, if you are relying on that and you can still in Apple, it looks good. I know, but the stock price continues regardless of whether the technicals look great. To some, it's going to sound like technical mumbo jumbo. If the stock continues to go down, who cares? Well, if the stock continues to go down, you're going to have a point of reference stop. So we're sitting right now at 158.92 is the closing price. I see 153.64 is your level where now that red light is flashing because you've broken below all of the technicals and the moving averages. So you can rely on technicals.

They have a tendency to guide you in the right direction. They have since July. Apple, I believe, was as high as about $175, $176 got. You got a pullback down yesterday to $161.5. You know that's where I purchased the stock. So I allowed $15 worth of price correction to unfold. And I think I'm entering a low-risk, high-point-of-reference scenario where I know what my risk is. It's well-defined. It's pretty tight.

It's down around 153, 164. And if you're right, the market responds to a more ominous signal from the Federal Reserve, I'll be out. So you agree with Mark Newton then that Apple right now holds the key to where the S&P 500 goes from here? Because that was his note today. Without, yes, without question. I think Apple and I also believe the price of crude oil is significant as well. I think what was interesting about today was there was really nowhere to hide, was there? Growth, value, both down. Energy, which was the leading sector month to date, that was down significantly. That's where myself and everyone else right now is carrying it overweight. So when you see that type of formation where risk is getting punished across the board,

that sends a very negative signal to the markets overall. But Apple, without question, at 7 percent weighting of the S&P, it is going to be a leading indicator of where the market is going. Doesn't it send the action today that you just cited, underscore it, don't fight the Fed market, as I asked at the very top? Isn't that what this is? The Fed has the ability, if you want to use that word, to push everything down. Well, I think the Federal Reserve has that ability. And what they're trying to elicit is an economic contraction. And I think the confusion came this morning in the jolts, in the consumer confidence, where you kind of scratch your head and said, wait a second,

a lot of the economic indicators recently are flashing that the Federal Reserve is being successful in demand destructioning, in weakening the economy, and that's what you want to combat inflation. Now you're kind of puzzled by what you saw today. That's why I said before, ISM manufacturing, non-farms payroll on Friday. That's really important. Candidly, good news is going to be bad news for the market as we move forward. Well, that's what we saw today, right? Perceived economic strength. Today was a reminder. I mean, it's no surprise that rates shot up on the 10-year to 311.

Today was a reminder of what the Fed's going to do. It's a reminder that for those who suggest that, oh, inflation has peaked and the Fed's not going to have to do all that it says. Today was a reminder of the job at hand. The question is, do you think they're going to follow through? And I want you to listen to what Mohamed El-Erian said today when he called into the halftime report. The only question I would have is not what the Fed should do, but what would the Fed end up by doing? Because if it flip flops, that's actually worse for stocks than if it's permitted and getting the inflation genie back into the bottle. So I think the uncertainty around the Fed is actually much higher than what's suggested by the discussion. Right. It's a show me Fed, right?

They can say whatever they want. He says by virtue of the fact that they still haven't, you know, had a, you know, come to you know what moment over their transitory blunder that they can't be trusted to follow through, even as they talk tougher than ever. Show me and then I'll believe you. That leads me to where I started this whole conversation. It's a either don't fight the Fed or just say, you know what, I don't believe them. So I'm not going to get too negative because they're going to have no choice but to pivot. That's very accurate. I agree with that. I think it goes back to my comments from months ago where I said the Federal Reserve lost credibility. They're trying

to restore the credibility now. I never believed in the pivot. I never believed in the pause. I think the Federal Reserve has to be committed and be disciplined to combating inflation. And by doing that, they need to put forth a very aggressive tightening policy. The question ultimately becomes, Scott, what if they continue with that tightening policy and they're not successful? That's the worst case scenario. If they're not able to bring down inflation and they keep raising rates, well, there's your stagflation environment. That's troubling. That's problematic. But exactly where you began the show, I am telling you that after today, take the technicals,

take all the numbers which I rely on on my board, put them to the side. They worked from July up until the end of August. Now it is squarely on the economic data releases and the Federal Reserve, the response to that, and if they're actually able to be successful. Okay. Let me just tell everybody a crowd strike is out, and it looks to me like the stock's trading lower in overtime by just a few bucks. We can show you what's happening here. Leslie Picker's going through this, and she is going to pop on in any moment now and give you the absolute reason as to why the stock seems to be trading lower.

