Closing Bell - Closing Bell Overtime: Jim Cramer on the market 5/20/22

Episode Date: May 20, 2022

The Dow posts its eighth-straight week of declines for the first time since 1923. Jim Cramer weighs in on the volatile week for stocks. Plus, Mark Newton from Fundstrat Global Advisors outlines key metrics to watch when looking for a market bottom. And, Dan Ives from Wedbush explains why Apple is still his top stock pick.

Welcome to Overtime. Thanks, Sarah. I'm Scott Walker. It's good to have everybody with us today. You just heard the bells. We are just getting started. In just a little bit, I'll speak with Wedbush analyst Dan Ives on when the pain in Apple and Tesla is likely to subside. We do begin, though, with our talk of the tape. The body blow this market keeps taking and when it might end. Maybe it got off the mat a little bit today. Let's ask Mad Money's Jim Cramer. He is with me right now. Jim, it's always good to have you. I feel like the market did a little rope-a-dope at the end here.

What's this about? It didn't flow like a butterfly sting like a B market. I have to tell you, this is an otherworldly market. And you know what, Scott? It actually would have been better had it been down. Because I think people just think that the phoniness of the market, the inability of the market to make any sense versus what's going on in the economy, that it has just made it so that people say, you know what, I don't want to be in it.

And that is really a shame. But that's because we have not choked off inflation. And until we win some battles in inflation, you're going to continue to see people get attracted by a market that's down. And expiration can be big. But there's really there's like very few players because people just hate this market. And I think that's a shame, Scott, because you and I both know that there are a lot of companies that are selling at four or five, six, seven times earnings whose earnings will not be cut in half. And so, you know, you have to look for bargains. But when you look for them, you immediately get crushed. And then at the end of the day, you feel great. But most people aren't even sticking around anymore. Yeah. Does this give you any indication, Jim, gut feel, whatever, from the many decades you've looked at these markets?

What this is, is this anything more than just expiration of puts? Market, you know, gets a nice bump into the close. Is it anything to build on in your mind about finding a real bottom? Well, look, I'm using some of the work of the great market historian Larry Williams tonight. And there are these 75 day cycles. And this was supposed to be the actual bottom of this cycle, of the 75 day cycle. The advance decline this week was actually much better than the stock market was. And that has historically been an amazing thing to see. Many more advances and declines, yet the market was down. And I also was actually quite heartened about the fact that

there are sectors of this market that are okay. They're okay. So you can be, not high, but actually be in defense. You can actually be in healthcare. You can actually be in domestics. And I think that today was one of those days where you actually saw that people were saying, you know what, enough of the selling in the software stocks. Let's just go in and start buying some of them. I know you have Dan Ives later on the show. There are stocks that are so that are hurting people so badly, like Apple, that people just want to turn you and I off. And I think that's a shame because in the end, maybe Apple goes down another 15, but I think it could be up another 100 over the next five years. Wow. Wow. I really do. Over five years, though. Remember, that's not that great a return.

But I don't know if you caught this discussion today between Sarah and John Duskin from Masellum on Kohl's. At one point she said, why don't you sell it? And that was a great interchange, because that's how I think people feel about a lot of stocks. It's like, look at me. I'm not happy with it. Just sell it.

And it used to be the old days, if you're not happy with it, let's go in there and get them. And you know that because you're from that world. You know people. But the question that she asked him, which is why don't you just throw in the towel, Scott, I bet you that a lot of the guys that you talk to who are really aggressive feel like just saying, you know what, Dad, just throw in the towel.

Let me ask you this. I was going to start out by asking you, you know, when you think this will all end. And maybe the better question now is, Jim, what will end it? What will cause an end to the selling? No one can pick exactly when it's going to happen, but what's it's good. What is it going to be? It's going to be J-PAL saying, forget that I ever said 50 this, 50 that. The data is just horrible. It's red hot. I'm going to stop it. I am not. I helped this economy when it was down on its on its heels because of COVID.

And now it's back. The economy is very strong. It's too hot. And I am not going to go by orthodoxy. Right now, 100 basis points, and then if it doesn't cool, we're going to do another 100. And that's how you get this done. That's what has to happen. J-PAL has to stop it with the 50-50 night.

No more Mr. Nice Guy J-PAL. He's got to step up and stop allowing the price increases. You know, it's a guy like Bullard, Jim, who never pulls his punches, who sometimes speaks what some would call out of turn. He speaks for himself. He doesn't speak for the committee. He spoke a little while ago and he said 50 basis points, a good plan for now. No stagflation, no recession in 22. Doesn't see it in 23 either. The economy's strong. Growth is faster in the second half. And he said their guidance is doing its job. What do you make of that?

