Closing Bell - Closing Bell Overtime: Markets Rebound, Boosted By Regional Banks; Legendary Investor Mario Gabelli on Defense, Industrials and the Consumer. 3/14/23

Episode Date: March 14, 2023

The Dow snapped a 5-day losing streak and the Nasdaq posted back-to-back gains. Regional banks finished sharply higher. Nuveen’s Saira Malik gives her take on this morning’s inflation report while Annandale Capital’s George Seay discussed why he still likes Meta and Apple. A US/Russian confrontation over the Black Sea briefly caused markets to tumble; former Defense Secretary Mark Esper gives his take on how the two nations can reconcile. Legendary investor Mario Gabelli discusses what stocks he likes now, including some names in defense and the consumer. Cadre Executive Chairman Ryan Williams discusses the ripple effects from rising rent costs on commercial and residential real estate. Plus, what earnings from Lennar reveal about the consumer and the economy and why bitcoin is rallying despite negative headwinds. 

That's right. Closing near session highs as stocks snap their losing streak. That is the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. Coming up on today's show, billionaire investor Mario Gabelli joins us exclusively with his thoughts on the market, M&A, and top ideas right now. Plus, a key read on rates and housing when we get results from Lennar, the country's second largest home builder. Let's get straight into today's market action with our first guest. Joining us now is Sarah Malik, Chief Investment Officer at Nuveen. Great to have you on. A lot of cross currents today. You had CPI that was largely in line with expectations. You have all this debate about what the Fed's going to do. You got bank stocks rallying. And then to top it off this afternoon, some geopolitics entering the fray and digging stocks for a short while. Your take on the market right now and where we go from here.

We saw a relief rally today for two reasons, and that's some stability in the banking sector and a CPI that wasn't surprising. But I don't think we're out of the woods yet. Just looking at the banking sector that was already dealing with the repercussions of higher interest rates and the impact on net interest margins. And now after the Silicon Valley bank debacle, we're going to be looking at potential capital raises, tighter regulations, and most importantly, the start of a consumer credit cycle, which puts us in the camp of when, not if, a recession. Now, looking at CPI, we're still dealing with sticky rents, which are remaining very high. And also, services spending is still high and good spending is not

moderating at the pace we hope. Narrowing that down to what does the Fed do? I think 50 is off the table, but so is a pause. Most likely, they'll do 25 basis points to balance financial system stability with still high inflation. So, Sarah, people are breathing a sigh of relief that CPI was in line, as you said, but it's still really pretty high. And at the same time, the consumer's been taking on more credit, has lower savings. How does that resolve into the back end of the year? Because a consumer with higher credit and higher interest rates and persistent inflation, not a great combination. Sure. And I think that's why eventually we have a recession that starts to

correct this. But looking at inflation on a long term basis, I think it's going to be tough for the Fed to get back to the two percent inflation level target. We may settle down even after a recession at higher levels than that. And that's often what we see pre pre the GFC. Anyway, the consumer and employment are keys to the depth of the recession. And that's often what we've seen pre the GFC anyway. The consumer and employment are keys to the depth of the recession. And the consumer has been strong, showing some signs of weakening with dipping into their savings rates, taking on more debt. I think, though, the banking sector is another crack for the consumer here because they'll start tightening their credit standards and that weakens the consumer more. So now we're dependent on the

employment market. And often you see the employment market crack right at the start of a recession. So just because payrolls remain strong doesn't mean that a recession won't come at some point. Yeah, it's arguably the most lagging of lagging indicators when it comes to recessions. You keep saying if not when. When do you think and what does that mean in terms of how you're positioned in this market right now? I think that the indicators of watching the employment market closely is going to be one indicator of when a recession comes. And later this year or early 2024 will probably be when we start to see that recession take place. We're seeing cracks in manufacturing data and these banking industry issues, if anything, start to pull forward the risk of recession. Last week, I'd seen some notes talking about perhaps a recession in 2025. I think it's more of a late 23, early 2024 issue because

of many of the declines in the economy and now with the consumer that we're already seeing. Yeah, it's a lot sooner. Sarah, thank you. Thanks for having me. Well, let's turn now to the breaking news this afternoon that a Russian fighter jet collided with an unmanned U.S. military drone, a Reaper, in international airspace over the Black Sea. That news sending stocks lower around 1 p.m. Eastern time. They did recover into the close, but certainly having an impact and getting folks' attention today. Former Defense Secretary Mark Esper joins us now.

