Closing Bell - Closing Bell Overtime: Critical 48 Hours for your Money 12/12/22

Episode Date: December 12, 2022

The next two days could change the direction of your money for months, with CPI tomorrow and the Fed decision on Wednesday. Trivariate’s Adam Parker breaks down what is at stake. Plus, veteran energy trader Mark Fisher reveals his latest trades. And, Hightower’s Stephanie Link made a late-day move in the chip space. She breaks down that move.

Sarah, thank you very much. Welcome, everybody, to Overtime. I'm Scott Wapner. You just heard the bells. We're just getting started from Post 9 here at the New York Stock Exchange. Oracle earnings, they are imminent. We'll have the numbers and the stock move as it year. We begin, though, with our talk of the tape. Two days that might change the direction of your money for months. CPI tomorrow, the Fed decision Wednesday. The stakes, as you know, could not be higher, especially with a year-end rally still up for debate, though with a good start today. Let's welcome Trivari. It's Adam Parker. He's with me here on set at Post 9.

So do we ignite that today, this year-end rally? Is that what this is about? I think what it's about is people thinking you're going to get some dovish news out of the CPI and the interpretation on that CPI from the Fed. I think there's things we know and we don't know. What we don't know is the probabilities that people seem to be assigning to different ranges of the CPI. I mean, those are made-up numbers that people are guessing at. Oh, I'll say, since you went there, let's go there, okay?

Because J.P. Morgan, their trading desk, is talking about probabilities, okay? Of what the range of the result may be, and then what the stock move subsequently could be from the S&P 500. Okay, they say now their most likely probability, 50%, is you get a reading between 7.2, 7.4. Stocks go up 2% to 3% on that. Okay? The probability, 25%.

You get 7.5 to 7.7. Remember, last time was 7.7. Okay? Then you go down 2.5 to 3.5. Do you know what they say would happen if you get to 6.9 or lower, which would, I think, be a shock to most people, including them. They say there's only a 5% chance of that. You go up 8% to 10% on the S&P 500 in a single session. So the bottom line, 70% chance of a rally of some kind based on their probabilities.

Here's what I know what they know and they don't know. The probabilities are made up. Nobody has a real feel for the percentages. And, you know, to me, the ban they put, 7.2 to 7.4, seems awfully tight to be 50%. So it's one of those things where there's a bit of a precision kind of issue. But the part that I think we can measure is the relationship between Fed fund futures and price to earnings ratios, the so-called multiple for the market. We did a bunch of work in this at Trivariant. You look at the relationship, what it shows is if we get about 100 bps more dovish, we should get one and a half turns of

multiple expansion for the overall market, three for growth stocks. So if people start thinking, hey, they're going to be 100 bps less on rates than I thought in the terminal, that will drive a pretty big expansion. I would say one and a half turns is a lot. You know, where we are now, that is probably four or so percent. But you know what? We don't know. But I don't know if we're going to get that. You know, who knows?

You know, in the bigger picture, what we don't know, and since we're talking about knowns and unknowns, you can think about the multiple. You don't know the earnings. You don't know what earnings are going to be. So you can't put, even if you think you have a good idea of a multiple, a multiple of what? On what? So you have to be also very careful. When I say 100 basis points, I mean incremental to what's priced in now. What's priced in now is next November, you start getting a little bit more than 50% of the participants saying they're going to cut rates.

So if that starts to materially go higher because you get a bit of a lower than expected CPI, it's above that what would drive it. So those numbers seem skewed a little bit high to me. You could get a rally tomorrow if you get a light CPI for sure. But if I look at that distribution of outcomes and I could bet over and over and over again, I would say that's probably too bullish of an interpretation on what's going to happen. So the Dow goes back above 34,000. It looks like it's settling out here in overtime. Right. S&P 500 is still shy of 4,000, which some suggest you need to get over that

hurdle first to confirm anything. And then you still got to get about 35 or so points above that, which is the 200-day moving average. You go above that and you have some kind of confirmation of a near-term uptrend. That make sense to you? You're a statistician. It could be. I've studied the predictive power of the 200 day moving average. It seems like the big, bulge bracket firm thing to do right now is be following that 200 day moving average because it's worked recently.

But let's not be confused. Over long periods of time, there is zero predictive value of the 200 day moving average in the overall market. Just think about it logically. Sometimes you want momentum, things go up more, and sometimes they mean revert. And we're in a mean reverting phase, and it's worked well, so now everyone's piling on and chasing that. But if I study it statistically, about zero predictive value.

So I try to be a little careful on that. I tend to agree with you that people are applying it right now, and so that seems to be the stat du jour being quoted by the big firms. You do have a Ph.D., I think, in statistics. So you're coming at this from stat du jour being quoted by the big firms. You do have a PhD, I think, in statistics. So you're coming at this from some level. Yeah. Facts, not feelings. Of institutional knowledge. Correct. Facts, not feelings. Facts, not feelings. So if the CPI surprises, you know what the talk's going to be then? Soft landing. Now, we may actually have a soft landing, whereas a month or so ago, I was like, we're having a recession.