You know, look, I like Bullard. I want the other Bullard, the Bullard from a few months ago, where he basically said, listen, we have to do what's necessary. Because as much as I like that guy, and we've had our disagreements, the numbers that we saw this week out of the retailers, they were the greatest wake-up call that anybody could have. The retailers, the amount of pain they took. I mean, these are really good companies. The amount of inflation they saw, you know, Scott, it's just too great. And we can't have it so that I can walk in, I'm a supplier to you at the restaurant, and the guy, listen, you know,

we were picking up your trash. Last year it was X. Now it's twice X. And take it or leave it. Everyone is doing twice X. We have to stop it. I think that the people who work at the Fed have not been to the supermarket because if they've been to the supermarket, it's a horror show. It's just a horror show. I mean, it's just I mean, look, I'm lucky enough. You're looking.

We've done well in life. But the average person in the supermarket is saying, well, I cannot afford that anymore. And that's got to stop. I just wonder, you know, if a guy like Bullard, who would be the typical person to come out and say, I agree with Kramer, we should do 75 or we should do 100, is now wondering what more aggressive hikes would mean, not only for the economy, given the week we just had with the target we just heard from. And maybe, Jim, too, the stock market is taking a toll too. And I want to read you a quote today from Wells Fargo. I want you to react to this, okay?

Well, as of December 31st of... I'll react to it. It's killing me. Yeah. As of December 31st of 21, equities accounted for 24% of U.S. household assets, up from 14% just one decade earlier. Therefore, a sustained stock market slump likely will breed into consumer the spending more deeply than in the past. It is not clear how well officials appreciate this. But maybe they are starting to appreciate that. I don't know. That would be great.

It's just that I need something other than chicken wings that are lower in price than they were six months ago. Chicken wings are. And that's great. So, like, we can have them, we'll let them eat chicken kind of thing. But other than chicken wings, I can't find anything that's lower. The stock market and chicken wings. If that is the economy, if that's the economy, then we're fine. But it isn't the economy. Scott, there's got to be some things going down in price.

And nothing's going down in price other than these, other than what is on your screen. And I just think that we haven't won. We have not won the battle. It's just that the economy switch. People are traveling more than. But you got to people eat food. They go to the supermarket and it's too expensive. And you can say that's not Jay Powell's fault. I don't care if you slow this economy down so it can catch its breath. We would have some price decreases. And I think that's what the American people need more than stock price decreases.

It's not over. I mean, it's like Walmart was a gut punch and then Target was a haymaker. And that makes me think of what Costco may deliver next week. Because this feels like the week that changed a lot. Costco stock is vastly underperformed. It's been a terrible stock this year. It does have a club model and it does have the lowest prices. I think the Costco won't be as shockingly bad as people realize. But when I look at what happened today and I just say that we're going to lose more people today than we typically will even on a given day in the stock market, because now people

say, well, wait a second, the 330 was bad30 was bad and $4.00 is good, that's not a repository of my wealth. I want my wealth somewhere else. If it could lose that much and gain that much in the blink of an eye, that's how we have that's a bear market activity, and I think they'd rather take their money out. You and I both know that there are so many stocks that sell at four, five, six times earnings. You know, Williams-Snowden report says they're selling at five times earnings. They used to sell at 14 times earnings.

But that's because people think the earnings are going to be cut in half, and it's really at 10 times earnings. I don't know, Scott. It is a discouraging time. And what I am hoping is that the work of Larry Williams, which is very contrary, which says that this was the bottom today, will be true. But I do think that if J-PAL just did one shock to the system and said, listen, I'm not done, guys. That was the first. Stop it with the price increases or you're going to get another. I think we could change the psychology of this country. But right now, if you are a salesperson, you're going in

to your accounts and you're saying, here's the new priceless. And the priceless is 30% higher. And it's just not right. And it's become ingrained in the system. And we've got to stop it. We have to. And you think, let's just for argument's sake, Jim, say that there was an intermeeting cut, which got you to your 50. I cut, which got you to your 50. It was like, I mean, it got you to your 100. If it was 50, if it was 50 and then they did 50 at the June meeting, what would the market do? It'd go up because it would show you that the

long-dated assets that many stocks are, that their value would be preserved. Right now, inflation is going to make it so that if you have a stock where the company is doing really, really well in terms of sales, but it's not making any money, people just throw that company away. And a company like Palo Alto, which had 40% order growth, that stock would be up 100. And I don't think that's so bad. That company is doing much better than anyone thought. We need the rate hikes now increase the value of your stocks. They increase the value. That's what has to happen.

I want to ask you about a specific stock before I let you run and get ready for MAD. No, I've got all the time in the world, man. I'm enjoying it. I love you, and I love your show. And your show is like great people thinking about what to do. And you've just had some really terrific guests this week. I've been loving it. Appreciate it very much.