He currently serves on the board of Epirus, a defensive commercial-focused tech company. Secretary Esper, it is good to have you on a day like today. How unusual is it to see something such as this? Because this incident involves a U.S. craft. It involves a Russian fighter. We're just over a year into this war in Ukraine. Is there a real risk of escalation here? So Russian behavior like this in terms of unprofessional and unsafe flying is not unusual. During my tenure, we dealt with this in the Black Sea, whether it was with regard to our aircraft or our ships. But what is unprecedented here is that they would actually bump into, it appears, this MQ-9 Reaper and knock it down out of the sky, which tells me that they were flying dangerously close.

And I suspect it was an accident committed by the pilot, poor piloting. But nonetheless, it stirs things up, right? It risks escalating things unnecessarily. But I think more facts will come out in the next 24 hours or so. Yeah, and certainly we have U.S. officials, John Kirby at the National Security Council, for example, a spokesperson there holding a press briefing earlier, the DOD putting out statements in light of what we've seen happen today. What are the next steps? How does the U.S. ensure this doesn't become an escalatory scenario between essentially two nuclear powers on the world stage.

Right. I suspect that DOD officials at every level, from the chairman of the Joint Chiefs of Staff on down, maybe even the secretary of defense, are reaching out to their counterparts to understand what happened. And the Russian explanation will have a bearing in terms of how we respond, but also messaging to the Russians that this behavior is unwarranted, it's unsafe, and it could lead to things that nobody wants to get involved in, some type of escalation or further confrontation. And I suspect the State Department is sending similar messages. So again, what the Russian explanation is, how they react to it will have a big bearing in terms of how we respond. But look, we need to be very clear with the Russians, both privately and publicly, that we're not going to tolerate this unsafe behavior because all it does is put us into situations that create friction unnecessarily.

OK, so this is happening near the conflict in Ukraine. What are the chances that this is Russia's attempt to say, don't send more weapons over there than you have already? You don't escalate because, hey, things can happen. I don't think it's related to that. We've been flying and sailing in the international waters of the Black Sea for a long time. Again, things like this happened during my tenure. Not a knockdown, if you will. But what I suspect is the Russian pilots were getting too aggressive and weren't acting properly,

and they made a mistake. And the result was this MQ-9 being knocked down and eventually being brought down, if you will, by the Department of Defense into the waters of the Black Sea. So again, I suspect there's been a lot of recalibration on the Russian side, but we'll wait to find out in the next 24 hours what both sides are saying. But again, I do think we need to assert our right to fly and operate in international airspace and international waters without this type of bad behavior happening. This comes on the heels of the Defense Department just yesterday rolling out the details about its fiscal 2024 defense budget wish list, if you will. What does this do to the trajectory of defense spending at a time where

there is a lot of investor interest in how that's going to shake out and how lawmakers shape that budget over the coming months? Well, look, I was disappointed by the budget. You know, they they the administration talks about a three point two percent or so increase over last year's budget. But when inflation is five or six percent, that means your defense spending is actually down. And then they tell us that they spent 30 plus billion dollars to invest in the industrial base, which makes complete sense. But when you're putting 30 billion dollars or so there, that means you're taking it from somewhere else. So, look, I think the budget is inadequate. I suspect the Congress in bipartisan fashion once again will respond and they'll beef

it up to where it needs to be because, look, we have to invest in our defense industrial base. We have to help the Ukrainians. We have to push back on the Russians. And we have to retool DOD and modernize it for the challenge ahead with China. It's as simple as that. Secretary Esper, we appreciate your time today. Thank you. Thank you. Now let's get to CNBC senior Market Commentator Mike Santoli at the New York Stock Exchange. Mike, what are you focusing on? Well, John, some erratic action, but resolved to the upside here. We understand why the market is jumpy.

We've just gone from a phase where we were worried about an overheating economy and the Fed going higher for longer with rates to one where we're worried about, you know, bank disruptions and a disorderly chain reaction of capital flight from that sector. Well, we got some breathing room today, mainly because we heard no new bad news. So one year chart really does start to bring home how we've been more or less in a trading range since last May. The one thing people have been watching, you know, is some excitement when we broke above that line, kind of created a new uptrend from October. Well, we're back below that.