Right. And we might be having a recession sooner than we think. I think if you get a couple, you know, something as tiny as 20 bips less than the CPI, let's think about last time we got 7.7 when people thought it was 8, and we got a monster rally, right? You know, so two times ago, rather. So I think if you kind of look at it now, I probably would get more negative on the market if we got a big reaction to a slightly light CPI, because your comment you made is really spot on. You have to have that price earnings, but you also have to have the earnings that aren't

declining a lot. You multiply them two together, P times E, you get the price. So I think right now, sentiment is, I think there's a lot of puts and takes to next year. We've talked a lot about this. One of the positives is sentiment's low, and you will see a lot of money come in. On the flip side, if you get just the same, let's say you get the same number. You get the same number we got last month, I think the market sells off pretty hard. That's what they think, too, they being J.P. Morgan. They think it sells off pretty hard, like 2.5% to 3% says their trading desk. Let me just interrupt you for a second.

I'm listening, of course, but Oracle's out. and the stock is obviously moving as we see it here. Looks to me like up a little bit, a couple of bucks on the bid ask. Yeah, you see it there in front of you. That's two and a quarter percent closely watched, obviously, given what Salesforce delivered or didn't deliver, maybe better said a week or so ago. And the stock really cratered on the back of that. Our Frank Holland is going through that really cratered on the back of that. Our Frank Holland is going through that. He's our ace reporter on that. He's going to come on and tell us exactly what's in the report

as we worry about demand for enterprise and other sorts of software products. Cloud revenue is where this company plays big. Stock's up a lot already, up 30% in Q4. So we've got a lot to go through, which we will. Most of the things I've seen for next year are down early, maybe ugly early, retest lows. We're talking like 3,200 maybe on the S&P, but then a big comeback in the second half. Does that sound reasonable to you? I agree with you. That's what people are saying. A lot of people are saying that. And I know, I don't, it's never happened the way people think it's

going to unfold. Think about it. Everyone does their year ahead outlook in November, and half the time they have to revise it by January. Which they've done. Right, right. So, I would say if everyone thinks that's going to happen, the one thing you can be sure won't happen is that, right? You know, so I'll take the other side, almost knowing nothing, saying maybe we have a slightly more buoyant first part, and then it's worse later, because my operating macro thesis is erode, not implode, right? And again, in a road environment with a high nominal GDP,

maybe companies can put up some decent numbers and surprise people a quarter or two longer. We know there's going to be some things that are up next year, auto SAR, it will be up. So I do think that in that scenario, you could see a little bit of a rally and then a fade. It could be the exact opposite. And if you did the exact opposite of what people suggested over time, you made more money than listening to them. Yeah, well, it's all I mean, look, you know, where sentiment and positioning is now, for example. And there are folks who say that's

reason enough to believe that you maybe should be bullish here because everybody's so negative. I got Frank Collins ready to rock and roll here on Oracle. Frank, what do we see? Hey, Scott, as you mentioned already, a beat on the top and the bottom line. Stocks moving higher right now. A couple of key things to look at in this report. Obviously, the beat on EPS in this earnings report, the company says if not for the impact of the stronger dollar, EPS profit would have actually been nine cents higher. Also, they say their Cerner acquisition, a multibillion-dollar acquisition in the healthcare space, that contributed $1.5 billion in total revenues. One metric that everybody was watching was deferred revenue.

You mentioned Salesforce showing some soft forward demand numbers. For Oracle, those numbers actually beat estimates. Deferred revenue of $8.8 billion compared to the estimate of $8.33 billion, showing it's a proxy for demand, showing that there's more demand for their products going forward and customers are continuing to sign deals with them. Again, a beat on the top and the bottom line. The company says the strong dollar impacted EPS by $0.09 a share.

And right now, shares of Oracle are moving about 2.5% higher. Back over to you. All right. Good stuff, Frank. Thank you, Frank Collin. Let's bring in Keith Lerner now of Truist Wealth and CNBC's newest contributor, Victoria Green of G Squared Private Wealth. It's great to see both of you. Victoria, to you first. Nice rally today. Does tomorrow confirm it or wreck it? Well, I mean, PPI on Friday wasn't that great, so we'll have to see if it comes in hot, cold, or neutral. I feel like we're in this like friends episode, not to be a millennial and talk about friends, but it's the one where we

know, do they know we know, you know, because what we don't know and know is what we're arguing about today, what's under the hood. And I think for us, it's something that until it's confirmed, we want the facts and the data and nothing's confirmed. Dollars holding 105, yields kind of hold that 350, S&P couldn't hold that breakout above 200. So until you start to see those signals actually confirm, for me right now, I'm more concerned about potential surprise to the downside as I think you're right now still in a bearish reversal. And Powell, there's this disconnect between what the Fed has recently been messaging,

which is higher for longer, and what the Fed fund futures are pricing in, which is like 4.5% end in 2023. So when you have that disconnect between Fed messaging and what the market's pricing in, I think that puts you at a lot of risk for downside pressure. So, yeah, energy might come in lighter. What's housing do? Health care, food costs. There are some things I think that are very hard for us to know.

