Closing Bell - Closing Bell Overtime: Inside Today’s Failed Rally 12/13/22

Episode Date: December 13, 2022

Stocks initially rallied on the CPI report, but quickly reversed course. So, what does this volatile price action mean ahead of tomorrow’s critical Fed meeting and news conference? Solus’ Dan Greenhaus, Virtus’ Joe Terranova and New York Life Investments’ Lauren Goodwin give their expert takes. Plus, CNBC’s Steve Kovach breaks down a late-breaking developing story about Apple’s app store. Plus, a late-day trade alert from Halftime Committee member Steve Weiss. He explains why he’s doubling down on one health care name.

Welcome to Overtime. I'm Scott Wapner. You just heard the bells. We're just getting started. In just a little bit, we'll be joined by Fundstrat's chart expert, Mark Newton, on what stocks are likely to do now, given today's stunning reversal after that CPI. We're also following a late-breaking story on Apple that could have major impact on the company's lucrative app store. You'll want to stay tuned for that. It's good to have everybody with us today. We've got Dan Greenhouse here, Joe Terranova as well. That's for our talk of the tape, what today's price action means for what the Fed might do tomorrow. So what's up with this? Why the fizzle? What's up with the fizzle out today, Joe Terranova?

Well, the fizzle occurs when you have no momentum in the market and you have a lot of volatility. And that's exactly the way you could describe the market here basically over the last several weeks. So today the fizzle intraday was really about a lot of impatience that I think traders had. I think there was a lot of impatience that this morning, because you got a little bit of a cooler reading, in particular for that core X energy services and rents, that you would see the market gather the type of momentum that's been missing. And I think that type of assumption is incorrect without fully understanding what the Federal Reserve is going to tell us in the press conference tomorrow. What do you make of the price action today? It's concerning if you were thinking that there was going to be a rally off of a good CPI? I mean, I would advance two other ideas. The first of which is, of course, we've had a terrific rally into this number. Yeah, no, but you're up 700 points. Yes. And a lot of that was the

algos enthusiastically cheering a better than expected number. I think also I would add that as the day progressed and notes came out from sell side economists, some of which were pouring water on the excitement around this number, making the case that when you, you know, things are certainly better, but not good enough that the Fed's only going to hike by 25 basis points tomorrow, or perhaps suck some of the rate, some of the rate hikes out in the first quarter of next year, and perhaps that puts some of a dampening effect on the market over the course of the day. Do we think, does this do anything to change the Fed's road ahead? Nick Timros, Wall Street Journal.

November, CPI isn't likely to alter the Fed's anticipated 50 basis point hike tomorrow, but two months of moderating price pressures could complicate deliberations over how much more to raise rates early next year and how long to hold them there. So it's likely that it's likely to have some impact, Joe, on the conversation in the room about how far to go and how long to stay at the destination. OK, so a couple of points on that. Number one, I mentioned this about a month ago. The one thing that's been missing from the Federal Reserve conversation is any degree of dissension. And dissension is actually good. I think it's bullish because dissension. I totally agree with you. Dissension actually gives you the signal that you're coming to the end.

And it is, in fact, bullish. So I think you're going to get some dissension and that's going to send a positive signal. As far as today, look, it takes the pressure because we pared back a lot of the gains. It takes the pressure off the chairman in that press conference to ensure that he's overtly hawkish, because I think that's what he needed to do if the S&P is up at 4,100, because we all know he's trying to affect risk assets. I want to go back to the dissension idea, because I've been thinking about it today. Everything to this point has been unanimous, OK? I'm wondering what the reaction in the market would be if there was a dissent or two or three from the vote. That does mean there's now friction in the room. It means there is a two-way conversation in what has been exclusively a one-way conversation.

But also remember that up to this point, everybody universally agreed, more or less, that the Fed was behind the curve, that they'd contributed to this problem to some degree by buying mortgage-backed securities and keeping interest rates lower than they otherwise should have been. So a lot of this, what I've called on the program with you, the easy money's been made, so to speak, by buying mortgage-backed securities and keeping interest rates lower than they otherwise should have been. So a lot of this, what I've called on the program with you, the easy money has been made, so to speak, in economics parlance.