And even at the highs of the day in the S&P, we basically just touched Friday's high. So still wait and see ahead of options expiration Friday as well as, of course, the Fed meeting next week. Now, the CPI, as we were just discussing, has came in pretty much on target. So no incremental reason to be worried, but definitely leaves in play a variety of kind of responses from the Fed. Take a look at the market's implied expectation for the rate of inflation over the next decade. Now, this is derived from the way TIPS, Treasury Inflation Protected Securities, are priced. And what you'll see over the last few years is that huge ramp up. People worried that we were really going to have much hotter inflation

for a long time to come. And now it's more normalized. Now, it's definitely above the 2 percent level where it was very steady before the pandemic. But it's trending a bit lower in that direction toward the lower end of its range. It implies that the market collectively believes that the Fed is going to accomplish the mission of getting inflation down to the normal range, whether it happens the easy way without a recession or the tough way with some kind of recession. I do always like to caution that these are not necessarily sort of the projections that you can bank on, that this is going to be the inflation rate for the next decade. But it does show the way investors are trying to price that prospect, guys.

OK, Mike, so we got the CPI number in line. The regional banks seem to sort of bounce back. Are we still set up for more volatility in the next few days ahead of the Fed decision? Or does today's trade suggest that maybe not as much? I think there's room for more volatility always, especially because the bond market itself is really whipping around in pretty violent fashion. And that's usually something that it's hard for stock investors to get comfort with. I don't know that we're fixated on any news. It's almost like the absence of new bad news coming out of the banking sector might be enough to keep things OK for a little bit.

We did get a real selling crescendo yesterday in the early part of the day, got people very panicky. That's sometimes good to put in a near-term low. But I don't think anyone's real secure that we can rely on that for not being revisited in the next several days. Okay. Wording issued. Mike, thanks. Shares of Meta, speaking of, jumping 7% today, closing at the highs after the company announced yet another round of layoffs.

We're going to talk to a top portfolio manager about what investors should do next. And later, don't miss our exclusive interview with Gamco's Mario Gabelli on today's rally, his latest stock picks and so much more. Overtime's back in two. Welcome back. It has been a strong start to the week for tech stocks. The Nasdaq 100 up more than 3%. Meta helping to boost the index today, having its second best day of the year after CEO Mark Zuckerberg announced a second round of cost cutting, slashing 10,000 jobs, closing 5,000 open positions. Meta is one of the largest holdings for our next guest. Joining us now is George C. Annandale, Capital founder and chairman. George, welcome.

Okay, so Meta, I mean, this cut takes us now below 2022 employment level. So we're not just cutting last year's gains, but is this excitement warranted or is there more that we need to see on the growth side as well? Well, that's a great question. And thanks for having me on. I think that this company is going back to classic business 101 blocking and tackling, and they're cutting back on a bloated cost structure and overly aggressive employee base because as we all know tech and silicon valley love to grow and that's a good thing and meta has years of growth still ahead of it i don't think its growth story is horribly impaired but they're cutting way back on some of these visionary projects it's it's kind of the equivalent of in football throwing a 60-yard bomb, which your odds of success are very low.

And they've gone back to power sweep right and making four or five yards. And Wall Street loves it. They love that they're going to have higher margins and higher profitability because they're going back to basic business premises. So just to dig into that a little bit more, because you have reports today that Apple's delaying bonuses for some corporate divisions and expanding its cost-cutting efforts, too. The fact that we've seen these mega-cap tech names rally, despite all the volatility and all the turmoil in the market more broadly in recent days, all the cost-cutting, the focus on operating margins, this puts a floor on these stocks and they become attractive because of it? Well, as long as the numbers support that eventually. But Apple's got to be potentially the greatest company the world's ever seen and also one of the best