But I don't think it's going to be a great surprise seeing what PPI came in and what wage growth was. Yeah. But, I mean, look, the market actually hung in there surprise seeing what PPI came in and what wage growth was. Yeah. But I mean, look, the market actually hung in there pretty well with PPI. You could have thought of a million reasons why it would have sold off hard and stayed there. In fact, Keith, it did sell off, but then it reversed. Tomorrow feels to me like it has a more binary outcome. Good is going to be great for the market. Bad is going to be awful. How do you see it? First, I think I learned early on from lewis

rukas i never make a forecast where you can be proven wrong in 24 hours but with that said i don't think there's much of an edge here we've been trading in the same range for about a month right now i think the market is anticipating somewhat of a hot number i think more likely it continues to stay in a range because we have this tug-of-war right positioning is relatively light sentiment's still negative but i think most of us are looking ahead and seeing macro challenges also i think the big picture as you kind of zoom out a little bit over the next six months to 12 months is that we think the economy is going to slow down we think at 17 times earnings even the earnings today is the best outcome as far as earnings stay flat we think there's downsides so we just think the risk reward here overall was as we look over the next

six to 12 months is somewhat unfavorable for the overall market but it's really a roll of the dice as far as what happens after a cpi print tomorrow all right so that's the prevailing view adam park i mean everybody's negative right no one wants to really go out on a limb and try and be positive in the wake of you know oncoming traffic so if you're investing in equities and you're trying to beat that market, which is mostly what I focus on, you have to have some exposure to the growth stocks that will go up a ton if we get a light CPI, but some exposure to the value stocks and the cyclicals

that may be able to sort of relatively outperform if we don't. Because we know we have a skew there on the multiple. So I'm looking Boeing today up 3.75%. I've got Caterpillar up two and a half percent. I've got Honeywell up 1.3 percent. Are we talking about those kinds of, are those cheap cyclicals? They have oil and gas and aero exposure, depending on which ones, which are both, I think, considered to be structural winners in, you know, kind of end markets that are positive that over the cycle you want exposure to i think i mean you know some of the more deep valued metals or or or energy the point is you have to have some bets

if growth works in some bets of as if value works into a what what what everyone thinks will be a sort of high volatility stretch here depending on you need goldilocks on the number i guess the question is what is Goldilocks? What would have to happen tomorrow for us to have an unch S&P? What is deep value energy? Is there such a thing now?

These stocks have run a lot. They still traded six and seven times earnings and, you know, sort of in the 20th percentile versus history on price to book. So there's a lot of energy you can own that has a lot of upside as they generate. I mean, Exxon generated more cash than Apple this quarter. So even the big boys still are pretty attractively valued. Keith, where do I want to be in your mind? If for somebody who's, you know, obviously cautious, if not downright negative on the near term, are there areas of safety that you would want to play now that are more defensive? Because let's be honest, some of these areas, which were great months ago,

are even expensive now. Sure. And listen, we are finding opportunities below the surface. The equal weighted S&P is trading around a 15 multiple. And again, I think the upside for the overall market is probably about four to five percent if we have a good print. So as far as the position, the way we're looking at it is you hit on some of the themes. I think aerospace and defense is still attractive. Look at the defense area making on some of the themes. I think aerospace and defense is still attractive. Look at the defense area making a fresh relative high today. You have a secular growth as far as defense spending, not only in the U.S., but especially if you look over to Europe and kind of the strategic battle that we have with China. So we like industrials and specifically defense.

We still like energy, as Adam just mentioned, trading around nine times earnings. They're actually cheaper than they were in the beginning of the year because earnings momentum has been so strong. And it's also a hedge against a China reopening that goes more smoothly than expected, or maybe global growth proves to be better. And then the other side, look at health care. Health care is almost back to new highs. I think that's a good sector in a more defensive type of market. You know, staples are a little bit more expensive, but if you expect more of a weakening economy, a choppy market, we're also there. So those are the four sectors, kind of the barbell approach that we're taking today. And finally, again, the equal-weighted S&P we think has more value than the market cap S&P.

I mean, talk about Victoria the herd, right? I mean, the herd is gone. Everybody likes energy. Everybody likes health care. Everybody likes staples, though some say, well, some of them are more expensive than others. So it's easy to be negative. It's easy to pick the obvious. What gets you to change your view from how negative you sound to something more constructive where you'd want more offensive parts of this market?

