Closing Bell - Closing Bell Overtime: Does the rally have legs? 3/24/22

Episode Date: March 24, 2022

Wharton professor Jeremy Siegel on where the market is headed next with Joe Terranova from Virtus Investment Partners and Lisa Shallet from Morgan Stanley. Plus, is retail the most underappreciated market opportunity right now? Portfolio manager Avery Sheffield from Rockefeller Capital Management gives us her top stock picks. And, Michael Santoli unveils a new acronym for tech.

What a day, Sarah. Thanks so much. Welcome to Overtime. It's answer, we welcome in the Wharton School's Jeremy Siegel, the professor of finance there. It's good to see you again, professor. Welcome to our new program. Hello, Scott. Happy to be here. We've had a huge run, as you know, in a relatively short period of time. Does it still have legs, professor? I think it has some legs, but I wouldn't be surprised if we tested those January and February lows. Because I still think there's going to be some hawkish surprises. Two weeks from today, we get the Fed minutes. I think they're going to reflect a very hawkish tone.

And then we're going to have that consumer price report on April 12th. And unless that's much better than expected, I have to tell you, I think it's going to be 50 basis points in the May meeting. And don't we know that? Don't we know that? Right. I mean, Jay Powell is conditioning us for that already. Yeah, but I think there's going to be more than 150. And it's it's it's not going to be it's not going to be the last one. That said, you know, as I've been saying, I think earnings are going to be very, very good this year. And the battle between the numerator of the earnings and the denominator of the interest rates is going to play itself out. But I'm actually a little worried when I see the VIX down in the low 20s, because it means that a lot of traders have taken off their hedges,

sort of all that hedging by buying puts is not as extreme as before. And there's still a lot of risks out there. But that said, I mean, wow. I mean, when you think about the S&P down only 6% from its all-time high, given what has happened, that's pretty amazing. Yeah, no doubt about that. So you're surprised, like a lot of other people, from where we were to where we are? Yeah, I'm a little bit surprised it's happened so fast. I think there's a lot of growing confidence that Ukraine is not going to be, well, certainly not a nuclear war, but that there's going to be measures they're going to take and that are going to ease some of the strains. That said, oil at 110, 120 or even 130, they're going to bite in the pocketbook. So I'm not discounting one more. I'd like to see it test

the low, form that base. And then I think in the second half of the year, as we're digesting the Fed and I think an easing of the European situation, a rally to new highs. But in the term, I feel a little one. I feel a little bit that it's gone a little bit fast. If your Philly friend Jim Cramer was here, he'd say, Professor, we've done a huge retracement at more than 50 percent of the losses we've had. You're a professor of financial history as well. I mean, I know you know the markets better than everybody else. Typically, when you have a retracement, the manner of which we just did, that oftentimes means all clear, no? It means all clear, but often means that

you're going to go, you're not going to go straight up in a line. This is this is not the V shape that we had during the pandemic, which was, first of all, way over sell off. Given the stimulus that's provided, we're in the opposite of stimulus. There's no stimulus coming from Washington. And I think that the Fed in the next two weeks or three weeks, it's going to start announcing what it's going to do for reducing the balance sheet. And between that and a 50 basis point and a hawkish tone, those things, I think, are going to prevent new highs. I don't think it's quite all clear. I know how worried you have been about inflation and what the Fed is going to do about it. I had Tom Lee. I know, you know, Tom Lee has been mostly bullish and pretty consistently. So he sat here next to me yesterday in overtime and talked about inflation and maybe why he is not so concerned anymore as much as some others are.

I want you to listen to what he told me and let's react on the other side. Tom Lee. The inflation that we saw last year was due to supply chain glitches. So let's say that was the event was movement of goods and cash freight index is a measure of that because it skyrocketed. Well, that's rolled over so sharply. It's now a negative year over year. And historically, that leads CPI by six months. So I think the goods inflation that we had hitting us last year is now diminishing. What if Professor the worst is soon behind us? I'm not quite as optimistic as Tom. I think, as I've been saying, that most of the inflation was done because of unprecedented monetary stimulus. Now, let me tell you, Scott, we did on Tuesday get the money supply for the month of February, and it was a much more moderate increase. But that's just one month. Last year,

we had June that was also flat, and then it flared up again. But it gives a little bit of hope. We need that money supply to slow down consistently. And I don't think it was just the supply disruptions. I think it was too much stimulus, too much money. Take a look at commodity prices. I mean, the indexes, yes, some of them are certainly down. But the commodity index, Goldman Sachs, Bloomberg Commodity Index, even when you take out oil, are still hitting all-time highs. Maybe a little bit of a slower pace, but the inflation is not over. I think we're going to get a not good report on March inflation on that April 12th call. And that's going to make that's going to stiffen the backbone of the Federal Reserve.

