Closing Bell - Closing Bell Overtime: Countdown to Powell Speech 11/29/22

Episode Date: November 29, 2022

How will Powell’s speech tomorrow impact the markets? Virtus’ Joe Terranova weighs in. Plus, iCapital’s Anastasia Amoroso is giving her year-end playbook and breaking down her recession forecast. And, market expert Mike Santoli tells us what he’s watching in tomorrow’s session and what he is expecting from Fed Chair Jay Powell.

Welcome, everybody, to Overtime. I'm Scott Walkman. You just heard the bells. We're just getting started from post nine here at the New York Stock Exchange. If you have any exposure to cloud stocks, you are not going to want to miss key earnings from CrowdStrike and Workday. Those numbers coming at a very critical time for that group. We'll have all you need to know when those reports hit the tape. We also have a very special guest today, someone who's given a lot to this country, former U.S. Marine turned entrepreneur and philanthropist Jake Wood. He is here. Look forward to catching up with him. We begin, though, with our talk of the tape, the markets Powell problem. The Fed chair speaking tomorrow in his last remarks before next month's key meeting on interest rates. Does he clear an end of the year rally for takeoff or does he ground it? Let's ask Joe Terranova, Virtus Investment Partners,

partners, chief investment strategist, CNBC contributor. He's here with me at Post 9. I mean, that's the reason why we haven't really done all that much, right? It's all about Powell. We need to hear what he's going to say tomorrow. Yeah, kind of running in place today. The problem will be if he actually turns the speech over to James Bullard and lets Bullard deliver the speech. That's a problem for the market. You mean if he's too hawkish? Yeah, I mean, if he basically stands up there and delivers exactly what Bullard's been talking about.

I don't expect that to occur. I think he's basically going to comfortably deliver to the market what the actual expectation is. Comfortably? That's an interesting word of choice there. Yeah, I think so. Comfortably? I think we're going to get that finally. I think he's going to deliver that. I think he's going to remove some of the volatility in his prior remarks.

I do have that expectation tomorrow. Does that ultimately mean that stocks lift from here? Potentially. I think they could. Well, I mean, if you're right that he's somewhat soothing, that's what you're leading me to believe you're saying, then why wouldn't the market take off? Need confirmation from the inflation report on December 13th, and then you actually need from the Federal Reserve

on the 14th to hear. Oh, you're way ahead of me. I'm thinking between now and then. I mean, let's get through the end of the year. We got five weeks. You're already talking to me about the middle of December. I'm trying to figure out if we can put something together between now and then.

Yes, we can. We can deliver something this week. If he gives the comforting remarks that I expect him to give tomorrow, I think the market will rally into the end of the week. I think the market was ready for that rally without the performance of Apple today. You had very strong performance from J.P. Morgan, a lot of the financial institutions, American Express, Caterpillar, Honeywell. The big names were there today. We wanted to have a blue chip rally today. Apple held it back. All right. So the other thing I mean, this is a real thread the needle moment in and of itself. He doesn't want to spark a crazy rally in stocks either.

So maybe you're hoping for something that he's not going to deliver. It's like the market's already rallied a lot. Do you think he wants to see it go another 5, 10 percent higher between now and the meeting? No, I don't think he wants to go 5 to 10 percent higher. He is focused on asset price inflation. That's what the Federal Reserve, Scott, can affect. No one's talking about a 5 to 10 percent rally. In my view, that would be completely extreme. I think what we're talking about is let's restore the bullish momentum that we were carrying into Thanksgiving. Let's go back and try and get the market above the 200-day moving average. Let's break out above 40, 50 to 40, 75 and see what we can do from there. But five to 10 percent, that's unrealistic.

Well, how are we going to get any of that momentum if Apple can't get any of that momentum? You have made the case on this show and others that the market cannot rally without Apple and those mega cap stocks. And that's the one with one of the biggest questions around it. Down more than two percent today. You have, you know, very well followed analysts out of Asia talking about shipments being down for the phone, 15 to 20 million units. Apple's on the defensive right now. It's very clear. It's a combination of tax loss selling. It's also a lot of institutional capital raising funds, shedding positions in the wake of what's going on in the crypto world. Apple, without a doubt, is under pressure. That can somewhat be reversed tomorrow with comforting words from Chairman

Powell. If you don't get that, Apple is clearly going to be what weighs on the market. Why is Apple so hinged on what the Fed chair says? I mean, Apple's got its own issues. No, there's not a direct correlation, but you have to agree there's a sentiment effect. If there's comforting words from Powell, the market lifts. That's going to offer some relief to Apple. It's not idiosyncratic to Apple itself. But Spoke had an interesting note on Apple, speaking of the weakest of the big tech stocks over the last five trading days with a decline of near 5%. And now it's back below its 50-day moving average, right?