You're now past that point, and you're at a point where there is legitimate debate about how much additional rate hikes are needed in the market. Because there is, as Jeremy Siegel pointed out on your halftime report, again, I watched, everybody should. Appreciate that. There are numerous categories in there that are declining in value, not just moderating an increase, but actually outright falling. And they're peppered throughout the report. And so, again, you're going to enter a period where some. So and what that means thematically to where we are, to the narrative. There's that. OK, to this. Now we're going to move closer to what really is the end. So the great moderation, you know, Steve Leisman knows what I'm talking about. That's the period 1983, 1984, where Chairman Volcker and the Federal Reserve finally stepped back from aggressively raising interest rates. What preceded that pivot was dissension that wasn't present

during, Dan, exactly what you're saying, a period of overwhelming consensus. This is the right monetary policy that we need to administer. So I just think knowing the indicator that you're looking for from the Federal Reserve to know when we're coming to the end is going to be preceded with a debate, a respectful debate in that room and dissension when the statement comes out. Well, maybe he tells you tomorrow. Here's Rick Reeder today, BlackRock. If data such as today's suggests a real trend that the momentum of inflation is lower, we could then see the Fed pause over the next few months at a still restrictive policy rate, but not one that

would put potentially excessive pressure on the economy, particularly the interest sensitive parts of it. That's sort of the point, right? You are going to get a pause at some point. Do you think Powell alludes to it tomorrow? Listen, he might, but we're all sort of dancing around the obvious here, which is they're close to the end. I mean, we are past the peak, obviously, on a year-over-year basis in inflation. We have two consecutive months now of a normal inflation reading, something 0.1, 0.2, 0.3, as opposed to the 0.5, 0.6, 0.7 readings that we have been getting. And if you put that together, you're at a point where you may not have to raise rates all that much, maybe 50 basis points tomorrow and then

maybe one or two more. What does the stock market do if that's if that's keyed in? But that's like what he alludes to is that is as important as what's already been done by the Fed, because that's that's the eternal worry at this point, what they've already done, what the lag effects of it are going to be, slower economy, slower earnings, lower stocks. Yeah, listen, to me and the viewpoint that I've been espousing with you for some time now is there are these lagging effects. And whether you do 25 or 50 or 75 basis points more, you're still not even a year out from the first rate hike. And so to the extent that we believe, and I think it's been proven that monetary policy operates with long and variable legs, by the spring of next year, you'll start seeing just the first effects of the first rate hikes. And so it's going to take some time for this to play out. And so to the extent you think there's a recession, the debate is not

whether there will be or won't be one. I would argue that the debate is whether it happens in the first half or the second half of the year. But to your point about what the market does, we have to move past this conversation about whether to hike 50 or 25 more and start really having a conversation about how long rates are going to stay high. That is much more of a difficult decision for the Federal Reserve going forward than is to hike one or two more times. Sure. But what if inflation, like Dr. Siegel, who you mentioned, thinks is all but over? What if you have data that's good enough that the soft landing conversation is still in the conversation? Maybe stocks are attractive where they are right now. Listen to what he said on the Halftime Report today. We can kick it on the other side. I think the market is undervalued. I think when the Fed gets it and they will get it next year, I think we got a good 10, 15 percent rally going for the stock market. I've

never seen so much bearishness. And we already know that a record number of people are predicting a recession by a great margin. And those same people say, I can't buy stocks when I predict a recession. That excessive bearishness to me means this is a good opportunity for investors. OK, so that's Dr. Jeremy Siegel, Wharton School. What do you think about that? History suggests, OK, you should be bearish because when the Fed does hiking like this, yield curve is massively inverted. You're going to get a recession. It's a matter of when, not if. Maybe this time, I know what you're going to say, but maybe this time is in fact different, as some are suggesting, because of the cushion that you started this whole thing with. Well, I think the concern

really is in January regarding earnings. But are stocks undervalued right here? Well, tell me if a trend actually presents itself. You see, we're getting excited. We're getting potentially overly excited about two inflation reports that suggest a peak in inflation is here. OK, but is a peak enough or do you actually need to see the peak? It's the fact that it's coming down. That's the point is, if you look at rents and things like that, they're actually coming down a lot more than even the data trend suggests. We don't have a trend yet. So the Federal Reserve could signal 50 basis points tomorrow, 25 basis points in January. We're going to stop. We're going to see what happens in 2023. What's a trend? Three reports? What? Well, what happens? What is a trend? I want to know what

is a trend. What happens if they have to raise rates again? What happens if they have to raise rates again? You only know if it's a trend, if the Federal Reserve stops for good and never has to come back and raise rates again, like we had to do in the late 70s and early 80s when inflation appeared to present a peak and then rose once again. So, yes, you need multiple months. You need multiple months during the course of 2023 where inflation recedes. OK, that's probably what you're going to hear tomorrow. The Fed chair or some form or fashion of that. What about what Siegel says, though? Markets undervalued. OK, I think when the Fed gets it and they'll get it next year, we got a good 10 to 15 percent rally going for the stock market. We can just stop right there and discuss that. My thought would be that much like 08 into 09, you would continue declining into the first quarter of the year, maybe the second quarter of the year as the data continued to worsen. I think we might push that out a little bit. If you believe that the recession or a recession should