Of course. You tweeted earlier, a hot money fleeing Deere might be a good buy at the end of the day. It's a Stephanie Link stock. She bought some more on the dip that we got today. It's down 14%. Is it emblematic of anything in the way you're looking at the market overall, Jim? Yes. Okay, so if anyone thinks that John Deere won't have unbelievable orders, given the fact that Ukraine has just the Russians have systematically destroyed all the farm equipment in Ukraine,

they're targeting it, given the fact that that's 13 percent of the calories, given the fact that we're going to have to produce more food everywhere else, given the fact that there are 250 million people on the verge of famine, do we really think that the number one farm equipment company in the world is going to have a bad 2023? Really? Or Agco, which sells at 10 times earnings, which has 54% of its business in Europe, they're going to have a bad 2023? But to get to 2023 is impossible. It's like last night, Applied Materials. They said they're going to have a great 2023, but the next month's bad. Everyone

sold it. We are so afraid of the next six weeks to three months that we are throwing away companies that are going to have unbelievable 2023s. Because 2023 is too far away. It's May. But I think Deere is going to have an unbelievable next year. It's just that it's not going to have an unbelievable next week. And that's enough to throw a stock away. Yeah, that's the kind of market it is. Watch Agco. Agco buys the stock back.

Agco is much—the tariffs on Deere in Europe are really horrible. So I tried to buy a Deere back over there. It's like, forget it. But Agco has much better pricing, and that may be a cheaper way to play. Jim, I can't thank you enough. I'm going to run. No, that's it. I've got to get to a bunch of stuff.

You don't want me to ask you. You can ask me about Kohl's and Masellum versus Zahn versus Sarah. Duskin versus Eisen. You brought up Duskin. You brought up Duskin and what's going on with Kohl's. Have a great one, buddy. You too, my man. That battle's not going anywhere anytime soon.

And we'll, of course, see Jim tonight on Mad Money. He has the CEO of Dominion Energy. Don't miss that, especially given what's going on in the patch these days. Six o'clock Eastern time. That's where you catch Jim. It's a CEO exclusive as well. And be sure to sign up for Kramer's Investing Club. Go to CNBC.com slash investing club. You can use the QR code on your screen right there. Make it easier for you to either way you get Jim, which is the best. All right. Let's get to our Twitter question of the day we want to know can the market

handle a one hundred basis point hike from the Fed. You can cast your vote at CNBC overtime on Twitter we'll bring you the results. At the end of the show it's a simple yes or no question maybe not a simple answer for the stock market.

But nonetheless we want to hear from you and up next star analyst Dan Ives joins us with his number one pick. In the beaten down tech space. Why he thinks this is the key stock to own right now to ride out this storm. He makes his case after the break. We're back in two. Quite a finish here on Wall Street. Stocks rallying into the close.

I haven't said that all that often. Here to break down the latest in the moves today is Fundstrat's Mark Newton. Mark, it's good to have you back. And I know you were just with us the other day. The reason I'm having you on right now is because of a note you put out, which says, quote, I'm expecting a full retest of last week's 38.58 low. This might be undercut briefly, but I'm not expecting a pullback under 3800 just yet, and prices likely stabilize into next week. We got down as low as $3,810. We went into official bear market territory on the S&P 500 before rallying out of that at the close to finish at $3,901. So it's an amazing call that you had. Now what? Well, look, Scott, I mean, none of us should be too short-sighted that we're looking at hourly or ranges of a few minutes in time.

I mean, it obviously is going to take a little bit more to show some evidence of confirmation that we put in a low. There's probably five things that I looked at coming into the last couple of days that I thought were important as to why stocks might be able to bottom in the short run. Part of that had to do with just Fibonacci retracement of the entire move up since March of 2020. And so we hit my official target. My base case target for this year was 3815 on the S&P that I wrote back on January the 20th. And I told clients about in our webinar. The second was that sentiment has started to reach levels that I thought was actually sort of fearful. We saw evidence of the trend, in other words, advanced decline divided by advancing volume divided by declining volume. Long story short,

huge amounts of downside volume over the last few days, which I thought was unusual and different than what we've seen in recent weeks. We're also seeing momentum divergence, positive divergence. In other words, prices move lower, momentum held higher. Finally, and probably most important, technology has started to actually do better as rates have rolled over. And that's an important gauge. Obviously, tech being 28% of the market. So stocks, you know, stock indices were down at key levels. Yes, it is an option expiration day.