So it's got some technical damage. It's got fundamental questions about phone delivery and what's taking place in China, whether it can overcome that. Oh, by the way, you got that new fight now with Musk and controversy about the App Store, et cetera, et cetera, et cetera. Questions that you used to not really have around this stock. No, without a doubt. And I didn't know any of the mega caps were really that strong.

I mean, look at the performance quarter to date. They're all really underperforming. The S&P itself. Amazon's incredibly weak. We've seen Alphabet basically just running in place. And we certainly know what Meta is doing. So it's a challenge for the market right now not to have the participation of mega caps. I do think it's specific, as I said, tax loss selling in the near term for sure. And I think there is a correlation between what we're seeing in crypto liquidating, raising some funds on the institutional side. I'm looking at my computer screen because it looks to us as though CrowdStrike has released the earnings report. Oh, boy.

Which we are going through. It is, oh, boy, and not in a good way, at least what it looks to me. I mean, stock's down 10 percent because I was seeing what the bid ask was as these numbers started to cross. And maybe it's relative to what the guidance is because it looks to me like, I don't know, it looks like to me you have a top and bottom beat, but maybe it's the guidance.

And I said, Christina Parton-Lovados is going through that, and she's going to jump on and give us more details as it relates to that. Now, Bank of America today, right? We're trying to figure out where we're going in this market, what you should buy, if you should be buying anything. Savita Subramanian says clients, quote, were net buyers of equities for the third consecutive week, led by institutional clients. What are they doing? Are they positioning for something into the end of the year? I think they're playing the seasonality.

I think it's the effect of what we had from the recovery in October. I think they're recognizing the potential opportunity as the calendar turns into 2023, that the Federal Reserve maybe begins to sit on their hands somewhat and allows the impact of their policy from 2022 to take effect into the economy. So I think that's what they're positioning for. And then ultimately, they could be looking for some overall value. But I will say this. I hope they're doing it in a very mindful way of what valuations are, because I don't think we're making the return where non-profitability presented itself. That's where the L recovery is going to unfold. I don't want to be there. Well, these are institutional clients, by the way, not retail. And inflows continued where? Into tech.

That's surprising. Do you think tech's bottomed? I think maybe semis have bottomed. Yeah, I think semis probably have bottomed. I think right now mega caps are in the process of bottoming. I think we'll look back upon that and realize that. I think large cap software is in the process of bottoming. Do I think emerging software, emerging semis have bottomed? No, I don't think that's a conversation

we could have for multiple months, if not years. Do you think the cloud stocks have bottomed? I'm looking at CrowdStrike. We could throw that again up there, please. It's getting crushed. Lovely. It's down 15%. You know, 118 bid ask-ask on that stock, which closed at 138. Yep, that takes it below the low for the year. You own that, right? I do own that. It's a mistake, clearly. It takes it below the low at 120.

Listen, everyone knows digital security is strong. Everyone knows cybersecurity is strong. The average price target on this stock is 231. Most recently, it's been lowered modestly. The average price target on this stock is $2.31. Most recently, it's been lowered modestly. The analyst community loves it. This stock has beaten on EPS and revenue for 14 consecutive quarters. We knew that the report today had the potential to be good once again. The problem is that too many people like myself that are stuck in a bad position right now.

I don't know. The mistake you made, it seems to me, is that you used to like myself that are stuck in a bad position right now. I don't know. The mistake you made, it seems to me, is that you used to love Palo Alto, and now you got out of Palo Alto and you got into CrowdStrike? Well, I've been in CrowdStrike for a while. And you've been out of Palo Alto for a while. Clearly. I mean, I'm wrong. I know I'm wrong.