OK, let me throw something out there that maybe just maybe the economy is strong enough to withstand what the Fed's doing. And earnings and margins are going to hold up much better than the most negative projections suggest. What's the possibility of that? That's a good possibility. I mean, I think that I guess 220, 225 dollars a share for the S&P are a very good possibility. I really don't see a recession. So I think those margins are going to hold up. But don't forget, stock prices are not just the profits. It's what you're discounting those profits at. And although we all know that interest rates have gone up, I think they've got to go up a little bit more. So that discounting mechanism is going to weigh on that. But I agree

with you. I think it's going to be a good year profit-wise. I think it's only the matter of how you're going to discount those profits in the future. And that's why we've seen that rotation. I mean, really, this was a good day, certainly, for tech. But we have certainly seen that rotation towards the value stocks, towards those stocks that have more near-term cash flows, not those far-term cash flows. I think that rotation will continue throughout 2022. But to be clear, and your headline, at least one of them, is you don't see a recession, because Carl Icahn told me the other day that he not only sees a recession,

it could be worse than a recession. You don't see that. No, I didn't hear Carl's. I mean, the Fed is going to have to tighten. That's going to slow down. But the job market is is so strong. The number of openings are so strong. So even even if demand for labor diminishes, I really don't see the unemployment rate going up that much. I mean, take a look at what we had this morning with those jobless claims. I mean, they're the lowest since, what, 1960 when I was 15 years old. And the population in the U.S. is double what it was back then.

I mean, it's absolutely extraordinary. I've never seen a job market this strong. So even if there's a softening in that job market, I still think we have a very good economy. Understood. Let's welcome in, Professor, if we could, Halftime's Joe Terranova of Virtus Investments and Lisa Shall at the CIO of Morgan Stanley Wealth Management. I want to continue the conversation with you, Professor. And Joe, I begin with you. You heard what the professor had to say, could retest those lows. Do you agree? I think we've got stabilization in the market. So I respectfully disagree with Dr. Siegel. And Dr. Siegel, it's fun to be able to talk with you on overtime. We generally do this on halftime. I do have a question for you. Are stocks not the single best hedge against inflation?

And is this finally the grand reallocation that so many have talked about the last couple of years from bonds into equities? Yeah. And I've been saying bonds are absolutely terrible on that. And that's one reason why stocks are going to hold up, because relative to bonds, we've actually got one of the widest margins that we've absolutely had in years. Stocks are absolutely wonderful, excellent long-term hedges against inflation. In the short run, they tend not to be as good during the tightening phase by the Fed to slow it down. But overall, they're a real asset and they are an absolutely wonderful hedge. And that's why people are saying with stocks,

what are they going to go to? They're not going to go to bonds. I mean, the only other thing is commodities and real estate. Both of those have had a run and I still think they probably will still stay strong. But certainly fixed income is really not a viable choice today. Lisa, I mean, you heard the professor here. It's not like everything is so bad. It's just that things are not going to be able to handle the weight of inflation and what the Fed is going to be able and what it's going

to have to do about it. What do you think about that? I completely agree. I, you know, I think that this is a market that has moved very far, very fast on this assumption that the Fed knows exactly what they're doing and that they're going to land the plane with perfection. And I just don't think that risk premiums are sufficient. I mean, if we look at what has happened, this is a market that has rallied in the face of a massive, massive move in the cost of capital. Massive, right? And so we've seen a collapse in the equity risk premium. And, you know, as far as I'm concerned, you know, there's just not a justification given the long list of risks. And I think we need to differentiate

between an economy that can tolerate, you know, a withdrawal of liquidity and higher interest rates and a stock market that can tolerate those things. At the end of the day, the cost of capital matters to the pricing of assets. And while I appreciate the argument about there is no alternative, at some point, price matters. And I think I'm having a very hard time looking at valuations of the indices and saying to myself, this all makes sense. I should pay a narrower risk premium and higher price earnings multiples today than I was paying in January. Professor, I'll let you take that on. Well, I'll take that. I hear what you're saying. But those risk premiums in January,

the difference between stocks and bonds was almost an all-time high. Yes, you are absolutely right. We have shrunk them. But, you know, when you're selling less than 20 times earnings, which is what the projection is in S&P, and the real yields on fixed income are negative, that is a gap of 6%, 7%. And in long-term history, it's 3% and 4%. So you're absolutely right. It has come down, but it is still very large historically. And I think that's what is still motivating people to come into stocks because they're saying, those are real assets.

