Closing Bell - Closing Bell Overtime: Exclusive with billionaire investor Carl Icahn 3/22/22

Episode Date: March 22, 2022

Billionaire investor Carl Icahn says, “there very well could be a recession, or even worse.” Plus, the latest on his activist stake in McDonald’s.

All right, Sarah, thanks so much. Welcome to Overtime. I'm Scott Wapner. You just heard the bells. We, of course, just getting started here in just a few moments. I'll speak live to billionaire investor Carl Icahn. It's an overtime exclusive. We can't wait for that to get his views on the markets and find out where he is placing his biggest bets right now. Let's begin, though, with our talk of the tape, where the tide is truly turning in favor now of the bulls. Let's welcome in our panel, Eric Johnston of Cantor Fitzgerald, Shannon Sikosha of Boston Private Wealth, and of course, the Halftime Investment Committee. It's great to have you both with us. Eric, I'm going to begin with you because you have been bearish. And you know what? You got a lot of cred because you've made some great calls lately that have come to fruition. January to February 24th, you were looking for a pullback in stocks of 10%. Well, the market sold off 10% in six weeks.

From February 24th to March 7th, you were tactically bullish, looking for a big trading bounce. We're up 5% in a week. So I'll give you all the cred. The question is now, is the tide turning? Stocks up, rates up. VIX down for six straight days. S&P 500 back above its 200 day. Apple with a big rebound. Earnings all right. Nike said things are good. What do you think?

So, you know, this we think this is a classic sort of bear market rally. Sentiment got extraordinarily negative. If you look at systematic strategies, CTAs, they brought their exposure close to five-year lows, hedge funds de-risked, things got washed out. And so we think this bounce where we're seeing now CTAs starting to increase their equity exposure, hedge funds have stopped de-risking and actually adding small, and now individual investors are sort of getting their fervor back. But we think this is the tail end of this short-term bounce and that the downside is going to resume. You saw these big rallies in 2008.

You saw these big rallies in 2000. All bear markets, they do have sharp rallies within them. But the fundamental backdrop, we think, is still extremely negative, and it's going to lead to lower prices. You've got economic growth is going to be materially lower. And we have a bunch of reasons why we think stock prices should be and will be much lower in the coming months. All right. I mean, Shannon, Eric's not the only one who thinks this is not a reliable rally. We had Morgan Stanley's Mike Wilson on halftime today. Here's what he said.

I don't think the picture is better than it was three weeks ago. We're closer to the sun now. We're closer to where the revisions are going to get more negative. And you're exactly right there, Scott. The thing that's held this market up is earnings. Josh said the same thing. That's exactly correct. But the price is wrong because growth is not going to be as fast as it was, obviously, the last two years, nor is it going to be as fast over the next probably five years because you pulled forward a bunch of demand.

That's not the end of the world. We're not even calling for a recession. You don't need a recession for valuations to normalize. All right. No recession, but not great either. Shan, you agree? I understand the point. I mean, we certainly are facing down slower growth, but why wouldn't we be facing down slower growth? We're really looking back and taking a look at 2019 and having that as your anchoring point. And it's not surprising to me, Scott, to see the activity that we've seen in the market over the last couple of days. If we are truly going back to an environment where we have low growth, we're going to be looking for stocks that are quality, that have free cash flow, and that can grow on their own in disruptive, innovative ways in order to compensate us for

perhaps that slower economic growth. However, I think that we're setting up a backdrop comparing ourselves to 2000 and 2008 that's really inaccurate. We have a much stronger labor market than one would expect coming out of the pandemic. Some of that demand has been pulled forward. But frankly, with the supply chain constraints that we've had, we haven't been able to alleviate that demand pull forward and meet that as of yet. There's continued manufacturing investment here in the United States that's very different from 2018 and 2019 when we were essentially in a manufacturing recession. And so I think there's a lot to be said for the second half of the year.