I'm stuck in the position. I've got to work my way around it. You get a sympathy cell here a little bit anyway on Palo Alto, which, by the way, has outperformed the rest of the group year to date. Everything is down a lot. Palo Alto is not down nearly as much as some of these others. Christina Partsenevelos is ready now on CrowdStrike. I had it as a beat on the top and the bottom, but they must have cut their outlook a bit for the stock to go down this much. Yeah, you do have a beat. It's a nine cent beat for EPS. Revenue's coming in at 581 million. Also a beat, like you said, a slight beat. Let's just call it that. EPS for Q4 guidance was actually pretty strong. They're anticipating a 42 to 45 cent

range. The street said 34 cents, but it's Q4 revenue guidance that's coming in a little bit light. Also, I'm just going through this report right now, and there's a line in here about reoccurring revenue. So annual reoccurring revenue was below our expectations as increased macroeconomic headwinds elongated sales cycles with smaller customers and caused some larger customers to pursue multi-phase subscription start dates. So you can see that there's a little bit of a change there in annual reoccurring revenue, which is the bread and butter for a lot of these companies. But if you're looking at the face value of Q3, it was a top and bottom line beat, Scott. Yeah. Christina, thank you for the update there. Come back on with us if there's

more that we need to know here. Joe, I just come back to you again as the owner of the stock. There was a note and I can't remember the firm that put it out today questioning whether spending on these kinds of companies, their businesses is peaked and that, you know, it's going to be a little more downside from here. That cannot be good for this space, which everybody seems to love, despite the fact that the stocks are down 20, 30, 40 percent year to date. All right. That's dependent on the macro environment, clearly. If the macro environment is going to contract further, then that's a statement that's fully warranted. I would agree with that. I think the mistake I'm thinking here

sitting, where have I made the mistake with CrowdStrike? The mistake is staying in a stock because I wanted to have the revenue growth expectation that far exceeded Palo Alto. I wasn't accepting 25 percent of Palo Alto. I wanted the 58 to 58 percent revenue growth that they delivered last month. I wanted the expected 47 percent revenue growth that they were supposed to deliver today. I thought maybe I could get the 85% revenue growth back in the pandemic days. You know what? It's unrealistic. I'm completely wrong on it.

Are you selling it or something? I'll manage my way around the position. I feel like that's the next line to come out. I'm not going to sell it right here, but I'll be a seller of this stock pretty surely in the next couple of months on any form of a bounce. I'll rid myself of it. I mean, there are other people who are in the stock who are not as— Overwhelmingly.

Yeah, but may not be sort of as nimble as you want to be, or tactical is maybe a better word. And if you're a longer-term investor, how would you say the names? If you're a longer-term investor, if you're able to get a market-driven rally, okay, that correlates to CrowdStrike rallying as well, sell the stock. Okay. All right. I appreciate that. All right. Let's bring in our CNBC contributor now, Brenda Vangelo of Sandhill Global Advisors, Lauren Goodwin from New York Life Investments. Joe, of course, sticking around for this conversation.

So is this all about Powell? Are you hinging on every word that he's going to say tomorrow? I'm not. I'm not. I expect that we're actually going to get out of Powell exactly what, with respect, forget Bullard, exactly what Powell's been saying in the last press conference, in the Fed meeting minutes. I agree with you that we are probably going to get a signal that the Fed is ready to reduce the pace of interest rate hikes that it's been on a roll for over the summer and into the fall. And that the Fed expects that the terminal rate is going to be higher, maybe significantly higher than in the September economic projections. And so as an aggregate, that's a story that I think probably

does get an equity balance, but actually isn't a great story for the equity market as we turn into next year. Now, as I look to Friday's jobs report, as an example, if we do see what would be the very first signs of labor market weakness from that report on Friday, that's a sign that both sides of the Fed's mandate are finally moving in the right direction. Then I think the market starts to get on a little bit of a rally. But again, I think that that is a temporary story where we have a little bit of relief from the Fed tightness, but we haven't yet gone into recession where I do expect we'll see another equity market dip. Hey, Brenda, maybe the employment report is in fact more important than Powell with all due respect to the chair. And respectfully, of course, it is the last time

we're going to hear from him before the press conference, after whatever decision they make on rates, and then he has to deliver his message. Yes, and I agree with Lauren that we're probably just going to hear more of the same from Powell that we've heard from him. So I don't expect his message to change until literally the day it does change. And I think that would be at a Fed a at a fed meeting and not not an interim communication that he's having and but we get I agree that the employment report is going to be