one occur is going to occur in 2023, I think there's perhaps increasing probabilities that it occurs in the back half of the year. And if that's the case, then the likelihood that equities appreciate in the first half of the year on the idea that everything is okay in the interim... Oh, I keep hearing the opposite, though, from much of Wall Street says the first half's bad,

second half's going to be good. That's right. Much of Wall Street is making that case. But you're making the opposite one. I'm speculating, wondering, debating, suggesting that perhaps if the strong data that we've been seeing in some parts of the economy, particularly the labor market, continues for the immediate future, and I think there is a case to be made that it will, particularly on the consumer side, which still has roughly a trillion dollars

in what we call excess savings, which are being worked off at about $100 billion a month pace, buys you time into the back half of the year, then maybe equities do have room to appreciate in the first part of the year. And then when the data continues to worsen and gets really worse, particularly on the labor market front, the back half of the year becomes a problem. To your point, very quickly, that does stand in stark contrast to what much of Wall Street is saying, but I think it's worth, at this point, at least speculating about it. Let's bring in Lauren Goodwin now of New York Life Investments to add to the conversation. It's good to see you. What do you make of the price action today before we get to

the bigger picture? I think the price action is appropriate, and the inter-day dynamics that we've seen today make a lot of sense to me. This is a good report. It's good news for the economy. It's good news for duration-sensitive assets for now. But the reality, as you've been discussing, is that the Fed is likely to maintain a restrictive stance over the whole course of next year. In fact, I doubt we even see cuts over the course of next year. And that's a challenging environment for duration-sensitive assets, including growth equity in some areas of credit. And so the moderate attitude that we've seen today, I think, is appropriate. So then you're not looking for a year-end rally. I mean, if you think it's appropriate that we went

up 700 plus and gave almost all of it back, then you must not be looking for much between now and the end of the year. Perhaps not. But I think the next couple of months are going to look very similar to the last couple of months, where we are facing a sort of area of transition, a phase of transition in the markets where the narrative, which has been so driven by Fed policy and multiple compression, just the sheer gravitational force to risk assets from interest rates moving higher, we're going to see some relief from that in moments like we are seeing today. Once we get past that story, the dynamic will continue to be that inflation is still too high, rates are too high, and that's going to bring the economy slower. The difference for investment positioning in this economic cycle is that while the economy is moving slower,

while the cycle is turning, you still have high inflation. And so what a recession-resilient asset class looks like is going to be different. What do you make of this idea that if there's dissension tomorrow, that it shows you the degree to where the debate has evolved and that in and of itself suggests that the end is near? I agree with that, that the end suggests that the end is near. I agree with that, that the end of the hiking cycle is near. And I agree with the conversation that you've already been having, that what really matters is how long the Fed stays where it stays. I'm going to be looking for a couple of very specific things out of tomorrow

to determine whether the policy path ahead has shifted as a result of today's November CPI print. The first thing I'm looking at, of course, is the dot plot, but specifically whether the Fed's expectations for the terminal rate in 2023 has moved up by 25 or 50 basis points. Before this inflation print, 50 was very much in play, 25 basis points looking likely, but I think risks are balanced there. The second thing that I'll be looking for is in the statement itself, because the Fed has been saying that it expects continued increases. That word continued is really important. Continued

increases in the policy rate to be appropriate. If they ditch that word, that's a strong dovish signal to me that the end is, in fact, near. Yeah. What do you make of that, Joe? I agree with those comments. And then going back exactly to what Dan say, I couldn't agree more. I think the first half of the year sets up really well. There's this overwhelming pessimism. You're seeing the building of relief in the inflation figures. You're going to see the moderation in inflation. And I think you're going to also see a return of the appetite to invest once again. So, Scott, I think you've got this period where January through the spring markets will be OK. Then ultimately you reach a point. And I don't know, Dan, where the landing point ultimately

is going to be. But I don't know. We go back to two percent inflation. I don't think we're getting there. So if we have to plateau at four, four and a half percent, the Federal Reserve might have to address that at some point. And let's also remember, let me be the first to remind all the viewers at some point in 23, we're going to look into the calendar of 24 and see a contentious election in front of us. through some other things first. Real quick, if I could just tie Lauren's comments to what Joe just said. Tomorrow, if they change that language that Lauren referred to from continued increases to just further increases, and I think Lauren would probably agree with that terminology, that's something that the Fed might use, that would be presumably an impetus for suggesting to the market that rate hikes are indeed coming to an end, whether it's 25 more or not. And that could present a, dare I say,

a multi-month rally in what is, as I've been noting and everyone's been noting, a seasonally strong period for the markets that carries through January. What about the idea, Lauren, that, you know, some are saying that the CPI report today confirms that the Fed is, quote unquote, winning the fight against inflation. Obviously, Powell has talked about doing too much, though in the same breath has suggested doing too little is the bigger risk than doing too much. But you have to believe he also doesn't, as I said on the halftime report today, want to snatch defeat from the jaws of victory if they actually think that they're getting it under control. Yeah, it's a very delicate balance, but one where the Fed has consistently weighed in on the side of doing more rather than less.

