Closing Bell - Closing Bell Overtime: Kynikos Founder Jim Chanos, Friday Night Fight 3/18/22

Episode Date: March 18, 2022

Major averages post their largest weekly gains since November 2020. “Mad Money” host Jim Cramer weighs in on this week’s stock surge. Plus, noted short-seller Jim Chanos from Kynikos reveals his latest short position. And “Friday Night Fight”! Steve Weiss and Jim Lebenthal debate – have stocks bottomed?

And welcome to Overtime. I am Scott Wapley. You just heard the bells. We are just getting started in just a few minutes. We'll speak exclusively to legendary investor Jim Chanos, who's going to reveal a brand new short position right here in OT. We do begin today with our talk of the tape. That is this week's stock surge. Whether it really does mean the worst is over, it certainly has been the conversation all week long right here in overtime. We're in the neighborhood of a tradable bottom. What we're seeing in our world is there is a lot of volatility. There is a lot of uncertainty. I think that the NASDAQ is not the place to be. For the short term, yes, because it's oversold. We've definitely corrected some meaningful amount of where the exuberance was. I personally don't think it's oversold. We've definitely corrected some meaningful amount of where the exuberance was. I personally don't think it's over.

All right, what a week it's been. Let's welcome in Mad Money's Jim Cramer now for his own take. Welcome to Overtime, Jim. It's so good to have you here. I have loved the shows. I knew Harvey Sandler, Ricky Stadler. I would listen to every minute. Eminence Capital, he is so terrific.

Gunlock, hey, listen, I think that quote was a little actually less boss than it really was. And I was encouraged by that. I thought he was great. I want to know so much about what the short position is going to be because I've got to tell you something. I've always liked him. I've always liked him. Chano's hat comes with game. What a week for you.

What a week. It's been great, Scott. Well, we're tapping it with you, which means with game. What a week for you. What a week. It's been great. We're tapping it with you, which means a lot. Let me ask you this. You heard what everybody had to say in those clips. Yes. And it is the question of the moment. Is the worst over, Jim Cramer?

Actually, I think I can ask this is the best over. This was an unbelievable week. And there are going to be people come in and they're Johnny come late. Lisa. I think there's a little more to be had, but then we can have another leg down. And the reason is because of what really of what Ricky said. Remember, he said there's a lot of stocks that are junk, basically. I'm being a little more elaborative, but you got to get out of those. This is a selling opportunity for the companies that sell at high multiples to sales.

You don't want them. But a company like Salesforce, a company like Alphabet, which is my favorite company. They're doing so. That's very interesting what you said, because, Jim, you're speaking directly of the so-called arc stocks, the ones that have had a great week. And now you're urging people to take advantage of this boom to get out of the positions that they may have been stuck in. And it is the same type week where Marko Kalanovic, who says those bubble sectors have corrected enough. Well, yeah, but you see, I want to own real companies that do real things that make money and then give you money back.

And that's going to be my theme for the duration, because there were 600 companies that came public, either via SPAC or IPOs, in the last 15 months. And I've been trying to find 10, 15 of them that actually make sense. I'm going to reveal some tonight. But Scott, most of these companies shouldn't be companies. You really feel that strongly that, look, there has to be some stocks in this universe, Jim, that have come down too much. I found a couple.

I got a Picasso on tonight, a property manager. I'm looking at a company. There's a couple of companies. I mean, some of them like actually make money that are new. I mean, it's just they're few and far between. I don't want to reveal all the companies that I got tonight, but I found like eight of them. Eight of them. Out of 600. Eight out of 600. We will wait. We'll wait for the great reveal. You mentioned Salesforce. We did

talk about it with Ricky Sandler yesterday. Let's listen to what he said. We can talk on the other side. Salesforce.com is another that we've been adding to. And so I think that's an interesting space amongst all the tech wreckage. Enterprise software is a place where we're fishing a little bit. Right, Jim, he makes the distinction between some of those high flying names, which he doesn't think have corrected enough. But Salesforce to him is different. It's not in that ballpark. It has operating cash flow. I mean, genuine operating cash flow. It has money in the bank. It has this, you know, look, there's ways to be able to

calculate how much they're really making. And some people consider it a run pass option. But you know what it is? It's got performance obligations that are on the books, which literally describe how much cash they have in the bank. Salesforce is crushing it. Workday is crushing it. You don't service now the numbers they're putting on. These are real companies doing real things, okay? But then there's a lot of the SPACs. Now, Kathy, when she's in her own world, she provided a lot of liquidity for companies that I wish hadn't come public.

