Closing Bell - Closing Bell Overtime: Fundstrat’s Tom Lee on the Chaos in Crypto 11/11/22

Episode Date: November 11, 2022

Longtime bitcoin bull Tom Lee reveals how he’s approaching the FTX fallout and its impact on the crypto market. Plus, why Veritas Financial’s Greg Branch says his near-term bear case faces its biggest hurdle in nearly a year. And, the latest on Musk’s Twitter takeover with Big Technology’s Alex Kantrowitz and Platformer’s Casey Newton.

All right, welcome to Overtime. I'm Scott Wapner. You just heard the bells and it was a very, very special bell ringing today as the New York Stock Exchange honors World War II veterans on this Veterans Day. The greatest generation, the greatest of American heroes. It's truly awe-inspiring to be in their presence here today. It's quite a moment. I want to welcome you all once again to Overtime. We are just getting started at Post 9 here at the New York Stock Exchange. Stocks took a bit of a breather, as you know, a little bit after yesterday's massive rally. That's where we do begin with our talk of the tape.

The future of this move in stocks, whether it was too much too soon or simply the beginning of an even bigger burst into the end of the year and beyond. Let's ask Tom Lee. He is Fundstrat's head of research. He's here with me on set. He's also, of course, a CNBC contributor. It's great to have you here. Thanks for coming in. Great to see you, Scott. You did call yesterday's CPI a quote-unquote game-changer. Why? I think it was the first time that the market could see an improvement in some of the underlying drivers of inflation, from shelter cooling to the durable goods cooling, medical, which was really on fire, flipping.

And it means it's repeatable. You know, the Fed wants to see a series of lower inflation prints. And I think we're set up for the next few months of 0.2 to 0.3. That's 3.5 percent inflation. You said the key thing, a series of lighter inflation prints. This is just one. Correct. It's just one. But it does look really repeatable. Again, because medical insurance only adjusts every 12 months. It went from being roughly 2% a month to a minus 4. So you're going to get minus 4 the next 12 months.

And shelter, which has been on fire as much as 0.8, is now down to 0.6. But now it's converging towards where markets are. So I think it is very repeatable. So let's get serious about this move. How far do you think it can go? How long do you think it can last? I think that the June rally and the sort of false dawn pivot is a minimum template. That was about a 20% rally over 25 trading days.

I think this one's going to be far stronger. Wait, wait, wait. Stronger than 20%? From the low. At least 25% from the 3500. So something that could carry us to 44 or higher. And that's because we have, for the first time, sort of the ingredients for the Fed to do a convincing pause, to go from being a hire in a hurry to one that's more predictable,

one that the markets can deal with, but possibly now raise the question that maybe the last hike is going to be December and then the Fed's done. Do you really believe that, that December is going to be the last hike for a while, that they do that and then they pause? Because their rhetoric, you know, even in the face of the report you yourself call a game changer, was still pretty hawkish. Yes. Powell's made it very clear.

He looks at forward inflation, not realized. You know, CPI is showing us what happened. If forward inflation is running at 3.5, a Fed at 4.75 is actually quite tight. And that, along with we already see so many leading indicators of inflation being lower, that the Fed can move away from the hard data, see the job market cooling. Trucking is the most common job in 29 states. There's a lot of cuts in trucking coming. The labor market's softening up. I just think the case for accelerating inflation is over. You think, I mean, look, Jeremy Siegel, the Wharton School was with me yesterday and said inflation's basically over.

Yes. It's kind of hard to declare that at a 7-7 print on the CPI. Yes. The stock market in 82 bottomed when the inflation was around 7.5% on its way to 3. Volcker didn't pause it pausing or ending the fight until October. So 10 weeks before the Fed actually even offered a view, the stock market had already bottomed. You've been advocating, fang for the duration for the most part right yeah um it feels like those stocks are broken no yeah i mean it really does it's kind of undeniable yeah that they look that way yeah it's been a terrible call uh you know i think fang still has produced a secular growth but this year a lot of inflation companies

sensitives like energy and some industrials, produce growth that's much better. And you're right, they're crowded. I think you're right. I think the market's going to question FANG for some time, but I think they should still be in people's portfolios because they're high return on equity companies. They solve inflation in the future, but that's not what people care about today. Well, I mean, I'm thinking of, you know, if the Fed, what do you think the Fed's going to do in December, by the way? Because, I mean, it all plays into the same conversation about these mega cap stocks and other areas of tech. I think the futures market has it right that they're looking at 50 basis points. And unless,

you know, we start to get so much cooler inflation, you know, there's, I would say the odds are that it's either 50 or 25, not 50 or 75. You know, Carl Icahn was with me yesterday and he, you know, he's been negative on the market. He's hedged. His hedge is expressed through a short on the S&P 500 in large part because it has such a high tech weighting and he thinks tech is still overvalued. Can you make the case that it's not? Yes, I can. In both 1940 to 57 and in 1970 all the way through 87, the way the economy solved inflation was an acceleration of tech spend and a parabolic growth in revenues. I think that's what investors are forgetting. They're thinking tech is a high multiple sector.