I think that why you're seeing this strength in the equity market is that this story right now was the one that we were preparing for. We were preparing for first quarter volatility based on coming up into the Fed in the tightening cycle. We were not prepared for the war in Ukraine. And so I think now what we're doing is that we're realizing that we're going to see a war of attrition in Ukraine. And so I think now what we're doing is that we're realizing that we're going to see a war of attrition in Ukraine, and it probably is not likely to spill over into neighboring NATO states. And so now investors are taking a look at their portfolios and saying,

wow, yeah, the yield curve is going to continue to steepen eventually. But in this interim, stocks are really the best play for this year, even in a slower growth environment. Eric, last word to you, then I'm bouncing. Sure. So, I mean, earnings growth or earnings have now peaked in our opinion. And so we've seen earnings rise, you know, over 30, 35 percent in terms of estimates over the last year. We think that is over. So if you go into a slower growth environment of, you know, zero to one percent growth, we think based on the input costs for corporations and where margins are right now,

that earnings could actually turn lower. And I think once earnings turn lower, the earnings multiple that the market puts on these earnings is going to fall dramatically along, you know, along with the Fed continuing to be hawkish. So we think it's a rough, it's certainly a rough picture from here. All right, we'll see what happens. Appreciate the time from you both. Shannon Sikosha, Eric Johnston, we'll see you soon. Now to our Twitter question of the day.

Which stock will hit a new high first? We mentioned Apple's rebound, NVIDIA holding its investor day today. Which one is going to get back to its highs? NVIDIA has a little bit further to go from a percentage standpoint, but tends to jump by leaps and bounds when it moves. Want to know what you think at CNBC Overtime? Tell us. We'll bring you the results before the end of our program. Now to one of the world's best ever investors. Billionaire Carl Icahn is

with me live for an overtime exclusive. Welcome to the new program, Carl. It's good to have you on. Good to be on, Scott. Good luck on it. Thank you very much. I wish we were seeing your face, but we'll take you however we can get you. And it is really the trillion-dollar question, Carl, of where the market goes from here. And I think it pretty much boils down to whether you think the Fed can engineer a soft landing. Do you? Yeah, I really don't know if they can engineer a soft landing or not. But I sort of agree with Eric there that I think we do have a lot of trouble ahead. When it happens,

I've told you this many times, on the short term, I don't think anybody can really predict it. I think there's just too many variables in this type of a market. But one thing I did learn many years ago, don't fight the Fed. Now the Fed, I think, pretty much has turned and when you don't have the fed put that's a whole new dimension that's brought to this market and you have a lot of people in this market a tremendous amount more than i've ever seen that have no idea what they're doing i mean it you know the market is not a gambling casino completely is there real there are people in this market that do have an edge. And you have so many people out there that really are gambling.

So I think there's going to be a rough landing. That's what I think. But that's not my area of expertise, really. I look for these companies that are tremendously undervalued and where we can bringvalued and where we can bring in activism and where we can get that big edge. And so I just learned it's very hard to predict it, but I do think of the long run. You've seen this movie before in some respects, and I know you're a movie buff. And in your heyday, Paul Volcker had to do what he did to crush inflation.

Do you think and do you have confidence that Jay Powell is up to the task? Well, I think he says he is. I think you have to do it. I don't think there's a choice. Inflation is a terrible thing when it gets going. You can't get that supply. In the last 20 or 30 years, you had this through the 80s and 90s, you had cheap goods coming in from the Far East, from China for sure, and even from Russia.

So you got that great advantage for our society. People would take the dollar and people would use that. And so all these countries wanted the Yankee dollar. And as a result, you really had cheap goods. And I think those days are over now. And you have You have this war going on now, which adds another problem to your inflationary picture. So I but you know what? That's not my expert. It really isn't. You know, but you have you you you have positions in a large swath of American business. So you see things that others just don't have the vantage point to do,

coupled with the experience you have from the decades you've been doing this. Do you fear that we're heading towards a recession? Because that's going to impact the kind of investments that you either have or the ones you may make in the future. Yeah, look, I think there very well could be a recession or even worse. I really think the one thing that I do have experience in, and I will tell you sadly, that our companies, we sit on a lot of boards. I don't put, I have delegates on those boards. And some are good, some are fine, but when you get to understand what these boards do, the system, the system is needing fixing. There's no accountability in corporate America.

You have some very fine companies, there's some very fine CEOs, but far too many that are not up to the task that I think is going to be necessitated. So I have that experience, I guess. And then I tell you this, I have kept, and I think we would have done a lot better, but I have kept everything hedged for the last few years. And I think now that we do have it, we have a strong hedge on against the long positions, that we try to be activists and get that edge. So that's the way I look at it.