Sure. And we are very willing to update our thesis. If we have a decisive break, then you've got to load into the gross the mega cap tax and and load more into risk versus playing defense i think you have to be prepared to change your thesis as the data changes so if we see that powell says no we're maybe not going to hold down through 2023 if we see change in verbiage if we see earnings maybe not going to get crushed as much as we think it is then i think you have to be prepared to update and certainly pile on some more risk in there and look a lot more growthy. But for now, nothing's confirmed. So I tend to want to be a little bit late than early, because for now, I think we're still in the same downtrend. And so until I see that data, I'm not prepared to really step out

on that limb yet. But yeah, we want to know, like, if we decisively see technicals support that this is no longer a bear market rally, but we are reaching breakout zone, if we decisively see technicals support that this is no longer a bear market rally but we are reaching breakout zone if we see the fed not just pivot but actually talk about hey you know we're concerned that we've gone too far and we're going to actually start to to lower rates in 23 which is what the market expects then absolutely it is you know hold on to your hat add the risk let's go and you're going to see all the beaten down names all those high betas all those high bees that right now are just can't win they're certainly going to lead us out of this and markets are a leading indicator so you have to be prepared for that markets will usually bottom before the data says it's time for them to bottom uh but again i tend to be a little more cautious there so let's go through the bull

case i like that idea okay let's do it right because i'm tired everybody and i think he's made a good point uh with his equally weighted comment. Look, micro-caps are traded at six times forward earnings. That's close to an all-time trough. Small caps are 11 times forward. You're seeing Bravo coming in by Coupa. You saw Blackstone get in with Emerson. The public markets are cheaper than the private markets.

A lot of these micro-caps and small caps don't even need to be public. There's a lot of dry powder at the big private equity firms that could come in and do deals. That could put some floor in some of the valuations here. And let's say we still have a road but non-employed scenario. Let's say that's right. A lot of companies still have growth in earnings in 24 versus 22. And as I'm looking out in early 23 at 24 earnings, I'm going to start saying, wait a minute, maybe Visa and PayPal. And maybe there's a lot of things that are, like, reasonably priced and have upsides. Semis, Amazon. I mean, some of these things are going to look pretty good risk-reward.

So I think that there could be businesses that are up 15%, 20% and kind of deserve it without some sort of dream on a multiple expansion from dovishness, but actually just are producing fundamentals that merit it. You're not looking at things that have negative free cash flow, though, right? I mean, you want earnings. You want profits. 50% of the growth universe has negative free cash flow. And the thing that really is anomalous, if I look back 20 years from now, this year, Q2, the growth stocks that generated free cash flow were down 26, and the growth stocks

that didn't were down 27. You didn't really get that protection you normally get from free cash flow generation in the downturn, the acute part of the downturn in the second quarter. So I suspect we could get some participation here. But look, it's always tactical versus structural. Right now, I probably would have to say, what are some of the garbage growth stocks that I can pinch my nose and hold just in case I get a big up trade tomorrow? I probably want a little exposure to that in my book across the risk management because I'll get left behind in an up 6 or 7 teep if I do get 30 bips light on CPI tomorrow. So you're always managing toward how do I beat the benchmark. I've got to own some sickle goals that can improve on the balance sheet.

I've got to own some growth that can produce 24 numbers that look better than 22. And I think there's enough of those that I wouldn't get too bearish in any medium-term view. And so I'm not. I don't know about the CPI. It's so hard to call 20 pips up or down. We'll see. Well, you need to and hope that it is at least trending in the right direction. It's the trend that matters more than anything else.

If it's flat to up versus last print, I could see that being apocalyptic. But I don't think that's the trend that matters more than anything else. If it's flat to up versus last print, I could see that being apocalyptic, but I don't think that's the highest probability outcome. Yeah. I gave you, again, the lowest probability as well, or certainly one of, is that you get, and just to remind all of you, October CPI was 7.7. So JP Morgan's trading desk suggests 7.8 or higher, obviously going in the wrong direction. Now, granted, they think there's only a 5% probability of that. You could go down 4.5% to 5% with a reaction in the S&P 500. So I can't wait to see what happens, and we're going to talk about it as well in overtime.

Thank you, everybody. Keith, good to talk to you. Victoria as well. Thanks, Scott. Welcome to the fam. It's good to have you as a contributor too. AP, always great to talk to you. Thanks, Ray. That's Adam Parker here on the desk with us. Thanks, Scott. Welcome to the fam. It's good to have you as a contributor, too. AP, always great to talk to you. Thanks, Ray.

That's Adam Parker here on the desk with us. We're just getting started here in overtime. Up next, legendary oil trader Mark Fisher. He's with us exclusively. Just made some big trades in the energy market today. We're going to talk about exactly what he did as a keen eye on where those markets typically head. And that leads us to today's Twitter question. We want to know, what price will crude hit first, 60 or 90? You can head to at CBC Overtime to vote. We'll share the results

a little bit later on in the hour. We're live from the New York Stock Exchange. Overtime is right back. All right, we're back in overtime. Oil prices jumping today with the Keystone Pipeline down and Russia threatening production cuts. Famed oil trader Mark Fisher, he's the founder and CEO of MBF Clearing Corp. He joins me now. Fish, welcome back. It's good to see you. Hey, Scott, how are you? I'm good, thanks. I understand you made a series of trades today at the close of the market. Can you give us the specifics, exactly what you guys did? Well, I hate picking bottoms because, you know, picking bottoms or picking tops is usually where you get yourself into trouble. But today was too irresistible because I think the setup was too good.

