Closing Bell - Closing Bell Overtime: Bracing for a Big Moment of Truth? 1/11/23

Episode Date: January 11, 2023

The critical CPI report hits tomorrow morning – so how might stocks react? Ritholtz Wealth Management Josh Brown gives his prediction. Plus, shares of Disney on the move in Overtime on the news that Nike Executive Chairman Mark Parker will be named Chairman of Disney and Nelson Peltz is seeking a seat on Disney’s board. Market expert Mike Santoli gives his instant reaction to Disney and what he’s expecting from CPI.

Sarah, thank you very much. And welcome everybody to Overtime. I'm Scott Wapner. You just heard the bells were just getting started from post-9, right here at the New York Stock Exchange. In just a little bit, I'll be joined by PIMCO's Erin Brown. She's going to give us her playbook for 2023. It's kind of loud down here.

They're cheering it right into the end. We begin with our talk of the tape, the road ahead for stocks with that critical CPI report hitting in the morning. How might the markets react? Let's ask Josh Brown. He's the co-founder and CEO of Riddholtz Wealth Management, also a CNBC contributor. Josh, it's good having you with us. Obviously, a lot riding on the morning.

CPI report's going to come out. The problem is we've run a lot into the number, including this nice close that we just had. What does it mean? I think this is going to be something that we're just going to have to focus on every month. It is going to be market moving so long as we are still in a rate hiking cycle, which we are. The CBOE odds of a rate hike of 25 basis points currently stand at about 77%, a 23% chance for 50 basis points. Obviously, a screaming hot number will look like a massive setback. You will see those percentage guesses flip, and it will not be a good day for stocks. But I don't think that there's really any reason to expect that.

A lot of the data has been going in the Fed's direction, as we've pointed out on the show a lot. So I would just say this is going to move markets, even if it comes in as expected. You don't know how people are lined up, the positioning ahead of the number. You'll find out relatively quickly. But this is not one of those data points that I'm willing to dismiss. Are we using up, so to speak, a lot of our move before the report even comes out? Let's not forget we're in the midst of a pretty decent beginning of the year, and then you attack on today ahead of that. What does that mean? I don't think so, because December was a trash fire. So I still think a lot

of what we're seeing here is the end of tax related selling pressure coming off and just a little bit more optimism about the year to come. I think everybody fully understands what the headwinds are at this point. There's been a ton of pessimism now for six months. Nobody is predicting anything specifically great for either the economy or for earnings. So that gives you room to move up. And I think it gives you even more room if we get continued confirmation that the Fed is getting its way. I would point out we no longer are in a situation where you have negative yielding bonds. There aren't any anymore, even in Japan, even in Germany. We're now in a situation where the normalization has, I wouldn't say come full circle and we're all the way there,

but everybody understands that that's the program and it's global. And so I think the stocks getting accustomed to that and the mentality of a stock market investor becoming accustomed to that is the best development that we're able to talk about right now. What do you make of the fact that, you know, a lot of last year's laggards are the early year winners? You know, I'm looking at things like the Nasdaq, for example, up one and three quarters percent today. It's up near five percent in a week. A lot of stocks that were sold off hard last year seem to be performing pretty well to start the year. Just mean reversion. Is it anything to read into? What do you make of that? Well, a lot of the you got to remember that a lot of the stocks that we're talking about, let's say in the Russell 1000 growth index or in the tech sectors, the different sub-industry groups, you had stocks down 40, 50, 60 percent.

At a certain point, if the headline and the news flow stops being negative, there's nobody left to sell for no reason, especially if you had a lot of tax-related selling in the fourth quarter, which of course you did. So no one left to sell, and a little bit of index support. You gotta remember, Judge, a lot of new money comes into the markets every January. A lot of rebalancing trades take place in January. So I wouldn't read too much into it.

It could turn on a dime tomorrow, but this is not as rare as you might think. Very often when you turn over a quarter or especially turn over a year, especially a year with as much sector dispersion as we had last year, you are going to see that rebalance effect and you are going to see the laggards have their moment in the sun. That's probably what we're experiencing right now. What do you make of this idea that, you know, we've been in this downtrend, obviously. It's been more of a sell the rip market than buy the dip. Are we still in that mode? If we get a little bit further ahead here, are you going to get some selling pressure coming in for that simple reason?