But I am negative, as you can hear. Short term, I don't even predict. I guess. But, I mean, you said it, though. You know, you have been predisposed to be negative for the last few years in the market. You've taken that view. You had once talked about, you know, your worries that high yield would blow up at some point. Do you share those worries today or have you moved past? And inflation now is the primary worry that you have and all of the implications negative for sure

that come with that. What's the one area of the market you're most concerned about, if there is one, today? Well, we have a very large position on shorting the malls through the CMBX, through a derivative. And that whole market is a huge market. I think it's got a lot of a lot of the market itself, I think, is manipulated to some extent. And we're going to be hearing from us on that in that area. But that is an area that I think has problems, certainly in the BNC malls and in other real estate. I mean, you can't ignore the fact that, and I don't know if this is a change that will continue, but you don't have people go into offices all the time anymore,

obviously. And I think that is going to militate against the real estate area, perhaps. But I mean, there's a lot of different areas that we go into. We just find companies that we feel are undervalued. Like for instance, now we're in a fight for SWX. It's a utility Southwest. That's Southwestern Gas. And you've been you've been embroiled in a pretty good battle with them. The latest news, of course, is you raising your tender to $82.50 from $75. They say they'll review it. Do you have any indication of whether they'll accept it? Yeah, I don't think they will. But, you know, that's the quintessential example of what's wrong in corporate America. I mean, you really don't have accountability.

I mean, here's a company that has, for seven years since this guy has been CEO, the company is only up, I guess, 10%. Well, its peers are up 40% or 50% of the stocks. But worse than that, they really, the agenda in that company, and many, in fact, is they're not on the same incentive program as a shareholder. And they, in fact, Hester and the board own very little stock. We think the stock is worth, you know, from 114 to 160, something in that area. And so the problem you have there is very literally just poor management. I mean, one asset there

is if you got the management out of there and stopped empire building, you would get a much better return in the market. You would be able to, in a utility, in a utility you take the rate base and you get a multiple on it in the market. And in this case, the multiple is very, is only like 1.2. And it should be, the peer group is about 1.7. Now, that's a major move. So this stock was selling when we bought it in the 60s.

I think it's up mostly because we're there, you know, making our tender. So we find companies like that, and we hope that we can have an influence on it. So let me ask you this. I think we learned from a recent documentary that is airing about you of how fierce you are as a competitor, but also when you know that maybe it's time to walk away. Is there any scenario here in which you would just walk away? Yeah, no, I don't think so. I think here we're here to see how this tender walks out. I mean, the shareholders have a simple option, really.

They vote for us and take the tender offer, or basically they don't take the tender but vote for us. And if they vote for us, we're going to clean up that company as we've done in the past in many companies. But in this company, I really think it's a sort of simplistic thing. You can't empire build, and you have to stop the SG&A growing and growing. Since Hess was there over the last six, seven years, stock hasn hasn't really got up but SG&A has gone up 37% I mean he's been criticized by the reg agencies quite a bit and I'm not saying he's a bad guy I just say that I think he's well over his head and I don't think he understands that there

were people he has to report to. The board certainly doesn't hold him responsible. But if you simply look at this company, for instance, on the one hand, they will tell you that my bid, what I made, 75 or 82, I'm sure they'll say that it's inadequate. And yet they put themselves in a position that they have to sell a billion dollars. You're saying that they have to sell a billion dollars. Oh, right.

For 65 bucks. Well, you're saying that they have to sell a billion dollars of equity. For $65. Sure, yeah. When he said that, it was $62, so he was playing it at $65. So he said, I'm going to have to sell $65 of equity. I put you shareholders in this position that I have to sell it because he made a terrible acquisition just recently. And so on one hand, he says that. On the other hand, he says, well,

you're 75 shillings. Don't take it because it's inadequate. And he's probably going to say it's inadequate at 82.50. I would abandon. Do you foresee a scenario in which you would go higher than 82.50? I'm not going to discuss that on TV. I'm not going to discuss that on TV I'm not going to discuss that on your program well you know that but you have to ask right of course I don't like to spend other people's money either but I do have to ask Carl do me a favor sit tight if you would I'm going to take a quick break and we're going to come back we're going to talk a lot more with Carl Icahn about some of the other positions