I'm going to go for them. 19 times earnings is certainly high from the long-term history, but given interest rates, it's not that high. Joe, this all seems to boil down to whether there's going to be a hard or soft landing. And it sounds to me like Lisa doubts the fact that the Fed can actually get the plane softly on the ground. Maybe the professor is going to give them the benefit of the doubt. They're going to do what they do. But at the end of the day, maybe Jay Powell is able to pull it off. And that is the trillion dollar, so to speak, question, right, Joe? That is the trillion dollar question.

And here's the problem with that. We're not going to know the answer to that question, Scott, for probably a couple of quarters. I think that's really a second half or really a Q4 2022 answer that markets are finally going to discover. So I think we're in this period. You've heard me talk about a malaise. I think this is a U-shaped recovery. I think there is enough on the downside in terms of consumer participation and corporate activity to really not have significant price damage below the January and February low. I think this is more about time damage. I think this is more about marking time. But the answer to your question, we're not going to know that until we see what corporate earnings are going to look like in probably the month of July.

Lisa, last word to you, right? As stock investors, we have to place our bets well ahead of maybe what the outcome is going to be. So, look, right now I'd be using this rally to take profits in front of the first quarter earnings reports that we're going to get in the middle of April. I think that there's going to be a confessional season here where as good as balance sheets are, managements are going to have to acknowledge that inflation is a genuine issue, that labor costs are a genuine issue, and that ultimately liquidity matters in this market. And I do think that investors are going to be, you know, facing some disappointments. And I just don't think we've been here before where, you know, the Fed has got to, you know, juggle with both hands.

All right. I'm going to ask you our Twitter question before I let you all go, because I'd love your opinion on it. What will be the biggest market driver over the next three months? That's what we're asking everybody. Is it earnings? Is it the Fed, geopolitics or something else? Tweet us what you think at CNBC Overtime. We're going to give you the responses before the end of the show. But I want to know, Professor, what do you think it is going to be of those choices? I think it's going to be the Fed. I think they're going to be more hawkish than the market, especially with reducing the balance sheet. And that's going to bring back memories of what happened in 2018, a little bit of that anxiety. And that's what I'm saying about the sell-off. I don't think it's going to be permanent. And by the way, I don't think we're

going to know until 2023 whether really he's going to get us a soft landing or not. Maybe not even until 2024. All right, Lisa, you answer the question as well for me, too, please. I agree. This is about the Fed. And I don't think that the market believes the Fed put is gone. And I think that the Fed put is finally gone. Well, we'll see, depending on what happens to this rally and whether it evaporates. And maybe if we do test those lows or go even lower, then we're really going to see what the Fed has in store. Joe, lastly to you. Well, I'm going to take a different turn here, and I think it's the price of oil, because a lower price of oil takes pressure off the Federal Reserve, and that's the best

economic punishment for Putin. A lower price of oil, that changes the whole dynamic with the Russia-Ukraine conflict. All right. We like a little difference of opinion around here. Great conversation. I so much appreciate it. Professor, it's always good to see you. Lisa, it's nice to see you here as well in overtime. Joe, you're going to stick for a second because I want to talk to you about that news of potentially a new subscription service, a hardware subscription service for Apple. We know about this stock, Joe. It was at $150 on March 14th, $174. That's what we're going to call it today.

What do you make of this news? What do you think about the stock from here? I think it's interesting because I think it speaks to the maturity of the liquidity that's been provided the last 10 years. So now, finally, Apple is basically telling us what? Well, you could lease your car, and now you're going to be able to lease hardware products from Apple. And that's what, in effect, this is. This is not the cost of an Apple iPhone is going to be $1,000, and you're going to pay that over a 12- to 24-month period.