A stock that, by the way, has outperformed relatively to the S&P this year as cyber has remained a hot spot in the market. We may also hear from a shareholder in that. We're trying to work that out as well. In the meantime, let's broaden our conversation about the market. Bring in Brenda Vangelo of Sandhill Global Advisors and Kevin Simpson of Capital Wealth Planning. Brenda, I'd like to get your take. Again, S&P below 4,000. You have serious questions on which side of this debate we should be on, as it truly is. It feels like a battle. You either believe the Fed is going to do what it says or you think they're going to have to pivot at some point. And thus you can find some reason to be more bullish than most. What side are you on?

Yeah, I agree with Joe's earlier comments in that we still need more data. But I think with some of this ancillary data that we're getting we're getting a picture of a strong economy right but we're also getting data suggesting that inflation is continuing to come down with home prices coming down finally a lot of food related commodity prices have come down hearing more and more stories about various industries being over inventoried which is good for the inflation story. So I think we're likely to see inflation

continuing to come down. We are of you that if we look out of the next six to nine months we think we're close to the end of this rate hiking cycle- but it certainly depends on a lot of things no doubt the feds gonna raise rates- late in September.

And then likely two more times this year but they will have at that point done a lot and we will be in restrictive territory so I think there's a chance they're likely to pause. And we can see how their- actions are impacting the

global economy if we don't have a clear picture by the end of the year. Which we might have. But I think as we look at in terms of what do we do. Right But I think as we look at in terms of what do we do right now, I think if we look at what we're expecting for global growth and growth within the U.S., we're likely to see a slow growth scenario playing out. So if we look at what's worked over the last couple of years, it's been a lot of cyclical sectors. And I think those

groups are just going to have a much harder time in that sort of economic environment. And I think those groups are just going to have a much harder time in that sort of economic environment. OK, so I think we're likely to see a return back to high quality growth companies. Brenda, sorry to just to jump in here. Leslie Picker now has CrowdStrike for us. Les, what do we see here? Look to me like it was a beat, but the stock was trading a touch lower. What can you tell us? Yeah, so it was a beat for the second quarter, both top and bottom lines, beating expectations for Q3 guidance on both the top and bottom lines, as well as for the full year. So all around a pretty decent report.

But as you mentioned, the stock traded somewhat lower. If you read through the analyst reports leading into the earnings today, it appeared that a lot of people were expecting the company to beat. And so perhaps this is a bit of a sell on the news, at least from first glance here. In terms of net new subscription customers in the quarter, the company added over 1,700 for a total of 19,686 subscription customers as of the end of July. That represents about 51% growth year over year. And just some color, too, from the quarter from George Kurtz, which is CrowdStrike's co-founder and CEO. He says a quote in the release that as organizations respond to macroeconomic conditions, they are prioritizing investments and looking to standardize with a security partner they can trust with better protection, less time, fewer resources, and lower total cost of ownership, he says their ability to deliver immediate ROI and consolidate the security and IT stack

significantly sets them apart from the competition. So clearly that helped drive some of these beats during the quarter. You can see, though, shares now positive, trading up about half a percentage point. So a little volatile in the after-hours trades. Yeah, I apologize for putting you on the spot if you don't have this number in front of you, Leslie. But a lot of people were looking for the ARR number, the annual recurring revenue. I know that Josh Brown was going to. I do have that. What is that? What is that number? So ending ARR grows 59 percent year over year to reach two point one four billion dollars.

OK, that's the magic number. I appreciate that. That's the magic number because $2 billion seemed to be the line in the sand from shareholders like Josh Brown. Let's stay with me for a sec. Josh is in the conversation now on the phone, right? That's what you told me on the halftime report today, right, Josh? $2 billion was your line in the sand. You wanted to see them get above that, and that is what they did. Yeah, that's a big number. I think the analysts were looking for 2.1, so they slightly exceeded it. They gave better-than-expected guidance for Q3, which is really important during this earning season.

Think about how many technology companies have not been able to do that. And that number, that 51% or 59% year-over your your growth in in subscribers uh... there are companies doing half that number trading at the same multiple as crowd strike so clearly uh... this is a company executing we know it's not a cheap stock nor should it be very few companies growing at this case in in uh... in this this this period of time so very happy to hear what we heard. Yeah.