he has in his portfolio we're're back with this Overtime Exclusive in two minutes. We're back with our Overtime Exclusive billionaire investor, Carl Icahn, joining us today on the phone. Let me ask you one more question, if I could, Carl, about Southwestern, and then I'm going to move on to some other topics that I would like to cover. What's the endgame? How's this all going to play out? It's just simply going to come to the proxy vote, and that's going to be the end? Well, I hope so. I can't speak for what the company is going to do, obviously, but I do think it's time that shareholders get the right to choose what they

want. I mean, it's a clear option for them. And I don't think the company has the right to tell them, we're not going to let you do it. And they did put in a pill to stop it. But that's not a condition in our minds anymore, because the shareholders vote them out. The new board were basically independent. But, you know, I haven't even met the guys from the new board, but they're all responsible guys that know the utility business. So basically, the pill would be thrown out and they would have a chance to collect their $82.50 or stay in a company that I think will be infinitely better managed than it is today with a board that does know the business

and does care. So I'm hoping it comes to that, and I'm hoping that we win it. And I think we will because I don't know why a shareholder should take the third option, which is keep these guys. And so this is where I hope it ends up. So we hope to buy it. Look, obviously the company has other choices here, and so I don't think they're ready to certainly say, well, go ahead, shareholders, and throw us out.

But I really think that the shareholders, at least every shareholder we talk to, feel they've done a terrible job. We'll follow it and see what the end game is. I mean, the stock is up 2.5% in overtime here as you're talking about it. Let me move on to Oxy. You recently sold your entire position. Why?

When you say sold it, I have had that company for several years, and I do believe that the company is a good company. Operationally, Vicki Hallen's done a good job. Steve Chasen, who's the chairman, who came in to sort of save it. I still think the acquisition was very badly ill-timed and what have you. But I'm happy that, you know, we had a big loss in it when we bought it because we never believed that the board would allow that acquisition to go through. But now, you know, it's really a bet on oil prices. And oil has gone up quite a bit. And if you really look at it, before this war with Ukraine, you know, oil, I believe,

and I'm no expert on it, but just listening to experts on it, I believe that oil was fully priced. And we'll see what happens but you know it's all it's all dependent on what the government does too i mean the government certainly has a lot to blame on for these high very high prices in gasoline and um you know you can't tell an industry you will get a punisher if you go look for oil and then come around and say, oh, please, please go and explore now and spend all that money for exploring. And then you have members of Congress saying, we're going to tax you. We're going to put a super tax on you. However, like all things, things go way up and way up very quickly. They come down and that's not my business. I mean, my business is really be an activist.

So there's no activity done in Occidental anymore. I know I was wondering, though, and I was going to ask you specifically if this was a bet on oil that had come so far in a especially short period of time. And you figured that it had topped out, and it appears from what you're telling me now that that is the case. It is noteworthy, and I wonder, you know, what you're thinking as you're selling and Warren Buffett is buying. And he's probably buying some of what you were selling. I'm just wondering how you thought about all that as it was unfolding.

Well, he's a tough guy to disagree with. I mean, look at his record. And I don't know that we disagree completely. You know, I think we're certainly, to a certain extent, in a different business with Warren. I'm an activist. I look for a company that's way, in my mind, way undervalued, such as SWX. And then there's something I could do about it. That's what I enjoy doing. That's why I come to work every day. And so

we don't really just build a portfolio for the long term with a lot of capital. We look for the moment to strike. And of course, I might have made a lot more money if I kept the apples of the Netflixes that we bought. but we bought it we made a big profit on it and now interestingly we were losing on the activist play in oxy because we never believed they did that they wouldn't even go through with it and as you know i mean it's public record you know we we turned that loss uh it's an accidental stock we've've made well over close to close to two billion actually in the stock. And we bought to add as an activist, I think we did one very good thing. That stock was so cheap that we got the board and Steve Chase said and he agreed to do these warrants that we put out. I mean, those warrants, the shareholders could really have benefited from it, but probably many did. Those warrants were $1. And now they're selling it around $35. So, you know, and so I've

still, I have a complicated hedge on it still, you know, where I own the warrants and short some stock against it and short calls against it. That's my old days. You know, I was an arbitrageur for a while. I left to play with those derivatives. So that's my old days. I was an arbitrageur for a while. I left to play with those derivatives. That's one of the plays I'm in. The stock went from 10 to 62. Your point's well taken in the long road that you had been in Oxy before you got out of it. Let me ask you this. McDonald's.