You still have a lot of nonbelievers. I mean, their sentiment's still so negative. Yeah, I think you have to differentiate between NASDAQ and S&P, S&P and Dow. And I don't mean the indexes themselves, but really just the investment style, like the mentality of the people who play in those areas. When you think about, when you look at the returns of 2022 and you dissect like which forms of beta work best, which strategies or which style, dividend was down 7% last year. Dividend actually did better than bond. Like I don't even think a lot of people are aware of that. So are you going to see an explosion higher in that area if there's a market-wide rally? Probably not because it's unnecessary. These stocks are not

that far off of their highs. Think large cap pharma. Think large cap insurance, for example. But if we stabilize here and we get a CPI print that's deemed to be benign, there could easily be another 10% or 12% move in your favorite semiconductor stock. I don't see why not. It doesn't mean it'll sustain for the balance of the year, but that's how bombed out some of those NASDAQ growthy areas of the market are and continue to be, even despite the bounce that we've experienced since the start of the year. There's been so much conversation over the last year about the so-called 60-40

portfolio, right? 60% stocks to 40% bonds. Jeffrey Gundlach had his first webcast of the year, his big one, yesterday. I want you to listen to what he says, because it flies in the face of tradition, and then we can talk about it on the other side, because I know you to listen to what he says, because it flies in the face of tradition. And then we can talk about it on the other side, because I know you're going to have thoughts on it. Here's Gunblock. Bond market is demonstrably cheap to the stock market. I recommend not a 60-40 portfolio, but more like a 40-60 portfolio or even a 40-25- 15 portfolio, bonds, stocks, and then other things in the 15 percent. All right. So what do you make of what Gundlach is suggesting here for the person who's listening, who's always who's grown up, so to speak, on a 60-40?

Yeah. So I was going to say my firm has probably written more about 60-40 portfolios than any other firm on Wall Street. I'm talking about what could possibly be 800 or 900 separate blog posts on the topic. And I would just point out, I don't think Jeffrey Gundlach's wrong, by the way, but he might be wrong for a different age group than who he's talking to. But I would just, this is very important to point out. They always write the epitaph for the 60-40 portfolio right after it's had a tough year. And every time it's had a tough year, that's been an optimal time actually to reconsider and reaffirm your belief in why it works. 2022 was the third worst year ever for a 60% stock, 40% bond portfolio. That's going back to 1928, 100 years of data. It was down 17% last year. The 60-40 in

2022 actually did worse than the 60-40 would have done in 2008 by 3%. 2008, the 60-40 was down 14%. It was also the worst year individually for bonds, though. And this gets into what Jeff was saying. The Barclays Aggregate Bond Index, which is mostly treasuries and high-grade corporates, was established in 1976. This was the worst year ever since its inception. It used to be called the Lehman Ag, by the way. There were only four down years for the ag before last year, and they

were minor. So this was four times worse than the worst of those years. So that's what makes bonds so attractive now. All of a sudden, you've got yield. It's not quite real yield yet, given where inflation is, but it's well on the way. You've got stability, sudden you've got yield. It's not quite real yield yet, given where inflation is, but it's well on the way. You've got stability and you've got a portion of a 60-40 that's actually serving a function beyond just, hey, it's better than cash. Now it actually is earning you something. So I don't know that I love 40-60 and being overweight bonds for most investors who have the next 25, 30, 40 years to invest and accumulate assets. But yeah, if you're in retirement, you probably should be thinking that way. What do you need the aggravation of excess equity market risk when you're being

paid for and change percent on two year number? And you can roll that. This is where it gets tricky. People say, Josh, why would anyone buy a 10-year treasury at 3.6 when they could buy a two-year treasury at 4.4? And it's a little bit counterintuitive, but you have to not even think about the yield. You have to think about the fact that you are forced to roll that in two years. And when you're rolling that, you're probably not going to get that same rate of interest unless we're still fighting inflation. So the problem isn't the yield, it's the roll. That's why you would select a 10-year treasury. Even though it's paying you less yield now, in two years, you don't have to worry about the problem. So that's one thing that I would introduce into the conversation as a financial advisor

that maybe doesn't get as much attention as it should. Let's expand the conversation now, bringing Kristen Bitterly of Citi Global Wealth, Nicole Webb of Wealth Enhancement Group. Ladies, good to have both of you with us. Kristen, I'll turn to you first and just let's pick up right where Josh left off because it's pertinent to how you think about the markets.

Is it time to overweight bonds versus stocks? We are absolutely overweight fixed income and have been for the past several months. I think it's premature to go long risk assets. I know a lot of the start to this year has been focused on constructive positioning, looking at the rally that we've had. But unfortunately, when we actually look at what has changed, nothing really materially in terms of the Fed's trajectory. You're going to have to forgive me for just two seconds. Hold your thought. And I apologize because David Faber has some breaking news that I need to get to. David, what do you have for us? Scott, we've got a couple of things involving Disney, one of which we've been waiting for