So we kind of bought everything today on the close. We bought crude, he knew all, Arbob. I'm sure we bought some natural gas. We bought everything today. Just, again, you know, typically you go broke buying bottoms and trying to pick a bottom. But today the setup was just too good for us. When you say that, you know, for those who are watching us, you know, and even for, you know, whether they're more experienced or more novice investor, what does the setup look like that that keyed you into today being the day?

Well, again, I'm usually usually when I'm right, I'm usually early and I'm usually really right or really wrong. And I'm probably, you know, now, again, Scott, I always say this when I come with you, I'm probably going to go on TV and look like a fool tomorrow when everything gets destroyed. But number one, you've got a situation currently where the weather is finally getting colder. You had California power prices over $400. Your natural gas prices and cash in California over $45. You have the situation occurring where you're coming to the end of the index roll in energy that ends kind of tomorrow. You've got a big rebalancing at the beginning of next year, where at these current

prices you're going to have to buy oil in those indexes. The SPR is down to a level where the administration said they were going to be buying oil around 70 a barrel the spr reserves basically all the selling will probably be over in the next month and you've had a perfect storm um in terms of uh weather up until this point why the prices have gone down some say that oil and all those are obviously valid reasons that you know you suggest could mean that these commodities markets go higher but some suggest ultimately you need a Fed pivot to push a more sustainable rally. You buy that or not? Scott you know me that I'm probably one of the most out of the box people that you know right just in life. Forget about trading right. With that being said anything that people focus on yes you could have a short-term reaction from the fed

whether they pivot not pivot cpi what they do on wednesday but that's all on the market i kind of like to take a step back and look at what people don't look like so the to me for instance the most to me that and i i think i'm i think you guys put a chart together with me, you know, this past day, the number one thing that correlates why the price of oil has gone down in the past three or six months has been because of the Iranian tensions. I mean, if you look at what goes on here, you know, except for maybe one blip, you know, as it's calmed down that, you know, it looks less and less likely that there's going to be a deal between Iran and the U.S. and the European nations, the price has gone down that, you know, it looks less and less likely that there's going to be a deal between Iran and the U.S. and the European nations, the price has gone down.

I mean, with all the protesting and all the, you know, the rioting and all the crazy killings and all the insanity that's gone on in Iran, obviously it looks like the deal's not going to get done. The price of oil goes down. But now it's $70 a barrel, $71 a barrel. The risk-reward is just too good. At $85 a barrel, it was probably much more of a crapshoot. But what do you really risk?

It's risk versus reward. What are you risking versus what you reward? And again, this time last year, I was on, talking to you about not this winter's natural gas, but next winter's natural gas. And again, if spot natural gas is trading $6.50 today at the hub, right now in futures, and, again, there's no shortage of natural gas. There's a shortage of pipelines. Like in Texas a month ago, where there's no pipeline connectivity, they were inundated with so much natural gas that the price went negative. At the same time, in Boston, for this coming winter, the price is $28 because there's no connectivity to it. Next winter, natural gas, again, is going to end up being, to me, a great trade because of the fact

that no one is really going to go ahead and want to step up and get short next year's natural gas. And is Europe really going to go through the same constrictions that they're going through this year? Are they really going to suppress themselves enough to do everything so that she has that to guess is probably a buying january you know december january of next not this with the next winter at these levels seventy dollars what do you really rest okay can defend come in a race race yes i had this i really make matter i don't really think so because i was focused on it

markets don't move on what people focus on markets more people don't really think so because everyone's focused on it. Markets don't move on what people focus on. Markets move on what people don't focus on. So it's interesting. You know, we do a Twitter poll or question to our viewers. And our question today was what price will crude hit first, 60 or 90? And it sounds to me like you think it's much more likely that we're talking about an upward move back towards that level uh rather than falling with a six handle well it could go it was almost at a six handle on friday can it go to sixty dollars there's a lot of things that can happen one you can have a resolution some type of peaceful resolution in in uh ukraine which would obviously drive the

price down right away which would by the way would be the buy of the century if that happened okay you can have a situation occurring the other way which i don't even want to talk about which would be a catastrophe which would drive the price way up but i i think it's 70 a barrel think about it if you're opec and the price of of of crude oil has come off 42 since the since the of the Ukraine. I mean, it's weird because the stock, the futures prices have come off, you know, 30, 40%, while the equity prices have gone up 20, 30%. And I kind of think that at $70 a barrel, $72 a barrel, especially with the technicals and fundamentals all lining up,

the risk-reward is just too good not to take the shot to be long-term. I got you. One of the beauties of of you and and what you do is you know what you know and you know what you don't know and you always say that you are you know you're a commodities guy you're not an equities guy which is why i asked joe tarranova to join the conversation because he plays the equity side uh in many ways of the kind of belief that you have on where actual prices are going. So what do you make about, I mean, this is essentially fish calling the bottom.