What's that really about? I mean, 200 shares. Yeah. We're not doing that. I'm not doing that to make money. I'm in McDonald's because it may sound sanctimonious to you, but, you know, we're a country that really doesn't like or hates, I'd say, unnecessary cruelty. And I really hate it.

I mean, for some reason, emotionally, again, I'm not trying to be saxophonist, but emotionally, when you read about what they do to these animals, the unnecessary torture and cruelty really bothers me. And whenever I could do something about it, I'd try. And now I think there's a way to do it where, I mean, you take gestation crates with these pigs. I mean, these pigs are animals. They're feline animals. They've got good brains.

And I certainly don't own any pigs, but, you know, I own dogs and whatever. So I sort of love animals. And it really bothers me to see this unnecessary cruelty. And here you have a board at McDonald's where McDonald's has a lot of gravitas, and they could do something about it. So my daughter worked for the Humane Society, she's a little chip off the old block here, and she worked for the Humane Society 10 years ago. And then she called me and she said, you know, we can't get through to McDonald's. And if we could get them on our side to stop the gestation crates, you know, that would be a great victory.

They will call us back. I said, well, they'll call me back. I'll bet on that one. So I called the CEO, and he called me back, you know, one day. And he said, Carl, look, you know, we hear you. We hear you. And we'll promise, we're going to make a promise to you that within 10 years, we will not buy from any producer that has gestation crates.

These gestation crates are the cruelest thing you ever saw. You take this pig, its whole life, it's only going to live four years, the sow, and you put them in a cage where they can't move. And the pig never did anything to you. I'd like to see you put a tiger in there. I'd like to see what happens to him. So they put it in that cage. The pig can't move.

They treat it cruelly its whole life. And it's like a machine to make piglets. And why do they make it? It's unnecessary. It's completely unnecessary to do this. So let me just read this. I mean, they say they're on the road to making changes. And they say, and it's a fairly long quote, so bear with me if you would,

but I think it's important to read it. They say, despite McDonald's progress, Mr. Icahn has instead asked for new commitments, including to require all of McDonald's U.S. pork suppliers to move to, quote, create free pork and set specific time frames for doing so. While the company looks forward to promoting further collaboration across the industry on this issue, the current pork supply in the U.S. would make this type of commitment impossible. Furthermore, it reflects a departure from the veterinary science used for large-scale production throughout the industry and would harm the company's shared pursuit of providing customers with high-quality products at accessible prices.

That is McDonald's official response. I think it's important to get it on the record, Carl. Yeah, no, it is important, and it's completely hypocritical. It's a lie, because there were many farmers today. Actually, what they're doing here is completely the antithesis of the ESG. And if you look at ESG, they say that you have to have some commitment, some feeling about it. When you talk about, you know, start the environment. Factory farming is terrible for the environment.

You get huge amounts of methane in concentrated areas and it's also really I believe causes a lot of disease we had not just I but but but experts of this when you keep these pigs confined that way take together there that they were in these crates they they get these diseases they fill them up with antibiotics. Your kids, the people out there, the kids that are eating this meat that's got antibiotics in them, it's, so you, and the areas they're in, the areas they're in, the air quality is very bad. I mean, I could go on and on, but I'm not the great expert on it but everything mcdonald says is completely a manifestation of the fact that the board and i'm sorry i will say the ceo also has no real idea

about where they're really even getting the supply of these pigs 10 years ago they absolutely promised to get rid of this thing get rid of of a buying from anybody to produce but now they're changing their story and saying we're asking for more. We're not asking for more at all. We're asking them to get rid of this problem. They do say by the end of this year they expect to source 85-90% of its U.S. pork from sows not housed in gestation crates during pregnancy. By the end of 2024, the company said... There's the complete bullshit that they're saying to you, because

they say during the pregnancy, well, the sow is pregnant for a good part of its life. So, yeah, so maybe they'll do this great thing. They'll make sure that the factory farm that's torturing the animals, so it's unnecessary cruelty or torture. Okay, we'll let them out for a week or two. You know, I've talked to the board, by the way. I've talked to the chairman or whatever, and he seems like a nice guy. But he even told me, he said, you know, I learned about this stuff only in the last few weeks because I've talked to you.