run companies the world has ever seen. And they're very no-nonsense about their cost structure and their employee base and how they run their business. So I'm not surprised they're taking the right steps there. But we're going to know in time what the margins look like going forward for these businesses and what kind of growth we get in the overall economic climate, both domestically here and around the world, because these are truly global businesses. And I think the verdict's out. But I do think that the severe downturn we got last year where the Nasdaq was down in the high 30s at the worst and the S&P was down in the mid to high 20s. We may have a floor there, but we're going to have to wait and see. It's probably going to take about a year and a half to play all this out. So, George, I like this contrast between Meta and Apple, though, because Apple didn't scale up hiring to the degree a lot of these other technology companies did. So Meta's cutting 21,000 people and Apple's not doing anything

nearly of that scale. They're just delaying some bonuses. How much potentially has Meta hobbled itself here? Zuckerberg in this note essentially said we got too bloated. We had too much middle management. Our ratio of engineers to non-engineers was off. Is it as simple as letting go of some people and then it's running like a well-oiled machine? Probably not. It's probably more complicated than that. But I think the market is really saluting that he's showing some humility and showing that he got way too aggressive and way too arrogant in terms of what their prospects were on on visionary projects that are going to take 10, 15, 20 years to play out. And they're getting back to running a business. And that's why you see that stock do so well when it had its first big bump and went up over 25 percent on earnings recently. I tried to talk to my senior research team about

maybe turning back a little bit because it was such a big move. And they gave me a big raspberry and said, no, we're going to hold the stock because it's still so cheap and we need to give it a longer time to perform. And today validates that. This stock's got more potential. It's still not expensive at all. Just sticking with the labor theme here, what we saw with Uber and Lyft and the fact that the California legislation that would have reclassified workers was struck down as unconstitutional. Is that a tailwind for companies, some of these other companies like Uber and Lyft and the like that focus on contract workers as well? Yeah, it might be. I think it really depends on how those companies are run. We're much more

constructive on Uber than we are Lyft. We think Uber's reached a point where it could really maximize its margins and cash flow going forward. And they've got a much more robust, stronger, bigger business. We're concerned about Lyft. I've shorted some put options on Lyft, but well below where it's trading at right now. And I think the jury's still out on that as a business. But it's obviously good news for both of those companies. Okay. George, thank you. Thanks for joining us, George. Thank you all. Up next, billionaire investor Mario Gabelli joins us with his latest thinking on the market, the Fed and the areas where he is looking for opportunities now. Welcome back to Overtime. Time for a CNBC News update with Bertha Coombs. Bertha?

Hey, John. Here's what's happening at this hour. Ohio is suing Norfolk Southern over last month's train derailment, saying the fallout from what it calls a highly preventable mishap is going to reverberate through the state for many years to come. The federal suit seeks to force the railroad to pay for the cleanup, environmental damage and ongoing water and soil testing. Representative George Santos has formally declared he is a candidate for re-election. The filing with the Federal Election Commission allows him to keep fundraising, but he can still change his mind about running. The Republican lawmaker faces multiple investigations.

And CNBC has learned that Morgan Stanley plans in the coming months to roll out a chatbot powered by OpenAI's technology for its 16,000 financial advisors. Morgan, they say it'll be like them being able to tap the smartest person in the room when they call their clients. I wonder longer term if this is successful, what it's going to do to headcount. Lots of questions. Bertha Coombs, thank you. From high inflation to geopolitical risks to the recent bank failures, the stock market has been on a roller coaster ride. But this can be an opportunity for stock pickers. Joining us now, one of the most successful billionaire investor

Mario Gabelli of Gamco Investors. Mario, it's so great to have you on Overtime. Welcome. Well, I'm glad to be on your show. And congratulations on your new program. Thank you. There's so much to talk to you about. I was going to start this conversation around inflation, given the CPI data we got this morning. But given the events of the afternoon with this Russian fighter jet downing a U.S. Reaper drone that was operating over the Black Sea today, I think we need to start with geopolitics, since you are such a significant investor in the aerospace and defense sector. Your thoughts? Well, look, if you sat here three years ago,

you wouldn't have thought about a product coming out of Wuhan. You wouldn't have thought about a ground war in Russia. You don't think about what's going on between Iran and Israel, what's going on in North Korea with hypersonic missiles. You don't think about what Xi might do or not do in regards to China. And they'd say, set a raw orchestra. So the Defense Department of the United States, the Defense Department of Japan, the Defense Department of NATO, the Defense Departments of those NATO countries are all saying, listen, we have to be better prepared. So the notion of our own defense budget in the United States going up to X dollars,