They're literally the solution to wage inflation. And so demand, once we come out of this inflation cycle, is for tech products to go up. So you don't buy into the belief that value is going to outperform growth for a substantial period of time? I think value as a factor does, which is really balance sheet intensive companies, because you're going to make money off your balance sheet. If you have cash, you make money. If you own inventory or resources, it goes up. A lot of tech companies are asset intensive or balance sheet intensive. I mean, cloud companies like Amazon are actually balance sheet stories. So I think tech can work in a value regime. But do you think value outperforms?

Yes. Yeah. Because if the tenure, let, let's say the 10-year hovers here between 3.5% and 5.5%, which, by the way, since 1871 is the highest P.E. for the market. The market average is almost a 20 P.E. Investors will buy companies that have visible earnings, which is value intensive. So they should outperform. Crypto and the Nasdaq have been pretty heavily correlated. If crypto continues to come down Doesn't that weigh more heavily on the Nasdaq? Yeah, it looks like the linkage might be breaking Michael pointed out with Nvidia and Bitcoin I mean crypto is is caught up in a really dark period. I mean there is a you know, a systemic event that happened this past week

It's triggered enormous losses and, I mean, devastating losses for a lot of folks I know. That means crypto is going to be tough to own. It's really only for the brave. But I think it is going to come back. That was that one saying, fortune favors the brave. I mean, maybe it was fortune favors the naive who thought that this was this new and incredible long-lasting asset class even in what was a highly speculative market for an asset class that was entirely unregulated uh yeah scott um you know crypto has a lot of folks who are trying to to create change it's attracted a lot of greed and money, and unfortunately, just like other early stage,

90% of all projects will go to zero. But that's the history of capitalism. You know, since 1970, of the 40,000 stocks issued on the stock exchanges, more than half fell 90%, and of those, half went to zero. So capitalism is about this creative destruction, but it's been super fast cycles in crypto and it's been devastating.

I mean, there are people who, let's be honest, Tom, I mean, there are people who put some of the more high profile evangelists, if you want to call them, on the wall of those who hyped this asset up, they may very well put you on that wall, right? There were times where you talked about $100,000. There were times your firm had very lofty targets. How do you feel and think about that today and the kind of responsibility that you think you and some of these others may bear

and just the hype. Yeah. Well, Scott, nobody wants to make a call being optimistic about something and seeing it go down. It's a terrible feeling. We've been really trying to keep our clients close to what we're seeing. And Sean Farrell does a great job. And I think your teams update his views. It's an ugly period. It's going to be tough for anyone who is straying outside of Bitcoin, which is what we like. But, you know, we don't want people to lose money. Bitcoin is going to cause losses this year. But it is cyclical.

And so, you know, we're optimistic that Bitcoin's blockchain works. It actually is cheaper to move money. It is pretty useful. But it's not going to turn around before the end of the year. I think it might take some time. environment that was free money for everybody for a long period of time and that's the only reason we saw it do what it did and now it's going to come back to earth it's going to be a much different asset it's going to be more highly regulated people are going to be a little more studious in the way that they sort of look at it as a as a viable asset class moving forward uh yeah that's fair point uh crypto is quite tribal. You might know that there are people who are Bitcoin maximalists and others. The Bitcoin community has straight away from leverage, trust and verify, it's really how many people own wallets. And today it is still cheaper to move money and it's more secure. You know, in the entire Bitcoin blockchain since inception, close to $20 trillion of money moved. Zero fraudulent transactions. Did you guys have any money caught up in the FTX stratosphere?

Fundstrat has not done any business with FTX. We have no financial relationship. We've never done business with them. They were a really well-respected company. We would have loved to have done business with them. Maybe not today you would have. I think it's been a blessing. We're a research firm, so we do advisory.