This is a bundled subscription. It's the same thing as leasing. It's a way that benefits Apple in terms of increasing recurring revenue and keeping the subscription base engaged and smoothing out a lot of the volatility that they've experienced in earnings. So for Apple, this is a fantastic move. But I think it speaks volumes about where we are with liquidity being pulled back from the economy and consumers no longer having that advantage. I mean, it's not like it's a new concept. In fact, Tony Sacanaglia Bernstein, who was on in the last hour, pitched this himself to investors in 2016. He said, and I want your opinion on it, the more that they can put into that bundle, speaking of this subscription service, I think the more attractive it could be.

So it depends how broad it could be, he said, and what really they could put together in a bundle. Just the idea itself may not be enough to simply move the needle. Without question, I completely agree with Tony's comments. But remember, in 2016, there was not so much of a need to present this in consumers. Much different private sector borrowing cost environment in 2022, 2023. And looking forward, therefore, there is the need. All right, Joe, I appreciate it. That's Joe Terranova.

Up next, the most underappreciated opportunity in the market right now. We'll speak to a top portfolio manager about the big money play she is eyeing right now. She's called a tomorrow's titan as well. Avery Sheffield's with us next. Welcome back. Now to an investor the hedge fund journal says is one of tomorrow's titans. Avery Sheffield is a senior portfolio manager at Vantage Rock.

It's a long, short strategy at Rockefeller Asset Management. It's nice to see you right here at Post 9. Thanks for coming in. My pleasure. So when you sat down, you said you were struck by what the professor had to say because he's usually pretty bullish. You said you went to the Wharton School. I don't know if you took a class with the professor or not, but tell me about your view relative to his. Yes. So I agree with him that I think the risk of a recession is more than priced in to many stocks in the consumer and

retail sector. And that's where there's a lot of opportunity. What was interesting to me to hear him say is that he is concerned about the discount rate. What do you pay for stocks? And I think what came out of your conversation, and Lisa Shallott was saying as well, is that the Fed raising rates is really bringing valuation into the prominence of investors' eyes more than it has in the past. And I think that's one reason why Professor Siegel was a little bit more cautious than I've seen him in previous years.

You run a long, short strategy. As we said, is it better to be long or short? I know. Exactly. That's a question I ask myself on a daily basis. I'm sure you are. And we've actually been running net short to around the neutral range for most of last year and actually this year so far as well. So we haven't made a call. I think that this is a really interesting market environment because you still have so many stocks that are trading at sky-high valuations. Maybe even if they've come off from the recent highs, maybe they come off 30% or more because they got to such ridiculous levels. So you have still high, still very expensive stocks

with slowing fundamentals. So whether the backdrop is modestly good or modestly bad or not good, those stocks have a lot of room to fall down. At the same time, you have stocks trading at single digit multiples, mid to high single digit multiples that have really fantastic company specific opportunities. So that's why we're pretty balanced right now. We see a lot of opportunity on both sides of the book. I'm struck to hear you say that, frankly, that some of these, you know, the most high flying stocks that have come down and look, 30 percent is generous. I mean, some of these stocks are down 70, 50, 60, 70 percent. And you still think that valuations need to reset even further relative to what's coming from the Fed and interest rates? Yes. Now, not every stock, right? I mean, there are shorts that we've covered, so don't get me wrong.

But there are absolutely a lot of companies that are still losing money with slowing growth and headwinds that are only likely to accelerate. They might have come off 70% and are this and are still multi-billion dollar companies that have a lot of further room to run. You say retail is the most underappreciated part of the market. Why so? I mean, here we are talking about inflation, inflation, inflation, and ultimately it's going to hit the consumer. And in confidence, it certainly seems to be, if you believe the reads that are most recent. It is. It is. And look, inflation is very tough for consumers. And that's one reason why the Fed, I think, feels so much confidence in raising rates now, because it wants to help consumers, especially those at the low end that are impacted by rising rent costs and

housing costs. Those that the Fed can have a direct impact over. It can't necessarily have an impact over food prices, over energy prices, but it can't control the cost of housing. So how are these consumers who are more stretched on basic food costs and energy costs able to buy anything else, right, or be able to buy anywhere near what they bought last year? Look, I'm concerned about the lowest income consumer. What I would say is for stocks that address the lowest income consumer, they've already priced in a massive recession. And the job situation is very strong, right? Wage growth continues to be strong. It looks like the supply demand is going to favor consumers. So I think that you just have more than enough downside priced in. And these consumers,