it was just announced the other day, let's call it $800 billion. And you look at the amount that the Chinese are putting in, $230,000, it sounds lower, but, you know, look at the expenses. And so the notion of investing in an area that is for our safety, look at China with regards to what they're doing in the South China Seas, look at what we, China with regards to the China One policy, with regards to what they're doing in the South China Seas. China with regards to the China One policy, with regards to Taiwan. So those are the issues. We hope that the world is peaceful. We like that. We like the notion of growth for the economies, the raising of living standards around the world. We need a food crisis, a water crisis, an energy crisis, but we also have to be prepared. And so in terms of the stocks that I like, you know, we can talk about several of those, one of which I kind of

call four T's actually, TTT, but one is the defense stock, and that's Textron. Textron has 205 or 10 million shares outstanding. The stock's about $70. Call it 69 or 70. You're talking about a $14 or $15 billion market cap. They'll earn $6 or $7. One of the programs for the Bell Helicopter Division is a replacement of the Blackhawk, which is called a Flora program. So, you know, that would be an example. Crane is spinning off their merchandising business. That stock will also be attractive. But these companies are also tied in with what's going on with Boeing, what's going on with Airbus, what's going on with Comac 919, which is the Chinese version of some commercial aircraft. And the commercial aircraft business is doing quite well at the moment. And

backlog shipments are rising, and the incoming orders for these companies are doing quite well. So, you know, that's the way we look at it. Yeah. And of course, Boeing having a really good day today, too, I think finishing the day up about two percent after announcing another big commercial jet order with the different Saudi airlines that are being stood up as well. How how real is the risk regarding geopolitics and rising tensions? I guess for investors in this market, how do you balance that versus everything we're seeing play out on the macroeconomic stage, whether it is high inflation, whether it is the debate now around what the Fed is going to do next week, given what

we've seen with the bank failures? That was a great question. And, you know, look, just look, you have to make an observation of what's going on in the banking sector, okay? And so you look back, there's a lot of crises during the last 50 years, 60 years. I remember the Continental Illinois Bank, the Republic National Bank, the Herstadt Bank, all having challenges back in different time periods. And obviously, just recently, 15 years ago, it was Lehman Baron and so on. But the one that sticks in my mind for this meeting, for this conversation, is the fact that in 1989-90, you had a savings and loan crisis. Duh. And what the accountants did, and this is important, the accountants passed a rule that said, I think it was FASB, whatever,

and it's got a code by the accountants. And they basically said, look, if you have an investment, either you can hold it to maturity, HTM, or you have an available for sale accounting, which means you buy and sell and you market to market or market to best value immediately. And what happened in the last couple of years is when interest rates reasonably low or zero for a period of time, money flowing into the banks and staying in commercial deposits or basically in a low cost bank deposit or whatever, or a checking account, all of a sudden everybody starts lending, borrowing, and making investments, long thinking they could buy a 10-year T-bill, a Treasury, not bill, but a Treasury note. And now all of a sudden with the public annual reports coming out, you look with a laser on them and you see the losses that have not been recognized. Right. Lots of surprises, right? Because because rates went up so fast. And I

wonder, kind of connected to that and the overall economic situation, what is your base assumption for what happens to the consumer in the back half of the year because of reduced savings, more credit card debt and how that affects stocks? It's a great look. We don't look at things that slowly. Look, I started my firm and I started as a sell side analyst in 1966. The Dow was a thousand. Fifteen years later, after I had already when I started my firm, it was a thousand. So, you know, I think during the next period of time, the markets may be flat for two or three years, but you can still make a lot of money, which we did during that relevant period. So that's my dynamic.