They're a much more trading-oriented firm, so we just never had overlap and we never did business. Let's bring in some others and expand our conversation if we could. Hightower, Stephanie Link with us, Greg Branch of Veritas Financial Group. Both are CNBC contributors. So, Greg, let's begin with where we began, Tom and me, on this notion of do you agree with his assessment that yesterday was a game changer for this rally? I absolutely do not. There's a couple of things that I disagree with. Number one, I think that it would be naive to say that December will be the last hike. I think the

Fed has laid out that the terminal rate, if it's not 5%, it's certainly very close to it. And I don't think that they raise a whole percentage point in December. In terms of the range, I think the range for December is probably 50 to 75. A lot's dependent on that CPI number we see in December. Lots of people have been extrapolating for the better course of a year now that this will be a linear retrenchment. And it's been anything but that. In April, we saw that the monthly went from 1.3 to 1 and then back up to 1.3 in June. And so I doubt that this is also linear. With respect to Tom, there certainly are some things in this inflation report that we can hope was permanent retrenchment, such as maybe the housing element. I doubt that.

Such as maybe use auto pricing, probably. But there are other elements that will probably have a spike again into the holiday season, like airfares. And so my bet would be that we see something more than the 7.7% for November that we saw in October, particularly when you bring the base effect into account. Remember last year, we saw a jump from 5.4 to 6.2 percent from october to no from september to october but then that moderated from october to november only

fate 40 basis points from six four six point four to six point eight and so it was likely even if inflation on its own was not retrenching that just due to the base effect we were going to see that headline number come in and now that it's not going to the base effect we were going to see that headline number come in and now that it's not going to come in as much next month i think that that'll work the opposite i bet we see an eight again for november you want to respond uh sure i mean i just something i'd point out you know we often look for cross market for validation or confirmation yesterday was the the largest drop in two-year yields and 10-year yields. Almost in 10 years, it was the second largest. It was March 2020 was the larger one. And then you have to go

back to March 2009 to find another large move. So this move, this CPI report was really respected by the bond market. It's been seen across the curve. So I think they're treating it, the bond market's treating this as not a fluke, but a real change. Steph, a real change? Is that what this is? Well, it's progress. How's that? I think that the CPI report had something for the bulls and something for the bears. So on the positive side, the headline number, the core number being down relative to expectations, very good. Owners' equivalent rent coming down, very good. And that was a surprise.

And it actually also coincides with the prices paid PMI indexes, which are a six-month leading indicator for the CPI and PPI. So those numbers have been collapsing. And so that's all good. It's all, you know, that's the positive. The negative is that if you look through the numbers, services, which is 73 percent of core CPI, is actually still very elevated, right, at almost five percent. So that means that most of the decline from the expectations was goods oriented. And we know that. We know goods are collapsing. Just look at the order rates and the cancellation rates. So we might be getting closer, Scott, to the Fed getting done. I don't

think it's this year. I think we have at least 50 or 75 more to go. But we also don't know what the implications are. We've talked about this. We don't know what the impact is going to be on the economy. We know it's going to slow. Does it slow in a soft landing? Does it slow in a recession? And so that's still the unknown. So I think the rally has legs into the end of the year. We've talked about this seasonality. It's your friend, right? Sentiment, very negative and positioning. So I think you can rally into the end of the year. What we do after that is really going to it's really going to depend on the economic data that we get. And by the way, I would just say one thing. I think the real positive, at least for corporate earnings, is the dollar, how much it's come back. And if we have a little bit less inflation and a weaker dollar,

that's very good for earnings for much better than what we were fearing. So why, Greg, is seasonality off of Steph's point, not your friend? I mean, you still think that we have not seen the lows of the year with six weeks to go? Momentum may be on our side. I'm going to stick with that view, Scott, but I'm sticking with it with the least conviction that you have experienced in our one year relationship at this point. Never before. And look, Tom and I have been making the polar opposite call for the better part of the year now. Never before have I had as meaningful a doubt that this might be right. There's a couple of things that could go wrong with my view. Like you said, seasonality, the Santa Claus rally is a real thing. Typically, the three months from November to January,

we see about 4.5% performance. Any other normal three-month period, the average is around 2.9. So the Santa Claus rally is real. I will be wrong if we see something 7.5% or less for November. If we see that, the market will have two pivots to concentrate on. Not only the fact that, yeah, inflation retrenchment will be a straight line retrenchment and that we will see month over month decline and it won't be volatile, as the Fed said. But secondly, I think that that would be reason for the Fed then to think about coming off the gas a little bit for the market to contemplate a terminal rate that's less than 5 percent.