while unfortunately struggling, are going to do much better than anticipated. And then you have the middle and high income consumers that actually have balance sheets in incredible shape, much better shape than in 2019. One of your picks that you like the most is Albertsons, which I find interesting just because we talk about rising food prices. Is this a margin play that they have the ability to just charge more for goods that are costing them more? Yes, they do, because the prices are rising for everyone, Right. So what you see is when prices go up for everyone, maybe Walmart tries to lower, raise prices a little less than everyone else. But if it's

at a certain point, it's also has to raise prices. And we're seeing that what I think is really underappreciated about Albertsons is people think, well, we have inflation, so everyone's going to move from Albertsons to Walmart. Well, people are also that you can have some of that shift. Higher gas prices favor Albertsons to Walmart. Well, people are also, you can have some of that shift. Higher gas prices favor Albertsons because it tends to be closer to people's homes. That's one reason they benefited during COVID, right? If you have to drive further to Walmart, it's not as good of a value proposition. The other factor that people really misunderstand is that there are still a lot of regional grocers that charge a lot more.

And they also have trade down from restaurants. And so Albertson's in much more of a sweet spot than people think and still is trading at a low double digit multiple at a discount to other grocers. Macy's, before I let you go, is another top pick of yours. Yes, absolutely. So Macy's is actually one of our top picks. Certainly information could change. We could change our view tomorrow. But what's really underappreciated about Macy's, first of all, is trading at a mid-single-digit multiple, about six times earnings. People think that this is a company that's going to go away. Yet people thought the same thing in 2019. Yet it's grown earnings over 50% since that point.

And what Macy's has going for it really is the number one thing that I think is misunderstood is they were really a hidden discounter that increased their volume again and again for years and just discounted more and more. Well, because they were incentivizing their buyers towards revenue. They've changed that. Now they're incentivizing their buyers towards margins, inventory turns, and revenue. And so that inventory discipline combined with smarter promotional strategies and better merchandising, including just having hired the head of private label for Target, I think put them in a position to have company-specific improvement combined with people buying more of the key items they sell, dresses, shoes, accessories in this time. It's going to lead them to have earnings significantly exceed expectations.

We'll continue to watch the stock getting a little bit of a lift in overtime. They say you're one of tomorrow's titans. We'll say we knew you when. So thank you for being here. It's been great having you. My pleasure. That's Avery Sheffield joining us today in overtime. We're awaiting results from NIO.

That stock under pressure this year, down 30 percent. Up next, you'll hear from an analyst who calls NIO a top pick, what he is watching ahead of that report that you need to know about. And don't forget, you can catch us on the go by following the Closing Bell podcast on your favorite podcast app. Overtime's back after this. It is time now for a CNBC News update with Shepard Smith. Hey, Shep. Hey, Scott. From the news on CNBC, here's what's happening.

President Biden at the NATO summit in Brussels, he says if Putin uses chemical weapons, the United States will respond. The toll of the war on the most innocent victims on full display. The United Nations announcing today nearly half of Ukraine's children, 4.3 million of them, have been forced from their homes, and nearly 2 million kids have left the country entirely. North Korea launches an intercontinental ballistic missile, its biggest weapons test since 2017.

The White House condemned it. North Korea, of course, is banned from such tests under U.N. Security Council resolutions. And that massive storm in the southeast that spawned a powerful tornado in the New Orleans area now hitting South Carolina. Dozens of houses damaged in Pickens County, west of Greenville, including a mobile home where emergency crews say they rescued several people trapped in the debris. Tonight, we're live in Brussels as the president wraps up meetings with allies and heads to Poland. The details on the news right after Jim Cramer, 7 Eastern, CNBC. Scott, back to you. Look forward to it, Shep. Thanks for being there.

That's Shepard Smith. Time for our most valuable pick now. EV maker NIO is set to report earnings any minute now. The stock is down 30%. So far this year, our next guest, though, says it's still his top pick. Let's bring in Edison Yu from Deutsche Bank. Edison, welcome. It's good to have you on. The stock not only is down 30 percent this year, it's down 60 percent from its high. And Phil LeBeau was on. Our reporter in the last hour suggested that these stocks, there's no indication that they've bottomed yet.