We've got to find out, I guess, more of what the outlook is going to be. But you touched on the fact of, you know, growing into a perceived elevated multiple. And I know you got to run, and I do appreciate you calling in, but you're confident that, you know, this stock is going to continue.

And by the way, I feel like, you know, we got through the bulk of the key part of earnings season pretty unscathed. This is an important stock at this very moment, given what technology is doing. And to answer the bell, so to speak, I would think is pretty important to the overall position of some of these higher flying tech stocks. Yeah. So regarding the lack of a positive follow through in the after hours, I would just point out the stock was up today in a lousy tape. It already rallied after Palo Alto reported. So like if you've been a shareholder, you've already got the benefit of people sniffing out the strength in this particular business.

And then just bear in mind from the lows over the summer, the stock's up 50 points. It was 137 or something. It's almost 200. So it's not as though you're not getting positive feedback from this great news. It's that, you know, you couldn't day trade it today, maybe. You had to have been in it all this time. So I'm a longtime investor in CrowdStrike. Nothing about what I've seen or heard tonight so far changes that outlook. All right. I appreciate you doing us a solid and calling in. I was hoping to hear your voice on this, and we're happy to have that. Yep. Thank you. That's Josh Brown. Leslie Picker, my thanks to you as well.

Pop back on if you've got anything that comes further from that earnings report or anything else you see that we need to know about. So, Kevin Simpson, you know, I heard Brenda suggest that, okay, maybe the Fed is nearing the end of the road for what it has to do. Are we appreciating enough, however, the fact that rates could be higher for longer? Who cares if they're near the end of the road? If rates stay elevated for an extended period of time, does it really matter? Do we do we forget how long Chairman Volcker held rates at the level that he raised them to before they started to come down? This Powell channeled Volcker. I'd say he also channeled Mr. T with that speech.

It was short, sweet and to the point. It was a knockout. You know, definitely the previous speech was very similar in terms of what he was saying. But this was completely different in terms of tone and messaging. So I'm not one of the guys that's going to say, you know, he's full of soup. We're going to see a dovish pivot. I think at this point, they're going to put the pedal to the metal. They're going to gear down on this. And the only way that we have a chance of getting past this inflation is for them to be aggressive. So you look next month and you say, will it be 50 basis points? Will it be 75 basis points? Probably a matter of semantics. You know, they talk about being data driven. Not sure that was the proper way to handle things. You get started a little bit behind the eight ball. You and Joe were talking about the temporary,

transitory comments. So I think at this point, you know, they're going to prove that they're going to do what they say they're going to do. And when quantitative tightening starts and there is not that liquidity in the bond market, you know, we're already seeing it with with rates right now. And we're a market that wants to be proven. You know, like you said earlier, show me. Yeah, I think they're going to do just that. Joe, you suggested high quality growth was a place you wanted to be. Does CrowdStrike fit that bill? You bought that June 8th, $178. Yeah, I bought, yep, I did. And the reason behind that, and Josh spoke a lot about right now, the revenue growth near 60% year on year. But also, Scott, you have to look at this company in terms of the free cash flow generation. It's remarkable to see a company that's somewhat immature as relates to its growth to record free cash flow generation up near 70%. And that's exactly what this company is doing. So I think this company is positioned properly where it's

insulated from a slowdown in IT spending. Enterprise will still spend on security. That is the sweet spot for CrowdStrike. It's a sweet spot for Fortinet. It's a sweet spot for Palo Alto Networks. I choose CrowdStrike because I think that's the right place to be. And I think the company is delivering and rolling out proper products. OK, Kevin Simpson, I see you have a new position in Qualcomm, which is fairly interesting to me. Cyclical tech, smartphone market seems somewhat weak. Why this? Why now? Well, just the past week and a half, Scott, while you were away, we sold out of our entire Apple position, our entire UPS position, and our entire American Express position.

We had a lot of dry powder. We had been writing calls against Apple so aggressively. The thing was up like 30 percent. So you never lose money taking a profit into strength. But as the markets pulled back Friday, early this week, we definitely have Apple on our buy list. I mean, no question about it. Today, it's getting really darn close to wanting to be starting to reinitiate it.