And that's, again, why we are seeing economists after just about the economic cycle and just about the idea that the Fed's interest rate increases can bring economic growth and therefore inflation lower. We've also seen some really important structural changes that not only influence these factors, but change the way that we need to think about factors such as inflation. I mean, if you think about just the changes in worker mobility, shifts in the way that we live and work, structural shifts in energy supply and demand, greenflation, these are all factors that may make persistent higher inflation more likely. And so all of the risks from the Fed perspective point towards a more hawkish narrative over a more dovish one. Joe, if we're to believe what you suggest could happen, OK, and the market is set up to have a

good several months ahead of us before, you know, reality, so to speak, sets in, what part of the market has to get us to where you think it can go? What's going to lead and why? So taking your definition of my comments and then adding upon that what I just heard Lauren say, which I completely agree with, I don't know as someone that is taking risk within the market that I could move away from that blue chip strategy. I don't know that I could make a return to the areas of the market where there was emerging growth, whether it's in cloud or semis or the non-profitable tech or consumer discretionary. Scott, I just think I have to stay with my comfort blanket, which is going to be those blue chip stocks, which is going to be

those stocks. What are you talking about? Dow stocks, energy? I mean, industrials. What do you mean? So I want without question, I want the Dow stocks, but I want to expand upon that. I want health care in the portfolio. I want to maintain that overweight positioning. And I've advocated for that throughout the year. I think there's areas of technology with a respect towards valuation where you can be allocated towards right now. But you have to have low beta exposure and you have to have a lower valuation. Yeah, but you've ridiculed those who suggest that the market can go up without mega cap tech. You have. I have. Have you changed that view? Well, there's enough there with Microsoft, okay? There's enough there with Microsoft that gives me comfort in that defensive

positioning and technology. I am concerned about Apple. I've said that. And let's remember something. I have said that the market can recover in the first half of the year, but I don't think the market's going to recover to the degree where some are expecting, where you're saying, okay, we're taking out the highs from January of earlier this year. I think the market could comfortably from this level give you maybe five or 10 percent. But I don't think you get very excited about going beyond there. Lauren, I give you the last word. So what has to work for Joe's scenario to play out correctly?

I happen to agree with Joe's scenario. I think that we see defensiveness, quality as major and important factors in choosing equities in this environment. All the things that we've been pointing to, higher inflation, persistently higher rates. This is not an environment where growth equities as a complex are likely to outperform. Now, value, of course, that quality and defensiveness is really important. It's not just about valuation, but those are the areas that we're looking. I do think, though, that also as the Fed's terminal rate comes into view, it's important not to forget the credit side of the equation, especially in asset classes that have benefited so much fundamentally from government programs over the past couple of

years. So municipal bonds, high yield bonds, we're looking at lower default rates and really impressive yields relative to the past couple of decades. Can't leave fixed income out of the picture in a balanced portfolio. No, I hear you. But quickly on munis, for example, Jeffrey Gundlach, whom I've asked on numerous occasions about munis, and of course, you know, one of the so-called bond kings out there, suggests that those opportunities have passed. They're too expensive. By the way, I'm going to ask him about it again tomorrow when he joins us on Fed Day, as usual, too. But how do you counter that?

They were great, but now they're expensive. Look, expensive, sometimes expensive for a reason. When you're looking at good fundamentals and quality income in a portfolio, especially as we expect economic growth to slow, that can still be a really important part of value generation in a portfolio. And so just as things are sometimes cheap for a reason, I think sometimes they're expensive for a reason. And this is one of those cases. All right. We'll leave it there, Lauren. I appreciate it, guys. Thank you as well. Dan Greenhouse, Joe Terranova. See you again in a little bit. Let's get to our Twitter question of the day. What do stocks do post Fed tomorrow? Do they rally or do they sell off? You can head to at CNBC overtime on Twitter.