We're trying to, whether he's right or wrong, we'll find out. Time's going to tell on that. But what's the equity play for our viewers who don't buy the commodities but look at the stocks? Okay, so let's talk about seven stocks that are included in the JOTI ETF. Three of these stocks I also own personally. I think it begins with the conversation about not extending too much beta risk on what your energy exposure is going to be. So there's two places I think first you want to identify.

Pioneer Natural Resources as well as EOG Resources. Now, EOG is going to give you a little bit of the exposure to natural gas. But what these two stocks have, Scott, is they have the consistency of earnings growth over the last three years, something I look at that's very important. In the case of Pioneer, you're talking about 43%. In the case of EOG, you're talking about 18%. What they don't have is that they don't have the extreme earnings growth

of a lot of the high beta names in energy in the prior quarter. So PXD, you're only talking about 22% revenue growth last quarter, EOG 45%. I like that. I like it's an even, it's a nice equilibrium of sales growth. It gives you the exposure to oil. It gives you the exposure to natural gas. Now, if you want to stay low beta and then you want to say, OK, where is the market short? What's the highest short interest? Two names. Occidental, which we all know is in terms of the XLE, that's the strongest return year to date. It's up 121 percent.

Big Buffett-Bergster play. Absolutely. Six percent short interest. Really? Six percent short interest. You're making that bet against Warren Buffett. And then in addition to that, Diamondback Energy, ticker symbol FANG, right? That's another name that has six percent short interest.

Now, the last place you go is you say to yourself, OK, what if the value of the U.S. dollar begins to retreat? I want the international exposure there. I want the multinationals. I want to go to ExxonMobil, which has 63 percent revenue exposure outside of the u.s or i want to go to chevron which has revenue exposure of 56 outside the u.s and each one of those names i'd buy one of those names if we see the value of the us dollar go lower last one refiner valero i own it personally okay good stuff and let's ping back ping pong back mark, to what degree does China reopening play into your long view here? Honestly, zero. How?

Because these are all factors that have baked into the market already. Anything that's there has already been dissected by every analyst on wall street over and over again i mean you look at look at the wall street journal today there's a there's a there's an interview with a with the chairman with the ceo of exxon and he talks about how lng prices are you know lng is going to be the commodity of the future and how it has to be basically and if you want to have exposure to lng the only way to really have it is through nat gas and if you really want to have exposure if you want to hedge out your inflation risk in your portfolio, you have to have exposure, you know, to energy in some way to hedge out inflation. Again, it's sort of like buying car insurance or fire insurance or life

insurance. You own it not to make money if you're an investor. You own it because you don't want to have the calamity of not having it and having a disaster on your head. As a trader, right, to me, you know, China, I'm not sure what that even means at this point because they've been, you know, the rumors of them reopening have gone on and now they're already starting to reopen. I'm not a China expert. I don't even know what I'm an expert in. But I do know one thing. At $70 a barrel, $72 a barrel, the risk reward is there to take an educated guess and to go ahead and get one of the risk was is to get these levels especially with the money flow that has to come into energy towards the end of the year

especially with the roles being done as of tomorrow the next day especially with the fact that marketplace is not long so you don't have the market of the will belongs to the spec longs weighing on both on the markets and it just to me just makes sense. That's that's all we need to know. Mark, I appreciate it so very much.

Thank you. That's Mark Fisher again. Not everyone. And. Yep. And you as well. And you as well. Before I let you go, I'm thinking about Marco Kalanovic. Right. It plays into this story. He just dropped a new note. Most recently recently he was suggesting maybe tactically negative oil long-term bullish so we'll see how that plays out but he just literally dropped this a few moments ago um and he had grown more negative in in recent weeks we think central banks are likely to induce market turmoil and subsequently be forced to reverse their course uh this year's equity market lows

will likely be retested early next year. And we see an ongoing trend of pullback in risk assets and a rise in allocation to bonds. Before I let you bounce, just give me a quickie on that. That's why you focus on low beta exposure. Every name that I have advocated for here today has a beta exposure of 0.8 or less. I do not want to make the mistake that I made in EQT, which has a beta of 1.27. We don't want to assume that type of risk. All right. I feel like we got some really good actionable stuff. Thank you. That's Joe Terranova. Of course, that was Mark Fisher as well. We got more on the way, too, in terms of actionable ideas for you. Up next, a bold call on tech star analyst Dan Ives. He's betting on a

really big breakout for that sector in the new year. Makes his case next. Time for a CNBC News update now with Contessa Brewer. Hi, Contessa. Hi there, Scott. Here's what's happening right now. California's ban on flavored tobacco products is on track to go into effect next week. The Supreme Court has now refused a request by tobacco companies to block that measure. It was overwhelmingly approved by California voters in November.