But in the interim, we started buying some UPS back and I wanted some exposure in tech. I figured Qualcomm was a little play on Apple as far as a supplier. It's got a 12.5 multiple, 20% year over year growth. I'm not saying they're going to keep up with that, but I'm going to get paid a 2% dividend while I wait. And I still think at that multiple 5G play still makes sense. Apple supplier makes sense. And that valuation doesn't scare me. What's your number on Apple when you look at it and you say, now I just can't pass it up? Do you have one in your head? Yeah, 145 to 155. Oh, so you think it has further downside. It's interesting because I know you just heard Joe say that he just got in. Well, I mean, I would buy it today. I mean, we can we can initiate a position here. I mean,

I like it at these levels, but he also said 153. You might get stopped out if it gets down to that 153 to 145 range. Again, I'm a longer term investor for this particular name. I'm going to load up on it. Yeah. Brenda, high quality growth. Does this just make sense to you? It does although I'd say in the grand scheme of things are looking at large cap tech both Apple and Microsoft. Are you know I cut the upper

end of their valuation ranges it doesn't mean that we they can't continue to work certainly there are they are so enormous within the S. and P. five hundred. The any money to simply going into to passive exposure there. Is can be

buying those stocks if we start to see people move back into the equity market in a more meaningful way. But when we look at other names like a Google like an Amazon like an Nvidia. Where valuations a little more reasonable relative

to themselves- and in some cases where we know- there is some bad news but it's well known and telegraphed and not not and in our view a description of what's happening in terms of the quality of the company. And I'm referring to NVIDIA, where we know they do have an inventory problem, but it's not structural. It's because we're seeing more of a return back to normalcy in that part of their business. But

when we look at that, these are the three names that we really like within that category of high quality growth. And we think we are likely to see these type of names lead in the market if we look out over the next six to nine months. Brenda, I appreciate it. Kevin Simpson, thank you. Joe Terranova, my thanks to you. Control Room, I'm going to call an audible for a second. Just throw up shares of Chewy before we go to a break. We're going to have more later on in the program. I don't want to miss a stock that's falling. Looks to me about 10 percent, 9 percent at this very moment. Revenue missed estimates. The EPS was expecting a loss of 11 cents. Looks like they did a five cent profit there. So they beat on the on the bottom line.

Again, the revenue miss and looks like guidance was weak, too. We're going through that. We'll have more. I just don't want to go to break and leave a stock down 9 percent, which is in some respects a popular stock. It's a household name. And I wanted all of you to see that before we do take our break. I do want to show you our Twitter question of the day as well. We want to know which of these August gainers would you fade? Would it be Norwegian Cruise Line, Deere, PayPal or Disney? Head to at CNBC Overtime on Twitter. Cast your vote. We'll share the results later on in our show. Up next, we're playing the pullback in energy. One money manager beating the market sees big upside ahead for that space. We'll find out the names they're betting on. Overtime is back

in two minutes. All right, welcome back. Chewy earnings. I mentioned they're out. Courtney Reagan has gone through the numbers. What do you tell us here? The stock's down, looks 8.5%. Yeah, it's the guidance, of course, Scott, that what is really disappointing here. But as you pointed out, we did have a surprise profit of 5 cents when the street was looking for a loss of 11 cents. And then the current quarter or the second quarter, I should say revenues did miss expectations, not by a lot, by a little at 2..43 billion. The street was looking for $2.48 billion. However, they are forecasting weaker than expected third quarter guidance as well as full year revenue guidance

that's also weaker than expected. The company basically saying they continue to expect sort of lumpy spending from the consumer when it comes to discretionary and non-discretionary goods. Shares down a little bit better than where they were, but still down more than 8% here. Margins did increase about 60 basis points. I guess that's a good thing. A little bit over 28%. Scott, I'm going to send it back over to you. I appreciate that, Courtney.