I think the board over at McDonald's, in my mind, is a sort of a rubber stamp board. Look what they did about Estabrook over there. You know, they let him walk away with a lot of money until they had such criticism that to bring him back. I'm not saying they're bad people, but I'm saying... Would you buy more stock? Would you increase your position and try and exert more pressure if that was a way to do it?

I would tell you this. You always like to know whether I'm buying something or not. And in this case, I am not doing this to make any money for myself. And I don't want to even be seen as owning stock because I'm saying I am not here to say I'm going to make some money on McDonald's. I think McDonald's has a lot to answer to people that are fans of ESG. Because I really think if you look at McDonald's, they got great gravitas. But in a lot of cases, for instance, in the environment, I would say they get an F because of what I've just told you. As far as the social issues go, this is antithetical to any kind of social issues that we're involved in here.

And certainly in governance, you have a rubber-stamp board. And you've had that for many years with Donald. But you know what? Many companies fail in governance. Many companies do have a rubber-stamp board, but this is particularly one. For instance, they knew 10 years ago we had this promise. They never even looked at it again. Okay, so that's one thing. But the rubber stamp board in many other areas, too. Just the Estabrook fiasco shows that.

And we're going to bring all that out in the next few weeks or the next month. And then, hey, let's see what they do. Let's see if they give a damn. But you know what? I really find that it bothers me. And I'm not going to tell you I'm here to, you know, change companies and change the world. You know, I do what I do, but I think I do it well. But when something like this comes up, it's more than just McDonald's. It's the fact that they have so much corporate hubris that you can't tell McDonald's what to do. And these animals are suffering day and night, 24 hours. They're suffering. And these guys just don't care. And that's what bothers me. By the way, they told the Humane Society, this is why I got in again. So 10 years ago, they promised to do it. I said, great. My daughter said, oh, great victory. She left

the Humane Society many years ago. But they did call me up and they said, you know, they just broke their promise. We tried to talk to them in 17, which was a date that they were supposed to talk. And they just won't talk to us. And they just blatantly told us to go fly a kite. They told us, hey, too bad that we have a promise. We're not keeping it. That's what they told them. So I said, OK, that's it for me. And that's what I got into it. All right. And I said, you know, while we're asking, and they said what you just read, we're going to do this, this, and this, and this. I said, well, okay, I want to verify that. I said, well, they say, they really, literally say, trust us. I said, how can I trust you when you didn't do it for 10 years? And we'll stay on. Right. we'll stay on top of the story.

There's going to be a, yeah, we're going to, we're going to, hey, you'll be hearing from us on that. And this one is a freebie. This one is because I care about it so much. Okay. Carl, I'm going to leave it there. I really appreciate you joining us in overtime, our new program. It's nice to talk to you again. Okay.

Good talking to you and good luck on it, Scott. Good luck. I'm sure you'll do as well in this one as your other one. I appreciate it very much. That's Carl Icahn joining us in an overtime exclusive today. It's time for a CNBC News Update with Shepard Smith. Hey, Shep. Scott, first, Mayor McChee's on line two. And here's what's happening. Supreme Court Justice Katonji Brown Jackson, grilled by Republicans, supported by Democrats, as she faces the first round of questioning in her confirmation hearing. Judge Jackson questioned extensively about the role of court precedent, her sentencing of child sex abusers, a critical race theory and her time defending Guantanamo Bay detainees when she was a federal public defender.

That hearing is ongoing. More U.S. troops may be permanently deployed to Europe. Several sources telling NBC News President Biden could make the announcement on his trip to Brussels for a NATO summit over the war in Ukraine. We're told no final decision has been made. And parts of Texas battered with tornadoes. The severe storms ripped through the southeast tonight. The National Weather Service says 5 million people are now under severe tornado threat in Louisiana and Mississippi. 75 mile per hour wind gusts predicted.