Cast your vote. We'll share the results later on in the hour. And sometimes they rally and then they sell off or sometimes they sell off and then they rally. So maybe you're right no matter what you say. We are just getting things started right here in OT. Up next, a technical take on today's turnaround. Fundstrat's Mark Newton. He's breaking down the big about face for stocks, what it could signal about hopes for a year end rally. OT is right back. We're back in overtime. Stocks giving up major gains today after a huge pop this morning. But

today's move didn't surprise our next guest, who says the downtrend for the market remains intact. Joining us now is Mark Newton, Fundstrat Global Head of Technical Strategy. I mean, I know that's the intro that we wrote, but what do you mean it didn't surprise you? You expected up 700 and then finished basically flat up 100? Come on.

Well, there's a lot of things still wrong with this rally, Scott. And one is that we've seen a huge uptick in defensive trading just in the last month. I mean, utilities have outperformed technology by over 500 basis points. So this is not your average December. You know, technology, to its credit, you know, it has rallied about 3% this week, but it's still underperforming and not really moving up that aggressively. And so, you know, a lot of my work shows a stalling out and a mild pullback between

now and likely December expiration. I do think the last seven to 10 days are probably higher in the market to end the year on a good note. But, you know, this isn't going to be your rip roaring rally where everything just takes off. And I think there's one thing for investors to pay attention to. It's the fact that, you know that inflation data came in tame today, but yet look at the 10-year yield. That's up about 10 basis points off the lows. So two-year fell. If anything, we're seeing the start of some steepening now in the yield curve, which I think will be led by the two-year. But anytime we see a big move higher in the long end of the curve, that's typically not a great sign for technology. And I think that could continue to be the case over the next couple of weeks. We could see tech lag as yields start to move higher. I mean, looking at the two-year as

you're talking, because those, you know, there are people like Gundlach, for example, who say that the two-year leads the Fed. I mean, the two-year is at 422. Well, it might be tough to see the two-year get down meaningfully under Fed funds. I mean, my thinking is it can get to 4%. But the 10-year, I expect to stabilize and actually rally a little bit in terms of yield. So, you know, if anything, we see a bounce in 10s and 30s, while two-year, you know, we'll see a little bit of a steepening. Tough to know. In general, inflation continues to come down. And that's what, you know, our own Tom Lee has been talking about for quite some time. So I know you'll have the chance to talk to him tomorrow. But look, markets are at

a critical make or break here on the upside. We've seen a good rally in a lot of different sectors, industrials, health care, discretionary, financials. It just hasn't really been in technology. That's really a key piece of the puzzle with Apple being 7 percent of the S&P and it's been range bound since May. I know, but couldn't you make a counter case that it's actually healthy, that it's in other areas of the market, particularly more cyclical areas than mega cap tech? I do think that's one thing the bulls have going for them heading into next year. We have seen the rest of the market rebound pretty strongly. I would also mention, you know, the majority

of institutions I speak to remain on the sidelines. So everybody's got this forecast that we're going to have a weak first half and then rally. It makes me, you know, really hard to think the market's going to have a huge decline if everybody's already on that side of the boat and thinks that's going to happen. So, you know, we'll wait and see. You know, I am thinking that upside is going to be tough from here in the short run, but I'm not convinced that we have to have a huge bear market further into next year if that's really what everybody else is thinking. But you almost paint a picture where tomorrow doesn't matter, that, you know, stocks are not going to rally for all the other reasons that you suggested, no matter what the Fed chair says, barring some incredible shocker that's,

you know, unbelievably dovish. As you know, Scott, you know, I don't look at fundamentals or macro to make decisions. And so a lot of this is based on momentum and breadth, having rolled over an uptick in defensive trading technology, just not able to rally. And a lot of the cycle is starting to roll over. DeMarc exhaustion, for those who study that kind of thing, is going to be present within the next couple of days. So there are some reasons to think that this December is going to be different than your normal December. I'm very willing to participate if the market rips up above 42.50, because I know people are going to be caught flat footed and they'll need to catch up. But I just don't want to take a lot

of risk right here ahead of the Fed. And I think today's reversal was pretty important. And it's important for investors to really concentrate on what yields are doing on the long end of the curve. All right. I guess that's why you guys are the technicians. You take the emotion out of it, if you will, and the fundamentals, too. We'll see you soon. That's Mark Newton. All right. You as well. Mark Newton of Fundstrat there.