really important although I have a feeling that it's still going to be quite strong we have a services sector. That is still up struggling to find and and people and so I think that is likely to continue here. But I agree with Lauren's comments that it would be great if we did see a little bit of weakness because it would suggest that the Fed's

actions are friendly having an impact on an area of the economy that's really driving a lot of the inflationary pressure that we're feeling through wage inflation. But I think more than anything, it's that CPI number on the 13th that is really going to be market moving and determine how we end the last few weeks of the year, in my view. I want to have a little bit of a debate here because you guys clearly disagree with one another. Joe, as you heard, as you were sitting here listening, expects a gentler bed chair tomorrow. You don't. You say he's going to be as hawkish as he's been. I think so.

I think so. And the reason for that is that we don't have any evidence really yet that the Fed is anywhere near where it needs to be. And the Fed has been, if you like what the Fed's saying, you don't like what the Fed's saying, they have been really consistent this year. And so I don't expect that this is the moment that consistency is breaking. Do you think they put 75 basis points on the table for the December meeting? I actually don't.

And that's where I think you and I do agree, where I think 50 basis points, which is, of course, what the market expects is what I expect. It sounds like it's what you expect as well. That's expected. That's not soothing. That's expected. Exactly. You thinking that's that's like the

suit in the right direction, right? Like you're getting closer to the terminal rate. And I think that's really the message that the market is waiting for is do we have the terminal rate in sight all year? That expectation that we're getting closer, we're getting closer has been wrong. And so expecting that the Fed will, as you said, sit on their hands for a little bit is going to bring some relief. The question is, is it really that relieving? I think for equity markets, the answer is maybe just for a minute. And in credit, I think it's much more interesting.

Joe? I think that when I use the word comfort, you have to understand that the market wants to know it's getting the 50, that it's 75 is in the rearview mirror, and that as we look forward, there's an acknowledgment in the deterioration conditions for housing. There's an acknowledgement that the economy is contracting. He cannot ignore, he can't tell us that he looks at the shape of the yield curve and then ignore what's going on in the yield curve. And it's not just domestic, it's global. So I think there has to be a recognition on the part of the Federal Reserve, on the part of the chairman, that these conditions are actually unfolding.

If he doesn't do that, then he's actually going to break it. Instead of just bending it, he's going to break it. And I think we're at that point. And it's something that Jeremy Siegel has said quite frequently. I think we're at that moment where they really run the risk of damaging the economy and the market itself. I think that recession isn't the risk. I think it is the policy. And we actually haven't seen any weakness really in the economy. Housing market aside, we are not seeing the Fed's action really take hold yet.

It's going to happen. The yield curve says so. I believe it. But it's happened in risk assets. There's a hard landing in risk assets, without a doubt. But there's room to go there. The Dow's down 7% on the year. Whatever hard landing is. The other day, you didn't want to talk about the Dow. But the Dow's down 7% on the year. Yes, there's a hard landing in growth NASDAQ assets.

Rate-sensitive assets. You know, the kind of which, Brenda, you have a lot of exposure to. Maybe those are the ones that are going to be hanging on every word from the chair tomorrow. Growth stocks. Well, yes, certainly growth stocks and not all growth stocks, but many growth stocks are down significantly from their highs. We also have to consider where valuation was at those highs, and it was quite extended. So I don't think we're going back to those highs anytime soon. But it's not

to say that there are some some areas opportunity that have been presented here but I certainly think though that the conundrum is that if rates continue to move higher. Which we think we're pretty close to the end of this rate hiking cycle but if

they were to move. Higher than we think they will and then that just creates more of a. A conundrum for stocks because then you can earn a risk free return. That is really quite attractive- and it certainly is even today versus where it was a year ago-

and so I think that will put a lid on some of the valuation multiples will continue to do that. We really think though that we're pretty close to the end of this rate hiking cycle. So should it end or pause? I think that would be a positive, certainly, for many of those growth assets that have just seen their valuation multiples decline significantly over the last year.