potentially for some time, which is that Nelson Peltz, the well-known activist, of course, of Tryon, a veteran of many proxy fights, is undertaking another one. It would appear to gain a seat on the board of Disney, the company confirming that that would be the case. We will hear more from Mr. Peltz, as my understanding, later today in an expected filing that will detail his attempt to gain said seat. Of course, people may recall that he took a position actually some time back. It was as far ago as this summer, built that position, and there had been some press around the fact that he was a significant shareholder and questioning whether, in fact, he would try to get on the board. The nominating committee of Disney not interested, and so at this point it would seem that Mr. Pelz is going to have to seek that board seat through a proxy fight. Separately, but not

unconnected, Disney also announcing that Mark Parker, of course, the longtime CEO or fairly longtime CEO of Nike, who's been on the board of Disney, is going to step up to the role of chairman when the annual meeting comes later this year. Susan Arnold has been the chairman of the board for some period of time. Of course, she was the chairman during that period in which Bob Chapek ran the company. And then she was chairman when Mr. Chapek was replaced by longtime CEO and CEO once again, Bob Iger. You can see there the composition of the board of directors. Mr. Iger, of course, right there near the middle of those pictures. He is not the chairman. He has been previously. He's not going to be. He's not now. But he is going to be running a company that is now going to be in the

midst of a proxy fight, Scott. And you know well, of course, the distractions sometimes that can come along with them, although it is oftentimes the lead director and the chairman who sort of lead the charge against whomever it may be who's seeking to get on the board. But in the case of Mr. Peltz, of course, a formidable foe, although it has been a while, Scott, that I can recall since he actually went to a proxy fight. He's certainly been on the board of Unilever recently and some others as well. I think Madison Square Garden, I may be correct in saying, but the last proxy fight was P&G. And that was more than five years ago, Scott. So this could shape up interestingly. Again, my understanding is we'll get more from Mr. Peltz, it would seem, when a filing is made a bit later in the afternoon, perhaps reading a bit more about what is behind

his decision. You know, you may know as well as I, Scott, he has been somewhat frustrated with the performance of the stock, of course, over the said period, let's call it last two to three years, and perhaps as well, the performance of the directors of the company. That said, Bob Iger has not been the CEO of this company over the last three years. And of course, those years did include the pandemic, which was not kind to Disney. Scott. You know, David, when this news first broke of his $800 million worth of stock that he had bought, the reporting around that was that Tryon wasn't supportive of Iger coming back for a variety of reasons, which, you know, you obviously know well. The fact that Iger was the one who picked Chapek in the first place.

And then, you know, some of the deals that Iger had done as well, particularly the Fox deal, which has led to some of the issues around the balance sheet for Disney, too. I'm wondering if you can just speak to that and sort of it gives us insight into this, what I guess is now taking a more contentious turn between the two parties. There's no doubt it's going to be potentially contentious. I think there have been some thought perhaps that the board would just say, OK, you know, Mr. Peltz. But you're right. There is going to be a focus to a certain extent on Iger's decision to buy Fox. The debt that came along with that acquisition. The pushback certainly will be,

Scott, that really a lot more debt was taken on as a result of the pandemic in April of 2020 in order to keep the company essentially afloat during that time when so many of its operations were closed and so many of its businesses were not taking in significant revenues. But it's going to be something that shareholders ultimately will decide on at the company's annual meeting. But you're right. You know, there will be back and forth. It did appear that Mr. Peltz was not necessarily enamored of Mr. Iger coming back, although many on the board may have believed that by replacing Mr. Chapek when they did, and they were aware, by the way, of Mr. Peltz's position at that time. They perhaps had quelled any any opportunities that he may have seen in terms of trying to get on the board.

Apparently not. Again, we're waiting for more details from Mr. Peltz later today in terms of why he made this decision. It's only one board seat on, as you saw, a well-populated board. But that said, Scott, as you well know, one person can make a big difference if it's the right person. Especially when that person has the name Peltz on the back of his jersey. I think we've learned that, both of us, over the years. Let me just lean on you one more time, David, because I don't know anybody who knows this company as well as you do, and the many conversations that you've had with Bob Iger, how you know the company from front to back. You know, if Peltz and Tryon have been, you know, arguing or at least are thinking about more cost-cutting measures that Disney could take, they've already done some of that, right?

They've already announced some layoffs and ways to tighten the corporate belt in what seems like a more uncertain economic environment. So one would wonder what's really left to have happen. Yeah, I mean, there has been some frustration, as you say, with what was some saw a lack of discipline in terms of cost. Although, frankly, Bob Chapek was known as somebody who was fairly focused on cost as well. You may recall it was Dan Lowe back in August when he took a position in Disney, really in many ways trying to be supportive of JPEG, but also putting out that list of potential recommendations,

many of which were not necessarily followed up, including a potential spinoff of ESPN by the former administration at Disney. Very much unclear, by the way, what Mr. Iger's approach is going to be to ESPN. But one of Loeb's focuses was cost, and we can expect that one of Peltz's focuses will be as well. That said, you brought this up. Iger's been focused on it, too. And it was only yesterday that we got reports that he wants to bring people back and make sure they're back four days a week in the office to be as productive as he sees they can possibly be. And so, you know, it's a good point. Peltz has no media experience in the past. And so what are the levers that he would like to see pulled perhaps that aren't being, I think, is a valid question, Scott, at this point.

