Closing Bell - Closing Bell Overtime: Earnings & Fed Fears Mount 7/14/22

Episode Date: July 14, 2022

Could today’s lackluster earnings be an ugly preview of what is to come in the next few weeks? That and Fed fears could rattle the markets in a big way. Greg Branch of Veritas Financial Group gives his market outlook. Plus, some “battle-tested” tech plays. Hari Ramanan of Neuberger Berman is naming some top names for your portfolio. And, Alger’s Ankur Crawford explains where she’s seeing opportunity in growth stocks.

All right, Sarah, thanks very much. Welcome, everybody, to Overtime. I'm Scott Wapney. You just heard the bells. We're just getting started right here, post-9, New York Stock Exchange. Just a little bit, I'll be joined by Stephanie Link. She's going to tell us what stocks she just added to in in the busy weeks ahead. And as if that's not enough to worry about, Fed fears front and center yet again, as some now expect an even bigger rate hike at this month's meeting. What is an investor to do? That is the big question. Let's see if he has the answers. Greg Branch, Veritas Financial Group founder and managing partner. It's good to see you as always. I mean, this is kind of what we feared, right? Earnings kick off, they're disappointing, the rubber meets the road, and then the car goes off the road. Yeah, this is exactly what we've been talking about for several months here, Scott. I think what's new is that the banks always have the ability to foreshadow more of what we can expect. And so while sure, the provisioning might have been a routing error on their total portfolio,

the fact that they are provisioning and expecting credit to deteriorate, as we also talked about several months ago, leads us to the conclusion that we're really probably just midway or in the beginning stages here, that even though net interest income was higher, that they missed on those bottom line numbers. Certainly a surprise to many. And I think that, you know, when you looked at the credit card numbers of J.P. Morgan, for example, they gave us some of the good and some of the bad. So volume, credit card volume was up 21 percent, which is good on the surface, but it's a decline from the 29 percent it was up last quarter. And so the consumer spending is starting to slow. We've talked about many times I'm worried about the consumer leveraging up just as it's becoming historically expensive to do that with average APR north of 16 percent approaching that all time high of 17 and a half.

I mean, it's not like earnings were that bad, though, right? I mean, they's not like earnings were that bad, though, right? I mean, they really were not. And Jamie Dimon was very, very positive on the state of the consumer. So what if I say, all right, I mean, earnings weren't terrible and inflation really is cooling off. Don't look at the CPI, the PPI, backward looking. Look at all of the metrics that suggest that we are way off the highs year to date on. I could go down the list of 15 different things in inflation. And oh, by the way, Fed's not going 100.

Get out of here with the 100 talk. Waller talked everybody off the ledge today. And that's partly the reason why the market came back. How about all that? I'm going to respond to that in a couple of ways. Number one, I'd be surprised if it wasn't 100. I'd be surprised if it wasn't if it wasn't 100 i'd be surprised um at the end of the day uh hitting a nine on on top of already a high base from the year ago compare that was fairly startling but i'm also not going to necessarily push back on your point and you

know last we talked i said i can start to see the end of the tunnel we need to get some of this stuff behind us we're in the midst of that earnings revision cycle and yeah maybe you say it's not that bad scott but 20 of the companies free warned and guided down so that softened the blow uh analysts finally got their pencils out and sharpened them and we're having those downward revisions once that's behind us once peak fed hawkishness is behind us, once everybody except the home consumer balance sheet has weakened, once that's all behind us, we can actually then start to talk about on the market's new levels what companies are really worth without all that overhang. So I don't necessarily think it's a bad thing.

It's just something we have to take our medicine, deal with, and get to the other side of. I mean, does the medicine, though, keep us in bed sick for a while? Are we going to new lows? Or how long does it take for the medicine to kick in? Absolutely. And so, you know, this is one of my biggest pet peeves, is that consensus is still expecting low double-digit growth or low teens growth in the back half in terms of the S&P earnings.

I'm forecasting contraction so that we end the year somewhere around the 200 level. And, you know, put a 17 times multiple on that, Scott. That takes us to about 3,400. So, yeah, there's some pain to go through along with getting those headwinds out of the way until we reach that new level. All this stuff is behind us and we can start to be more forward looking, having all capitulated and accepted a common reality. I think some are trying to get real on earnings though, finally, right? Bank of America, Merrill today, Savita Subramanian, she takes her earnings down to 4% earnings growth. She dramatically cut down her S&P target. And maybe that's the tip of the iceberg. Maybe we just needed somebody to jump into the pool first so that everybody can finally get a reality check and do the same thing. I don't