Thanks for the color there, Courtney Reagan. We do have a news alert on Goldman Sachs. Leslie Picker back with us with that story. Les, what do we see here? Hey, Scott. Yeah, about two, two and a half years into the pandemic and you're starting to see Wall Street really update their protocols for covid testing, exposure, vaccination. Goldman Sachs, no exception. We obtained a memo that was sent out internally updating their COVID-19 guidance for both vaccinated and unvaccinated individuals. That consists of, as of September 6th, all Goldman colleagues, according to the memo, that's the language they use, can enter their offices in the Americas,

with the exception of New York City and Lima. In New York City in particular, they require still a vaccination to enter the office unless an employee has an approved medical or religious exemption. They're also ramping down provisions of test kits on their campuses and their offices, starting to kind of update more of a return to normal. They also say with regard to coming into the office full time, they've been one of the leaders across Wall Street that's really required people to be in the office more than many other firms. However, they say that for those who have been working remotely, if you have not been coming to the office, speak with your manager to ensure that you understand and adhere to the division's current return to office expectations.

So still kind of on a case by case basis with regard to returning to the office full time. Scott Solomon, as you said, the CEO has been among the most vocal, right? As you cover this beat, The most vocal, at least certainly towards the top of that list of wanting employees back in the office. I think of Morgan Stanley's Jim Gorman, sort of his right-hand man on that issue, if you will. Yeah, and Jamie Dimon as well,

especially more recently, has been much more vocal about wanting, especially their senior leaders back in the office. Of course, all of these firms deal with a lot of client interaction. They deal with a lot of kind of creativity in terms of coming up with different, say, deals or different investment advice, depending on the division within the firm. A lot of that manifests in person. And some of the big justifications that these leaders have used is that, you know, for younger employees, it's important for them to sit next to people who

are more experienced that they can learn from and so forth. So they have definitely been across kind of corporate America champions of having people back in the office, if not full time, at least on a hybrid basis for a while. Appreciate it, Leslie. Thank you, Leslie. Picker back with us there up next. We have a new twist in the Twitter takeover saga. Elon Musk making a fresh attempt to break his bid for that company following those explosive whistleblower allegations. Star analyst Dan Ives with us on what this means for that deal. He joins us next. CNBC is delivering Alphas just 30 days away. I will be there. It's in person again. September 28th.

Cannot wait. Scan the QR code to register. Overtime. We'll be right back. All right. Welcome back to 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. President Biden declaring just minutes ago that he's determined to ban assault weapons in America. He referenced the original 1994 assault weapons ban and said we can do it again. The president in the battleground state of Pennsylvania today ahead of the midterms to highlight the administration's crime prevention policies. Tensions with Iran. Its revolutionary guards tried to capture a U to capture a USC drone in international waters. The Defense Department releasing this video showing the Iranian ship towing the drone. A defense official tells NBC News that a U.S. patrol ship identified itself, then demanded

the release of that drone at least five times. And after no response, the ship launched an inflatable boat to go out and cut the tow line. But the Iranians, they tell us, cut it first and released that drone. And the Mississippi State Capitol without reliable drinking water or even enough water pressure to fight fires or flush toilets. State of emergency declared, National Guard brought in, and no timeline yet on when the water plant will be back online. Tonight, much more on what is a building crisis in Jackson, Mississippi, plus a violent gang charged with robbing athletes and celebrities of the bling they flaunt, and Netflix hit with a defamation suit over the series Inventing Anna right after Jim Cramer.

7 Eastern CNBC. Scott, back to you. I appreciate that, Shep. Thank you. That's Shepard Smith. We'll see you at 7 o'clock. All right, we are back in overtime. It's time to double down on dividends and energy as the pullback continues, says one fund manager beating the market over the last year. Joining us now, Mike Morey.

He's the chief investment officer with Integrity Viking Funds. Why now? Why is now the time to start bulking up on dividends? Yeah, good afternoon, Scott. Thank you for having me on. When looking at, you know, dividend paying stocks in a rising interest rate environment, we just feel that, you know, the cash flow, the pre-cash flow that the typically dividend paying companies make is much more valuable. And when you compare them to more growth orientated names that are priced more so on their future cash flows it just gives you more of an assurance of of returns

from dividend-paying names and on the energy front even though energy's had a great start to start to the year we feel that we're kind of in the early innings of a multi-year bull cycle for the for the energy sector. I feel like rising rates means the potential of a deteriorating economic condition or environment. Do you worry at all about dividends being cut if in fact a recession materializes? Not not the Integrity Dividend Harvest Fund. We have a strong process of focusing on companies with long histories of raising their dividend uninterrupted. And, you know, companies that have, you know, 10, 20, 30, all the way up to 50 plus years of consecutive dividend raises gives us confidence that we're going to be able to, or that the