Oftentimes, you can see violent swings. But, you know, I'm thinking that we likely are going to stabilize and have a little bit of a bounce. And we'll see to what extent we can rally. You know, I know I said eighth inning before. I'm not willing to say this is the stock market low. A lot of my projections called for a bounce and then a pullback into June and or July. It would line up with, you know, 90-year cycles, 60-year cycles. We've seen a lot of bottoming during midterm election years and particularly looking back 20, 60, 90 in June, July period. So that more lines

up with a longer-term bottom. But short-term, the conditions are right to see some relief, I think, from the selling that we've seen. Is that is that what we should think about heading into next week, the possibility, given all that you said, of at least a short term bottom? I think that's correct. I think that, you know, oftentimes when I look at evidence of overbalance of selling on the downside, when markets have started to get near oversold levels. You know, sentiment had a real sea change. And everything the last couple of days, real weakness this week out of consumer and a little bit better stabilization of technology. So a little bit of sector rotation. And, you know, I just think that we're close in the short run.

I appreciate you coming on on a moment's notice. I know we called you late, and I really appreciate it. Mark Newton, Funstrat, we'll talk to you again soon. Have a great weekend. Thank you. You as well. Important to hear from you today. NASDAQ 100 has gotten hammered this week.

Apple and Tesla among the biggest drags. Our next guest covers both companies for Wedbush. He's Dan Ives, the star analyst there. He's back with us at Post 9. I fully expect you to show up here and pound the table on Apple and tell me all the reasons why it's great and everybody should buy it. And right now, the market doesn't necessarily care about all those reasons. So why should we? Look, I mean, we've done checks over the last week and we are ready to cut numbers.

If we thought coming out of the supply chain, we saw that zero COVID really having a massive negative impact. Instead, it's the opposite. I actually think right now tracking slightly ahead. I think from a demand perspective, what we're seeing on services, what we're seeing on iPhones, much better than expectations. And it comes down to streets baking in, you're going to see numbers cut. We think the opposite. That's why I know when we look at Apple here, I view it as a table pounder risk reward. And I think based on checks, further bullish based on this name. I mean, you come on and I know you always criticize what you call the haters, right? When people try and come out and talk negatively about the stock. But the stock does seem to have an issue lately that

all of those fundamentals are being ignored. Tell me why there's no reason that the stock could go from 137, where it is right now, down to, say, 125. Why couldn't it go there if market sentiment remains as uneven, as unsettled as it currently is? Look, I'm not saying that we can't go. But my fundamental issue is the services business. That's the game changer. That's why I believe, ultimately, we look out six, nine months from now, 12. We're going to have a stock with a two in front of it. In other words, I believe services is the key change in Apple. And the other thing, the iPhone demand story, you got 25% that have still not upgraded their iPhone in three and a half years.

That's the install-based story. And like we said, right now, many yelling fire in a crowd theater. We did checks, ready to cut numbers. Instead, it's actually maybe even slightly better. crowd theater. We did checks ready to cut numbers. Instead, it's actually maybe even slightly better. All right, so let's pivot to Tesla. A new nine-month low for that stock, which talk about, you know, getting beaten up lately. It's an obvious understatement.

Has your view on Tesla changed in any way? There are some who suggest that this is the last of the so-called meme stocks. If you want to put this in that basket, that is rolling over right now as we speak. Yeah, look, we cut our price target this week from $1,400 to $1,000, still bullish, you know, in terms of the long-term story. That's a big cut. But it was a cut because, look, fundamentally, based on our checks and what we're doing in Asia, in terms of China, I think it's going to be a delivery miss. We want to impact in terms of what that's going to be in the quarter. Still bullish on the longer term story and test, but let's just be clear. The Twitter circus show, what we've seen coming out of Musk combined with what we see, especially in the zero COVID in China, can't wear the rose card glasses.

We had to cut the price target. And that was really where we came out. You've said before that Musk accounts for what, like this drama accounts for like a hundred bucks, something like that. Is that right? I think it's increasing in terms of what that overhang has become because of the worries that if Tesla stock keeps going down, what that can mean in terms of a margin call, does he have to ultimately put up more stock? That's why this circus show has basically turned into a category five hurricane. How much of your price target cut was due to concerns you have about China and then how much legitimately were due to this ongoing soap opera with Musk? All because of China. When we actually look at the Musk situation, I still think that, you know, a lot of that started to get baked into

the name. But as we see today, it starts to cascade. And at the end of the day, you know, it's been a black eye for Musk. And at a time you need him to navigate the storm, you want to see him on Twitter, just focused on Twitter rather than on Tesla in terms of what we see in the supply chain. So playing off of both of these stocks, which have huge weightings in, like, say, the NAS 100, for example, there are some who say that that one of the worrying signs still in the stock market is that people are still too enamored with tech. These stocks went way up too much. Their valuations increased on Fed liquidity. A lot of that's coming out of the system now. And until investors break the love affair they have with some of the names like this, the market overall can't get real. Sure. And totally get the argument. But I just think when we look at the transformational growth in tech, that's not stopping in terms of cloud cybersecurity.