know. That's how we work in this industry, right, Scott? So, you know, I don't care who was first. You know, we all needed to kind of get into a common neighborhood on what GDP growth or lack thereof is going to look like, on what earnings growth or lack thereof is going to look like, on what earnings growth or lack thereof is going to look like. And until that happens, we're going to have the volatility. And so it has been encouraging, like you said, to see that the downward revisions have started probably a month or so ago, and hopefully we'll get to where we need to be. But you say you're going to be surprised if,

and this is just in a couple of weeks, mind everybody, this Fed meeting, you'll be surprised if they don't go 100. Bostic threw out the bombshell yesterday of leaving everybody on the table. We should remind everybody he doesn't have a seat at the actual table because he's not a voting member. And Waller, Fed governor today, says, like, you need to relax with that. It's, you know, he's for 75. The market got pretty far ahead of itself. I mean, as of yesterday, Greg, the market was had like 175 basis point hikes in the next few months. Maybe the market's ahead of itself. And there are a lot of people who try to push back on all of the negativity now and say, you guys are just way too itself and there are a lot of people who try to push back on all of the

negativity now and say you guys are just way too negative i got a lot of that myself today on the other program the halftime report right look it's hard to extrapolate anything from from any one participant right and you know i've long been a fan of bullard who's on the other end of that spectrum. So Bullard has been among the most hawkish and probably the only one seconding or who I was seconding last year when I said they needed to come out of Jackson Hole and start raising in that fourth quarter after great third quarter earnings. And he was the only voice saying that rather loudly, but they didn't do it. And so, you know, I've learned not to extrapolate from what one participant says, but, you know, this is just my call on tape. I'd be shocked if it wasn't 400. Okay. I want to call everybody's attention to shares right now in overtime of

Pinterest. They're soaring right now. Why? Because the activist investor, Elliot, management has, according to the Wall Street Journal, set its sights on that company, has built up a stake of over 9 percent, have already been in discussions with Pinterest. So you see that spike of nearly 22 percent. We're digging in, as we always do, of course, on that breaking news. And we'll bring you any more details when we have them. But this is one of the things that happens in a down market. You get the opportunity to build up a stake by a very well-known activist investor, as apparently, according to The Wall Street Journal, Elliott, who's been one of the more, frankly, active investors in recent years,

has built up a stake now in that company, Pins. We'll keep our eyes peeled there. Let's expand the conversation while we're at it with Greg Branch, bringing in a couple of CNBC folks here. Stephanie Link of Hightower Advisors. She's a CNBC contributor, G-Squared Private Wealth's Victoria Green. It's good to have both of you with us. Stephanie, I'll turn to you first. Greg says he'll be shocked if we don't get 100 at the next meeting. Now you think so, too?

We're going to get 100 basis point hike by the Fed? I have no idea. I mean, I think they should because, I mean, the numbers we got this week were just incredible. I mean, just think about it. A CPI of 9.1, haven't seen that since 1981. There are some people that are in the business that weren't even born the last time we saw inflation like this. And today's PTI number, it wasn't the headline that was so surprising. It was the mix. So services inflation grew 7.7 percent, but goods inflation grew 17.9 percent, the exact opposite of what we have been seeing. And so that was a little bit disturbing. So there's inflation

everywhere, whether they go 75, Scott, or 100, it's not going to matter that much because they're probably going to have to continue into September. It might. Well, no, I don't. I mean, come on. Nah, 25 basis points won't make a difference. Yeah, but it's like, I don't know, it's like a sledgehammer effect. think part of the reason why the market came back off of the worst levels today, Steph, is because of Waller coming out and saying, I'm for 75? And Bostic, who's not a voting member, it really doesn't matter what he says about everything being on the table of 100 basis points, which the market tried to get its arms around real quick. Waller seems to have talked

people off the ledge, including investors today who tried to buy some stocks back. Yeah, I mean, I just think you have to ignore all this because it's noise right now. Right. Powell is going to make the decision and we don't know what that is. And so is it 75 or 100? It doesn't really matter because they're going to have to continue to do in September. Maybe they do 75 or 100 or maybe they do 50. But the bottom line is the direction is higher because inflation is everywhere. I mean, if you look at one-bedroom rents, they're up 25.5% year over year. Two-bedroom rents are up 26.8% year over year.

Rents are a third of CPI. So no matter what happens with commodities, and I do hope the commodities continue to roll over, but no matter what happens with commodities, and I do hope the commodities continue to roll over, but no matter what happens there, they can't really control in the short term rent. In the long term, they will because they'll depress housing. Housing prices will come down and then rents will follow. But there's a huge lag between now and then. And so whether we talk to them 75 or 100, they're not going to do 75 or 100 and then stop. They just can't.