Streaming is obviously an incredibly important component of the overall company. It continues to be. They have to spend on that. Parks, obviously very important. There are some other assets, including ESPN, where there's more questions about whether they might be better off as not part of the whole. But, you know, that's not necessarily where Peltz typically goes. So, you know, again, I don't want to get ahead of him. And I think we'll obviously in time, especially given how well we know him and his willingness to communicate, I'm sure we'll hear fairly soon. Sounds like we will from your reporting. Disney Wars Volume 2, I guess we'll call this. David, thank you for your reporting. That's David Faber joining us now in overtime.

We're lucky to have Nicole Webb with us who owns Disney, I'm told, as well. So, Nicole, when you hear this news that David has just reported, you're going to have a fight now. What do you think? Yeah. You know, as I sit here and digest kind of our positioning on Disney and thinking about kind of the direct-to-consumer business, obviously the excitement about Boomerang CEO, Bring back Iger, the M&A positioning and opportunity there as we think about consolidation and DTC. And again, expansion abroad, thinking about kind of the way we stream sports internationally and the stronghold on ESPN.

So my initial reaction is still very positive in terms of the trajectory of Disney, where the share price is sitting today on the far side of COVID. And then as you dissect the company and look at kind of effectively picking up DTC almost for free, I still think there's a lot of potential there, even in kind of, as you said, kind of Disney 2.0, as we continue to look at the trajectory of the company in the coming year. Yeah. Josh Brown, I mean, you know of Mr. Peltz's exploits well enough from following what he's done over the years, the companies that he's been involved in. You're not a Disney shareholder. You just recently had Netflix in your portfolio until you just sold it in the last handful of days. So how do you see this progressing from here? Look, Disney is a is an extremely depressed stock price relative to where it was. And I don't think that there's any doubt that Nelson Peltz, if anything, has been known for trying to work with management and not always being in an adversarial situation, not firing off insulting letters.

He's a very different, more old school type of activist. And oftentimes when he gets involved, he stays involved for years and years and years. And we can cite different examples of that. But he does expect things to happen. And I think that's probably if you're a Disney shareholder, you probably aren't looking for some sort of radical change or massive, dramatic proxy fight. But I'm sure you would love to see Mr. Peltz and or some of his representatives having a seat at the table and having a voice. Because Disney is at a crossroads. They've got to make big decisions. I think they have to make a big decision on ESPN, for example.

They have to decide which of these assets would be better off and more likely to flourish as standalone in a spinoff situation, which might be worth selling. And then, of course, we know Iger's a dealmaker, and he's probably going to take a swing at something. And if he does, do we want someone else to have a pair of eyes on it or maybe be in his ear about whether or not it's wise to go forward with? Some of this is subjective. My personal opinion is having more voices in the room, especially people like Tryon, is better than it would be worse. But I can understand people feeling, you know, the other way.

Let's also not assume that they would advocate or that Iger would be looking to do a deal just for, you know, argument's sake in an environment that, as we said, and David was talking about as well, is rather uncertain. Iger is obviously thinking about tightening the belt, too. Got to think about a divestiture at some point, too. I mean, you just got to keep everything on the table because we just don't know what the environment in the months ahead is going to bring and what all that's going to mean for Disney park attendance and everything else that goes with it. Which brings me back to the market itself, Kristen Bitterly. We've run a lot into the CPI. What do you think is at stake in the morning as we turn our attention back to that?

Because it's going to be right in front of us, early a.m. It's going to be a very nuanced discussion. I think everyone's looking at month over month, particularly with core inflation, and that 0.3%, whether we come in above that, that obviously would be bad for risk assets if we come in below or at that 0.3%, whether we come in above that, that's obviously would be bad for risk assets if we come in below or at that level. I don't think we'll see a big rally off the back of that because of the action that we've already seen. But I think the key thing

and why we're not getting prematurely bullish here on risk assets is that regardless of whether that means a 50 basis point hike in February or 25 basis point, we are still in tightening financial conditions. And it's not just the hikes that are left. It's quantitative tightening. And a lot of that has not flowed through into corporate earnings yet.