Up next, we're following a late-breaking story on Apple. Big changes could be coming to the company's money-making app store. We've got those details next. And later, we have a late day trade alert. One halftime committee member doubling down on the best performing stock in the market today. We're going to tell you about it. Overtime is right back. It's time for a CNBC News update with Bertha Coombs. Hi, Bertha. Hey, Scott. Here's what's happening at this hour. President Biden has signed the Respect for Marriage Act into law, giving federal protection to same-sex and interracial marriages. Biden calls it the culmination of a long journey to

protect marriage for all Americans. Thousands of people were invited to the bipartisan event, which included musical performances by Cyndi Lauper and Sam Smith. Multiple reports say the U.S. is getting ready to send a Patriot anti-missile system to Ukraine. Ukraine has been urging Western countries to provide more advanced weapons to stop Russian airstrikes. The Kremlin has warned against sending Patriot missiles to Ukraine and is likely to view the move as an escalation. Denmark's largest bank, Dansk Bank, has pleaded guilty to money laundering and agreed to pay $2 billion in a settlement with the U.S. At issue were billions of dollars in illicit payments from high-risk clients in Russia

and elsewhere. And scientists say Hawaii's Mauna Loa has stopped erupting. The volcano has been spewing lava for more than two weeks, its first eruption in 38 years. The picture's still spectacular, though, Scott. Yeah, no doubt. All right, Bertha, thank you. That's Bertha Coombs. We're following a developing story now on Apple.

Broke late in the day today. The company is reportedly ready to allow outside app stores as a major overhaul. Let's get Steve Kovach with more on these details. Give us the lowdown here. What's going on? Yeah, Scott. So this is about the Digital Markets Act, or DMA. It's a law in the EU that just went into effect a few weeks ago, and it's targeting big tech companies, especially Apple. And in Apple's case specifically, they're going to be required to allow third-party app stores, meaning, in theory, iPhone apps in Europe will be able to dodge those fees that we always hear developers complaining about when they make their apps. But look, the EU is not going to start enforcing the

DMA until the spring of 2024. And this report we're talking about from Bloomberg shows that Apple is building the system now in case they have to use it later. And this report we're talking about from Bloomberg shows that Apple is building the system now in case they have to use it later. And look, Scott, you can bet Apple is going to do everything they can to water down the effects of the DMA between now and then. But if it happens and they have to comply in full to it, gaming companies are actually going to be the big winners here. Companies like Microsoft and Epic Games would love to have their own app stores on the iPhone. Gaming is the most lucrative part of the app store, Scott. Does it mean anything for what, I mean, the biggest controversy right now, or certainly one of them around Apple, is the very

issue here in the United States, right? The Spotify fighting with them and Riot and others, you know, making noise. Does this have any bearing on that conversation? Only in the EU, Scott. So this would make the Bumbles and Spotify's and match groups of the world very happy to see this actually go into effect in the EU, because in theory, if they don't like Apple's App Store rules, they can go to another third party App Store that could theoretically offer them a more favorable deal. But again, according to this one report, Scott, this was most interesting to me. It looks like they're only developing this for the EU, meaning if this all goes through and all goes according to the EU's plan, there'll be a different version of iOS in the EU versus what we use here in the United States. And I read into that as Apple is willing to fight this country by

country in order to protect their profits in the app store. Yeah, really interesting. I think they've kind of made the case, or at least they've dug into the point that they seem willing to do that. Steve, thank you for the latest there. That's Steve Kovac, that developing story on Apple here in Overtime. Up next, we're drilling down on the energy trade. Is it too late to get in? We'll debate that in today's Halftime Overtime next. In today's Halftime overtime, a top trade in the energy sector. One halftime viewer buying Occidental Petroleum today after those shares have more than doubled this year. Hightower's Stephanie Link also owns that stock and sees even more upside ahead. They have very good assets, very strong free cash flow, 3.1 billion in the most recent quarter. They're paying down debt.

I think they're going to increase the dividend. It trades at six times earnings. And you have Warren Buffett in there as well, owning a big chunk of it. So I would stick with this one. All right, that's Stephanie Lincoln. Despite oil prices turning flat for the year, the outlook for the energy complex, too good to resist. That, according to famed commodities trader Mark Fisher. Here's what he said to us

yesterday in ot i hate picking bottoms because you know picking bombs or picking tops is usually where you get yourself into trouble but today was too irresistible because i think the setup was too good so we kind of bought everything today on the clothes we bought crude he knew all our bob i'm sure we bought some natural gas. We bought everything today. Just again, you know, typically you go broke buying bottoms and trying to pick a bottom. But today the setup was just too good for us. All right. That was Mark Fisher, Joe Terranova, back here on set. Too good to pass up. That's one of the keys. Our viewers, we said, bought Oxy. People are still looking for opportunity in that space. Should they be? Yes, they should be.