But I do think that, you know, Salesforce just had a week that was up 20 points. But I don't think it should ever been as low as it was. I think there's some retailers that are going to have some good numbers. And they've got Matt Boss's conference coming up. It's going to be a great show at place for them. How about we get a deal for Kohl's this weekend? Do you think that would make things better? That could happen.

We'll have to see what happens there. And by the way, to your point, discretionary has had a great week. Since we're talking Salesforce, though, Jim, I want you to answer our Twitter poll tonight before we pose it. And I guess we're posing it to everybody now. Is this about whether the commandos do well against Wentz? We're going to find out. We will find out. The better buy in technology right now, is it Apple? Is it Salesforce?

And is it Arc, which has had a great week as well? Which do you think, Jim Cramer, is the best buy in tech right now? I'm going to say that I think there were a lot of people who gave up on Apple, that it had some sort of death cross. Death cross? What is this like, you know, Mad Max and Thunderdome? And that I think Apple's down the most. I would have said Salesforce when it was back at 196. But can I just say something about what you're doing?

As an anchor, it is so darn excited. I mean, this is what I love. I love stocks. I love this. And the people you're bringing on. I mean, look, I'm going to be sitting here taping my show and I want to know whether Chanos is hitting one of my stocks. I don't want to be like saying, hey, you know what? I think I should buy. You might like Joe Blow. And Chanos has having said, hey, you know what? I hate that one. I have to watch you. I'm doing my show right now and I'm watching you. It's like I have to watch two football games.

I have to put on my football game and see how you do. To see who's making the playoffs. You're in the playoffs every night, partner. I'm so proud of you. You know that. I'm so proud of you. It is really so great to have you have this show. Shano's doesn't reveal new positions all that often publicly.

So we're very much looking forward to what he has to say tonight. I'm not either. He's going to have to watch my show. Does he have a good one? Is it like a large cap? Just give me a hint. Well, we're going to find out. Maybe you'll be surprised by it.

Maybe you'll be surprised by it. Maybe our viewers will as well. But I think Jim, what we're really trying to do. I don't want to look bad immediately. It's not Apple. It's not Apple. I'm not. You know what we're doing, Jim? What's that? We're showing people that even though you hear the bells ring at four o'clock, the fire still burns and there's still stuff going on.

Stocks do move. People make trades. Big investors come on and take new positions in things. And we're trying to bring that to everybody in real time. I so much appreciate the support. Listen to me. You know how we say it? Like Tony Romo says it and our guys say it. Hey, there's only two minutes left in regulation. You know what they call regulation? Because there's overtime. That's why. Regulation is okay. I play regulation in 930. I went overtime after regulation. And I think it's the playoffs. You tell me what's coming. I don't know.

It's mad money, obviously, but maybe we call it triple OT. I don't know what's coming up tonight. So hard. Nothing. I can't top you. You got Matt Roberts right there. It's a killing in an open table. And he's really smart. This is a real interesting property management company. It does not compete against Airbnb, but it's very, very interesting. But it will not be as interesting as overtime. It's killing me.

I've seen it to you. Not every game is as good as other games. Are all games equal? What a week to launch, too. I mean, where the market was on Monday and where it is today, incredible to be able to track that every day, too. Do you think there's a coincidence that the market went up big and you started your show? I don't know. We'll thank the market gods. Jim, you have a good show tonight. I'm so proud of you, darn it! By the way, we want to remind everybody,

we'll see you at 6 o'clock. You can have Kramer delivered right to your inbox with the CNBC Investing Club. Sign up now, cnbc.com, slash join the club, or by using the QR code on your screen right there. Now to the investor known for his prowess betting against companies, Jim Chanos, the president and founder of Kinecos Associates.

He joins me now live. Welcome, Jim, to Overtime. It's so good to have you. Thanks, Scott, and congrats on the new show. Thank you so much. As I just said to Jim Cramer, Jim Chanos, what a week it's been from where we were on Monday to where we are now. There is it feels like some newfound momentum in the market. Who knows if it lasts, obviously. But what do you make of where we are?