companies we own are going to continue to raise their dividend. And this policy has allowed our fund to raise our annual distribution to our shareholders on an annual basis ever since the inception. Yeah. You talk about energy, but I know you like health care, which you call a sweet spot right now. Yeah. So within the defensive sectors, consumer staples and utilities are beginning to are looking a little bit expensive. But health care, we are finding some value there. And two

names that we like right now are AbbVie and Merck. But these companies are providing a solid growth, a good base dividend, and both of them have very strong pipelines. In tech, do you like Broadcom? Yes, Broadcom is a very, you know, one of our top holdings. They, again, provide a great dividend. The recent acquisition they made of VMware diversified their cash flows, so it's much more stable, which is going to equate to a more stable dividend. They initiated or started paying a dividend 10 years ago and have paid it uninterrupted since. This will be their 11th year.

And in fact, they've raised their dividend by 35 percent annualized over the trailing five years. What's your number one energy pick between the ones you have on my list, Exxon, Diamondback and Cotera? If you had to pick only one, which one of that three? Well, shorter term, natural gas is certainly catching a bit. So Cotera Energy is probably going to fit the bill there. They have solid execution within the Appalachian Basin, and they do have some exposure down in the Permian. That occurred via the merger between Cabot Energy, or Cabot Oil and Gas, and Simerex Energy. But on a longer-term basis, I think Diamondback is probably our top oil producer

pick right now. But you can never go wrong with Exxon, a well-diversified company with strong free cash flow, strong track record of paying a dividend. Okay, we'll leave it there. Mike, I appreciate your time. That's Mike Morey joining us here in Overtime. Up next, a twist in the Twitter Musk saga. Star analyst Dan Ives is here to unpack the

impact there. And do not forget, you can catch us on the go following the Closing Bell podcast on your favorite podcast app. Overtime's back right after this. Welcome back. Twitter shares lower today. Elon Musk making yet another attempt to end his takeover bid of that company. Musk's latest move coming after those explosive allegations from that former Twitter employee now turned whistleblower. Star Wedbush analyst Dan Ives here with me on set with his take. So here he goes again. His latest effort to terminate the deal. Successful or no? Look, I think the Zacco situation for Musk Christmas came early. I mean, he was going into Delaware

in terms of October, I think in a very weak position legally. And I think, of course, even from a substance perspective, this is significant in terms of Pandora's box, what it could open, not just in the bot issue, but in terms of broad even on the security claims. There is a belief, though, that this doesn't really change all that much. And at the end of the day, again, I just always go back to the fact he had the opportunity to do diligence on the deal. He didn't do it. And now he's looking for any reason possible to cry foul so he can get out of a deal he doesn't want to go through on. Yeah. Look, the scapegoat issue is a big thing, right? Because he's really between a rock and a hard place. I mean, our view with Musk is ultimately is if he steps in the court in October, he's either going to have to buy Twitter at 5420 in terms of, you know, that ultimately being forced in the courts or a settlement of five to 10 billion potentially out of court. So right now, I believe this is all a game of high stakes poker that ultimately forces Twitter and Musk back to the negotiation table in September. Well, that's the thing. There are

those who suggest that that's just not going to be the case, right? That the judge is not going to say, OK, you guys just figured out and settle this. It's like you agreed to the terms. Go through on the terms. Why isn't that more plausible? Yeah, well, I think the Zacco situation has really, I think it's changed the calculus because it's not just about the bots. It's about some of the security claims. He'll be in front of Senate in mid-September. And I think for Twitter, you can't put the genie back in the bottle. And I think that's really the issue here is that they were going and even in the stock. I mean, you're talking about a stock that was really reflecting that ultimately Musk was going to have to buy Twitter. I do believe now you've seen a change, not just in terms of how the street views it, but in terms of just the broader soap opera playing out.

I mean, if you're Musk, you can't invent new genies, though, right? I mean, you can't claim like there are these new issues which aren't necessarily issues to come between him and the deal. Unless, and I want you to take here too, what if he sues in federal court alleging fraud? Well, I think there's a lot of variables that this could go down. And I think ultimately, Musk, you're starting to see he's now starting to be on the offensive. Ultimately, Twitter had an iron hand in terms of going into courts. But if you look now, and it's reflected in Twitter stock, this has changed the variables.