And then lastly, the pace of negative revisions and remember that's been one of my big boogeymen is the negative revisions and that estimates were wildly off where they needed to be we entered the third quarter that way with an expectation of about 10 earnings growth we entered the fourth quarter much closer to the reality i think that we'll experience where right now the estimates are for negative two percent earnings growth. If in December when we get that print, the estimates are at one percent flat, two percent, then we won't have the headwind of needing significant negative revisions. And when you combine that with a Fed backing off the gas with a victory declaration in terms of inflation,

then, yeah, that could be a sustained rally. My bet is that not all those things happen. OK, Steph, so you added this week to Caterpillar, to Estee Lauder and to Meta. Why? Yeah. Yeah, well, I mean, look, Wednesday was really ugly, as great as yesterday was. Wednesday was really ugly and some of these stocks got hit really very hard. And so to me, I think with Estee Lauder, and I like the fundamentals, I like the products, but it's really the catalyst was China potentially reopening kind of thing and also the stock being down so much.

They have 30 percent of their revenues in China. So to the extent you believe China does reopen, even if it's partial, that will help. They already lowered guidance on Caterpillar. They only have 10 percent in China. But I do like their diversified revenue mix. And I think the energy component is so misunderstood because you have had massive underinvestment for years on end. So they should benefit. And then on Meta, I like the fact that he's cutting costs even more than I thought. Right. I thought that we were going to see 10 percent in terms of layoffs. Now you're getting 13 percent. Maybe he has religion. Maybe he doesn't. But anyway, you look at it, this stock trades at five times EBITDA. And they do have a core franchise that is very strong. And actually, the reals piece is actually showing improvement. So

that's encouraging. All right. Tom, I gave you the first word. I'm going to give you the last. Leave us with a thought we can think about for the next week at minimum. We get some economic data. You've got a lot of Fed speakers. You've got another CPI in a month and then the Fed meeting. Well, I think that the big picture, if I take a step back, is inflation's been really tough to defeat most of this year. We haven't had any signs that the services that Steph was talking about was cooling. We're finally getting that break.

BLS breaks that line up. Xelter and core is 0.18. We're at 2% services, ex-housing. That is giving the Fed some breathing room. The job market's cooling. The Fed is no longer the enemy of the market as much. And I think that allows us to make a pretty big rally, especially given how many people are offsides. Most of our clients are bearish. So, you know, they've been had their head wrong, but it's they're still bearish. I appreciate you being here. You always show up and you always answer the questions in good times and struggling times. And I appreciate that. I know our viewers do as well. That's Tom Lee from Funstrat. Steph, Greg, thanks so much. I'll talk to you again soon. I'm fairly sure of that. Let's get to our Twitter question of the day. We want to know if you think the lows are in for the year. You can head to at CNBC Overtime on Twitter.

Cast your vote. We'll share the results coming up later on in the hour in which we are just getting started here in overtime. Up next, the Twitter blues, the turmoil intensifying amid a fresh round of exits, a bankruptcy warning. What is the ultimate end game for Elon Musk and Twitter's 200 million users worldwide? We'll debate that. We're live from the New York Stock Exchange. Overtime back right after this. We're back in overtime. The turmoil intensifying at Twitter.

In just the past 24 hours, the company has seen more high-level departures. CEO Elon Musk warning employees Twitter could go bankrupt. And just this afternoon, it appears Twitter is pausing its new paid blue subscription service. Joining us now to break all of that down, big technology founder Alex Kantrowitz, platform editor Casey Newton. Both CNBC contributors, both have been with us every step of the way. And I'm glad to see both of you here again because it's just a drama filled road that we've all been on. And Casey, I think the headline of the last period of time here is, because it's just a drama filled road that we've all been on. And Casey, I think the headline of the last period of time here is two weeks of chaos. What do you make of

it? Well, it really has been. And in addition to chaos, I would add unforced errors, right? Elon Musk inherited a business that wasn't amazing by any stretch of the imagination, but it wasn't on death's door either. And somehow in two weeks, we've gotten to Elon telling his team yesterday, hey, look, bankruptcy isn't out of the question. So I'm trying to figure, Alex, where do you see this all going from here? Well, I think it's going to get a lot more messy before it gets better. You have advertisers who are trying to plan, should we spend with Twitter, should we not? They don't know what it is right now. They don't understand where it's going from a brand safety perspective, and that's really tough.