Now, let's go back to your details. The International Monetary Fund, IMF, in October of 2022, the last time they issued some numbers, and they're going to update them shortly, said the world GDP is going to be 108 trillion. Of the 108 trillion, China is 20%. The United States is 24%. And Europe is 17. I am in this camp that you have to look globally. And China is going to be up sharply in the second half of 2024 versus the second half of 2021. And that'll have an impact on macro demand, everything constant in the geopolitical world. The second part is the united states look at the consumer the balance sheet just came out for the fourth quarter

consumer wealth was very substantially above expectations at that period of time loans are 18 trillion up from 13 trillion so there's spending power now let's break the consumer down it's 70 of gdp and i don't look at this stuff i just know it but uh autos which i'm importantly involved in because we that's one of our ecosystems that we have accumulated compounded knowledge on autos uh inventory at the dealer level at the end of march i think uh the industry has and i live with the number about 1.9. The average for the previous 10 years was 3.9. And even if they don't order that much, that is going to be an important part of that ecosystem. Then the second part is the consumer obviously has to have higher wages to offset the inflation that you saw today in terms of wages.

Rents were supposed to come down. They didn't come down. So those are the dynamics. Now, more importantly than that, when I look at the balance sheets of companies, the managements this cycle have finally learned how to deal with how to deal with buying inventory, how to pass through pricing, how to adjust their contracts. And so that the learning curve of working capital for the industrial part, which is not as important as in the 70s, but it's still important, is they're handling that inventory and commodities, and you double-ordered, you're canceling orders. So those are pretty dynamic elements. And, you know, that's the way I look at the consumer. I think it'll be okay in the second half of the

year, even with the current interest rates. And I want to get into some of those consumer stock picks and also some of those industrial picks with you as well. Mario, we're going to take a quick break. If you could just stay with us and we will finish this conversation on the other side of this break. Names including names that you're watching, including in the media space and in the industrial. Stay with us. Lennar earnings are out. The stock moving a bit higher after hours. Diana Olick has the numbers. Diana. Well, John, it was a nice beat for Lennar in tough market conditions. EPS came in at $2.06 a share versus estimates of $1.55. Revenue of $6.49 billion versus estimates of $5.93 billion. Deliveries were up 9% and above guidance, while new orders were down 10%. But that's actually not that bad for this market. And this all in a quarter that saw volatile mortgage rates. Lennar's chairman, Stuart Miller,

said that hit sales in December, but helped them recover in January and hold into February, even when rates jumped higher. Miller said homebuyers are considering the possibility that today's interest rate environment may be the new normal. Accordingly, the housing market continues shifting as growing household and family formation continue to drive demand against a chronic supply shortage. Lennar dropped prices of both new home sales and those in backlog to promote deliveries and reduce cancellation rates. It still, though, reported a cancellation rate of 21 percent. Morgan. Diana Olick, thank you. Shares of Lennar popping 2 percent right now. Let's bring back in Gamco's Mario Gabelli. Mario, I want to get your thoughts on Lennar, because a 10 percent drop in orders, as Diana

just mentioned, not so bad for a rate-sensitive area of the market that has just been hit so hard as the Fed has tightened? You got a lot of facets to that question. First, you know, Powell has to continue to look at the whole subject, the rates runoff of the debt that he inherited, even though he's putting a lot of that back. You know, they put down that he inherited, created during the last three years, and basically, they took down about $840 billion, but they're going to have to put that back into the system. But the second area, you asked me about consumer of 70 percent. Housing is about 10 industrials, of which housing is an element, as the economists would say. That's an important part. And from my end, you know, I bought my first house at a 6% mortgage a few years ago at $35,000. And today, going back to 6%, we're going to have to get used to it. The

tax deduction is not as easy as it once was because prices have gone up and you're lagging that policy. But from Lenore's point of view, the other thing you should think about, don't buy the stock, buy the voting stock. The voting stock sells at $16 discount. You had companies that families that controlled like the one up in Victor, New York, where they got a significant cash premium for converting. That's Constellation Brands. They're low. They're voting stock into ordinary voting stock like every other shareholder and you got that with several other companies okay a company out in long island did the same thing so all i have to do is buy the the vote the higher voting stock

at a 15 or 16 dollar lenard.b uh and that's the way i would play that you got a good business with a good management i just like to make sure you're buying the right instrument it's gresham's law that says you know find the better product because you're driving out the good will drive out the bad over time in event uh with regards to uh going back to your question about other stocks that i like let's talk about ttt i gave you you Crane. I gave you Textron in the defense area and commercial aviation. But in the terms of the other T is Tegna. Tegna is a stock with about 210 million shares. I say that because I don't know what they've been buying back in the last three or four weeks. And basically, the stock is 15 and a half. They