Lauren, your biggest overweight is value, not growth. That's right. And for the very same reasons that Brenda's outlining, we see lots of opportunity in equity, but not all equities are created equal. So we're looking for defensiveness. We're looking for income. We're looking for quality. And those things are expensive, but sometimes things are expensive for a reason. And that, in my view, is a conversation very much in favor of value equity. Give me the last word, Joe, from you. The market is defensively positioned. It's correctly defensively positioned in the near term. If the market gets a degree of comfort, then we could restore some of the

positive momentum from last week. If we don't get the comfort, then obviously the downside is where we're headed. And I can't wait to see what happens tomorrow when we talk about it in overtime and see what the market actually did. Guys, thank you so much. Brenda, we'll see you soon. Lauren, thank you for being here. And Joe, of course. I think Joe's coming back a little bit later on. Let's get to our Twitter question of the day. We want to know what you think about Apple. Does it close above or below $140 a share by the end of the year?

You can head to at CNBC Overtime on Twitter to vote. We're going to share those results later on in the show. We're just getting started, though, here in overtime. Up next, the recession obsession. That's what iCapital's Anastasia Amoroso says is fixating the market right now. She's going to tell us how she is navigating all that noise. Overtime live from the New York Stock Exchange is back in just two minutes. Back in overtime, stocks mixed today.

Our next guest says get ready for a year end rally, though. Joining me now post nine is iCap's Anastasia Amoroso. Good to see you. Good to see you, Scott. What's going to drive this rally? We're all waiting for it. Well, I think it's been in the making, and what's going to drive it is probably no new news. I know you were debating what Chair Powell is going to say or not say,

but what is he going to say that's really going to surprise the markets? I mean, we know sort of where the next phase of policy is going to be, which is we're trying to get to 5%. We're not trying to get there in 75 basis points anymore. Probably it's 50 in December. So I think that's already baked in. That's known. And inflation, meanwhile, there's more and more signs that it's actually easing.

And I think, Scott, one thing that may actually also drive the potential rally here or extend it is that the labor market weakness may actually be perceived as the strength for the market. And so we get the payrolls report this Friday. It's got to be pretty lackluster relative to the numbers we've seen before. So if the Fed cracks the labor market, they may have a chance of cracking inflation and then they can actually ease. You said we have a recession obsession. I mean, the yield curve is so inverted, like the most in 40 years. Yeah. Forgive us for having an obsession about what we think is coming as a result of that. Well, rightfully so. And I say that because, you know, you look at a number of different outlooks out there and some say the recession is now, some say the recession is not until 2024.

I think the recession has been in the making. The recipe has been in the making for a long time. And I think it's likely coming in the next couple of quarters. And by the way, we can debate the definition of a recession. But whether it's a recession, whether it's a slowdown, I really think it's coming in Q1 and Q2 of this year. I mean, you talk about the yield curve. You talk about a variety of indicators. The implied probability of a recession right now is 57 percent. Typically, it is about 18 percent. So you can't deny those things. And again, it's been in the making for a while. So if we actually have this recession in Q1 and Q2, then inflation does probably have a chance of moving meaningfully lower.

And if that happens, then, Scott, by June of next year, we'll be in a situation where Fed funds rate is likely at 5 percent. But inflation at, let's say, 3.8 percent core PC. If that happens, if that gap opens up, that's when the Fed can finally ease. You think we bottomed in mid-October or not? I don't think we have necessarily in terms of, I think we may have to retest. I mean, like the bottom. I think there's a chance to that, but I think we may have to retest this 36, 3500 level. The reason I say this, Q1 is probably not going to be very pretty. Because first of all, if we're right about this recession or slowdown that's going to play out in Q1, the inflation is not going to be low enough yet for

the Fed to ease. So you have this pretty bad recipe of weaker growth and still elevated inflation and the Fed on top of that. So that to me probably brings us back down to thirty six hundred. Are we going to break below that? I think you have to have a more meaningful recession. I think you have to have a balance sheet recession. And I don't know that we're necessarily going to get that. In fact, I'm not in that camp. We're what? We're thirty nine hundred and fifty seven is where we are now. And the problem I have is that, you know, so even if we have this rally that you suggest is coming right between now and the end of the year, you still. I've been calling for it since October and continue to November. So, I mean, I think we push higher somewhat, but I'm not saying we're going to get to 4,200 on the S&P. I think we probably chop around these levels, maybe move a little bit higher just because seasonally that's what you do?