Victoria, you're expecting 100 also. I mean, everybody seems to have gotten on the same side of the boat already. Yeah, I thought about changing my vote because I was like, man, everybody's on 100. That probably means we're wrong, right? But in reality, look, let's talk about what Wallace actually said. He said, I'm for 75, but, and you always know you have to actually listen to the thing after the but not before because when you throw in the but that means he's thinking about things and he said we have retail data and housing data neat that's still gonna come out before the meeting and he's willing to update it as he gets more data I thought that was more flexible

and more supportive 100 so I feel like the market latched on to the iron for 75 and stopped listening to the important part, which was, but we're getting more data, which might update my thesis. I really think they have to take a hard look and really, I mean, Canada went for 100. How can we not do it better than what Canada did? So I think you've got to think the Fed is thinking hard about it. Look, the market absorbed 75 just fine in June. You know, even equity markets, which the Fed's not supposed to care about, but certainly they don't want upheaval and dislocations. You know, the equity markets were fine with 75. The bond marks, liquidity, all of their signals. And our thesis is the Fed hikes

till something breaks. And the only thing they care about breaking is inflation down closer to the two to three percent, which we all know it's not getting there this year, but it needs to be in a sustained downtrend or it's going to be the labor market. And they don't care about anything else. So I'm sorry if stocks go down. I'm sorry if they keep hiking. But it's a hawkish environment. And the whole don't fight the Fed, it's like the best mantra in the world right now. Well, maybe, Greg, the Bank of Canada isn't looking at aluminum down 39 percent off the year to date high or chicken wings down 38%, or wheat down 37%, or lumber 36%, or cotton 35%, or oats 32%, or nat gas 28%, corn 23%, crude 22%, coffee 20%, cocoa 8%.

I mean, I could keep going. Right, right. Look, and part of that, I think, is the market being somewhat anticipatory and anticipating a slowdown uh part of that is uh the the the slowdown being more acute in certain areas right because just as stephanie was mentioning we could also talk about rents being up 25 but i'm going to agree with both of you actually and just make a subtle point about the the discussion you were having on the one hand stephanie's probably right it probably is not that meaningful a difference between 75 and 100. Since 1970, the Fed has actually raised by 100 basis points or more 38 times. This won't be anything shocking and new in the grand scheme of things.

The problem is, is that we rarely focus on the grand scheme of things. And so I think at the end of the day, at this moment, in this environment, there will be something psychological about that 400. Yeah. So, Steph, you added to your small Morgan Stanley position on the pullback today from earnings. Do tell. Yeah, I did. Yeah, I did. I thought that the quarter was solid underneath the surface. Headline was ugly, but underneath the surface, net interest income beat. Trading total revenues beat. Net new assets came in at 53 billion, 4% annualized organic growth.

And most importantly, they have 200 basis points of excess capital, which is one of the main reasons why they were the standout from the stress tests and are able to they raise the dividend 11 percent and are able to buy back 20 billion dollars worth of stock at one times price to book. Very rarely do you get Morgan Stanley at one times price to book. I mean, JP Morgan wasn't nearly as bad either, but it's much more crowded name. And I think, you know, at 1.4 times price to book, it's just not as compelling to me. So I am going to continue to build the position and I'll buy along with Morgan Stanley for the long term. And that brings me to you, Victoria, because you suggest it's too early to buy the dips. And I wonder if you think it's just too early to buy

the dips in anything. Yeah, we're playing defense right now. I think we're going to leg down again. We're very bearish on Q2 earnings. I think the headwinds you have and the headwinds going forward with the dollar just cannot be ignored. So I know we're coming down. But, you know, obviously PEs depend a lot on the E. And I don't have a lot of bullishness on our ability to grow earnings in this environment. I don't think it was bad or tragic, you know. But I think, unfortunately, this earnings season,

any miss on earnings or margins is going to be punished, and any actual beats may actually be picked apart, so you're not going to see the lift you typically would see from a solid beat because people may say, oh, but their guidance was weaker. And so I think a lot of people are paying attention to saying, what are you going to do for me going forward? And, you know, you saw J. saw JP Morgan warning about that a little bit. You know, we're wary about kind of falling into value traps.