operate TV stations. They had a deal with a Sue Kim standard general to be bought at $24. The stock is $15.50. I think that two years from now, even if the federal FCC has given them some kind of a stalemate by doing something that was unusual. And basically, either way, I think they'll earn $3 in 2024. Broadcasting is going to do extremely well in a political environment year of next year. And secondly, the companies that we talk to, like Procter & Gamble and so on, and consumer products companies in the food area are starting to bring back new ideas, and they're going to spend money on it. The car dealers are going to spend more money. So it's a very good picture. Tegner is a

win without a deal. It's a win with a deal. Okay. And the other T that I would tell you is a German company called Trayton. There's 500 million shares at 18. Basically, one of the largest shareholders would call icon of Navistar. They bought Navistar. So it's the MAN group in Europe. It's 90% owned by Volkswagen. So there's 50 million shares outstanding. And those earnings are going to do extremely well independent of these cycles because Navistar is coming back under their stewardship. So those are the three T's that I would like in different industries in different parts of the world. Okay. I do want

to get your thoughts more broadly on the media landscape, given the fact that you made your name, at least in part, on your successful track record investing in that industry. We saw the short-lived proxy war for Disney. You've got belt tightening across the industry. The focus has shifted from growth at all costs as these legacy media companies have rolled out their streaming services to now profitability and how they're going to make money doing it. Who are the winners? Do we know yet? Yeah, well, you know, theatrical box office used to be you and I going to the movie theater was 42 billion. China was about 13 or 14 billion of that. That's coming back, along with gaming in Macau.

Basically, that's theatrical. Now, Netflix, you know, kind of showed you Glass Onion briefly in the movies to do whatever. I don't know what they were doing. But bottom line, the amount of money on content is significant. And I'll just have to read the number. It was estimated for this year at about $130 billion for all the companies. You know, three or four years ago, it was $90 billion. So you've got that content as out-of-pocket cash. Then they put it into, part of it is not amortized. Then it goes through the inventory and that goes through the P&L.

That's flattening out. Now, I'm assuming that the Writers Guild, the Screen Actors Guild, all of those strikes are not going to hobble anything at the short term. So what companies do I think will make a lot of money two and a half years from now where you can double and triple your money? I have to focus on Paramount. Paramount has 650 million shares, good content, good management. Obviously, they're suffering negative cash flow short term over the next year or so from going into direct to the consumer called streaming and other dynamics. But they have good content. They know how to make it. They know how to run it. Bakish is doing a good job. Then you got Zasloff at Discovery. He took on Warner Brothers and obviously had a few potholes that he didn't think about.

That stock's around $14. Again, you know, one point. And that's it. So we like those. All right. I have to ask you one more question quickly. I spoke to Scott Wine, the CEO of CNH Industrial, earlier today. I got his outlook on the heavy machinery landscape,

given the fact that they sell machines into construction and agriculture. I just want to play a soundbite from that. Take a listen. Certainly the immediate signs for our direct markets are still quite good. You know, I do believe that the likelihood of a recession is quite real. But, you know, because of the we trade more on the ag cycle and the ag cycle continues to be strong, soft commodity prices, while they've drifted down a little bit, are still above the historical norms. And, you know, on the construction side, again, we see strong demand in most of our markets. So certainly I think the overall global economy may weaken, but we like our current end markets right now. You're invested in this name. Just final thoughts, whether it's this company, the industrial landscape or the economy in general.

I are a I.I.A.J. are two acts that will benefit the whole equipment area. He's in ConExpo in Las Vegas. I have two analysts there looking at kicking tires, so to speak. Case New Holland is around fifteen dollars. One point three billion shares. You've got to buy it. Mario Gabelli, thank you so much for joining us today. We appreciate your insights and your picks. Great insights. The volatility index pulling back today, but it saw a big spike in the past week as fear ramped up on Wall Street. Mike Santoli is going to break down the levels to watch

when overtime returns. Welcome back to Overtime. Let's get back to Mike Santoli taking a look at two measures of volatility in the market. Mike? Yeah, John, for two different assets. So here's equity volatility, the very familiar CBOE volatility index on the S&P 500. And you see we did have a pretty good spike here up toward the 30 level just yesterday. That has been a little bit of a demarcation. When you get up around or above 30 and then spike lower, it usually means kind of the fever is in the process of breaking. We did see much higher readings last year, but that was as we were making new bear market lows in the S&P 500. This time we still were in kind of a more modest pullback range. So it seems like for the moment, the fever has broken.