Is now the time to cover shorts or to double down because of the kind of move that we've had? What do you think? Well, while he was on, I was looking up the symbol for Joe Blow. It's not one I know, but I think that what we've seen this week is a relief rally. You mentioned the bubble stocks earlier. The bubble stocks were leading the way this week. I have shorts that were up 30 and 40 percent since Tuesday morning. And we've seen the snapback in the Chinese market. And what's really interesting about what happened prior to Tuesday and from Tuesday to today is we are starting to take for granted really massive moves in asset classes and entire markets. I pointed out to people a few days ago that the Chinese market prior to Tuesday was down basically by a third in a straight line over three weeks.

And whether it was the US tech listed stocks or the Chinese SOEs listed in Shanghai and Hong Kong. And to put that in perspective, that was $4 trillion worth of market decline, or 5% of global GDP, Scott. 5% of global GDP was exactly what all of the global markets lost in October of 1987. And I'm dating myself here. But that basically caused the world to have a heart attack. And in this case, we just sort of shrugged and said, oh, Chinese stocks are volatile.

And of course, they bounced back. And so whether you see PayPal or Netflix down $100 billion on news. Alibaba up $100 billion on government reassurances. I mean, these are becoming commonplace. And I think it's just good to step back and realize a little bit about how uncommon these kinds of moves historically are. Have you covered any of your shorts based on the kind of activity that you've witnessed? No, we haven't really covered a lot. But because we have a lot of our positions in the form of put or put spreads, we actually get less invested as the market goes up in our short only accounts. And we've been about market neutral all week in our hedge fund. I mean, you have had, obviously, a long history with China since you mentioned it.

You've been a bear since 2009. I mean, one of certainly the longest bears on Wall Street. And there was a history as well with a one-time short, for example, of Alibaba, which you covered a long time ago. And I was curious as to how you viewed the not only the position of some of those stocks and how dramatically they fell because of the new regulations there, a covid, which is by all accounts out of control. And I wanted to ask you what positions you have on now from a short side as it relates to Chinese tech stocks, internet stocks or any Chinese stocks? So we we have a couple of Chinese financials that are listed in Hong Kong that have been long term core positions for us there that we're still on. And and of course, we still have

our position in Wynn, which has exposure to Wynn Macau. But the But the only tech stock of note, and I think it was up about 70% from the lows this week, is the Chinese internet broker, Futu, which has had quite a run this year from the highs earlier in 2021 of near 100 down to 20 and uh back up to 40. um and it's a simple story uh trading stocks uh in the people's republic of Chinese citizens, among other citizens, to trade stocks through Hong Kong or Singapore in Western markets, which is technically against

the law in China. So it's kind of a unique situation. Yeah, I mentioned in a little bit, you're going to reveal a new short position in a very well-known name. I don't want you to do that yet. I want to continue the conversation about China. I mean, in the universe of all of these stocks, and you saw the dramatic move higher in FUTU, of course, before you just started talking about it. Why did this stand out more than some of the others? And are the others just too dangerous and difficult to short because of the kinds of moves which we've witnessed this week alone? Well, really, our exposure in China

has been in the last few years has been pretty much as low as it's ever been because the excesses are here in the good old U.S. of A. And so that that's number one. Number two, I mean, the Chinese market, as you alluded to, the FXI when we got bearish was somewhere around $40. I think it's still around $32 or $33 after a big rally after 12 years. You know, so this has been a very, very good place to be short, as I keep telling people. But it's not the greatest place, risk-reward, to be short now, with some exceptions, obviously. The thing we do warn clients about, though, repeatedly, and it was part of our Alibaba warnings back in 2016, is the VIE structure. All kinds of people come on your network and talk about Alibaba being cheap or JD.com being cheap or Baidu being cheap, and it's irrelevant. For Western investors,

you do not own the company in the People's Republic of China. I can't stress that enough to people. You own a piece of paper in the Cayman Islands or British Virgin Islands that says you share in the economics somehow. And the Chinese love the VIE structure. They don't recognize it legally in effect, but they love it because it allows Western capital to come to their companies inside the People's Republic. The problem is the capital never goes back out the other way. And so we just warn people that in a worst-case environment, you have no recourse in the Chinese courts,

and it's just fraught with all kinds of governance issues that I think that most institutional investors are wise to avoid. Interesting moves, to say the least, this week. Really head turning. Do this. Stick with me, if you wouldn't mind. I'm going to take a quick break. We're going to come back. I mentioned Jim's going to reveal publicly a new short position. We're going to talk about some of the other short stocks that he has specifically. And later, our Friday night fight. Basically, Jim, Jim, you're wrong. You're factually wrong. All the gloves are going to come off between Steve Weiss and Jim Labenthal.