I guess my point is that it's hard to get people engaged to feel like it's a good time to buy stocks, thinking that you can get a little more upside. If at the same time you suggest that Q1 is not going to be pretty and we could go back to 35 or 3600. In other words, what's my impetus to put money to work in this kind of environment to get a few percentage points if I'm lucky before it gets, in your words, ugly or not going to be pretty in Q1? Yeah, I don't think you should. I don't think this is the time that you should be playing for the next couple of percentage points into your end. I think you should have in the beginning of October. And that's something that we've talked about. But what I'm saying is there's probably not going to be a big capitulation or a meltdown event because there's just no new bad news that I think we're necessarily going to get. And then you've got the corporate buybacks, the biggest buyer that's in the market. So I think we can hang around these levels, maybe push a little bit higher. But then, yeah, to your point is what do you do with this rally?

Well, you probably sell some things that you don't want to carry over into 2023. And for me, that's parts of the unprofitable tech. Oh, I've thought about that, too, of, you know, some have suggested, well, we've seen most of the tax loss selling for the year. But if you do get a more sizable pop than people are expecting, whether you get more selling into it to take advantage of tax loss selling before the end of the year? I think you will. A lot of the mutual funds have already harvested any of the tax losses. Individual investors can still do it. But I think it's going to end up being a rebalance. You sell things that you really don't want to own, which is, again, this unprofitable tech that's been reliant on valuation expansion, which you'll probably buy back some other things and things

that I've been buying, for example, are dividend payers. So I don't necessarily think that this wave of tax loss selling is going to just deter the market entirely. I think it's going to be a bit of a rebalance and all in, I think, a couple of more percentage points into year end. But that's about it. OK, thank you for being here. Thanks, Scott. That's Anastasia Amoroso, iCapital chief investment strategist. Up next, the China trade. Chinese stocks are soaring despite anti lockdown protests in that region. Is the market's optimism too much too soon? We will debate that in today's halftime overtime next. And we are keeping an eye on CrowdStrike. It is getting hit very hard in overtime. It's dragging all of the cyber stocks down. You can see their CrowdStrike at the top down more than 18 percent. But Palo Alto, a darling of that space for many, is down

near four. Zscaler down five percent. Fortinet getting hit pretty good, too. We'll be right back. We're back in overtime. It's time for a CNBC News update now with Bertha Coombs. Hey, Bertha. Hey, Scott. Here's what's happening. An update on the U.S. World Cup soccer tournament coming up. But first, without naming either man, the top Republican in the U.S. Senate sharply criticized former President Trump for having dinner with Nick Fuentes, even though Trump says he did not know anything about the man labeled a white nationalist by the Southern Poverty Law Center. The way I'm going to go into this presidential primary season is to stay out of it. I don't have a dog in that fight. I think it's going to be a highly contested nomination fight with other candidates entering.

Lift off today for a rocket carrying three astronauts to complete the construction of China's permanent orbiting space station. The three crew members already there will be heading back to Earth after six months on board. And just about a half hour ago, the U.S. defeated Iran 1 to nothing. That win guarantees the American team will have a slot in the upcoming knockout stage, final stage of 16, where every match now is a must win. Amazing game, Scott. I think they run like 10 miles during that, and they had extra time as well. I don't know how they do it. Amazing effort today by our guys over there. Bertha, thank you.

That's Bertha Coombs. We want to call your attention to shares of Horizon Therapeutics currently halted for news pending. The news, according to The Wall Street Journal, is that Horizon is fielding takeover offers from large pharma. So we're going to continue to follow that. And I'm sure when that stock does reopen here in overtime, it's not going to look like that either. And when it does, if it does in that time frame, we'll certainly throw it back up. So that again, Wall Street Journal headline horizon said to field takeover inquiries from large pharma. We will follow it in today's halftime overtime. The China trade Chinese stocks having a November to remember, despite anti lockdown protests sweeping across that nation. A number of big ETFs that track the space are set to post their best month on record.