Obviously, names like Palo Alto we saw last night, names that are holding up. I believe the amount of tech spending over the next four to five years will actually be more than what we've seen over the last 15. So it speaks to my view from a multiple perspective. You don't just throw the towel in on these names because what we're seeing on fundamentals play out. And that's going to be the debate, as we saw today, front and center. Now, you mentioned Palo Alto, which was your last, you know, again, these are your words, the table pounders like Palo Alto finished almost up 10 percent. Is this still the best stock in that group, which is a favored group? And I'm not shocked by any stretch that this stock did well because the sector is prime, prime to be where people want to be.

It's a defensive and offensive stock. What they showed last night, that was just, you know, almost a phenomenal quarter that I think no one was even expecting. God, and cybersecurity holding up extremely well. You look at names like Zscaler, Fortinet, among others, as well as Palo Alto. And I just think right now, in this storm, that's a sector that is holding up. And a lot of these stocks have just continued to get thrown out. And I also believe we will see— Why did you cut the price target there, though? You cut it to 580 from 660. Market multiple.

We got to look at market multiple. Yeah, but you didn't cut Apple because of the market multiple. Well, because ultimately, when I look at Apple versus Palo Alto, I believe from a services perspective, that's a key from a multiple continuing to increase. Oh, so you get to pay a premium multiple for Apple continuously now because the services business, regardless of the overall market multiple coming in where these others are more susceptible because they don't have the service business attached to it like Apple does? Well, I think the services business, I view that that's worth anywhere between $1 to $1.4 trillion.

So that's a big part of why we don't cut the price tag on Apple because of that multiple. Powell, we cut it on market multiple, but ultimately that's one 580 base case. Bull case could be 650. And that's why in this storm, you look at cybersecurity, a Rory McIlroy-like order. All right. We'll see how he does at the PGA over the weekend. He looked pretty good this far. Dan Ives, thank you. Thank you. All right. We'll talk to Dan soon, for sure. Up next, more volatility ahead. That is what our next guest is forecasting, why she thinks we still haven't seen the ultimate lows. We'll do that after the break. Overtime's back right after this.

We're back in overtime. It's time for a CNBC News update now with Shepard Smith. Hi, Shep. Thank you, Judge. From the news on CNBC, here's what's happening. Russia now says it has full control of the city of Mariupol, the Black Sea port city, under near constant siege during the war. The Russian defense ministry also touting what it calls the complete liberation of the steel plant there. No immediate confirmation from Ukraine. The former Attorney General Bill Barr is now in talks with the January 6th House Committee to testify. NBC News has learned Barr is inclined to cooperate with the probe. The panel is set to hold public hearings on its findings in prime time next month. And the show must go on with masks. The organization that

reps Broadway theaters announcing today that the mask mandate will remain in place at least through June. The decision comes as New York City sees cases rising and hospitalizations increasing. Tonight, Sarah Eisen joins us to talk the markets, the latest on the president's trip to Asia, and reinventing Anna, the fake German heiress has a new side hustle on the news, right after Jim Cramer, 7 Eastern, CNBC. Scott, back to you. Well, I can't wait to see that one. Thank you, Shepard Smith. All right, we'll see you in a little bit. The Dow posting its eighth straight week of declines for the first time since all the way back in 1923. It's seven weeks and counting for the S&P and Nasdaq. Our next guest

says the selling likely isn't over. Let's bring in Cameron Dawson, her first TV appearance in her new role as a chief investment officer at New Edge Wealth and also joining us is Rich Bernstein with Rich Bernstein Advisors. It's great to see both of you. Congrats on the new gig. Nice to have you here. So I'll start with you. Your headline is more pain ahead.

Yes, I mean, we can see counter-trend rallies from here. It's very normal in bear markets or downtrends to see rallies to the upside. They're called bull traps for a reason. It's very common. But the challenge we have is that we have a lot of overhead resistance and we haven't seen those signs that are typically consistent with a big flush in markets. We're looking for things to be so bad that they're good. And those signs aren't at extremes yet. They're elevated, but they're not at extremes. Rich, but things have felt so bad.

Do we necessarily need that capitulation moment, the VIX to 40? Because I'm looking at the VIX right now. It's 23. Does history have to repeat itself every single time? Scott, I'm not sure history has to repeat itself. But I think, look, there's the thing that I think people have to understand about volatility is that volatility always signals a change in leadership. What happens is that the old leadership in the stock market was geared to a certain economic environment, in which case for tech innovation disruption, it was secondarily falling disinflation, secondarily falling interest rates.