So we're playing defense. We're a little heavier in health care and staples. You know, you've got to love your Costco's of the world with their $1.50 hot dog. I mean, it's just a good place to be. I want to collect my dividends. I want companies that are making money now. And I'm going to wait it out a little bit. I think on the technical side, you know, that 38-15, that support broke'm gonna wait it out a little bit um i think on the technical side you

know that 38 15 uh that support broke so now it's a ceiling and i think you could possibly see this leg down further i do think it's interesting you know we saw a rally back out um you know and obviously you're seeing some inflationary pressures as you mentioned with the metals and commodities coming back down and that should help with some inflation but i think you're going to lose any lift you got with that with the headwinds with the dollar. So I think you need to pay attention to where your company's revenues are coming from. Are they mostly U.S.-based revenues

or are they European and Japanese revenues, which you're going to see a 20%, 30% haircut this year because of the currency moves? Yeah. All right, great stuff. I appreciate the conversation, everybody. Greg, Stephanie, and Victoria, see you all soon. Back here in overtime.

Let's get to our Twitter question of the day now. Will the Fed hike 100 basis points at the next meeting? You can head over to at CNBC Overtime vote in our poll. Simple question. Yes or no. Do that, please. We'll share the results at the end of the show. We do have more details now regarding this new stake. The Wall Street Journal is reporting by Elliott and Pinterest that has sent those shares soaring. Julia Boorstin is here with that. Interesting. The CEO was out just what, a couple of weeks ago. And I guess maybe now we know why. Yes. Well, so CEO Ben Silverman, he has left that role. He's still executive chairman. And Bill Reddy, who has a commerce background, is now the company's CEO. And I reached out to Pinterest for a comment. I've not heard back yet. But I do think it's really essential to note that this is a company that has really struggled in the phase of coming

out of the pandemic. It benefited a huge amount from people being stuck at home and using the platform to plan home activities and cooking and home decor, etc. But it actually saw a decline in users for several quarters in a row. And even though it's managed to generate more revenue from its shrinking user base, it is seeing a shrinking user base. So I think that this comes from Elliott at a time when we're awaiting the next quarter of earnings, trying to figure out how they're going to manage their user issue, but also as this is a company that transitions to being more about commerce. It's been hit by those Apple operating system changes that make it harder to target and measure the impact of ads.

But right now, you really see a shift to engage more in commerce on the platform, which could be a big opportunity for Pinterest, which is all about people going to plan things and figure out what they want to buy or do. So I think this it makes sense that Elliot would be looking at this company right now, especially considering how much its stock has dropped coming out of the pandemic. Yeah, I mean, to your point, it's down 75 percent over the last 12 months. I think it's also very interesting that Elliot, led by Paul Singer, not afraid to wade into the waters of social media. Right. Remember the Twitter stake and their argument that Jack Dorsey should step down there.

So they have experience not only in technology, but certainly in social media stocks, too. Certainly a lot of experience in social media. And you wonder what they learned from that Twitter experience that they could be applying here. But I do have to point out that this is a different situation than Twitter in that Twitter did not have a CEO founder in it with a controlling stake. And Pinterest founder, former CEO Ben Silverman, he does control about 37 percent of voting shares. So he does have a big say in what happens with the future of this company. He doesn't control 80%. It's less than 40%

of those votes. But the fact that he does own such a significant chunk of those voting shares could make this a little bit harder for Elliott to implement change. And the fact that Twitter did not have that situation left the door open for Elliott to have more. And the fact that that Twitter did not have that situation left the door open for them to have Elliott to have more influence there. So that'll be an interesting piece of this to watch as well. Yeah, you keep us up to date on what happens next. Julie, I know you will. That's Julia Boorstin with the reporting there for us. Up next, battle tested tech trades where one big money manager is finding opportunity amidst the volatility. We're back in the OT in two.

We are back in overtime, but a tough run for tech over the past few months, as all of you know. Our next guest, though, says it is time to start looking at battle tested names in that space. Let's bring in Hari Ramanan. He's Neuberger Berman, Global Research Strategies, CIO. Welcome to our show. It's nice to see you. Thank you, Scott. Nice to be here. Yeah. I mean, yes, it's you know, well, I was going to say between currency issues and and IT spend worries, it's kind of tough to get all bulled up about tech. I think that's a fair that's a fair sort of assessment. I mean, we've had inflation, currency, interest rates, of course. But I think what is front and center of mind for us is actually the capital cycle playing out in tech and several areas adjacent to tech. And you've seen this heavily in the private market side where, you know, typical VC funding in this environment has been, you know, about $200 billion a year or so for the last decade, except in the last few years that it stepped up to $600 billion or so.