And the Zacco situation is really sort of the silver bullet that I think for the Musk camp really came from a timing perspective. Interesting time. So your ultimate call is likelihood of a settlement. Is that ultimately Musk buys Twitter for a lower price for $50 and ultimately they don't even step into court in October. 50. That's all. I mean, he pays 50 instead of 5420. You really think he wants to pay 50? I thought you were going to tell me he pays like 40. Well, I think right now for Musk, it all goes back to going into court.

He still legally is in a weak spot relative to the deal. And the Zacco situation has changed the calculus. But I still believe if he walks into court, he's either buying Twitter 54-20 or ultimately a $5-10 billion settlement.

That's what's reflected in Twitter stock. You said October. He's trying to push it to November. Saw that news today too, right? Yeah, I still, I believe that that judge stays in October in terms of that being the timing. And ultimately, this is a get out the popcorn because I think there's gonna be more twists and turns ahead post Labor Day. Better believe that. What about for Tesla? Right.

You've said I think you've called this a sideshow and not in a good way for Tesla shares, which, by the way, haven't done all that bad of late. So does it really mean anything material there? Yeah, it was a black eye for Musk was an overhang on Tesla stock. But I do believe since some of the, you know, the leverage in terms of the Tesla stock has changed, you've started to see that overhang removed from Tesla stock. And now the street really focuses on the fundamental story in the China production playing out. Don't you follow CrowdStrike? Yeah, so look, in terms of CrowdStrike, my comment on CrowdStrike would be you combine this with Palo Alto.

It's our view that that continues to be a golden age for cybersecurity. It's bullish. You have Zscaler and another weak point ultimately reporting. But it just shows that that demand story continues to play out, and Palo Alto, in our opinion, still. Why is Palo Alto the best? You called it a, quote-unquote, table pounder before. Why is it the best of the group?

Why not just own multiple names in this hot space? Well, you could own the basket. I mean, you own CrowdStrike. You can own Palo Alto. You can own some other names. But the reason I view that as a table pounder is because of the install base you're only 30 through on the cloud story and ultimately as this plays out this is a stock that ultimately could be mid sixes sevens as that they ultimately execute you look at that crowd strike street was so laser focused on that now you got that pal out there i think

oracle will also be positive and before i let you bounce i'm going to ask you about apple it seems to be according to some at least you at least the most important stock in the market right now. It's below 159. It was above 170, 175. Where's it going? I believe it's going to have a two in front of it as we go into the next six months because of the iPhone 14 cycle. In six months, it's going to have a two in front of it? Oh, I believe this is the stock. As we look out six months plus, the stock has a two in front of it. All right. We'll see. We'll hold you to that.

Dan Ives, appreciate it. Great to be here. All right. Up next, we're tracking a big move for HP in the OT. We'll give you those details next. Alert on shares of HP. They're falling on earnings. Steve Kovach has the details for us.

What do you see? Hey there, Scott They're falling on earnings. Steve Kovach has the details for us. What do you see? Hey there, Scott. Yeah, HP earnings. Big miss here, or a slight miss here on revenue. $14.66 billion versus $15.74 billion. EPS came in line with expectations, right in line, $1.04. Shares down about 3.5% now. They were a lot lower earlier after reporting. By the way, lower guidance for the fourth quarter. I spoke with HP CEO Enrique Loris, and he's telling me PC and printing demand falling, which is why the guidance was light for the rest of the year. That's sending

the shares down and saying the slowdown accelerated throughout the quarter. And that's echoing what we've heard from other PC makers. We heard from Dell. We heard from Microsoft. The PC market is in a bad way. Scott, back to you. Yeah, I appreciate that. I was going to ask you about that. This is nothing new, and nobody should be surprised, I should say, about weakening demand in PCs, right? Yeah, and I was talking to the CEO about this, too, and he's saying, look, they're really betting on this hybrid model. He won't say when things are going to kind of reinvigorate themselves, but they had a lot of pull forward demand during COVID as people were working from home, buying PCs, buying cameras and video conferencing equipment. He sounded optimistic that will