That's changing, and that's why you get volatility. A new leadership emerges that's better suited to the new economic environment. And so volatility is painful. But I think as a real investor, what you have to start doing is trying to analyze what that new environment is going to be like and what leadership is appropriate for that new economic environment. But I just don't understand why technology wouldn't still be it. I mean, technology represents what the future is going to be. It's disinflationary. So I don't understand why couldn't technology be that? Well, Scott, it could be if we haven't had sort of this bubble type valuations associated with it. Look, after the tech bubble, all the stories came true in the

next 10 to 15 years about how the internet would change the economy, about how cellular communications would change the economy. It all came through. But if you bought NASDAQ in December of 99, it took you 14 years to break even. So we have to separate out the story from the valuation of the assets. And tech is still one of the most overvalued sectors in the market today. You agree with that? You're shaking your head yes. Yes, definitely. If you look at tech as a valuation relative to the market, it's still trading at an 18% premium. And you could think that it's worth that, that they're better companies. The thing is, prior to 2019, tech actually traded

at a discount. And so there is a precedent for tech to trade at a much smaller premium, at least. And we've still seen big inflows into tech innovation and disruption. There's been $1.7 billion of inflows into ARK. So this really isn't capitulative. Yeah, it's a good point you make. You also make the point that if you think the Fed is aggressive or tight now, that the game is just getting started. Just you wait, because at 75 basis points on the Fed funds rate, they're targeting to get to neutral, which is two point three five based on the dot plots by the end of this year. And they want to go beyond neutral to be able to control inflation. So if we think that inflation might roll over a little bit, it's certainly not going to keep them from delivering on those rate hikes. And guess what?

They haven't even started quantitative tightening. They haven't even stopped their bond or started the tapering of bond purchases or the cutting of the balance sheet. And so the challenge we have is that yields probably do see pressure as they exit the market and they become a seller instead of a buyer. Rich, there are some who suggest the Fed, everything Cameron said is correct, but there are some who suggest that the Fed's going to overshoot as a result. It's going to be too tight. It's going to overshoot and then it's going to back off. Well, you know, Scott, every cycle ends with the Fed panicking.

And I think that will undoubtedly happen in this cycle, too. But Cameron's point is very important. The real Fed funds rate, which is basically just the Fed funds minus the inflation rate, is historically negative. Every prior to every recession in the last 50 years, it's been positive. So we have a long way to go before the Fed is actually trying, you know, literally slowing the economy, let alone fighting inflation. People say that they're becoming more hawkish. I would agree with that.

But it's sort of like hunting an elephant with a pea shooter. You're hunting, but what's the success going to be? Your weapon is way too small. That's exactly what's going on right now with the historically negative real Fed funds rate. Yeah, they're tightening. Yeah, they're on their way. But we're like in the second, the top of the first inning. What do you think about this thought about the Fed overshooting? I mean, I wonder what would cause the Fed to panic at this point? Credit market seizing up because it hasn't. And as long as the credit market is acting reasonably fine, which which it obviously is, and the stock market is the one that's upset. Yeah, they've maintained they're fine with that. And if they didn't maintain it, they know it.

The Fed doesn't really care about equity markets. They do to a certain extent for financial stability and the wealth effect. But the reality is that the Fed cares about funding markets. They want to make sure that you're not seeing stress within credit, stress within the ability to raise cash on a short-term basis. And so the reality there is that we're not actually seeing real signs of stress yet. If you look at financial conditions, they've tightened, certainly, but they're back to the levels where we were in 2019. In 2019, the Fed was cutting rates while unemployment was at a 50-year low. And so there's still quite a bit of room to go before financial conditions would get so tight that they would need to step in and settle things. Is that what it takes, Rich, that you'd have to have an issue in the credit market for the Fed to stop doing what it's doing?

Absolutely. Look, the Fed isn't stupid. They know they've caused a bubble in long-duration assets, whether it's long-term bonds, tech innovation disruption. Do they care whether, and I mean, this is going to be heresy to say this, do they care if cryptocurrency prices are cut in half? Not a lick. Do they care if funding is going to the energy market to fund expansion and refining and everything else? Yes, that they're very worried about. So, you know, do they care about what's going on in the markets right now? Not really, because of exactly what you just said. The important markets, the ones that truly fuel the economy, are not being affected in any great way. The other thing people say, Cameron, and we'll

make this the last word, and Rich, you can respond to this as well, is when people talk about bear market, it's not just a matter of price. It's a matter of time. And this bear market, if that is what truly we are in, feels like it's only been 10 minutes. Exactly. This takes time. And I think we can see this by looking at the percentage allocation that investors have to equities. They're still near an all-time high, near 70%. Back in 2008, 2003, those got as low as 40%. So we still have a long way to go for people to actually sell, feel the pain of this bear market. They might be saying that they're scared because of AAII bull bear indicators, but they haven't been selling yet. Though, Rich, some might say, what's Wapner talking about? There are so many stocks that have been going down stealthily before the rest of the market