This ban applies to everything from fruit-flavored vape juice to menthol cigarettes. While it's looking more likely that the Senate will seek to pass a stopgap spending bill to keep the federal government operating past a Friday deadline, Senate Majority Leader Chuck Schumer says lawmakers should get ready to pass a one-week funding extension so the full year spending bill can be finished before the holidays. And a man has been reunited with his dog after seven years apart from one another. Jazzy, you can see her there, ran away from home in Fort Worth, Texas during July 4th fireworks in 2015. It's enough to send any dog running. But she was recently found in Florida, abandoned in a motel room without food or water.

And thanks to Jazzy's ID microchip, Animal Services identified the dog, sent her back to her owner, flew more than 1,000 miles to pick her up. That is a happy good news story. I'm leaving my Monday in good hands, Scott. Yeah, that's incredible. Contessa, thank you so much. Sure. That's Contessa Brewer. We're back, as you know,

in overtime. Tech remains one of the worst performing sectors year to date. The space is on track to post its worst year since 08. Our next guest, though, calling for a major rebound in the new year. Let's bring in star Wedbush analyst Dan Ives. he's here at Post 9. 20%? How? Well, when I look at where growth's going to be from what we see in software, cybersecurity, and pockets of tech, I ultimately think right now growth is going to hold up a lot better in 2023 in some of these areas than I think the street's factoring in. And then we even look at the Coupa acquisition today from Bravo. I think it's tip of the iceberg, which is also going to be a surge of M&A.

I mean, it's one thing to just say that, but what backs it up? Well, I think it's going to be great growth, this, that, and the other thing. I mean, in the face of everything that we're worried about, a slowing economy, the Fed, still high inflation, a move that has been more pronounced to value over growth than people think? Don't just tell me, like, show me, like, why? So from a growth perspective, if you look at the last five years right now, valuations, they're basically trading below the last five years from a growth adjusted in terms of mean, within software, within a lot of pockets of tech.

So in terms of the adjustments that we've seen from valuation, I ultimately view it as a bright green light in terms of software, cybersecurity. Names like Microsoft, to me, names like Salesforce.com, despite the negatives that we're seeing, Palo Alto, which me and you have talked about a bunch. Scott, to me, it's really, it's the pockets. It's ultimately going to be a fork in the road. But software, cyber, and I think a lot of areas of big tech, you know, despite all the sentiment right now, I think we does higher into next year.

You say pockets, there's been an air pocket for Salesforce. Why should I believe that that story is about to turn anytime soon, given the challenges they had, what they said on their earnings, the executive departures, you know, and on and on and on and on? Well, I think that's one, like activism is going to,

you're seeing that continuing to increase. I think margins, there's going to be more pressure on Benioff to increase margins. I do believe they could be more acquisitive from an M&A perspective. In my view, it's ultimately a moment of truth for Salesforce, but you look as a cloud behemoth. I mean, similar to what we're seeing with Oracle even after the market. I think that's an area in terms of overall cloud that I view as sort of what's really going to be a rock of Gibraltar into 2023. So you think that Starboard and Jeff Smith are going to accomplish something at Salesforce that makes me and as an investor want to buy the stock

today playing for that outcome? Well, I think activism is part of it, but ultimately, if I look at valuation relative to a cloud behemoth with an install base, that they could further and further penetrate. Salesforce, to me, I think the risk-reward is extremely attractive, combined with how I view names like Microsoft, as well as other cloud names. I'm pulling up one last name before I let you go, and it's Tesla. The stock's like cratering. Well, you still have outperforming 250 on it. What's going on here? Look, I mean, we lowered our price target a few weeks ago. I mean, look, I think it's been dark days for Tesla. I think if I look at the Musk brand situation in terms of what's happened on

Twitter, it's had a significant impact on Tesla in terms of worries that he's going to have to sell more Tesla stock. And ultimately, look, for Musk, you talk about a fork in the road. This is a fork in the road the next three to six months because Bloom's coming off the roads. And even for huge defenders like ourselves, it has just been what I view as a train wreck situation in terms of how he's navigating. But why do you still haven't outperformed that?

And even, look, $250,000, even though you lowered it, is still a lofty target considering where the stock is today. Because in my fundamental view, in, even though you lowered it, is still a lofty target considering where the stock is today. Because of my fundamental view in terms of Tesla on electric vehicles, where that could go over the next one to two years. But I'll be the first one to say Musk is a key part of the premium, a key part of the brand. That's why now you got to now start to see him navigate the storm, especially that we're seeing in China. I appreciate it, Dan. Thank you. Thanks for having me.

Again, Wedbush joining us here. We're tracking some big stock moves in overtime. Steve Kovach standing by with that for us. Steve? Yeah, Scott, I got yet another software merger moving shares of the acquirer lower in the OT, plus a major chipmaker laying off a small group of workers. We'll have that and more details when Closing Bell Overtime returns after this. We're tracking the biggest movers in OT. Steve Kovac is back with that. Yes, sir. Scott, here's another software deal for you today. Shares of Trimble falling after hours following the announcement it will acquire Transporion. Trimble, which makes software for construction and transportation, will pay 1.88 billion euro in cash for the Transporion.