But according to Josh Brown, this rally could be getting ahead of itself. I hope the news flow comes in and affirms what these stocks seem to be trading on. But I mean, your guess is as good as mine whether or not the Chinese government will back down to protest on the second or third day. Historically, they haven't done that. All right. Joe Terranova is here with me on set. You have any exposure here at all? I do not. I do not. Would you initiate any? I mean, I just want to give you an idea. You and everybody else who

probably stopped looking at these names because they just became, for many, uninvestable, given everything that was going on there. Baba, Alibaba, up 26% in November. Best month since October of 2015. JD.com up 44%. Tencent up 38%. Pinduoduo is up 43%. And Baidu is up 31%. That after having a horrible October. So U.S. listed, China listed stocks in the U.S.

are up 30% in the month of November. They were down 25% in the month of October. That's what I just said, yeah. Horrible October, great November. So what taketh is given back. So it's a completely binary sentiment and outcome on both. I think what Josh is saying is right from the standpoint of, do you want to be tactically selecting individual stock names

when you're not sure ultimately what the path of policy is going to be? I don't have exposure. If you want to have the exposure, the best way to play it probably is to buy an ETF. Like the K-Web? M-C-H-I. M-C-H-I to me is the most diversified exposure you're going to get. You're going to get all the names that you've mentioned there, Pinduoduo, Tencent, BABA. And in addition to that, you're also going to get some financials, China Construction Bank, Bank of China. That's the best way to play.

Do you want all that exposure? I mean, this crackdown over there has been in large part on tech-related businesses and some of the most powerful leaders of those businesses. Why would I want to take added risk into areas that are certainly more cyclically exposed to the economy there, which you're suggesting banks or real estate, which is already a question mark there? If I think that maybe tech is going to be somehow OK, why wouldn't I want the KWeb, something that is more specifically geared towards Chinese Internet names, like the ones that I mentioned. I think you want to measure

your risk more. I think you also want to understand that this is about a reopening trade more than anything else. That's what this is. This is about a country that potentially has the ability to begin to reopen. It's similar to what we experienced here in the United States. So in that case, you want the sensitivity to cyclicals. You want the sensitivity to a lot of businesses that are tied to potential economic growth. There's also support there for the housing market. There's going to be some initiatives that are going to be really the opposite of what we have here in the U.S., where it's stimulative in that effect. That's why I think you could have that broad diversified exposure. But I would just do it through an ETF. And again, I'm not there.

No, I know you're not. I know you're not. And I'm just going to ask you straight up. Do you think it's investable at all? Through an ETF? Through an ETF. But that still gives me exposure. It's not like an ETF is not susceptible to some of the issues. So take the MCHI for a second, okay? Think about the scenario of 2022. The market's basically hard landing for risk assets, down 25, down 28% is what that ETF is ultimately going to give you on a year-to-date basis. So if you have to have the exposure, I'm giving you an answer from the

perspective of if you have to have the exposure, I'm giving you an answer from the perspective of if you have to have the exposure. Who needs that? Who has to have that? OK, so then then the way the response is just completely walk away from investing surrounding any China equities at all. It's a completely acceptable response. You could say if you believe that it's uninvestable, then I have then just say it. I I'm not going to say that it's completely uninvestable. I will not say that. I do think you could have the geographic diversification that would include China, but I would

do it in a very measured way. Okay. All right. Good stuff. Thanks, Joe. That's Joe Terranova. Wait, I mean, you know, we got to push together. I got Crowd crowd strike problems right now. You're already a little cranky over crowd striking. Understand why. All right, Joe Terranova, thank you. Up next, giving back. Former U.S. Marine Jake Wood served his country. Now he is on a new mission to serve others. He joins us live at Post 9 to talk about his latest venture.

Overtime is right back. We're still tracking the biggest movers in overtime. Christina Parts of Novelos is here with that. Christina. Let's start with cloud service provider NetApp posting a beat on earnings, but revenue fell short. The company warning about the months to come with weaker Q3 revenue and EPS guidance, as well as a lower full year guidance. The share price is definitely reflecting those concerns, down over 11% right now.