started to do for such a long period of time. It seems that maybe that part of the market, the bear market, if you will, just under the surface had started a long time ago. We just didn't recognize it enough. Oh, I think that's probably right, Scott. I think that, you know, looking at the indices, I think was very misleading, right, because of the narrowness of the market. You have to remember the stock market got incredibly narrow. My colleague Dan Suzuki has done a lot of work on this. The stock market got so incredibly narrow and was so tied to long-term interest rates, that narrow leadership was so tied to long-term interest rates, that underneath there was so tied to long-term interest rates that underneath there was a bear market going on for quite some

time and nobody cared. Now that's reversing. Think of the market as a seesaw. One side of the seesaw got really extended and now the other side of the seesaw is coming up. Yeah. See how it all plays out. Thank you both for your insights today. Richard Bernstein and Cameron Dawson, thank you so much. And again, good luck with your new job over at New Edge. All right, still ahead. Searching for market bright spots. Are there any?

Where investors can put their money in this volatile market? First, though, Christina Partsenevelos is here to wrap up our week in our rapid recap. What's on deck? Yeah, so I've got the winners and losers for the week. Throw in a little mosque, a little retail, a little cybersecurity. And one question. Our viewers, can you name the year that baseball was first played at Yankee Stadium? All the details on why that year is important for markets right after this break.

Stocks finish out the week with a nice move into the close today. The Dow finishing just fractionally higher, as was the S&P, but it's a far different story than it was for most of the session today. Christina Partsanovalos has our rapid recap. Hey, Christina. Let's actually talk about that big reversal into the close. And I want to focus on a few companies because they really showed what happened just within the last two hours. Take a look at Texas Instruments, Starbucks, Adobe, Meta. Just right after 2 p.m., you started to see this upward trend, and all of those companies ended the day in the green. But, unfortunately, markets, though, in general, are sticking to trend, and that means weekly declines.

Seven straight weeks of declines for both the S&P 500 and the Nasdaq, eight weeks for the Dow. And here's that question. You know the last time that happened? 1923, the year the first baseball game was played in Yankee Stadium. Yankees defeated the Red Sox. Let's talk about consumer staples, though. That was the worst sector in the S&P, falling almost 9% this week, led by Walmart and Costco.

Taking that group down, you can see that a lot of retailers, well, both of those retailers down double digits. Walmart, along with Target, actually, cited inflation and supply chain constraints as the main reason behind the lower than expected profits and weaker margins. Only energy, health care and utilities were higher this week. And since Elon Musk likes to be in the spotlight, let's talk about Tesla's brutal week. The worst weekly decline since early 2020 from its peak in January alone. Just this January, the stock has lost more than half a trillion bucks in market cap. And because it's Friday, gotta go for dinner and drinks. Let's end on a positive note. Cybersecurity companies like Tenable Holdings, SentinelOne managed to eke out some gains this week. Palo Alto Networks had its best day since February, but still couldn't

end the week in the green. There you go, Scott. Rapid recap. All right. Dinner and drinks. Sounds good. Enjoy. We'll see you next week. Thank you. All right. Christina Parton, that was us. All right. Up next, AMD shares sliding this week, but one halftime committee member is buying that dip. We'll debate the move in today's halftime overtime. First, though, a message from Squawk Box producer Dean Mealarp as CNBC celebrates Asian-American and Pacific Islander heritage. My parents taught me at an early age the value of education and hard work. Being the only Asian kid in the room in most of my classes, I didn't have much of a choice, but strive to be the best that I can be. Working alongside my parents at their restaurant really inspired me and motivated me to be my best.

And those are the values that have always stuck with me throughout my education and my professional career. And I hope to pass that down to my daughter someday. In today's Halftime Overtime, buying the dip in AMD. That's what Halftime's Shannon Sikosha did this week, adding the name to her portfolio after a decline of more than 30 percent this year. They have the benefit of execution and it's a competitive advantage for AMD right now. And so we think even though this is trading at a discount and there's some concerns about additional demand, we think the market share alone that they're going to be able to pick up over the next couple of years makes it worth a buy at this level.

All right. Let's bring in Short Hills Capital partner Steve Weiss. He is on the phone. Weiss, it's good to have you. Nobody's going to time the bottom, obviously, unless you get lucky. This is a stock AMD, six months down 42 percent, year to date 37. I look at NVIDIA, for example, down 51 in six months. Is today a good time to buy if you're a long-term investor? Well, it really depends on your time frame, but essentially that's what those investors are doing. They're trying to pick the bottom because they're not going to buy the stock