Has the market really bottomed? They'll duke it out when overtime returns. All right, we're back now with legendary investor Jim Chanos of Kinecos. Jim, I want to get to some names. I want to start with DraftKings. What's your current position in DraftKings? Because you have had a bit of a feud with Jason Robbins, the CEO, who has taken issue with the way that you've described some metrics of that company. Yeah, so my BFF, Jason, got quite upset. I had his lawyer send me a nasty letter. And it's we made a mistake on your halftime show.

We multiplied the the holdings of 800 million shares times the market cap. There are 800 million shares outstanding in DraftKings, but 400 million are held by Jason and are uneconomic. They're the super voting shares. So they are worth nothing in the eyes of the marketplace. I actually think they're worth something, but that's a separate story. So the market cap of DraftKings is not, at the time, was not $23 billion. It was $11.5 billion. And so he got quite upset with that. I would point out the stock from that appearance, however, is down about 28%, from $28 to around $20.

But this is kind of an important theme I want to get across to your viewers. For stocks that have gone down, what I want to point out is that a lot of fundamentals have actually dropped at or worse than actually the stocks have declined in some cases. So for example, if we take my friend Jason's company, the 2025 consensus EBITDA estimate in early December when I was on the air with you was $360 million. It is now $260 million. Interestingly, that's down about the same 28% that the stock is down. So in effect, DraftKings today is selling at the same 2025 EBITDA multiple as it was in December. And we have lots of stocks in our portfolio where the actual numbers have deteriorated dramatically since the fall. And the stocks are down 30%, 40%.

But on valuation metrics, they're at or above where they were in the fall. And the stocks are down 30, 40 percent. But on valuation metrics, they're at or above where they were in the fall. And I think that that's why the bubble stocks are so fraught with risk. But to be clear, you're still short this name, right? Oh, yes. DraftKings is one of my favorite shorts. Is that right? Their EBITDA, since my appearance on your show that he was upset about, the EBITDA loss for this year, the estimate has gone from 500 million to 900 million. So things are getting worse. They're not better. Well, the other issue that he had, they pretty much accused you of being dishonest in the way that you've described what their price to sales multiple is. In reality, it's about 12 times. You've described it. They've made the argument as 30 times. And he took you to task for your math. And that was after your last appearance on my show.

Yeah, that's what I'm talking about, Scott. We got the share count. Half the shares are uneconomic. So the company is claiming you cannot count those in the market cap. They're right. Oh, I got you. OK. I just wanted to make sure we're talking about apples and apples. So you do admit that you had made a mistake on my program, the Halftime Report, the last time that you were on. I know it's shocking, but I sometimes make errors. They're not in bad faith. Okay. Let me ask you this. Your new short that you're going to reveal right here is what? Our new short is a kind of a one-off interesting situation. It's a little company called Coinbase. Okay, and why is Coinbase the one?

So Coinbase is what I'm kind of talking about. Coinbase is what we would call one of the bubble stocks. Obviously, it's got a unique market niche. It's pretty much the only public crypto exchange and consequently has the valuation to go with it so coinbase is about a 40 billion dollar market cap company stock was trading in the fall between 200 and 300 dollars got down to about 150 recently. It's bounced. I think it closed somewhere around 185 today. But Coinbase is, again, exactly what I'm referring to. So in the fall, when the stock was trading between 200 and 300, the adjusted EPS estimate for this year was $7.

It's now that same estimate is now $3. So the multiples actually gone up on a gap basis because of course, like many tech stocks, they add back share based comp. On a gap basis, the estimate for this year has gone from $6 in the fall to a loss. We basically think Coinbase is over-earning. If you do the numbers, their revenue base is roughly 3% to 4% of their custodian assets, their customer assets. They have over $200 billion of customer assets in their system. And if you look at comparable kinds of exchanges

or trading operations, and Coinbase is an amalgam of a lot of these because it has different functions. Charles Schwab has revenues of about 25 basis points of client assets. Trading operations, bank trading operations, typically have revenues of one to one 1.5% of assets. And there you have Coinbase at 3% to 4%.