The one thing I will say, and the early returns have not been good for Elon, no doubt about that. It does not look good right now, although usage is going up according to the charts that he's shared. But the one thing I'll say is we and, you know, us journalists and analysts have killed Twitter for years about the fact that their product roadmap and the fact that their shipping has been really slow, slug slug paced. Now they're shipping fast. There's new features, there's new policies, there's new products seemingly every day. They don't have to hit that many, you know, to get to a place where you can actually say, all right, he's made a change. So I would say right now it's a little bit early to say Elon's destroyed Twitter or Elon will revive Twitter. We really need to wait and see where this goes. You think people are being too hard at all on him, Casey, that there's too much schadenfreude going on here? He's been there literally two weeks. It's not like Twitter was a, you know,

a fireball going into this whole thing. So maybe the guy deserves some time, no matter how messy it looks publicly, to figure it all out. And because he is Elon Musk and he has had a habit of doing that, he'll get it right. It's just going to take some time. It's going to be ugly in the interim. I mean, look, it would be great if that were true. I guess I would just say, show me the one good thing that he's done so far. Like, I think what Alex said is insane. Yes, he's shipped products, but they've arguably been some of the worst products that Twitter has ever shipped. He created an enormous new brand safety problem for himself this week when he let anyone verify themselves

as any brand. And we've seen billions be trimmed off the market cap of some public companies temporarily because nobody knows who's who on Twitter anymore. So until he's able to just prove he can walk in a straight line for three days, I'm not ready to say that this guy's the, you know, trailblazing savior of Twitter. Alex, when someone gets their ideas called insane, they deserve a follow-up. Yeah, I think Casey's taking my ideas completely out of context. I never said that he was this trailblazing savior

for the network. I'm simply saying if you're trying to say that Elon Musk has destroyed Twitter or he's the savior of Twitter within 14 days, that's insane. The truly nuanced and, I would say say reasonable path to take is to say, let's see how he does. He's already pulled back on some of the things that he's rolled out. And I don't deny the fact that he's made some serious mistakes already, you know, one week in.

But I kind of and look, I don't like the experience right now. I'll be the first person to tell you that. But I think that, you know, people who think that they can make this call of, you know, Twitter is dead within 14 days are missing the big picture. There's going to be more coming. And let's wait and see. Right, Casey, what's so wrong with that? Yes, absolutely. We can wait and see. What other choice do we have? I just think it's important to point out that Elon has smart people inside Twitter who worked there for a long time, who had predicted all of the mess that was going to be created as he began to roll out some of these changes. And he's ignored them every step of the way.

So I think part of the game for him here is just deciding to listen to some of the very smart people he has on staff and let them save him from himself. Yeah. The other issue, obviously, is what the fallout or increased or increasing continued risk towards Tesla. Alex, how do you view the relationship between these two undertakings, if you will, and what we've witnessed with Tesla shares and what the continued fallout could be there? Yeah, I think it's unpopular to say,

but Elon's performance at Twitter is gonna be inextricably linked to his ability to keep Tesla in the place that it's been in the public markets. People pay a premium for Tesla. Why do they do that? They do that because they believe that Elon is this generational entrepreneur

that has better ideas than everybody else. And therefore, even if the car production isn't far beyond what his competitors are doing, they have faith that his genius is going to propel that company. I mean, that's the Tesla bet, right? If Elon continues to publicly flop around with Twitter the way that he has and ends up destroying that company, there's going to be a cost to pay because that shine, that mythology around Elon Musk is going to come off. And I think this is a serious risk for Musk. And the pressure mythology around Elon Musk is going to come off. And I think

this is a serious risk for Musk. And the pressure is on right now for him to perform. Guys, we're going to leave it there. I appreciate it, as always. Alex Kantrowitz, Casey Newton, both CNBC contributors. I'll see you soon. Up next, five-star stock picks. Top money manager Kevin Simpson is making some big moves this week. He opens his playbook. We share it with you next. Welcome back. Time for a CNBC News update now with Christina Partsenevelis. Christina. Hi, Scott. Here's let's start with the news. We begin with an update on vote counting in Nevada in a press conference. The Clark County registrar said the county still has over 50,000 mail ballots to count. Nearly 16,000 of those should be reported this evening. Nevada's Senate race has yet to be called,

and Republican Adam Laxalt holds a slight lead over Democratic incumbent Senator Catherine Cortez Masto. President Biden today announcing his pick to head up the IRS. Danny Werfel, a former IRS and OMB official, will need Senate confirmation before he takes over. His task will include spending the $80 billion allocated over the next 10 years to improve outdated technology and hire new staff at the agency. And a high-ranking House Republican is backing Donald Trump for a 2024 run.

Elise Stefanik of New York said in a statement that Trump is clearly the leader of the Republican Party and that she is proud to endorse his next presidential run. Trump has yet to declare his intentions, but signaled that he could announce his run maybe sometime next week. Scott. All right, Christina, thank you. Christina Partsenevelis. Stocks finishing higher again today. The S&P 500 notching its best week since June.