You did tell our producers, quote, there will be opportunities to go long risk assets in the coming year. Are we at one of those moments now or is that in the future? Unfortunately, not yet. And you have to ask what has changed at this moment in time. And the Fed is still in the future? Unfortunately, not yet. And you have to ask what has changed at this moment in time. And the Fed is still in the driver's seat. And we actually believe that there's going to be an earnings contraction of upwards of about 10 percent. So where have we seen some changes? We've seen the China reopening. We've seen a milder winter in Europe and we've seen that big rally in European equities. But when it comes to the key question about which types of

companies can survive tightening financial conditions, we're still playing defense, which is why our positioning is still in dividend growers. It is still in global pharma and a lot of the winners that outperformed last year. I'm going to thank everybody for being here and also for your patience as we dealt with that unexpected but interesting breaking news. Nicole, thank you. Kristen, of course, thanks to you. Josh Brown, we'll see you soon for sure. Let's get to our Twitter question of the day now. We want to know, do you agree with the 40-60 gunlock portfolio, as in 40 percent stocks and 60 percent bonds? You can head to at CNBC Overtime on Twitter to vote. We'll share those

results a little bit later on in the hour. We are just, of course, getting started here in overtime. Up next, going global. PIMCO's Erin Brown seeing some big opportunities overseas. We'll find out where she is finding the biggest upside outside of the United States. Plus, shares of KB Home falling in the OT. We've got the details on that move. Earnings out must not be great. And, of course, we'll continue to follow that Disney story.

Sounds like we've got a fight on our hands. Disney versus try and we're live from the New York Stock Exchange. Overtime, we'll be right back. KB home earnings are out. You saw the stock was lower a few moments ago. Our Frank Holland has the numbers and the reasons why we're seeing that chart. Frank. Hey there, Scott. Shares of KB Homes down about 5% right now after a slight miss on the top line. Big miss when it comes to EPS. Profit came in at 247 a share, almost 40 cents below estimate. So some different data points here when it comes to selling price. KB Homes beat estimates at 510,000 per house above the estimate of 503,000. That was a 13 percent increase year over year.

However, deliveries missed estimates at 3786. The estimate was for 3961. In the report, CEO Jeff Mesger said, in part, we prioritize delivering our large backlog and protecting our high margins over taking steps to stimulate additional sales during this seasonally slower time frame. When it comes to guidance, that was also pretty soft. The company forecasting a big drop in selling price, saying the range of selling price next quarter or the current quarter, I should say, will be $490,000 to $500,000 compared to $510,000 this quarter. That's as much as a 4% decrease.

Again, shares of KB Homes down now about 4.5%. Back over to you. All right. I appreciate that, Frank. Thank you very much. That's Frank Holland. We're back in overtime. Welcome back. It's been a strong start to the year for international stocks. The MSCI World Index, excluding the U.S., is outperforming the S&P 500 by the widest margin since 2009. And our next guest expects that trend to continue throughout this year. Let's bring in PIMCO portfolio manager Aaron Brown. Aaron, happy New Year. Welcome back to Overtime. Happy New Year, Scott. So there's a lot of talk about going overseas relative to the U.S. because the dollar is finally weakening from its incredible strength.

That's why Gundlach likes that trade. We've talked about that with him often. I want you to listen to what he said on his webcast and we can talk on the other side. Here's Gunlock. I tremendously favor non-U.S. equities, U.S. equities at the roundtable prime. I recommend zero U.S. equities and instead more like European, but especially emerging market equities. The emerging market currency index is now above its 200-day moving average. Not by enough to make a definitive statement about it. But if we spend some time here above the two hundred a moving average it's a massive tailwind

for the relative performance of emerging markets versus develop markets. What do you think you agree. I think that's right I think one of the tailwinds is certainly the pivot that we've seen with respect to dollar strength dollar weakening will

support emerging markets that's been definitely a significant headwind to the EM trade. But I think even the bigger argument for buying emerging markets and specifically buying China is the China reopening story. And we've started to see this play out over the last couple of months. But I think we're in really, really early innings of this trade. Just to put it in perspective, in the third quarter of 2022, there were 46, sorry, 2 million outbound travelers out of China, you know, to other countries. That contrasts to about 46 million in the third quarter of 2019. So basically negligible travel last year versus, you know, where you typically have very healthy outbound tourism. That's going to be a significant driver as we start to see China reopening to global equities, particularly in emerging markets.

And so I think that the China reopening story is still in very early innings of playing out. And we're likely to see this really percolate and drive investment performance in 2023. We had a guest yesterday, in fact, here next to me who likes LVMH for the very reasons that you suggest, the economy reopening, people traveling more and buying luxury goods. Is that on your radar, too? It is. And I think there's three main areas that you want to focus on for China reopening. You know, keep in mind that the China reopening story is not going to be like what we've seen in the past, where China rebounds driven largely by commodity driven strength. This is going to be about people getting back out in the world, spending on consumption, spending