The only reason that you would not be is if you believe that this is once again another boom-bust cycle for commodities, like we've seen in prior cycles. But based on all of the supply trends, based on the demand trends, based on the possibility that China will see a reopening in 2023. We understand that that imbalance still dictates being invested in energy. And the only area, the only economic effect, the only economic reasoning not to be invested in energy is the hard landing thesis. What's better to invest in in energy now? Oil related

stocks, not gas related stocks, something else altogether. OK, so understand with natural gas, there's a high degree of volatility and there's also the seasonal effect. So weather's your friend right now. It is. But weather can also punish you greatly tomorrow. Let's understand that I've seen that I've seen the warm weather descend upon the lower 48 in the middle of January and natural gas is down 12 percent. So I like the low beta exposure. The way that I'm personally playing it is through EOG. You're seeing consistent revenue growth there on the oil side. I support Stephanie with her investment in Oxy. That's a good one. It's got the stamp of approval.

From Warren Buffett. From Warren Buffett. It also has a 6% short interest. And something else to keep in mind with energy and the pricing of oil, it's pretty compelling to understand how short, yes, short, the overall managed futures market is for the price of oil. It's got the 200-day moving average. We talk about it all the time on the network. Some people think it doesn't work. Other people think it does work. But it's relevant because everyone's looking at it. Well, the 200-day moving average in oil, it's $96. The price of oil right now is $75. The 50-day is $83. The 100-day is 83. The 100-day is 86. So you have a lot of the CTAs that are short oil.

Beyond DOG, like PXD, obviously Chevron and ExxonMobil, on a lower dollar, they're going to continue to work because of their limited U.S. exposure. High short interest, Diamondback, that's a 6%. High short interest stock. And then Valero, that's a name that I own as a refiner. As the price of oil goes lower, that does benefit refiners. All right, Joe, thank you. That's Joe Terranova. We're tracking some big stock moves in overtime. Christina Partsinevolo is standing by with that.

Hi, Christina. Hi, Scott. Well, one company is warning about a tight labor market for 2023, and we've got more health care breakthroughs, this time with Amgen. All of those details after this short break. Tracking the biggest movers now in overtime, Christina Partsenevelos is here with that.

Hi, Christina. Hi, Scott. Well, buildings facility manager ABM posting revenue of about $2 billion. That's a slight beat, but it's the full year earnings per share guidance coming in slightly lighter, and that's adding to the 2% stock sell-off we're seeing in the OT right now. ABM expects, quote, relatively healthy demand in 2023, but warned of a continued tight labor market. Although it was one of the weaker stocks on the Dow today, Amgen making

some news in the overtime, according to the Dow Jones, with results from a phase three cancer trial with a drug called Blincyto. After 3.5 years, 830, or I should say 83% of patients on Blincyto plus chemotherapy were alive versus 65% of patients just on chemotherapy alone. There was about almost 500 patients that participated in this trial, but you can see the stock, it's moving ever so slightly to the upside. There was about almost 500 patients that participated in this trial, but you can see the stock, it's moving ever so slightly to the upside. It was unchanged before, but we got some movement now. Let's talk about real estate investment trust, Mid American Apartment Communities, and that company announcing a 12% increase to its quarterly common dividend. Shareholders can expect a payout of $1.40 on January 31st. The trust invests in

apartments across the Southeast as well as the southwest of the United States. The stock, though, is down nearly 28% this year alone. Scott? All right. Christina, thank you. Christina Partsinevola still ahead. One halftime trader just made a late-day move in the healthcare space. We'll have more on that coming up when Overtime comes back.

We're back with our Overtime Trade Alert. Steve Weiss of Short Hills Capital making a late-day move today in his portfolio. Joins us now on the news line. We did mention what you did earlier today on the Halftime Report, Steve, but we didn't get a chance to talk to you. The headline is you bought more of what was the best-performing stock in the market today. I did. This morning before it opened, the stock was trading at about $14, and I'd gotten alerts.

And then Stefan Boncel sent me an email with the release that I had seen already, and it's a game-changer. Look, I've always said this company should be regarded as a technology platform, not a life science company. It will be the most valuable life science company in the world when you're going in that direction. But they've got a technology, mRNA, that's adaptable to virtually any therapeutic vaccine. They've got 50 in their platform, up from about 12 or so when I originally invested. And the heads up on this was when Merck agreed to make the $250 million milestone payment last month. They'd seen the data. There's so much more to come. In the headlines constantly, every news show, they're talking about RSV and how that's just spreading like wildfire, respiratory disease.