And my next guest is making some big moves in this recent run. Joining me once again is Kevin Simpson of Capital Wealth Planning. It's good to see you again. Welcome back. Thanks, Scott. Let's document some of these new positions. Let's do those first. Nucor and Schlumberger. Tell me. It's been a long time since we've had these old school names in the portfolio, but we're trying to de-risk into this rally a little bit. Nucor is an old school American steel company. If we believe in the infrastructure play, what better than an old school steel company to ride it? They've been increasing their dividends handsomely by 8% over the past three years, really good cash on cash. And if we talk about multiple compression, and you did a great job on Halftime having a conversation about multiples, it's trading at about four or five.

When you say de-risk, that leads me to believe that you sold some things to move into these names. Is that right? We did, Scott. We sold Qualcomm, and we only owned it for two months. We were looking at how the chips and the semis were disappointing. We sold this right before earnings, took a very small loss, reallocated into the new Nucor position, the new Schlumberger SLB position,

a little bit higher multiple on Schlumberger, but just incredible cash on cash. You know, they suffered when fracking and shale was a little bit out of favor, but it seems like energy now is a license to print money. They've increased their dividend by 100% this year, and they've got a commitment, much like Devin, for up to 50% of their free cash flow to dedicate towards share buybacks and special dividends.

So we like those names. You sold Goldman, too, yeah? We did today, right before the close. Right before the close, why? It's up 30% in the past month. So when we're thinking about risk managing a portfolio, and this is a great lesson for viewers, we love the stock, we still own it. But it went to a 7% weighting in our portfolio.

That's too much risk to have in any one name, no matter how much we love it. So we trimmed it back to 5%. It's still a full position. We still believe in the rising interest rate play for financials. But now we've got some dry powder on the sideline for next week that we can take a look at other opportunities. So it's just risk management. Oh, I got you. So you just trimmed it. I don't want to intimate it that you had sold the whole thing. So I'm glad you you made that perfectly clear to our viewers that you still like the name. You just took the weighting down in your book a little bit. Are you a believer that this move has more to it between now and let's just say the end of the year?

I don't want to even get, you know, too far out ahead of our skis. But we got what, six weeks or so between now and the end. How much further do you think this goes? Well, we think that the market's pretty fairly valued up here, but I love the seasonality and all the talk and excitement of Santa Claus and New Year's and the consumer. So it could certainly extend a little bit further. But the markets can't go up forever. Trees don't grow to the sky. And when we think about valuations for next year, I'm still in the camp that earnings estimates are going to come down for 2023. And the Fed's still going to be aggressive on that terminal rate. So we've got to be careful on our multiples and our earnings expectations for next year. But heck, into the end of the year,

why not be optimistic? Yesterday was the first pleasant surprise we've had in a long time. It followed through. And today, maybe we were lucky the bond market was closed. But I'm not going to go home this weekend with any glass half full pessimism. I'm excited for the end of the year. Yeah, I mean, do you let's just say it does continue. Do you continue to de-risk into that, i.e. sell? Yeah, absolutely. I mean, we'll just continue to take some profits. We're always fully invested for the most part.

So it's not like we're trying to time the market. But the other thing, Scott, that we can really take advantage of in this rally, presumed rally into the end of the year, is writing calls into strain. We wrote covered calls on Cisco yesterday. We wrote covered calls on UPS yesterday. We wrote covered calls on Dev and Energy on Monday. And you get a sustainable rally. You have opportunities to put a little extra cash in the portfolio, give you a little bit of buffer. Everything we own is generating dividends on top of dividends. So we're going to continue to squirrel away more and more capital to take advantage of any pullbacks. We're probably not out of the woods yet by any means. We don't have a catalyst for a full, all clear bull market into 2023, but we're starting to see some decent signs. And I think there's reasons to be modestly optimistic. OK, let's take some baby steps. We

don't need to make these big proclamations just just yet. Have a good weekend. We'll see you soon. That's Kevin Simpson, Capital Wealth Planning, joining us. All right. Up next, taking aim at tech billionaire investor Carl Icahn betting against that sector. Is it the right strategy after this week's rally? We'll debate that in today's halftime overtime. And don't forget, you can catch us on the go by following the Closing Bell podcast on your favorite podcast app. OT is right back.