Tonight, from Ukraine, we'll talk to American fighters serving in the war after volunteering. Some of them already injured in combat. Their stories on the news right after Jim Cramer, 7 Eastern CNBC. Scott the McRib, though, that's still very good food. Yeah. Oh, boy. Shep, thank you. We'll see you at 7 o'clock.

That's Shep Smith for the news this evening. Up next, betting big on Gen Z. One Wall Street firm is getting bullish on Block. It's today's MVP, our most valuable pick. We'll discuss it with the analysts behind the call next. Breaking news in the OT on Starbucks. Our Kate Rogers has the latest. Hi, Kate.

Hi, Scott. A Starbucks store in Seattle has just voted in favor of unionizing. The vote tally was a unanimous nine in favor of forming that union with Starbucks workers united with zero against. Now, this is the seventh Starbucks store we've seen that has voted yes in favor of organizing. Five of the other stores are in Buffalo, where this all began, a sixth in Mesa, Arizona, and now the first one in Seattle, Starbucks' hometown. More than 130 stores across 26 states have now petitioned the NLRB to seek votes on unionizing. This is something that new and incoming CEO Howard Schultz is going to have to take on in April

when he takes the reins over for Kevin Johnson, who is leaving that post at Starbucks. And just a reminder here, Starbucks does have to negotiate a contract in good faith with the union, but neither party has to agree with something. So yet another unionized story here, a little stock reaction, but notable, again, for the union, another win. Scott? No doubt. Kate Rogers, thank you.

It's time for our MVP, our most valuable pick. Block is rallying today. Why? Because Mizuho raised the price target on the stock by $10 to $1.90 a share. The analyst pointing to strong adoption of Block's cash app among teens. Let's bring in the man behind the call, Mizuho's Dan Dolov. It's good to see you. Welcome. Thanks again, Scott. You know, you raised the price target by $10 to $1.90. I mean, the stock was trading at $2.90 before. Is this

a sign you don't think it's going to get back to those levels anytime soon? No. You know, like what we wanted to do is we wanted to, you know, we look at valuation very carefully. And I think the market is actually very focused on valuation. So we, because of this is early data, these are early days of the cash app for teens or cash app for 13 plus we wanted to make sure that we don't overestimate the impact but if you ask me i actually think the real impact is going to be much bigger but we you know we wanted to see how it goes over time but i think that that you know we wanted to make sure that we actually you know look at the data interpret the data and and and kind of see directionally where it goes. So obviously, you know, we love Square and, you know, 190 is hopefully just the start.

Yeah. How much is the company growing beyond Bitcoin, growing its revenues, which frankly I didn't realize until I was doing research for this segment that Bitcoin is half of Square's revenues. So it's so tied to Bitcoin at this point, which remains especially volatile. Right. And I think that's actually something that a lot of people are missing. It's a big part of the revenue. But if you think about the way we look at it, the way the market or investors look at it, they look at it on a gross profit basis. And the margin they make on Bitcoin is very, very small. So while it's levered to Bitcoin on a revenue basis or volume basis, Bitcoin really only accounts for a very small, you know, single digit percent of gross profit, which is the way to look at it. And the other stuff, right, the seller business,

which they now call Square, which is point of sale, Cash App, which was what we're focused on today, and the after pay business. Those are like the real growth engines of the company. Dan, we leave it there. Appreciate your MVP today. That's Dan Dolove joining us. Coming up, we're talking tech. Does the recent rebound still have room to run? We're going to break it down in today's Halftime Overtime as one trader on Halftime makes a bunch of rally in tech and the surge of options activity that Pete Najarian highlighted in some of the mega caps. Now they're coming back again for Facebook and they're coming for the 220 calls and looking

at huge size. And we are seeing huge size trades across the board. AMD, a buyer of 50,000 of this week's expiring 120 calls. Microsoft, we were seeing upside. They're going actually out to April on the 320s in Microsoft. Stock was trading at the time just beneath 300. So it gives you a little bit of an example of what we're seeing, the kind of volumes that we're seeing, these size trades that are coming in. Oh, the bulls are running. Let's bring in RAS Asset Management CEO Carrie Firestone, see if she thinks this tech rally has legs. Carrie, it's nice to talk to you.