And so now what we're seeing is this giant sucking sound of companies retrenching both on the private side and then clearly the spillover on the public side, where there's this sudden focus on profitability. And what that does is a lot of uneconomic spend gets cut, and then you get to sort of see who's been sort of swimming naked. Now, I think that is starting to get pretty well recognized by the market. But to some extent, that was conflated with ideas around the macro regime change. So I think we think of this as really just a good old-fashioned capital cycle playing out in tech. In fact, in this regard, yeah, go on. Well, we set this up sort of as, you know, we say tech, but I look at the stocks you like. I look at these new ETFs that you guys have set up. And yes, there's the NVIDIAs or the analog devices that are in there, but I've got T-Mobile, Marriott, Nike.

We're talking far beyond your traditional garden variety technology companies. Yeah, I think that's right. I mean, investing, I mean, you know, you referenced the, whether it's the energy transition fund that we've launched or launched the disruptors fund in an ETF format or the consumer, connected consumer fund. These are all extensions of our franchises in the space. I think what we wanted to do as a firm was to sort of bring the idea that tech

investing does not really just equate to meme-like investing, right? For the last some years, investing in innovative or disruption-oriented companies had gotten the status of just investing in memes. And when you look at companies like T-Mobile, when you look at companies like even Floor & Decor or take an Ulta, which is a very large brick and mortar operation, 95% of Ulta's customers are digitally native. And what happens is beauty shopping is hyper personalized. And so in this context, when you grow a customer base from 11 million subs to 40 million and actually generate free cash flow, you create economic value and not just build a castle in anticipation of people coming there.

I noticed some of the other themes or areas that you like, and I'm surprised to see this, frankly. I mean, why would I want to invest in the industrial economy right now when economic fears are so pervasive? The rails, I really want to buy the rails now. Right. I mean, I think, you know, when we think about the rails or even a company like Analog Devices, I mean, Analog Devices is a semiconductor company, but really a company that is geared into the industrial economy as different from a company that's geared into the consumer economy. I would say the industrial economy on a relative basis has been doing okay, if not for now the fears of this recession. If you look at this again, the last 10 years, industrial production growth lagged GDP growth by 200 basis points or so per year. And in those 10, 15 years, you've really not seen supply growth come

up. So, coming out of what may be a mild or heavy sort of recession, I think you're going to have a booming industrial economy, and you want to be geared into companies that provide the picks and shovels, or even if it's an analog devices that provides battery management systems for electric vehicles, which is going to be a very, very important driver of decarbonization. CrowdStrike on your list, not a surprise. Frankly, a lot of people like that stock. A lot of people like the space for obvious reasons. T-Mobile, though, why that one? Yeah, T-Mobile is a good example of actually a disruption or a disruptive company because you know that their pricing is 15%, 20% below the incumbents AT&T and Verizon. But what you have in T-Mobile post the acquisition of Sprint now, and finally, is really arguably the best network, the best 5G

network in the country with a low-cost operator. So we love these low-cost operator models, especially when the offering is phenomenal, whether it's a T-Mobile or even a Florin Deco, these are as much disruption oriented as, you know, your meme like name that is still unprofitable. Yeah. It's good to have you on our program. We'll see you soon. That's Hari Ramanan joining us today. Coming up next, going for growth. One portfolio manager seeing some serious upside for growth stocks. That sector is coming up next. We'll find out what she's betting on when Overtime comes right back. We're back in Overtime.

It's time for a CNBC News Update with Shepard Smith. Hi, Shep. Hey, Scott. From the news on CNBC, here's what's happening now. Ivana Trump has died. In a statement, the Trump family called her an incredible woman who will be dearly missed. Ivana and former President Donald Trump divorced in 1992. They had three children together, Ivanka, Don Jr., and Eric. Ivana Trump was 73.

A Russian missile strike on a city in central Ukraine, far from the fighting in the Donbass region, killed at least 23 people, including three children, and injured more than 100 other people. That's according to witnesses and the government, Ukrainian government. President Zelensky is accusing Russia of yet another deliberate attack on civilians. And the former South Carolina attorney Alex Murdaugh charged today with the murder of his own wife and son. He's already behind bars facing dozens of other counts, including financial crimes and faking his own death. Tonight, full coverage of the Murdoch

case. It is quite a story. Plus, President Biden's trip to Saudi Arabia tomorrow and a new way to lend money to your friends and family without having to ask them for it back on the news. Right after Jim Cramer, 7 Eastern CNBC. Scott, back to you. All right, Chef. Appreciate it. See you then. Growth stocks swept up in the recent volatility with the S&P growth index down more than 3% this week. Our next guest, though, says still opportunity in that corner of the market. Joining me now, Post 9, Ankur Crawford, Executive Vice President and Portfolio Manager at Alger. It's nice to see you here at Post 9. Thanks for coming. Thanks for having me. So there is a good debate right now about growth versus value. And I read an awful lot that says value is having its moment and it's not