Yeah, so I think it's very important to put this into some context. We just witnessed over the last few weeks, I think, a generational level of volatility with these stocks. And when I say these stocks, it's not just NIO, right? It's all China ADRs. And as an investor, you have to be comfortable with applying some sort of discount to these names because there's simply a lot of geopolitical risk that's very difficult to quantify. So I think in that context, what we saw last few weeks is, look, is that discount 50%? Maybe. It's not 100%. And you saw these stocks approach levels, in particular NIO, that they haven't seen since mid 2020. And at that time, the EV penetration was 4% or 5%.

The volume was less than half of what it is now. You have to sort of pick your spots. And I think with a stock like NIO, you've clearly seen that there is a bottom that's there. And well, we'll see. We'll see. I mean, you know, look, viewers may have a problem with the fact that, you know, you have this level of conviction about it, but even you took the price target down by 20 bucks. I'm always somewhat skeptical when an analyst makes a bullish case after reducing a price target by 20 bucks. Yeah, so I think, you know, there's two things going on there, right? I mean, the multiple for stocks like this, it's not just for NIO, has come down. I mean, it's a gross stock. It's a Chinese stock. As, you know, we put a price target on, as we analyze

the mechanics going on, the numbers haven't changed at all, but the multiple has. And that's something that we have to get comfortable with. And I think the market, to some degree, last week did get comfortable with it. So looking forward, yes, there's risks. There's no question about that. But are you being rewarded for that? I think you absolutely are, even at 50 bucks. We're going to find out. And we're going to find out in short order, for certain certain when the company's earnings do hit the tape. And that could be any moment. Edison, thank you. That's Edison, you joining us up next. We have a trade alert in the OT from John Najarian. He's hitting the sell button today on one chip name you need to hear about. He'll join us after the break. Plus,

ditching Disney halftime committee member Jason Snipe is getting out of that name. We're going to break it all down in halftime overtime. And later, Santoli's last word. He is tracking the tan trade and it has nothing to do with solar. He explains when overtime comes back. Welcome back. We have a trade alert in the OT. MarketRebellion.com co-founder John Najarian is ringing the register on his AMD calls following today's chip rally. He joins us now on the news line. I guess I'm not surprised, Doc. I'm looking at the stock, which has gone from 102 to 120 in a pretty short period of time.

That's right, Scott. And on your show Monday, it was. We talked about Nike and this one for unusual option activity. And AMD was hovering, I think, right around the 115 level. It was soft over the next session, but then today's move, just a monster to the upside. I mean, given the market's move, which was strong, this was three times stronger than the upside. I mean, given the market's move, which was strong, this was three times stronger than the market. I mean, that's the kind of alpha you hope to get. And this time, whoever the buyer of those calls were, was spot on and we were able to ride right along with them. Understood. I mean, is this a broader statement that you're looking to sell RIPs rather than the reverse?

Yes. We're still in that mode right now, Pete and I, I think, that we're looking to take profits on these big jumps. If we did get a big drop, I'd be all the more willing to buy into it. I mean, we saw a real big reversal today, Scott, in some of the fertilizer stocks that we've talked about with you. Mosaic, for instance, got all the way to $71.30, closed $3 under that, still up on the day. But that kind of move seems like the sort of move you see from a short squeeze, not just from organic buying. Yeah, yeah. Look, we've been debating that, whether this move is coming from, quote unquote, real buyers or whether it's simply a short squeeze. I want you to stick around before I let you go, because in today's edition of Halftime Overtime, we're calling it Ditching Disney because Doc Jason Snipe sold that widely held stock. Let's listen to what

he had to say. I'll get your reaction on the other side of it. Obviously, I got impatient with Disney. I bought it, admittedly, at kind of $175, somewhere in that neighborhood. And it's been a loss. I've only been in it for eight months. But my concern around Disney is going forward, I think there's some margin headwinds here. There's some spending that they're going to be doing on Disney Plus. And, you know, guess what? The subs were great, you know, in the last quarter, but it's a fragmented industry. It's very difficult to grow there. And I just think that there's places there's other places in the market for me to take that capital and spend. Yeah. What do you make of that, John? I mean, Snipe's willing to take an L on this one. Yeah, and I don't blame him. I've certainly gotten bit a little bit in Disney here and there as well.