if they think there's more than 10% downside. So they're saying 10% is the bottom. I think it may be more. So I'm not focused on how much the stocks have declined, the share price. I'm focused on the earnings and where valuation is and how much I believe earnings can decline. And one of the issues with the semi-stocks, and I'll put the AMD in this category, is that we truly don't know if there's been double ordering through this cycle. We do know that companies would have loved to have double-ordered if they could. Some have an ability to get more supply than others. So I don't think AMD is particularly cheap here. It's selling at 20 times forward earnings. That's a big premium to the market at this point. I think it's going to be an even bigger premium to the market because I'm still

looking for the market to overshoot the downside in the multiple. So if you want to go out five years, sure, you'll make money. If you want to go out two, I'm not so sure that you will. So I've sold my semis. I sold my big semi positions a while ago, and I sold MU, Micron, which people say is cheap, but you don't know what the E is going to wind up to be. And that's the big issue. So I do think the recession's in the offing, and that's going to hit your earnings. And that then makes it more expensive than where it is today. Double ordering, good point. Stephanie Link's been raising that issue all the time regarding the chip stocks.

You had Skyworks and Corvo. You had gotten rid of those months ago. You told me just now Micron on Semi when you got rid. You mentioned valuation being the key metric that you look at, and obviously many others do as well. At the beginning of the year, AMD's valuation was 43 times forward PE. Today it's 20. NVIDIA, for example, was 58 at the start of the year. It's down to 27. So they have come down a lot. Your key point seems to be that it ain't done yet It's not done yet And while you send these have found a much larger tan total addressable market is to go into virtually everything They still are somewhat sick. Go you have removing cyclicality

So when you cite those correct PE numbers the facts are those were hugely usually Inflated and they haven't come down to historic levels yet. So when they come down to historic levels, that's where I'll have more interest or when they overshoot. But then I've got to get some comfort on where the bottom is in earnings, or at least when we're within reaching distance of it. I just don't have that yet. Yeah, you and everybody else. That remains the key question. I appreciate it, Steve. Thank you. That's Steve Weiss, Short Hills Capital. You have a good weekend. I'll see you on the other side. It's an ugly week for stocks. I don't need to tell you that. But you know that up next where one money manager is trying to find opportunity amid some

of this uncertainty. It's our two minute drill and coming up at the top of the hour. Trillions lost in big tech market cap. So is the group still investable? Fast traders are going to break that down for you. Overtime is back right after this. Welcome back to Overtime. To the results now of our Twitter question of this Friday, we asked, Can the market handle a 100 basis point hike from the Fed like Jim Cramer is now advocating? It was closer than maybe I thought, but no. No takes the cake today. Fifty four percent of you say no, it can't. Forty six percent say yes.

All right. Up next, our two minute drill. Overtime will be right back. It's time now for our two minute drill with us today, Max Wasserman, the founder and senior portfolio manager with Miramar Capital. It's great to see you. Thank you for being here. I want to talk about your picks here. And I want to start with the one that jumps out to me more than anything else. And it's VF Corp. And I'm sure you know why I'm asking you about it after this week, which may have changed the game for the way we need to think about retail stocks. There were some winners. Yes, I'll give you that. But it left a lot of people worried. Why VF? Well, the reason we like VF is a simple fact is that they're they're

banized North Face, Timberland, Dickies. It's a it's an outdoor space. And what they're able to do is they're able to sell through. And what their experience is about a 44 percent direct to consumers. They've been able to handle their profit margins, which is the number one key thing. If you compare it to like the targets and everywhere, they've only lowered their gross profit margins going forward at 50 basis points. So you're seeing a company that's being able to move their merchandise and get pretty much 90% of the full retail price. Now, you throw that in with a 4.2% dividend, it's a dividend aristocrat, trading roughly

15 times earnings. That's come down from like $88 a 4.2 per 6 dividend. It's a dividend aristocrat, trading roughly 15 times earnings. That's come down from like $88 a share. And we think there's a lot more potential, especially as China opens up. There should be a real catalyst for that in their vans line. And you don't think that, you know, they're going to end up with too much inventory and have to cut prices like I think right now is the big fear among retail? I think they've been really doing a great job of handling the inventory. According to them, they've had about a 25% increase in low-end inventory increase, but they're able to move the merchandise.

They've been able to shift it and the fact that their distributors are all open, except for in China, you have about 20%. So the fact that stock came down, keep in mind, Scott, that it came down from like $88 a share and now it it's trading at 44. So it's already reflected that. And we've been investing in this company, and we'll be investing even more, at 15 multiple revised. They just came out and reiterated earnings about 3.3 to 3.40 a share going forward. And they're still looking for 7% revenue growth. So they're able to capitalize on this, where I think the other retailers are having a harder time and did not take advantage of the shift in the consumer. I got you. I got

you. I'm going to have to leave it there. I'm tight on time, but you have a good weekend. I'll see you on the other side. That's Max Wasserman of Miramar Capital. His other picks, by the way, Corning and UPS. Quite a week for the markets. I hope all of you have a great weekend.