So we think that as competition increases in crypto, and this is not a call on crypto or Bitcoin prices or anything like that, but we think as competition increases amongst the exchanges, you're going to see fee compression. And as it is, Coinbase will probably not be profitable this year with a 40 billion dollar market cap. Is there risk, though, that look at times Coinbase has tracked Bitcoin, that as Bitcoin recovers, assuming it does, and gets back to its higher, even higher highs, does that put your thesis at all at risk? Yeah. I mean, obviously, if it tracks Bitcoin as a sympathy play, it will do that. But what we're seeing is the economics are starting to diverge. And I think that's that's kind of the important part. And and you can easily hedge out the Bitcoin risk if that's if you correlate to

Bitcoin, you want to take that systematic risk out, you can do so. I mean, the other thing this just this week, there are a couple of positive research notes I wanted to read to you quickly. Oppenheimer says Coinbase has, quote, hidden value in the ventures business. Needham was out today saying the NFT segment or this week said the NFT segment could add more than a billion dollars in revenues. I mean, obviously, the street remains fairly optimistic about this one. Yeah. What are their profit estimates on those reports? Well, I guess that's the the the million dollar billion dollar question yeah so we're back to look we're back to people trying to get excited about things they got excited about last summer and and they certainly have every right and ability to do that um but i think that uh

the problem is is that this market has so burned people in names that are not profitable. As Jim said at the beginning of your show, we're looking for companies where the profit forecasts are continuing to decline as the valuations stay up in the stratosphere. There are plenty of companies that are in the new economy that have real growth and real cash flows with real earnings. But there's a lot that are just being sold on stories. And we would argue that Coinbase is one that's being sold on a story. We'll make that the last word. And we'll certainly follow those shares of Coinbase in the weeks ahead. Jim Chanos, thank you for being on in overtime.

We'll see you soon. Congrats, Scott, on the new show. Appreciate it very much. That's Jim Chanos joining us. The big question for investors, have we, in fact, seen a trading bottom? Should traders sell the rip? We've got quite the debate here with New Edge Wealth co-founder Rob Seachin, Requisite Capital Management's Bryn Talkington, Axonic Research Director Peter Cicchini is here to break it all down. It's good to have everybody. In fact, Rob, you made a big call for your firm this week when you said, yes, the bottom is here, and you think now it holds. You know, Scott, I just want to say it's nice to be on the team and nice to be able to play in overtime.

That must mean, you know, we're playing pretty well. You know, we're trying to be investors. Our process is designed to remove emotion from the decision process. We like to buy them when they hate them and sell them when they love them. And we think we're pivoting to an active environment. And that sell off earlier this week where we retested the lows gave us an opportunity to be active. And we think we are pivoting to an environment of active management, not speculating. We're not changing our minds every day. But on that day, you know, the negative sentiment was extreme. Markets stopped going down

on bad news. I pointed to China. We used the blueprint from last Wednesday, the 9th, as the way to invest. Of course, we acknowledge there's uncertainties related to the war, inflationary pressures and increasing risk of stagflation and recession. And, you know, really, a lot of this is dependent on the war. And even if the war ends quickly, many companies have self-sanctioned. And, you know, we're going to have inflationary pressures here for a while. But I think what you're going to see is markets are going to desensitize to the aggressive stance out of the Fed, which we thought was absolutely necessary because the biggest risk to the economy, Scott, is inflation. So they did what they were supposed to do. And we think that was right. And that's why we saw Wednesday on the back of that announcement, markets advance again.