nearly over. Why is that wrong? You know, when we look at the market, we don't actually look at it value versus growth. What we look at is businesses that can grow despite a weakening economy, especially right now. And sometimes, given the correction that we've seen in the market, sometimes growth actually becomes characteristically what looks like value. And that is what we're starting to see in the market, as a lot of these stocks have baked in a slowing economy to some extent. You're talking about cary stocks, what people call growth at a reasonable price. Well, I think, yes, we are talking about Garpy stocks. Businesses

like Microsoft look Garpy at this point. But there's also businesses like Applied Materials that, you know, even in a cut in a recessionary scenario, the earnings trajectory is such that you can buy them for anywhere from 9% to 13%. They generate 9% to 13% of their market cap in cash. So for us, those become really compelling opportunities because if you look at the semi-cap equipment players, for example, these are the machines that build the machines that build all of the innovation in our world. And so for us, that sets us up for a pretty compelling growth phase and opportunity on risk reward. What if the machines that build the machines aren't building as many of the machines because there is now a supply glut when there was a shortage?

Absolutely. And, you know, and that's why we invest based on probabilities, right? You have, we don't have an exact earnings number, but what you have is, you know, what is the probability or the trajectory of earnings in a recessionary scenario or in a, in a less recessionary or just a slowing growth scenario. And however you look at that, for example, just for applied materials, again, it's 9% to 13% free cash flow yields. Let's talk Microsoft for a second, because it's an interesting time to pick a stock like that, right? Yeah. Big concerns about currency, which the company has said itself is going to hit earnings. You're not concerned about any of that?

I mean, you know, again, it was ServiceNow, different business, obviously, but they said to the effect of it's impossible to outrun what's happening with currencies. What about that with Microsoft? You know what? I think I think we have to differentiate between fundamentals and currency effects. And if you look at businesses that the core fundamentals of a business like Microsoft is, I mean, we view it as a democratization of digital transformation. It makes technology accessible to businesses of all sizes. And, you know, that aspect of digital transformation and the use of AI, that is, will it slow? Sure. Relative to where it was growing, but it's not going to collapse and it's still going to grow. I mean, in any given year, Microsoft has 85% visibility to the next year's revenue because

of the recurring nature of their business today. And so, yes, will it slow? It will. But the question is, what is a stock baking in today? Is it baking in at a 4% and a 5% free cash flow yield? Is it baking in a recession that is deeper than we think? You feel that's what 254 suggests to you on the price for Microsoft right here? Is that what it is baking in, right? Stock was at 275 or so. It's not like it's down all that much. Well, it peaked at20. And so back in November, I do think it was at $320. And along with the rest of software, it has come in. So it is peaking in a 4% and 5% free cash for yield today. So quick other picks that you like. UnitedHealth, tell me why. Oh, so look, we don't really know where the economy is going. However, the market will pay a premium for businesses that have visibility and have certain

growth. UnitedHealthcare is kind of a bastion of safety in a volatile market, which, you know, we think that in a volatile market, the market will pay a premium for businesses that have certainty. It has pricing power. It has staple-like growth. And, you know, the valuation is actually not stretched. Live Nation.

I've got to be quick on that, but it's another interesting pick of yours. Why do you like it here? I mean, obviously, everybody's, you know, going to concerts and everything else this summer. But sort of beyond that. Well, look, it's a business that has it. Well, it isn't because it's actually entertainment for the masses because a concert ticket is actually not a big ticket spend. And so as the consumer retrenches, they will still likely go to a concert and they have pricing power in part because if you look at concert tickets, they're a lot cheaper than a

sporting event, for example. Yeah. Depends what concert you're talking about. Depends on what concert. It's good to have you here. We'll see you again soon. Thanks. Ankur Crawford joining us here at Post 9. Up next, we're tracking the biggest movers in the OT. You know who's standing by with that action. Christina Partsenevelis, what do you see?

More spaceships coming to Arizona. Several management changes at Ford. And more on that big move in Pinterest. The details, next. We're back and we're tracking the biggest movers in overtime. Christina Partsenevelos back with that. And we are seeing shares of space moving higher in the OT. That's because Virgin Galactic just announced it signed a long-term lease

for a new manufacturing hub in Mesa, Phoenix. The company says the new hub will make the next generation Delta-class spaceships, so that's up to six spaceships per year, according to the company. The new spaceship hub should be open in late 2023, and so shares are up just a little bit shy of 1%. I want to flag some management changes announced after the close today. Dave Bozeman, most recently the VP of Amazon Transportation Services, will be heading over to Ford on September 1st to lead global supplier customer service. And we also have a change at Alphabet as well. Marty Chavez was just appointed to its board of directors. Chavez is also a partner at investment firm Sixth Street. And we continue to watch shares of Pinterest soaring in the OT after activist

investor Elliott Management reveals a more than 9% stake in the company. That's according to Wall Street Journal. The move comes after several Pinterest executives departed in recent months. Stock up over 19% right now. Scott? All right, Christina, thank you. Christina Partsenevelos. Up next, pumping the brakes. One top auto analyst getting bearish on the space. Now we'll debate that in today's halftime overtime next. In today's halftime overtime, tapping the brakes, Morgan Stanley star auto analyst, Adam Jonas, trimming price targets across his coverage universe today due to slowing sales growth and auto industry credit headwinds.