They sort of have a war going on, I bet, Scott, between the folks that want to stay in theaters for launches and the folks that want to bring it out to video as quick as possible. And it just depends on which side you line up on. I think as a shareholder, you kind of see that and say, wow, you know, just as the Black Widow did, you know, when Scarlett Johansson went after them, the release in theaters perhaps could have pushed that one to and through a billion dollars. And instead, streaming it, it certainly helped the streaming service, but obviously she complained, and I bet a lot of other actors and actresses

are going to be pushing back against streaming releases versus theatrical. But overall, I still like Netflix better. I liked what they said about experimenting with making sure not too many people can use the same streaming logins. They're experimenting with that right now. If they end up really pushing that, I think that could mean a lot more revenue for Netflix and they'd be, once again, leading that online delivery of content. All right, Doc, I got to bounce. I got some breaking news I got to get to. Thank you, John and Jerry. And to that breaking news now with Eamon Javers. Eamon.

Scott, that's right. Department of Justice at this hour unsealing two indictments involving Russian hackers attacking the energy sector around the world and in the United States. Now, these two separate indictments are aimed at four individual Russian government officials. These are hackers working for either an institute affiliated with the Russian Ministry of Defense or the Russian FSB intelligence agency. They targeted the global energy sector between 2012 and 2018. Their targets included thousands of computers at hundreds of companies and organizations across 135 different countries around the world. One of the more notable targets here is the Department of Justice is saying that hackers targeted a U.S. company that operates a nuclear plant in Kansas. So that is going to raise people's eyebrows. What the Department of Justice is

saying here is that the hackers at the FSB, the Russian intelligence agency, successfully compromised the business network, important nuance there, of Wolf Creek Nuclear Operating Corporation in Burlington, Kansas. They're saying that the business network was compromised at that nuclear company by a Russian hacking, a spear phishing attempt, but that they did not get into the operational software involving that nuclear plant corporation. So that's an important distinction. Nonetheless, a significant threat from the Russians. The U.S. government unsealing these two indictments today. The indictments were made last year in 2021. Typically, what happens here is the government indicts these foreign officials

and then keeps those indictments under seal. And if those foreign officials ever leave Russia or the country in target and transit to any country that has an extradition treaty or cooperative law enforcement with the United States, that's when law enforcement will arrest them and try to extradite them to the United States. In this case, though, what the Department of Justice is saying is they are unsealing these two indictments of these four Russian hackers because they want the U.S. energy sector in particular to know about the historical nature of this activity dating back as far as 2012 to penetrate and install malware on systems inside the energy sector dating back years. And they also seen, this is my analysis

of it, Scott, but it seems like this is an attempt to signal to the Russians that U.S. intelligence knows exactly whose fingers are on the keyboard in Moscow, exactly who's responsible for this. And this seems to be an attempt to disrupt that activity and send a bit of a warning shot in cyber terms to the Russians who might be contemplating any activity right now. U.S. officials just within the past hour or so saying that they believe that these two indictments reveal the dark art of the possible when it comes to cyber security attacks on U.S. critical infrastructure. Scott, back over to you. All right. An important story. Eamon, thanks so much for that.

That's Eamon Javers in Washington for us. Up next, three under the radar stocks in the real estate space. That's in our two minute drill. Let's get to Mike Santoli now for Santoli's last word. Today it is. We're going to call it TAN. T-A-N. I guess we could have gone with Ant, but TAN is Tesla, AMD and Nvidia. And the reason is, if you go back to the middle of last year, these stocks have moved almost step for step

in line with one another. If you compare that chart to anything else related, if you compare it to the NASDAQ 100, the semiconductor index, the tech sector in general, it doesn't look anything like that. Obviously, they've outperformed, but also just it seems like they have their own rhythm

based on kind of the risk appetites and essentially people who are willing to bet on the disruptive leaders. These option stampedes, you know, drive these stocks in the short term. And it's an interesting trio to track as a gauge of whether we're in a real revival of the growth stock momentum that we saw last year, or if it's just kind of an echo boom and we're going back and they're down a lot and all the rest of it. So I do think it's sort of interesting in that regard. They'll diverge at some point, no doubt. If you go back farther than the middle of last year, it's not quite so tight. But Tesla and Nvidia in particular have really been the two lead dogs. I would call them the beta dogs because they do move so aggressively. Are these the product of the great move in stocks or are we reliant on them? And that's a key question to figure out whether we really do have staying power.