In today's Halftime Overtime, the tech sector surged, the group posting its best week since April of 2020. Much of that coming yesterday. Carl Icahn, though, told me yesterday he's shorting the S&P 500 as a hedge due in part to its high weighting towards technology. Listen. I think the tech stocks are too high for the most part. I really think that eventually a lot of these tech stocks are good. I think they're too high. I think that with high interest rates, they will not be able to

make an impressive value. They're just not worth what they're selling for. All right. Well, let's bring in Shannon Sikosha of SVB Private. See if she agrees. I made it clear. And by the way, he's not the only one that thinks that that tech is out of favor right now, that this is an expressed hedge against his long positions and in part because he thinks tech's overvalued. What do you think? Yeah, I mean, you could certainly argue that tech still is somewhat overvalued versus the rest of the market. I think that shorting the S&P 500 is probably an inelegant way to hedge that. But I can understand the rationale here. The expectation would have to be that this premium from a valuation perspective continues to compress. And you could see that continued pressure. I mean, we're looking at Fed funds implied rates still being up over five and

a half, Scott. And that certainly would point towards at least a couple more quarters for pressure on tech. But my question is, and I guess my argument is, number one, what if we actually don't crest those levels? I mean, we're certainly riding high on the enthusiasm from the CPI print this week. But two, you're assuming that there should be no premium afforded to these companies. And I think the ability to grow revenue, grow top line consistently at an above market rate, that's still in place, even if that above market rate is perhaps lower than it was a year ago. But haven't you taken your own tech exposure down in the prior months? We've had so many conversations about this, that you own several of the mega caps,

but your exposure is not what it was. No, we were significantly overweight technology in coming into 2021. And we have taken it down. But more importantly, we've also taken it down incrementally, but we've also expanded it out. We've diversified it. And so the breadth of our portfolio from a technology exposure perspective is wider, just like the market is now. And so the breadth of our portfolio from a technology exposure perspective is wider, just like the market is now. And so I actually think that part of this is really probably Carl Hedging, in particular, mega cap tech. But I think some of the transformational names in technology over the course of the next several years are going to be these adjacent technologies to some

of the trends that we're seeing, reshoring, for instance, here in the US. The other thing to point out, and one thing that I think is important, we're looking at all of these layoffs that are happening in technology right now. Think about the margin improvement. Think about the capital allocation, the discipline that's being put into place. We see this type of discipline, and then you couple that with potentially continued above market growth rates. After we cut, there could be a real inflection point for technology in the next 18 months or so. We'll leave it there, Shan. Thank you, Shannon Sikosha. We'll see you soon. Enjoy the weekend. Up next, the big stats from this week on Wall Street. Christina Partsinello is back with that. Christina.

It was actually the most intense rally since early 2020, from gold to tech to solar, all soaring. We'll break it down right after this short break. We're back in overtime. We wrap up another big week on Wall Street. Let's get back to Christina Parts and Lovers. Parts and Lovers. Parts and Lovers. Parts and Lovers. Yes. We're going to fix that prompter in a second. I know they just they had the wrong prompter in there. But what we're talking about is we did see the Nasdaq up 8 percent this week.

Quite a turnaround. Literally, when the CPI data hit the tape, prices. Yes, they have climbed a 7.7 percent, but still not as bad as what the street was expecting. And that's why you saw that sustained rally going forward. But you also have the S&P that closed, what, almost 6% higher with SolarEdge, the biggest gainer this week, up 32% on strong earnings. And Outlook, 32% is a huge jump in just one week. Meta, another double-digit winner, up 24% after cutting costs. And you have that sector and those three stocks and several others helped tech, materials, and communication services climb this week, all up better than 11 percent right now. The softer than expected CPI that we just talked about brought the dollar index down, though, about 4 percent.

It's worst week since March 2020, the height of the pandemic. And the weaker dollar tends to drive up the price of gold since the gold is denominated in USD and demand goes up. So gold was actually up five and a half percent this week. Strong week. And once touted the digital gold, maybe you can debate that now. Bitcoin unraveling 21 percent lower this week, below the 17000 dollar mark, of course, on the bankruptcy of FTX, a prominent cryptocurrency exchange. Scott, thank you for that intro. Same last name several times. Yes. Just to make sure I got it right. Christina, thank you. And I apologize. No worries. No worries. The prompter was all messed up. Have a good weekend.

I'll blame it on the I'm blaming it on the prompter. That's Christina. All right. Coming up, Santoli, Santoli, Mike Santoli. It's his last word. Let's do our two minute drill on this Friday earnings edition. A big week ahead for retail, the likes of Home Depot, TJX, Walmart set to report. There's Target, Lowe's. We've got a lot of retailers next week. Neuberger Berman's John San Marco joins us now. He runs the firm's next-generation connected consumer portfolio. It's good to see you. Generally speaking, before we talk those names specifically,