I think the war can set us back. No question. They've barely done anything yet, right? They only raised once and the road ahead looks bumpy. Peter, is Rob right? Did we see the bottom is the worst over? Well, I do agree with Rob that we're in an active investor's paradise right now. I think there are really three things to worry about. Inflation is clearly first and foremost, top of our front of our minds. The second is really a Fed that's constrained by two things, not only inflation, but also the fact that it's at the zero bound, which means that even if they hike a few times, if we go into

recession, there's not much they can do to combat recession once the slowdown occurs. And then lastly, of course, fiscal policy inertia. And fiscal policy was a massive part of why markets rallied as much as they did throughout the pandemic, despite the fact that inflation was picking up. So I think I would take the other side of that. And I would say I think this is a sell the rally market. It is certainly an active investor's market, but it is a sell the rally market, especially given that you look at the S&P 500, even with the recent pullback, still three times revenues. Bryn, settle it. It was right. Yep. Yeah. So I think that in energy, it is a buy the dip. I think that right now we have we are fighting the Fed. We've got energy well over 100, and we also are getting closer and closer to an inverted yield curve. And so I think those three things

together give people pause. And so I think the question is, are we at the bottom? I mean, so far that February 24th low, where Jim Liebenthal called the bottom, that's been a good tradable bottom here. But to me, what I'm thinking about is, OK, let's say we're at a bottom or we hit the bottom earlier this week. How much higher do we go from here? And so I think whether we're at a bottom or close to it isn't the real question to figure out. The question is, once we get there, how much do we rally off of that? And I think because we are in Fed tightening, because you have high inflation with energy and food,

and because that darn yield curve continues to get narrower and narrower if you're looking at the 210s, I think it's still going to be tough sledding for the broad markets as a whole this year, regardless of if February 24th was the bottom or yesterday or the day before. So give me your highest conviction name then right now. Oh, energy. I would stay, stick in energy, right? I think that the technicals are there. The backdrop is there. The inflation is there. The supply demand imbalance is there. And so I say stay long energy and buy those dips. OK, Bryn, thank you. Rob, thanks to you as well. Peter, we'll see you back

in overtime sometime soon. We have an OT alert on General Motors. The stock is moving higher right now. GM buying SoftBank's equity ownership stake in its cruise unit for $2.1 billion. Separately, GM will make an additional $1.35 billion investment in cruise. You see the stock there in overtime. Coming up, Masellum's Jonathan Duskin revealing a new activist campaign at Spartan Nash. Those shares rallying today to a new high. Up next, he'll join us to break down that new position, what he's looking for, and what the company is saying in response. And don't forget, you can catch us on the go by following the Closing Bell podcast on your favorite podcast app. Overtime's back right after this.

Welcome back to Overtime. Take a look at shares of grocery chain Spartan Nash hitting a new high today on where that activist investor John Duskin has taken a stake in that company. You may recall Mr. Duskin currently is in a battle with Kohl's. He's also with us right now in overtime to make his case here. Welcome back. It's nice to see you in overtime. Hey, Scott, thanks so much for having me on again. Yeah, it's good to have you. And why this company as I look at it? So it hit a new 52 week high today in part on news of your stake, but it seemed headed there anyway. Well, I think, Scott, you know, for us, you know, we're very targeted. You know, we take kind of a private equity approach to investing in the public markets. We only make, you know, one or two investments a year.

And we believe in, you know, trying to create value over a long term. And we pull the lens back a little bit further. And we're not just looking at what the stock's done, you know, maybe since the COVID lows or with the COVID tailwind. But we pull back the lens a little bit further and look at it over the last three and five years. And it's materially underperformed. And despite the fact it was, you know, kind of at its 12-month high, it's still, you know, dramatically underperformed its peers. And it's underperformed on an operating basis and, you know, on multiple levels, sales, EBITDA.

Many of the different divisions have all underperformed their individual peers as well. You want three board seats. The company took a look at your letter today and said, quote, it seems that the investor group's priority is a proxy contest, not constructive engagement with Spartan Nash about ideas that would benefit all shareholders. Your response to that? Yeah, I don't think that's a fair characterization, Scott. You know, we've been talking to Spartan for many months now. We nominated directors back in early December, December 7th, I think it was. And we've been trying to work constructively with them. And we've been,

you know, engaged with them to try to understand what their plans are. And I think, Scott, you know us well enough at this point, you know, I think we tend to dig in, you know, pretty deep and we have very constructive ideas about how to improve businesses. So you do a lot of activist reporting, you know, that's a pretty standard response from a company when they're being, you know, put in the spotlight. You know, this company flew below the radar screen for many, many years, not great shareholder engagement. And now for the first time, they're being called out for a lack of having a plan, a lack of having a growth strategy, a lack of growing. They've served, you know, 17, 19 and 24 years on the board. And those are staggeringly long numbers. And, you know, they've got a very poor track record of acquisitions. They've made bad strategic deals. You know, it feels like to us it's just time for change. We'll see how it develops. John Duskin, thanks for your time and