It is. You know, the feedback loop is tough to actually decipher in real time. I would argue that the overall market has to be in risk-seeking mode for them to do well. But when the market is in decent shape and when it has traction, they tend to outperform and therefore act as lead, bellwether-type stocks. Especially, I would say, something like, I mean, the way NVIDIA and AMD have just left the rest of the semiconductors kind of in the dust, even though some of the other ones have done okay, it's almost a different game. They operate at a different speed. The NVIDIA move, I mean, today alone, what was it, up 9%?

10%, yeah, just about. I mean, it's so interesting. Just when you think and you want to question whether this rally is about to run out of gas or it looks tired, you take a day off and then you have a resumption like you did today. Yeah, so far there's enough sense out there that people were caught flat-footed by the speed of the initial rally and therefore feel like there's a little bit of chasing to be done. But we still have to keep in mind. I mean, we're talking about the part of the market that has lagged and it's still playing catch up. And so it's not plowing new ground to the upside just yet.

You still even have people like Jeremy Siegel, for example, coming out and suggesting, as Josh Brown did yesterday, that we could still go back and test those lows, if not go below. I think almost the chart reading consensus is we're not really going to be persuaded until we get above the February highs. It's about a couple percent up from here on the S&P. And even at that, it kind of looks like a long trading range as opposed to up, up and away. We'll see. Yeah. Forty five hundred was that key level. Forty five twenty. I'm looking at it right now. S&P. Mike, thanks. That's Mike Santoli. All right, coming up, it's our two-minute drill, three top picks for your portfolio. Overtime will be right back after this. All right, we're back in overtime.

Let's get the results now. To our Twitter question of the day, we asked, what will be the biggest market driver over the next three months? Is it earnings, the Fed, geopolitics or something else? Twenty one percent of you say earnings. Thirty six percent say the Fed, 40 percent geopolitics and three percent of you say others. So it's geopolitics that take the cake today. Wow. I thought it was going to be the Fed.

A number of you agreeing with Joe Terranova saying oil prices will be the cake today. Wow. I thought it was going to be the Fed. A number of you agreeing with Joe Terranova saying oil prices will be the big driver. Bitcoin and inflation also popular answers. If you're not already, you please should follow us at CNBC Overtime so you can cast your vote in our daily question. It's time now for the two minute drill. Three top stock picks for your portfolio with us now is Scott Crowe, Center Square chief investment strategist. Scott, welcome. It's good to talk to you. Let's go through these names that you have with two minutes on the clock. Prologis is number one. Please tell me why. Well, one of the best opportunities out there right now in these times of volatility is to invest in hard assets. They're both a safe haven, but also assets

that are benefiting from inflation through pricing power and secular demand. And Prologis is a great example of that opportunity. It's the largest provider of industrial warehouse distribution in the world. And whether or not there's geopolitical risk or inflation, what's going to continue to happen is the need to build out our supply chain that supports the new way that we shop and work. And I'm not just talking work. And I'm not just talking about Amazon. I'm not just talking about third party logistics providers. I'm talking about old world retailers which need to get in sync with the Omni channel, provide distribution points that

aren't just physical, but also virtual. So this is an asset class that's going to power through the volatility that we're seeing right here, right now. I suppose a big reason why the stock is up 50 percent over the last 12 months. Number two, Invitation Homes. It's a controversial space. Housing stocks have not done well. Why will this one do well? Well, Invitation Homes is one of the largest providers of single family rental assets in the country. And there is a huge migratory move to the Sun Belt. There are demographic shifts as millennials age up,

and that's all pointing in the direction of people having a preference to rent houses. At the same time, we've been running a housing shortage, a housing deficit in this country since the global financial crisis, and so there's very limited options as it relates to supply. So the confluence of these factors means that invitation homes can continue to raise rents. Another great way to play inflation. Don't forget, 40 percent of CPI is housing. Interesting. And EQR, equity residential. Can you give me 10 quick seconds on it?

Great way to play the reopening of America's great cities. We're talking apartments in New York, Boston, Los Angeles, San Francisco. The masks are off. People are coming back to these cities. They're renting. All right. And supply supply is also very muted in those cities as well. Got it. I appreciate it very much. I'll see you tomorrow in overtime. Fast money's now.