But Hightower Stephanie Link has one name in the space on her radar, which is why she is back with us now. It's not just Jonas, Steph, that's gotten negative, at least more negative on these names, cutting the targets. Evercore cut the price targets, too. What do you make of that? Yeah, I mean, look, these are very cyclical companies. And to the extent you see a recession or even a slowdown, they're in the crosshairs, right? I mean, the one thing I agree with Adam on in the report is that maybe earnings will be more resilient this go around, this downturn, because we're coming off from a low base in terms of the North America SAR at 15 million next year. And the average long term is 16.1.

So numbers are already kind of reflecting a big slowdown. Plus, the auto companies have pricing power for now and also the mixed shift to SUVs. So maybe earnings don't get halved, but they're still going to have to come down. You've always, correct me if I'm wrong, maybe not forever, but for a long time preferred the parts companies over the OEMs. And is that still the case? Yeah, no, that's definitely the case, especially because they've gotten hit so hard due to lower volumes and higher raw material costs and the supply chain problems that they've had. So they've been in a world of hurt and they haven't been able to negotiate to the OEMs on full pricing. So they're getting hit all over the place, right on the top

line, on the bottom line. But, you know, I have a favorite in the space that I have my eye on. I'm not there yet to buy it, but I do like Aptiv for the long term. For a minute there, I thought you were going to you weren't going to reveal it. It's Aptiv. OK. I was going to tease it and then I figured I was going with the flow. I would have made you tell us anyway. What gets you from talking to buying? Yeah, I mean, look, the stock is down 47%, Scott, year to date.

It trades, though, still at 23 times, And that is kind of rich. That being said, they're the number one player in the industry and they are growing over market by 11 percent. So they grew revenues four percent last quarter. The market that was 11 points better than the industry average. So they're gaining all kinds of market share. They're the leader in connectivity, in safety and in EV. GM and Volkswagen are their biggest clients, but about 10%. So they still have a very diversified mix. And their margins, we talk about margins all the time. Their margins are super depressed.

Their last quarter, 7.8%. But the company is actually guiding to 9.9% for the full year. So if they can do that and they can get these costs under control and get better pricing, you're going to see my favorite word, operating leverage. And I think that at this point, I want to just wait it out a little bit, but this is definitely one that is on my short list. I thought you were going to say margins when you said your favorite word. Margins and operating leverage, both. There you go. All right. Words, favorite words. I got you, Steph. Thank you.

Thank you. Thank you. That's Stephanie Link joining us here in overtime. Don't miss GM CEO Mary Barr. She's with Jim Cramer tonight. Mad Money, 6 o'clock Eastern time. That is a CNBC exclusive. Up next, betting on the banks.

The financials kicking off earnings season today. One money manager sees big upside for one top lender. We'll tell you the name just ahead. And coming up at the top of the hour on Fast Money, Wall Street's new biggest bear, B of A's Savita Subramanian. We've talked a lot about her on the network today. You hear directly from her five o'clock tonight after slashing her S&P price target by 20 percent. O.T.'s back after this. Time for our two minute drill now. Joining us now, Wall Street Alliance Group partner Adil Zaman. Welcome. It's good to see you. Let's go through these picks. And the first one, peculiar JP Morgan. Apropos to today, much of the conversation after earnings.

Great to be with you, Scott. So JP Morgan is a stock on our watch list that we really like. We think that the earnings were disappointing. The only reason was because they built up their reserve for bad loans. But we think that's probably not going to get utilized because of the health of the American consumer. And I think they just did it because of abundance of precaution. We have to understand that these banks, they've been hammered year to date, but these are not the same banks that were there in 2008. These banks have pristine balance sheets. They have built up, they've passed the Fed stress test results with flying colors. And J.P. Morgan in particular, it gives a best of breed Fortress balance sheet, pays a dividend of about three and a half percent.