The deal will bolster Trimble's software offerings in transportation, the company said, and when it revealed the deal just after hours here. Shares of chipmaker Qualcomm are also down slightly after hours following a Wall Street Journal report that company is laying off about 150 employees. Now, chipmakers like Qualcomm have previously warned of falling smartphone demand this holiday quarter. And finally, shares of Bank of Montreal following in the OT after announcing an offering for common stock in an effort to raise over $3 billion Canadian dollars. The bank's saying it plans to use the funds

to help pay for more regulatory costs and other expenses. Scott, I'll send it back downtown to you. Right, good stuff. Thank you, Steve K it back downtown to you. Right. Good stuff. Thank you, Steve Kovach. Thank you very much. Up next, we have a trade alert in the chip space. Stephanie Link just made a late day move on one semi stock. We're going to tell you exactly what it is, exactly what she did next.

Welcome back. Hightower Stephanie Link making a late day move in her portfolio joins us now on the news line in overtime interesting stuff i understand here you bought back lamb research which you sold in january i did i did scott um i i think a couple things a lot of bad news is priced in um and i know it's had a recent rally uh so i only started with a small position and i will continue to buy some more on the way down but a lot of bad news is priced in. And I know it's had a recent rally, so I only started with a small position, and I will continue to buy some more on the way down. But a lot of bad news is priced in, meaning wafer fab equipment guides already down 20 percent for 2023. The China restrictions, I think, are also manageable. They already guided down about $2 to $2.5 billion to total revenue for

next year. That's about 12 percent of their total revenue. So my point is that I think earnings have come down to a more realistic number, and trading at 13 times the forward numbers, I think, is very attractive. These guys have $30 in earnings power potential, in my view, driven by services, expansion into memory, market share gains and logic, and cost control. And they have a deferred total revenue of $550 million, now at a total of $2.8 billion. So you have visibility on the existing orders that they have. Are you making a statement in general about where you think chips are? You just pick this one to express that view? Yeah, this one is cheaper than applied materials.

You and I have talked about it on Halftime a Bunch, which one I would own if I was going to buy one. And I just know Lamb Research. I think the management is stellar. But, yes, I also did add to Broadcom after they reported last week because that quarter, very few companies are beating and raising in technology at all. And this company did it, and they grew revenues 12 percent, and they increased the dividend, and they're buying back stuff and doing all the right things. And they're gaining market share in their end market. So, yeah, I'm getting a little bit bigger in semiconductors at this moment.

Love, love a trade in overtime. Stephanie Link, thank you very much. We'll see you soon. That's High Towers. Stephanie Link, as you heard there, buying land research in overtime. Still ahead, Santoli's last word. We're back right after this. To the results of our Twitter question, we asked what price will crude hit first, 60 or 90? The majority of you, 57 percent, saying 90. Let's get to Mike Santoli for his last word. We've got a binary thing happening tomorrow, I'm told. Seems like it. And the market is completely of two minds about which way it does break, because even though the stock market did have this levitation late in the day, it seemed like people wanted to make sure they at least accounted for the prospect

of a very soft CPI number and likely rally thereafter. You also didn't see really treasury yields come in, right? They basically ended higher on the day. The dollar was firm. So, in other words, it wasn't some kind of trade that swept all the asset markets in some sense that the market has an idea of which way it's going to break. Maybe that leads to the potential of an even bigger upside then for those because of the lack of participation. If if it goes in the right if it is decisively a soft number. Here's what we know as a premise.

High and declining inflation is one of the more bullish setups in general historically. It doesn't matter what the level is. If it's coming down fast, that's tended to be bullish for stocks. Now, I don't think the Fed's going to go out of its way to say friendly things. It just won't have to. It'll say we did our half point and, you know, we're going to be a little more data dependent and we have our target rate set roughly where the market sees it. I mean, it doesn't have to come out and necessarily say overly friendly things. It will, a CPI that's

good, cool, enable them to not come out and say bad things, which would upset stocks. Right. He doesn't have to go out of his way hey powell right to say you know we got to keep doing this that and this the other thing the cpi is going to speak for in many ways the fed chair himself well it will now the question is what's the shelf life of that move um remember we basically had before today we're sitting right where we were the last cpi number that was a softer number that was encouraging it did create did create a push higher. So it's a process. It's not just some moment that says, OK, now we're in the clear. Although, you know, we'll see if it gives way to at least an opening for this idea that the second half of December tends to be a little firmer than the first half.

Well, and, you know, positioning's bad, sentiment's so negative, right? And the seasonality conditions Conditions are ripe if this cooperates. A lot of things have to cooperate. I mean, I do think that that's, you don't want to get too skeptical about the prospect for the market and the economy holding together. I think that's one of the things you saw in the market today. It's like, look, the market's not sinking into recession in a timely way based on how much people expect it to be there very soon. So I think that's the sort of uncomfortable spot we're in, whereas we kind of think we see where it's going, but it's not actually, you know, happening quickly enough to redeem those trades.

It's going to be the biggie tomorrow. I'll see you for your last word. I can't wait, and I'll see all of you, too. Fast monies now.