how do you feel coming in relative to consumer strength where we are? Yeah. Yeah. Thanks, Scott. Good to see you again. Yeah. You know, I think retail earnings is going to be is going to be a fireworks show both for for better and and for worse, because on one hand, the consumer is really facing just almost unprecedented distress from from inflation levels, from higher, levels, from suddenly higher borrowing costs. Consumer confidence is incredibly low. And we're getting these job cut headlines, which can't feel good to the consumer. But on the other hand, the consumer's balance sheet is still in really good shape,

and nominal wages keep trudging along. So we think that leaves enough space for some bright spots like luxury and value retail. Who's going to do the best next week of the three that you own, Depot, TJX, or Walmart, and why? Yeah, I think TJX is uniquely well-positioned for this environment where there's just way too much inventory out there. They're one of the few retailers who can actually benefit from that by buying really well and offering their consumers great value. So I put my money on them. What about Depot? I mean, obviously, given all the questions around housing and where it seems to be going from here, which is lower now, housing stocks obviously had a good week and that's been an interesting story in and of itself. But what about Home Depot?

Yeah, you know, for starters, I think home improvement is inherently more resilient than the broader housing complex. So that helps. I think 3Q and 4Q, you know, which we'll hear about both next week, you know, should both be relatively uneventful. The bigger question is, we get into 2023, you know, and beyond, can home improvement keep out running the broader home sector? I think it'll be tougher. I think there'll be some deceleration for sure. But Home Depot is just rich with self-help opportunities, and they've been masterful at managing their cost structure. So that's why it's in our portfolio and a perfect fit for what we're trying to do. Give me 30 seconds on your expectations for Walmart. You know, they're at the crossroads of offering great value and selling essential goods, which,

you know, consumers, whether or not they like to afford it, are going to have to afford it. So, you know, that's a good place to start from. So I think 3Q will be an echo of 2Q, a really healthy grocery business. I expect to see some continued sluggishness on the general merchandise side. All right. Have a good weekend, John. We'll see you soon. That's John San Marco Neuberger Berman joining us there up next. It's Santoli's last word. All right. That's the results of our Twitter question right now. We asked you if you think the lows are in for the year. The majority of you saying yes, 60 percent. Mike Santoli here with his last word. I mean, that kind of week will make people feel that way.

Yes, we're 500 S&P points off the intraday low. I mean, it has been pretty dramatic. It's about 3490 was the intraday low on October 13th. It's happened in a hurry. It's less than a month. I think that the way to characterize the potential for that being significant as a low and for what we saw this week is the way the market reacted to the Pfizer approval of the vaccine. November 9th, 2020, almost exactly two years ago. Nobody thought we were out of the woods.

Nobody thought the economy was in good shape. Nobody really felt as if things were moving in our favor fundamentally or economically. But, you know, the odds move just enough. And you saw the rate of change for the potential for things getting better. You can't really endorse that right now. I mean, we have inflation that's not necessarily on a downtrend. You've got the Fed in a habit of knocking down risk markets when they don't like them getting excited. You know, obviously a great week in the market, but the reality check of what you're seeing at the bottom of your screen here on exactly, you know, the state of where the economy is, where some think it might be going. Our own Alex Sherman reporting what you're seeing here. Disney plans this targeting hiring freeze and and job

cuts. Taking a look at the stock here in extended hours, getting a little bit of a lift. Not so much a surprise there. We've seen stocks and companies that have announced, Mike, layoffs. There was the meta move this week, the 13 percent, the stock popped. But your thoughts here, again, sort of reality check of kind of where the psyche of corporate America is. It is. There has to be a bit of a pretzel logic here because you're not at the end of this process. You're closer to the beginning of the process of rationalizing payrolls. So far, the market likes these announcements. You know, they're trying to look for a profit margin protection going on at these companies in aggregate. Obviously, if it goes too far, that's not good. But in the interim,

when you have a Federal Reserve that says we need to see fewer job openings, we need to see a softer labor market. It's kind of funny. Like, what are we wishing for here? Clearly, you don't want people to lose their jobs, objectively speaking. But we're in a funny spot when it comes to the market, what's already been discounted. And, you know, it reminds me, you know, people keep talking about the 2000, 2002. The market had its massive retrenchment well before the real economy started to soften up very much. So we got less than 30 seconds. Do you feel like we have a pocket here between now and the end of the year?

Some of some ability to do something news wise, catalyst wise. It looks like we're clear. Look, if things get disorderly, even more so in crypto, if you start seeing more shoes drop, you can't be confident that we've already discounted all of it. But yes, there is some room. It's only 2% to 3% up from here for the S&P hits the two-inch-a-day average. That stopped the August rally. Yeah, I feel like we haven't seen the last of the crypto headlines for sure. Good weekend to you. Good weekend to all of you.