They have a vaccine for that in later stages. So you'll see so much more to come. And again, this is a technology company. It should be followed by in partnership with a technology analyst and with a biotech analyst, because that's the only way you'll really understand it. Part of the problem with that, though, is that if you want it to be considered a technology company, you're going to have to deal with the volatility that we've already witnessed in this stock, for example, which has been treated like a high growth, high valuation tech company because it was a year ago trading at 321 and here

we are as at a low of 115 now of course it's had a nice rebound here but you get where i'm going it's all the kind of risk you're going to need to uh accept if you will yeah and i think part of that risk has been put to bed because the big debate was that saying this is just a COVID company, just a COVID vaccine company. And once that goes away and we've seen demand for vaccines is going away, then what's going to be left? Well, here's what's left, an amazing pipeline, nearly 50 therapeutics and vaccines. And despite its $75 billion mark cap, Twenty five billion of that is in cash that they can use for R&D and they are or acquiring other, you know, perhaps therapeutics, which they don't need to do. So they're just in the best possible position you can be. So I actually think the volatility

will die down somewhat because now you've proved at the platform yet again. And this isn't the first proof of it. Yeah. All right. I appreciate the call in, Steve. Thank you. That's Steve Weiss, short of his capital buying more shares of Moderna. It's the last call to weigh in on our Twitter question. We want to know what will stocks do tomorrow post Fed? Will they rally or will they sell off? You can head to at CNBC overtime to vote. We'll bring you the results. Plus, Santoli's last word is next. We have some breaking news we want to share with you now as we show you the courthouse outside of it in Nassau, Bahamas, where Sam Bankman-Fried, the disgraced FTX founder, has been for the majority of the day. We understand a judge in that courthouse has denied his application for bail, declaring him too much of a flight risk.

Charged today, of course, with multiple criminal counts by the SEC, the CFTC. Question now is whether he's going to try and fight extradition to the U.S. There was a story late today that suggested he may, in fact, do that, as a treaty does exist between the Bahamas and the United States. So we're going to keep watching that courthouse. If we do see Bankman-Fried emerge from it, we're going to go back there and show you that shot. Not exactly sure when that might happen,

but we'll certainly bring it to you if it does. But that is the very latest. Let's do the results now of our Twitter question. We asked, what do stocks do post-Fed tomorrow? This one is neck and neck. About 51% of you say sell off, 49 percent say rally, and both of you could be right at some point after the Fed decision. So we'll see when I see you all tomorrow in overtime. Before we do that, though, Mike Santoli's here for his last

word. Wow, this was quite a session. I don't know what it says, if anything, about where we go tomorrow. Well, we can look to history, Scott, a little bit and say, all right, what has typically happened in the rare instances where the S&P was up more than 2 percent in the morning and then closed with a lower than 1 percent gain? And the answer is it's not really decisive. It's a lot of those days in the agitated phase around low or in the in the course of a of a late bear market like in 2000, in 2002, in 2008, in 2015. But I think what it mostly tells me is this was a very hedged up market coming into today, perhaps hedged in both directions, but mostly to the downside. You had some kind of spring-loaded response.

It is not only a CPI week, but a Fed week and an options expiration week. And it's December. And people just want this year kind of to be in the books. So you have a lot of twitchy, illiquid action. All that being said, I do think the market is showing signs of placing the inflation scare and even the Fed tightening campaign in the kind of we've been there column. OK, in other words, that's yesterday's prevailing threat and pressure point. And now it's on to what does it mean for the economy next year? How much damage has been done? Because, by the way, inflation coming down the way it has, it's not because the Fed jacked rates to three

and three quarters. The Fed was just jacking rates alongside it. And we know that things don't act in real time. So, you know, perhaps some of the effects are to come. Maybe the market is starting to listen to people again, like, you know, Mike Wilson, who when you were just, you know, saying the words you were, I was thinking of his note of a couple of days ago saying that focusing on the Fed and inflation

is yesterday's news, that it's about the effects to this point. It's about earnings taking a nosedive into the new year. It's about the economy being weak and then stocks follow. He says it's about earnings taking a nosedive. I think it's about what earnings actually do. I think there's a very, very tight consensus building. I've been talking about people essentially over extrapolating into a very near term recession and earnings crunch. Maybe we get that. But I think that there's a leap to get there because the earnings seasons of the past two quarters have

not been as tough as we expected. And you do have good nominal growth. You know, Mike was saying, Mike Wilson was saying 85 percent of the S&P pencils in the forecast for 10 percent profits above 2019 peaks. Right. So next year above 2019. Why not? The economy, the nominal GDP is 15% higher right now than it was in 2019. So I think that there's a good debate about whether the fundamentals

are going to have to soften up really quickly to redeem all these calls for a week early 2023. Going to see you tomorrow. Can't wait. That's Mike Santoli at the Stock Exchange. I'll see all of you tomorrow as well for Fed Day. Jeffrey Gundlach is back with us yet again. His first reaction to the decision, what the chair says at the news conference as well. I'll see you then. Have a great night.