overtime. We'll talk to you soon. It's time now for a CNBC News Update with Tyler Matheson. Hey, Ty. Scott, thank you very much. From the news on CNBC, here's what's happening. Droughts in California are drying up hopes for more water for cities and farmers. Water agencies serving 27 million people and 750,000 acres of farmland will now get just 5% of the water they requested this year, a third of what they were promised back just in January. Officials are calling for more water-saving efforts after a voluntary conservation campaign failed to hit its goals. West of Dallas, a complex of wildfires has grown to 45,000 acres

because of dry conditions and heavy winds. Containment is still just 4 percent. More than 400 homes have been evacuated in one town. Fire experts at Texas A&M say the rare conditions could also spark wildfires in parts of Oklahoma and Kansas. And we're just in March. And the State Department is demanding Russia give it access to WNBA star Brittany Griner. Griner has been behind bars, as you may have heard, in Russia after being accused of bringing oil derived from cannabis into the country. On the news tonight, Shep will get you up to date on the latest attacks in Ukraine and show you a solemn memorial for children killed in the war. That's right after Jim Cramer at 7 Eastern on CNBC.

Back to you, Scott. All right, Ty, appreciate it. Thanks so much. Still to come, a special edition of Halftime Overtime, a big Friday night fight between two traitors. Have we, in fact, bottomed? They'll debate it next. We're back in overtime. for our rapid recap. Now, a quick check on shares of Coinbase in the OT.

Legendary investor Jim Chanos just revealing right here that he is shorting that stock. You take a look at it now. It's down 2 percent in overtime. The S&P finishing out the week with a 6% gain for its best week since November of 2020. And a look at the best performing sectors this week, led by technology, consumer discretionary, communication services, and health care. Up next, our Friday night fight. Basically, Jim, Jim, you're wrong. You're factually wrong.

Okay, has the market found a bottom? The gloves are about to come off between Steve Weiss and Jim Labenthal when overtime comes right back. We are back in today's halftime overtime, a Friday night fight between Steve Weiss and Jim Labenthal over whether stocks have indeed bottomed. It's good to have you both with us. Farmer Jim, Jim Labenthal, you're the one who has gone back all in, made the bold call that we have in fact bottomed. Why? A couple of reasons why, Scott. First off, you have a choice every day on what to focus on, the positives or the negatives.

There's plenty of both. The market, like me, is focused on the positives right now. And I think that's a sea change in sentiment that's going to last. The other thing is, is if you're focused on the negatives, you have to focus on things that the market doesn't know. The market already knows there's bombs dropping in Ukraine. The market already knows about commodity price spikes. And the market's already priced in seven rate hikes from the Fed. I don't think the market has much more negative to price in. I'm very comfortably Mr. All in. Now, as for my frenemy, who we'll call Mr. 30 percent. No, I'm sorry. I'm sorry. He raised it to 35 percent today. We'll call him Mr. 35 percent. He's left 420 basis points on the table and given it to me this week over the last four

days. So I'd love to hear from Steve why he's right and I'm wrong. I don't even have to tee it up. He just did. What's the problem here? What's the problem here? Well, first of all, just to wear an equal footing, I'm intellectually going to put one arm behind my back and say this. Look, you don't focus only on the positives. The market knows those as well. The market knows the negatives. Of course, it's what you don't know that always comes at you. And what Jim is not focusing on, and by the way, I'm 40% net long.

What Jim is not focused on is that we've had major inputs into raw material, that raw materials that are going higher. So that's going to hurt margins. So I think you're going to see a steady stream, not just from labor, which you saw a little bit and was managed somewhat in prior quarters, but also from other commodities, from oil. You're going to see that in plastics. You'll see it in resins. Food, you'll see the food costs, their inputs. Food has overall gone too high. So the inflation is going to kill margins for companies.