And we think it's very attractive at these levels. I'll give you, I mean, you know, obviously they're not in danger of going out of business like financial institutions were in in 08. But that doesn't mean that they're not going to suffer through what may be a recession, mild or deep, who knows, at this point. So there's nothing to say that the stocks wouldn't suffer repeatedly in that environment. So, Scott, we feel that even if we do get a recession, it is going to be relatively mild because of the health of the American consumer. The American consumer is sitting on north of $2 trillion in savings and sitting on north of $27 trillion in home equity. And unemployment is at a historic low of about 3.6 percent.

So we feel that eventually the economy will start to grow again and investment banking activity will pick up. And as the Fed is aggressively raising interest rates, bank like J.P. Morgan will also benefit from higher net interest margin on their loans. All right. Now, your point's well taken. Jamie Dimon himself today cited the very strong consumer. So I hear you on that. Let's do Amazon, because that stock has been a dud, been a real disappointment. Why should we buy it today? Yeah. So Amazon is a great stock on our watch list that we really like. The stock is down more than 30% year to date. And at this level, the value of their cloud division alone is greater than what is currently being reflected in the stock price. Amazon's cloud division, which accounts for more than 70%

of their operating profit, is a relatively recession-resilient business as more and more organizations are adopting cloud, Amazon benefits from it tremendously because it's a clear leader. Just to give you an idea, Scott, their market share of cloud is greater than that combined of Alphabet and Microsoft together. I got you. Adil, thank you. Adil Zaman, Wall Street Alliance Group partner. We'll see you again in overtime soon. Up next, it's Santoli's last word, and it's on Apple. Overtime's back right after this. Let's get the results now of our Twitter question of the day. Will the Fed hike by 100 basis points at its next meeting? The results, 54% of you said no, 46% said yes. Mike Santoli's here with his last word. Waller kind of talked people off of that idea a little bit today, and that helped the market,

I think. It did, without a doubt. That's a coin flip, you know, within the margin of error there. So I do think that's the case. Just throwing a little cold water in that direction, it timed very well with when short-term yields peaked for the day, when the dollar came off its highs. All that stuff fits together. I do think it's interesting that we did get some traction again. I mean, you've had the lows of the day really going back seven or eight days. Most days has been in the morning. So it shows you that there's not a tremendous pile on by sellers throughout the day. What was interesting today, among other things, was Apple's performance up 2%. And, you know, big outperformance. It's a big reason that the market cap weighted S&P outperformed the equal weight by a lot. The question is what it means.

It's at a new all-time relative high to the S&P 500, if you just did that ratio, which is kind of stunning. When it really goes on these relative runs, though, it isn't necessarily a bellwether for future broad market performance. Sometimes it actually is a little bit of a last man standing type of a dynamic when people grab for it. Now, it's not at an absolute high. So it's not as if the stock itself has kind of raced ahead of one of these momentum peaks. But if I looked at prior relative highs, when it peaks, it was September 1st of 2020. It was late January of 2021, even April, early April of this year when that bounce kind of ended is when you got that. So it's almost a coincidence to even slightly lagging indicator for the broad tape. It's not out of the ordinary for the stock to move higher into earnings.

And then sometimes you get a sell on the news, too. It's interesting that you note it, though. I mean, there's still this battleground between big tech, which had a nice bounce. It has had a nice bounce. In the last couple of weeks. I mean, Apple, what, at one point a week ago was up 10% off of the June lows? Oh, yeah. It's actually up for the week even.

Yeah, without a doubt. And NASDAQ 100 in general over the past few weeks has been gaining a little bit of ground against the overall market, whether that's the quality and its rates being off the highs. It's also just kind of the non-cyclical quality balance sheet type stuff maybe working again in its favor. So all those things are good. Maybe it suggests, you know, tech earnings would probably have to really be ugly to create another down leg in that. But I do think you have to be careful with extrapolating Apple action as saying, oh, it's the biggest stock in the market. Therefore, the overall market's going to do X. Yeah, it's 7 percent of the S&P 500. And almost nobody has 7 percent waiting in their own fund

in Apple. So it's not really over owned. But, you know, it's sort of its own animal. It goes by its own its own force. We really have a pocket between now and the actual Fed meeting. And you're going to get the Bostics and the Wallers and whoever else is making these comments. And you can see how volatile and fragile the market can be at a given moment. Yeah, it's twitchy. And that's why I do think almost there's going to be reassurance in going in earnings season, kind of back and forth company by company, as opposed to having to try to read the tea leaves on the next policy kind of turn of the screw. We'll see what that means. It's a net positive or negative for the overall market stuff. We'll see you tomorrow again with your last word there. That's Mike

Santoli. I'll see all of you right back here as well. Fast money begins now.