on services. And so where I think you really want to focus on is first the travel and transportation industry specifically focused on China. So that's the gaming sector, the airlines, as well as focused on hotels. Second, I think, is that luxury good market. China historically has been a significant driver of the luxury good market and particularly out of Europe. And I think that as you start to see more outbound travel, as you start to see them going back to Hong Kong, as you start to see more consumption dollars spent as people are able to get back out in the world, I think you're going to see luxury do really well on the back of that. And then thirdly, I actually think that tech sector could also start to do better as well, and specifically semiconductors, which have come under significant pressure over the last year or so. And I think

that as we start to see China reopen, I think the tech sector, just because, you know, from a usage perspective, but also from a supply constraint perspective, I think that that sector could also bounce back. How do you you know, if you move out of emerging markets to more developed markets, I still see notes coming out that say to be overweight tactically Europe versus the U.S. as well, because multiples are severely depressed. And I think actually Europe is one of the biggest beneficiaries of China reopening their leverage much more to the China story than that of the U.S., which is much more domestically driven. And so as you start to see China reopen, that is going to benefit Europe. The other thing that's really benefiting Europe right now is lower energy and natural gas prices. And that is also a big tailwind to the European story, which came under significant pressure of sort of a move away from industrial use in Europe and into sort of more competitive markets. And so as you see energy costs abate, that will help Europe outperform too.

So I think that in conjunction with China does argue for being long developed markets outside of the U.S. relative to the U.S. this year. It's good seeing you, Erin. We'll talk to you soon. Got to leave it there. That's Erin Brown of PIMCO joining us now with her 2023 playbook. Time for a CNBC News Update with Christina Partsenevelos. Hi, Christina.

Hi, Scott. Here's what's happening at this hour. Southern California is getting a break from drenching storms, but the snow and rain continues to fall in Northern California. In parts of the Sierra Nevada mountains, three to six more inches are expected where travel is already difficult. North of San Francisco, divers found the body of a 43-year-old woman under 10 feet of water. She had called 911 to say she was stuck in a flood. Another New York Republican is calling for Representative George Santos to resign over lies about his resume. The chairman of the state GOP, who is also a House representative, says Santos cannot be an effective congressman. Santos says he will not resign.

And NBC News reports Biden aides have found at least one more batch of classified documents. They were at a new location different from the Washington office Biden used after serving as vice president. No details yet on the number and classification level of the documents found. The White House has not responded to any requests for comment. Scott. All right, Christina, thank you. That's Christina Partsenevelos. Breaking news on Disney this hour. Activist Nelson Peltz is seeking a seat on that board. We have Disney

shareholder and halftime committee member Jim Labenthal with his first reaction to this breaking news. Overtime is right back. We continue to watch shares of Disney in overtime. You see him right there getting a bit of a pop on that news. David Faber reported just moments ago that Nike executive chairman Mark Parker will be named chairman of Disney. And even more interestingly, Nelson Peltz's Tryon Partners is seeking a seat on Disney's board. Disney shareholder Jim Labenthal joins us now on the CNBC Newsline. Jim, it's good to have you. What's your reaction here as we may be heading

towards a proxy fight? Hi, Scott. Thanks for inviting me on. I will tell you I'm cautiously optimistic on this news, but I want to stress cautiously, and here's why. This is a stock, Disney, that is no longer a recovery from the pandemic stock, right? We used to be worried about whether people were going to come back to movie theaters. Now it's an execution story. We're talking about things like what was the box office take for Avatar, just as an example. This applies to their other business lines as well. So they still have some challenges. Josh Brown just noted the demise of linear TV and what that implies for ESPN. A shareholder like me is curious as to when they'll reinstate the dividend. With where the stock and the company is right now, I'm not sure I want the distraction of a proxy fight.

I will grant you, grant you, Nelson Pelts is one heck of an investor. So if it were anybody other than him, I would not be optimistic at all. But I just I'm not sure that we need the drama right now as much as we need the execution. But I will stay optimistic, albeit cautiously. What's the strategy that you want Disney to pursue as a shareholder? Is it to continue to spend heavily on the streaming next generation of Disney's business, if you will, or is it to cut back in what looks to be a more uncertain environment? Well, a little bit of both. But just what I mean is continue to grow the streaming business, because when that reaches profitability, the incremental margins are tremendous. But I wouldn't mind them rationalizing their overall business. And ESPN is an example.