And frankly, it doesn't have to kill them. All it's got to do is hurt them a little bit. So right now, you're still at an historically high multiple in S&P earnings. Where the earnings currently are forecasted, those will come down. Multiples tend to overshoot both on the upside, as we saw, and they will overshoot in the downside. But even if they don't overshoot in the downside. That's where I think the big disagreement is. That's where the big disagreement seems to be, Jim Labenthal, is your belief in how strong the economy can remain versus Steve Weiss thinking

that inflation, along with an aggressive Fed, is going to hurt margins and earnings. And that thus is going to bring stock prices down. I think you do come right to the crux of the matter, Scott. You know, earnings for this year around 232 estimates right now for next year, 249. That's exactly 18 times next year's earnings. Maybe it's a little too early for that. But I hear both of you saying that earnings estimates will come down. I submit to you they may well go up. I don't think anybody's paying attention to how strong this economy is.

Jobs are plentiful. Airlines are full. Hotel rates are full. This is a very strong economy. Look at industrial production. Ports starting to clog. Again, it's not that I'm blind to the negatives. It's that you're not focusing on the positives. And that's what's changed this week. Yes, Mr. 40%. What would you like? Scott, we're a consumer-driven economy. 70% of the economy is driven by consumer. Most of the people in that 70% live paycheck to paycheck. The consumer confidence numbers have been destroyed. They're trading at 10 to 15-year lows.

So yes, planes are full. They're full with people in that high class that can afford that, that can afford the hotels. The rest of the economy, not so much. So while jobs are full, that's an issue because labor costs are way too high. So it's sort of like whistling by the graveyard. Yeah, it's great now. I'm going where the puck's going to be, not where the puck is right now. And that's how you make money and that's how you avoid losing money. And with China as the ultimate issue, it didn't go well. That

could really be the black swan in the market. We make that the last word to be continued for sure. Steve Weiss, Jim Labenthal, thanks for being in overtime. Have a great weekend. I'll see you on the other side. Up next, Santoli's last word. He says the market's fever has broken. Will it stay that way? He'll break down the reasons why. Overtime's back after this. Mike Santoli here for Santoli's last word. What is it on this Friday? Well, calm at this point. A little bit of an outbreak of orderly action today.

Now, obviously, we're up a lot. So it wasn't a calm day in terms of the magnitude of the upside, but it was much more, I would say, measured in the action. Now, the volatility index has cracked well below 30. You know the VVIX? That's the volatility of the VIX. It's made a new low today. It basically tells you this market's been kind of tested and stressed and finally had some tension release. Bonds, 10-year yield has barely moved in four days. Bond spreads are better. So the question is, does it really mean it's back to health? I kind of think it's too early to say. V's back to the high after a 12 percent drop. Very unusual. Onus on the bulls. We'll see what happens next week.

Still is. Good to see you. Thank you. Santoli's last word. That's Mike Santoli up next. Three picks for your portfolio. It's our two minute drill when overtime comes right back. The results of our Twitter question of the day, 60 percent of you picking Apple over Salesforce and ARK as the better bet in technology right now after a huge week for the Nasdaq and the Nasdaq 100. Time for the two minute drill. Daniel Shea from Simple Trading with us. You're on the clock. What do you like best right now? You know, right here, I think it's most important that investors spread their risk in a variety of different sectors. I have one pick in energy, which is going to be Marathon Petroleum. I love Amazon right here. And I also love Hershey's. You know, I look at Marathon, it's up 25 percent in three months. I think a lot of the conversation has turned to not how high oil is going, but whether the trade has topped out.

Why hasn't it? So for Marathon in particular, I mean, it really hasn't moved as much as Chevron and Exxon have lately. It's been consolidating around the $70 price point. And I think that traders can get in right here and target about $85 with a stop below $70. So while the other ones have been a little bit higher, I do think there's still more room to run with Marathon. Amazon's been a tricky one. They announced the split, obviously, but why that one over some of the other mega caps? You know, Amazon had a muted move last year, and a lot of it had to do with the fact that they were

investing a lot in their supply chains. But you know what? Amazon crushed it last quarter. And when you're looking at Amazon, statistically, they rally about 6% going into the three-week timeframe prior to earnings. That timeframe is coming up really soon. On top of that, you have the split. Yes, I know it doesn't change the underlying fundamentals, but retail traders are going to come in and buy that thing. Look at what happened to Apple, Nvidia, Tesla pre and post split. I'm definitely a buyer of Amazon here. All right. Points well taken. Thanks for being in overtime, Daniel Shea.

We'll see you soon. Have a good weekend. Best week for stocks since November of 2020 for the major averages. That does it for us in overtime. I'll see you next week. Fast Money's now.