What do you think? I mean, the bullish activity that Pete highlighted today was pretty impressive, and you have a lot of positions in tech from Apple and Microsoft to Alphabet, Twilio, et cetera. Yeah, exactly, Scott. Thanks for having me. Well, this market got oversold, and as Pete has suggested, there are buyers that are now starting to rush. And the first couple of days of this rally were light volume, big numbers going up, but not a lot of volume. And we needed to see the volume to see some follow-through. We know that the market's still

unsettled because of Ukraine, because of inflation, because of interest rates. But there was so much decimation. The NASDAQ down 23 percent. The S&P down 13 percent. It was bound to happen that names like PayPal, Twilio, they're up 25 percent now from the bottom. Facebook, 16 percent. Adobe, Autodesk, 15 percent. The S&P is up 8%. And this is a strong reaction to what is an oversold position that may or may not continue to go higher.

I mean, this 8% move on the S&P is a lot. So we have to be careful. If you want to keep buying, do it carefully now because a lot of the easy money has been made. And now you have to be careful and pick your spots. Yeah, now it's time to work real hard for it. Kerry, I appreciate it. That's Kerry Firestone joining us in halftime overtime. Up next, Santoli's last word, why it two minute drill to health care picks and opportunity in one old school tech name as well.

Overtime will be right back. It's bringing Mike Santoli now for Santoli's last word. What do we have today? Look, it's a tenacious rally. I think you have to respect any market that keeps going up when there's a lot of excuses for it not to go up like yields today. So all that being said, and we absolutely were primed for a big bounce, here's the thing that maybe are reasons to take a beat.

One, right above, one or two percent above this level, S&P 500, is a threshold to February highs, 4,600 or thereabouts. Even folks who were saying this is a downtrend, any bounce up to that level, I'm still not going to be convinced. That's still out there. Consumer discretionary, not really leading. Broker dealers, all these little, you know, kind of nagging issues where it's not fully in gear. Again, I say no all clear, but you know what? The great V bottoms of history, you didn't have an all clear until you were up a lot, right? So it's never going to be that easy.

You fixed some technical damage. No doubt about it. The VIX has been going down for, what, six days in a row. So you're like checking off the boxes of things you want to see happen. But you have to be able to see both sides. Yeah, good stuff. All right. That's Mike Santoli with his last word. Up next, our two-minute drill. We're back right after this. Joining us now in our two-minute drill is Profit Investments President, CEO, and Portfolio Manager, Eugene Profit. You're on the clock. Welcome to Overtime. And your top pick today is MRNA, better known as Moderna. Why? Well, Scott, it looks like a giant come lately,

Moderna being up six percent today. But if you look at Moderna, you're looking at a stock as a six P.E. that's it has a product that's going to be in demand as the need for viruses is going up. They're combining vaccines to where they're trying to create a flu vaccine with the COVID vaccine. And finally, the U.S. government contract is up in April. And so they might have a little bit of pricing power, even though it'll be a little bit difficult. The fact is that the U.S. government will buy more vaccine and there will probably be a fourth booster.

So at a 6 PE, we're very high on Moderna. That being said, we were also high at the beginning of the year and the stock was down about 55 percent. 30 percent of the return has come to last five or six days. So you're still down 20 percent. But we're they got there in five years. I'm sorry to interrupt you. They have their vaccine day coming up, too, which maybe the stock is is running a little into that. AbbVie was was one of your other picks. But tell me about Intel. And maybe that's one of the most controversial, clearly.

I mean, the stock's gone from 68 to 48. Why should I think it's going to get back? Again, 10 PE with non-recurring revenue forward. Essentially, they're investing in the foundry business. I think that this will be a deglobalization. We try to bring chips back into the U.S. Intel is well positioned. They have great clients with Qualcomm and Amazon.

And a quick note, I mean, 13 years ago I was on Halftime Report and I was touting Microsoft and getting beat up the same way I'm about in. So hopefully history will repeat itself. I hear you. We'll see you soon. Thanks for being here. The Twitter result, Apple or NVIDIA back to its high? Apple. Big shock that you voted that way. That does it for us.

I'll see you in overtime tomorrow. Fast is now.