Like, where does that fit in with this? Is that something that can be monetized? We also have to acknowledge something that you said earlier in the program, that we don't know where the economy is headed. Obviously, I have my thoughts about that, and they're positive, but we don't know. So I want the company to lay out a plan that says, hey, we're ready for growth, but if things go downhill in the economy, here's what we're going to do. Again, the overarching thesis here is execute right now. Don't get caught up in a distraction. Maybe do you, well, how do you feel about the idea of Peltz himself or someone from Tryon, I mean, presumably it would be Nelson,

being on the board to help facilitate the kind of execution that you say is now needed? Yes. So I will repeat, if it were anyone other than him or his organization, which we know has a long history with consumer facing companies, then I wouldn't be optimistic at all. But I am cautiously optimistic because this is the perfect sort of guy to do this. Look, this is going to be a cataclysmic. It's going to be a clash of titans in the boardroom, right? Iger versus Pelts. It's going to be a heck of a drama. I just hope it doesn't take anybody's eye off the ball. All right, we're going to make that the last word for you, Jim. Thank you. That's Jim Labenthal calling in his first reaction to this reporting today, driving Disney shares a touch

higher, maybe gearing up for a fight between Tryon, Nelson Peltz and Bob Iger of Disney. Coming up, demand dilemma. Barclays cutting its price target on Apple over fears of a slowdown in that critical services business. So what should investors do with the stock today? We debate that in today's Halftime Overtime next. All right, we're back in today's halftime overtime. Growing demand concerns. Apple finishing the day higher today despite a bearish note from Barclays, warning about weakening demand. And according to our Joe Terranova,

Apple's buyback program and investor repositioning will continue to support shares in the face of this possible headwind. Remember, Apple has that blunt instrument of a significant buyback, just like Microsoft and Alphabet does. They'll utilize that in February if there's a significant rather drop off in their supply to demand and balance and it's reflected in earnings. All right. Our own Steve Kovac covers that company joins us now. It's good to have you here. OK, you know, Joe's right. They have a huge buyback and I totally get it. But if we start having a demand issue, that feels like a game changer for where this stock may go. Yeah, absolutely, Scott, because the last we heard from Apple, demand was

just fine. We heard back in November when we started hearing all these production issues coming out of China, saying, you know, the protests and the lockdowns and so forth, really making it hard for them to ship out those iPhones in time. Last we heard from them, though, people really wanted to buy phones, and not just any iPhone. They want the most expensive, the Pro line of phones. So people were really looking to that heavy demand to say, look, even if Apple ships fewer than expected phones that quarter, they can still make up for it by buying those higher-priced phones.

Now it looks like that didn't even— they weren't even able to do that. Barclay says demand is falling across all categories, Scott. So it's not just services. There's fall in gaming that we heard about. Tim Cook even told me about that last quarter. If the hardware demand falls, that's the thing to start worrying about. That's what investors need to watch for. We will get a little hint of this tonight, Scott. Actually, TSMC is going to be reporting earnings, and any guidance they give will give us a little hint into what Apple's going to see for this current quarter. Interesting that the stock was able to shrug all of this off.

It also comes on the back of our reporting of Apple's app store growth slowing down as well. So there are a number of fronts that we need to keep our eye on. And as you said, you know, earnings are still a few weeks away. So we're not going to hear and you're not going to speak to Tim Cook theoretically for a few weeks here. Yeah, that's right. So it's kind of we're in this uncertain period right now that we've been in for the last three or four weeks, and people are trying to, you know, read the tea leaves of anything they can see. Is demand actually faltering? Outside of the iPhone, I'm speaking specific to the iPhone now, but outside of the iPhone, we've got to look at the other hardware categories, the Mac business.

Apple already warned that's going to fall quite significantly year on year for the December quarter because they did not introduce a new product in the end of last year for people to go out and buy and upgrade their current devices to. So it looks like this will be the year of the Mac. This spring will be the spring of the Mac. And maybe that'll provide a boost on that hardware front. But again, it's iPhone, iPhone, iPhone. And if the demand falters there, like Barclays says it is, if that is in fact true, that's why I'm going to be watching TSMC today, because if they have the same warning, watch Apple shares tomorrow. All right. We will as well be watching TSMC. Steve, thank you. That's Steve Kovach bringing

us the latest on that interesting story regarding Apple. Coming up, we're tracking some big stock moves in overtime right now. Christina Parts and Nevelos is back with that. Christina. The CFO of Marvell is jumping ship to a competitor and a new slew of layoffs from several firms. All of the company names and stock reactions right after this short break. We're tracking the biggest movers in overtime now. Christina Partsenevelos here with that. Christina. Jumping ship.

That's what's happening with Marvell CFO Gene Hu, who is leaving to take on the role of EVP and CFO at competitor AMD after AMD's CFO retires. In the exact same statement that came out after the bell at 4 p.m., Marvell also reaffirming the midpoint of its Q4 revenue outlook. Net revenue is expected to hit $1.4 billion. You can see shares are turning 0.8% lower. A new report right now from Bloomberg says Apple's working on adding touchscreens to Macs as early as 2025. CNBC has reached out for comment. We haven't heard back just yet.