continue after this little lull, but that's pretty much what they're betting on, Scott, is that we're going to be in this hybrid work environment and they can play off of that pretty well. He still has to face the music tonight on Mad Money. That's right. All right. So Steve Kovac, thank you very much. Thank you. He's going to be Mr. Lawrence is going to be on with Jim tonight, 6 p.m. on Mad Money. So you get the story right from him. So tune in then, please. Up next, a supersized call on the consumer one money manager sees big upside for this fast food joint. We're going to break it down in our two minute drill. Time for the two minute drill. Joining us now is Brian Vendig, MJP Wealth Advisors. Presidents, good to see you. Welcome to Overtime. Let's talk market

first. Your outlook for stocks from here is what? Well, I think, Scott, we're going into a seasonally tough period in the market. And with Chairman Powell throwing cold water on the idea that the Fed's going to pivot, I think right now the market's in limbo and there's possibility going down at least to that 3800 level on the S&P. OK, so if I'm doing the limbo, why do I want to do McDonald's? Well, I think right now we know that the economy is slowing and we want to look at companies that have pricing power in this environment and also the fact that we know that the consumers being choisy on price, specifically with dining options, we see that McDonald's really has an opportunity to grow sales globally as a great loyalty program. And also when considering their dividend, it's been extremely stable for a long

period of time. Yeah. Tough environment for banks. No. But yet you pick PNC Financial Group. Tell me why. Well, I think when you when you look under the hood, PNC Bank is actually real more focused on small business lending, more Main Street versus Wall Street, which we know investment banks has been somewhat volatile this year. And also they've shown that they are expecting loan growth over the balance of the year and also being really focused on cost. So if you had push come to shove, you'd choose Main Street banks over Wall Street banks all the way around? I think right now in the environment currently, especially with a lot of the uncertainty going on with the economy and some of the data dependency that we have, I would in the short term and also keep in mind that as the Fed continues to increase

interest rates, we're going to see net margins expand for more locally focused banks and maybe some of the larger big ones that are out there. In less than 30 seconds, give me something on Equinor. A lot of folks like energy for obvious reasons. Why this one? We prefer natural gas plays right now over oil plays. And when you think about what's going on in Europe, this company is the second largest supplier of natural gas right after Russia. And if you think about Europe's energy independence, it's a theme that's not going away anytime soon, Scott. Wow, that was right at the buzzer. Appreciate it, Brian.

Thank you, Brian Vendig, joining us for our two-minute drill. Up next is Santoli's last word. We are back in overtime. Let's get the results now of our Twitter question of the day. We asked which of these August gainers would you fade? Most of you choosing Norwegian. Forty four percent of the vote. Can't see the others, so I guess it doesn't really matter. But trust me, that's the winner. Mike Santoli is here with his last word. So I'm wondering, Mike, if you think the most underappreciated variable for stocks right now is the idea of higher for longer. That's so what if the Fed is at the beginning of the end? If the end lasts for a long time, does it really matter? I think it's one of the most important.

It's not clear to me that it's fully underappreciated at this point. I feel as if that kind of helps to explain Friday's negative market reaction, because if you see it, it's not as if the market, the bond market added back more anticipated rate hikes. They just essentially said, well, that's going to be it for a while. We're going to be plateauing. So I do think the market's going to have to adjust expectations and valuation around that. It doesn't change the fact, though, that underlying it all, investors recognize that if you either get a sharp weakening of the economy or inflation starts to take care of itself, the numbers start to become a little more friendly, then, you know, hire for longer kind of goes out the window. It's not as if they're going to do it just because they said they're going to.

It's very difficult to read all the messaging because we know what the Fed was saying a year ago, and it bears no resemblance to what they did in the past year. You know, and it's a good point you make, because to some, they so damaged their credibility over the last year that, as Mohamed El-Erian said earlier today, and we discussed this earlier, it is a show me market, at least as it relates to that they could say whatever they want. Well, that's true, except I would argue stocks are going down on an increase in Fed credibility because two year expected inflation is way down. It's back in the zone of their target. So

their credibility means they're going to take care of inflation one way down. It's back in the zone of their target. So their credibility means they're going to take care of inflation one way or the other. And that in itself is not helping the near term for equity market sentiment. They've helped it with their talk. Let's see if they continue with their walk. That's ultimately going to be what matters most. I'll see you tomorrow. Yeah, that's Mike Santoli with his last word.