Meanwhile, shares have worked at another cloud name, climbing higher after not only a top and bottom line beat, but the company plans to spend up to half a billion bucks on share buybacks. The company also raising the low end of its full-year subscription revenue and operating margin guidance as well. The stock was up 6 percent on the news and now it's come down, but still up 3.6 percent. And then lastly, shares of Hewlett Packard Enterprise. HPE also rising after seeing strong demand in Q4, beating on adjusted earnings and

revenues. HPE's largest segment is compute. So it contributes roughly a third of total revenue. And that segment alone brought in 3.22 billion billion compared to the estimate of $3.1 billion. The CEO saying the company had strong growth in its order book and strong demand that led to record quarterly free cash flow of $2 billion. And the stock is up over 2%. All right, Christina, thank you.

Still ahead. Thanks. The Santoli's last word. Coming up on Fast Money, the two-way risk in the market right now. Morgan Stanley's Mike Wilson lays out his case. Don't go anywhere. Overtime is right back. I was last called away and on our Twitter question, we want to know if you think Apple will close above or below one hundred and forty dollars a share by the end of this year. You can head to at CNBC overtime. Cast your vote. We will bring you the results, plus Santoli's last words next.

All right, welcome back. We have an alert because Horizon Therapeutics is back open for trading, and you can see that is one heck of a spike there by some 35%. What was originally just a report is now being confirmed by that company that they are talking to possible suitors. They say in a press release, quote, they're engaged in highly preliminary discussion. They're naming names, too, which is somewhat interesting and maybe unique. Amgen, Janssen and Sanofi are all of the companies that are mentioned by Horizon as possible suitors that they are engaged in preliminary discussions. Now,

let's give you the results of our Twitter question as well. We asked you about Apple. Will it close above or below $140 by the end of the year? Well, fifty seven. We'll round it up. We'll say fifty seven percent of you say below, which is interesting for where maybe you think that the rally is going to happen or not as well. And maybe we'll get some clues tomorrow. Yeah. I know that's where the fixation is, understandably. You know, since the November 2nd Fed meeting, when he said his estimate for the terminal rate would have gone up between September and November, you've gotten one good jobs number, but you also got the downside surprise on CPI. And you have a bond market that's really calmed down and settled into this range of believing it's got the Fed's path priced in. So I think it's an interesting setup. Now, the nominal subject is the outlook for the economy and the labor markets.

He might spend a lot of time talking about the characteristics of the labor market right now. It hasn't softened up very much. Maybe there's some odd stuff structurally going on with it. But I don't think he's going to be setting out to soothe anybody. But I just think by definition, by what he's signaled already, that 50 basis points in December would still be in tune with what he thinks is necessary. Market probably could be OK with that. We do have a jobs report on Friday, don't we? And not only that, we have the Joltz report before he speaks tomorrow. Oh, interesting.

So you're going to get another read on exactly this whole job openings dynamic, something that Powell has pointed out. You know, there was a time earlier in this tightening cycle, as you know, when he was sort of saying, look, all we're doing is trying to eliminate some open jobs. And we think that's enough to bring things more into balance, not have to bring unemployment up. That may not really apply anymore because it's been very stubborn. Growth has been better in the economy. And arguably, you know, he had I guess it was Williams, John Williams, the New York Fed this week saying he figures four and a half percent unemployment is OK and may be necessary to get inflation where it needs to be. He's going to have to choose his words carefully, I would imagine, too, and maybe more so than normal, just given the fact of how much stocks have already come off the bottom. Yeah. He doesn't want to initiate another huge move, I would imagine that raises other issues.

So he's got to be careful. Maybe not. You know, he doesn't want to crush you, but he doesn't want to soothe you too much either. No, that's right. I mean, there's no reason he has an incentive to try and give the market more confidence that not only is a soft landing going to happen, but the Fed sees a turn coming in terms of their rate policy. No, that's not on the table. I don't think that, you know, the S&P at 3,900 and change is somehow at a level where he feels like he really needs to step on it.

Remember, it was around 4,300 in August before they did a couple more big rate hikes till now. So it doesn't seem like that's screaming at him that he has to necessarily go hostile. But, you know, it's a wide range of possibilities for the tone he can strike. Yeah. But as you said, I mean, look, the inverted yield curve has to have gotten his attention. The degree by which it's inverted, like the biggest in 40 years, the 210, very big. Also the ones that he has pointed to in the past, which is more like this 18-month curve, has also gone slightly negative. So yes, he's going to have to acknowledge

that recession risk is in the market as a probability. All right, we're going to see what he says. And obviously what the market does, we'll talk about it again tomorrow. Thank you.