Shares, flat, pretty much the negative. And, unfortunately, bad things come in threes. More layoffs. Alphabet, the parent of Google, plans to cut 15% of its staff from its health science unit. And then you also have CNBC Learning. DirecTV is laying off hundreds of employees, about 10% of its upper ranks, as the company looks to cut costs. DirecTV is actually owned by AT&T, you can see here, and TPG.

The reaction, not really much reaction. AT&T down slightly, two-tenths of a percent. And then lastly, Qualtrics, ticker XM, that we have on the bottom right here, unchanged, but they're eliminating about 270 jobs across the company. Scott. All right, Christina, thank you. All right, it's the last call to weigh in on our Twitter question. We want to know, do you agree with the so-called 40-60 gunlock portfolio? That means 40% stocks and 60% bonds, but reversed from historical standards.

You can head to at CNBC over time to vote. We'll bring you the results. Plus Santoli's last word next. To the results now of our Twitter question, we want to know, Do you agree with the 40-60 gun lock portfolio? As in 40% stocks, 60% bonds. The majority of you saying no. 76%. All right. Three quarters. Mike Santoli is here with his last word. All right. So iconic company. Yeah. Iconic activist. Iconic CEO. Grab your popcorn. Exactly. No, there's plenty of intrigue here. We obviously don't know what Nelson Peltz might be advocating strategy wise, very specifically about how Disney should should run. But I do think you can take somebody who maybe can smell the makings of a turnaround almost no matter what happens. Disney shares are trading at levels they first got to

eight years ago. Not cheap because, you know, they obviously have inflated with a lot of debt they've taken on and cash flows maybe are not maximized right now. But you do have the CEO in there who presumably having had the job for 15 years before knows the company and what perhaps should be done right now better than somebody who's been, you know, playing around as an activist in other companies. So I don't think there's a way shareholders lose here, whether in fact he gets a board seat, whether he doesn't. Obviously, Mark Parker, his chair, is interesting as well as a new change. So, you know, I think it'd be fun to watch. I don't think that whether Peltz succeeds is make or break for what's going on with Disney, which is let's get a return on investment for the content spend and obviously, you know, do some cost trimming around

the edges. OK, so let's turn our attention to tomorrow morning, the biggie, CPI. Now, we've moved a lot into it already. We have. So a couple of days ago, I said that a soft CPI number, in other words, a pleasant surprise, was definitely not in the market. I don't think 3% move since then or whatever we've had or percent and a half today necessarily changes that too much. Keep in mind, we rose to levels with this year to date, a little spurt in the S&P, back to where we were on December 14th. So it's not as if we've actually gone up, up and away.

I think it's a more balanced position to go into the number. I don't think whatever we get tomorrow in terms of the data is going to completely wipe away the assumption that inflation is on the downswing. And whether it's 25 or 50 basis points in February for the Fed, I don't really think matters that much. We're just about done. In fact, if you look back to the prior soft landing, the magical one in the mid 90s, everybody points to the final rate hike of that cycle was a half percent. In other words, it doesn't always taper down to zero in a gradual way. We still go to the question of how high and for how long, right? That's the gunlock thing from yesterday, which we discussed. Not going to be

able to get to what they say, so don't listen to them too closely. Watch the bond market. It leads the show. And the bond market has very, you know, very, very clearly said inflation is yesterday's war. You know, sooner or later, we win it. The question is, what's the toll along the way? And so right now it really is the recession call. It really is. Our earnings estimates low enough that companies can kind of bump along and muddle through. And what you're seeing right now is I think the earnings numbers for this quarter that we're going to hear about are pretty beatable. We might have done three to four percent real GDP in the fourth quarter based on some of the estimates. So I don't know. I mean, I think, you know, the bond market is pretty comfortable in this spot, feeling like maybe

the Fed gets toward five percent and we can hold there. I think we have to find an equilibrium at a five percent risk free rate, you know, in terms of valuations and everything there. I think we have to find an equilibrium at a 5% risk-free rate, you know, in terms of valuations and everything else. I'm not sure we're there yet, but we could be. Yet another day where the Santoli said bombed out parts of the market are the ones that are performing. I'm thinking of NASDAQ. It's up, you know, what, one and three quarters percent today. People, obviously, there's a snapback effect. There's a short covering effect. Amazon up 5% in a day when nothing actually changed in the story. It's just people grabbing for exposure to the faster moving parts of the market if, in fact, we're going to run.

There's a lot of talk of the systematic hedge fund types that are hitting these triggers that feels like they have to actually buy more in terms of index exposure. So we'll see if any of that continues to play out or Or if, in fact, we've gotten our rally for now, we have to see how the market absorbs a potential pullback. Interesting, too, that negative note about demand on Apple. What does Apple do? It finishes higher. Go figure. That's the moment, I suppose, that we're in.

We'll see you tomorrow. We've got a big day to react to. All right, that's Mike Santoli. Everybody have a great night. I'll see you then. Fast Money's now.