But you see a lower low on this chart. Now, take a look at the Treasury market's version of the VIX. It's called the MOVE Index, developed by B of A Merrill Lynch. And you see it's just way off the one-year chart at this point. So, yeah, we had a really jumpy year in Treasuries last year. We had a Fed with an aggressive tightening cycle. What's happened since the Silicon Valley bank failure has been well elevated, well above that. So clearly uncertainty about the Fed. And this is something it's going to be hard for the equity markets to really get sustainable traction unless you see this recede back to normal levels. Mike Santoli, thank you.

Bitcoin prices touching their highest level since June of last year following the banking turmoil of the past week. We're going to talk about why crypto, well, specifically Bitcoin, is getting a boost when overtime returns. Take a look at shares of Smartsheet after hours up more than 9 percent. The enterprise software company beating on earnings and revenue. The company also announcing a new chairman of the board. We're going to hear from the CEO tomorrow here on Overtime. Looking forward to that.

Well, stocks are all over the map since the collapse of SVB. But one area, one asset class that's been rallying, Bitcoin, touching its highest level today since June of last year. That's despite some negative headlines, including collapse of two crypto-friendly banks, Silvergate Capital and Signature Bank. So what is driving the recent rally? Let's bring in CNBC.com investing reporter Taneya McKeel. Taneya, it's great to have you here on set. Is this rally all about the idea of blowback from banking? Is it the fact that we've seen risk on with other types of asset classes and parts of the market, too? It's a really interesting time, Morgan, especially for the one that follows the prices day in and day out,

really to see some of this volatility come back. Like you said, it would make a lot of sense because Bitcoin was, in fact, created out of the banking crisis. And I think even the first block that was mined even referenced the bank bailouts. So from a narrative perspective, that makes a lot of sense. But I think even with all of the banking crisis front and center right now, this is really just a move after the CPI data. It's an extension of the rally yesterday. But you really saw that big jump this morning right after 830 despite the banking narrative Despite the banking narrative crypto really trading still like a stock and motivated by a lot of macro factors So is there any consensus on what it's moving for? I mean, it's not an inflation hedge

It's maybe not the future of money because the dollar right now seems to be that right I think that the Bitcoiners would tell you it's kind of all of it. But in terms of the prices alone, it's going to continue to move like a stock, even though as of today, Bitcoin's correlation with the Nasdaq is actually at its low at historic lows. Even it's still driven by a lot of macro factors and a lot of investors and analysts don't really see that changing until you see institutional investors start to come back into the market. So they've been sitting on the sidelines post FTX. And, you know, it's it's.

But are they if there's two banks that have collapsed that were handling all of those flows, are institutional investors coming back in the market? Yeah, it's a it's a good question. There's still, I think, despite the fact that you saw this big relief rally in January coming out of everything to do with 2022 and after FTX. Yeah, they're still sort of sitting on the sidelines. And you can tell that because volatility was at an all time low in January, which is both good and bad because volatility is the biggest hindrance for institutional investors. But it's also, you know, we're still as of today down more than 60 percent from Bitcoin's all-time high. Not going to get back there without some volatility. Indeed. Tania, thanks. Thank you. Something else on the rise besides Bitcoin? Well, the rent, which helped push up CPI prices this morning. We're going to talk to the CEO of real estate investor Cadre about that trend and the

impact of the big rate moves we've seen on his space when we come right back. Welcome back. Higher rent costs were a big contributor to today's CPI report with Shelter making up the primary chunk in the rise in consumer prices. Joining us now to talk about that and the big moves we've seen in rates in the last week is Ryan Williams, founder and executive chairman of Cadre, a commercial real estate investment platform. Ryan, good to see you. So this bank situation and interest rates, how is it complicating an already tricky environment with high rates in commercial real estate? Yeah, thank you, John. It's good to be with you. Look, I think that what's happening at this point in time is, you know, you're really starting to see a barbell effect. You know, you're starting

to see some clear winners and losers from an asset class and sector perspective. There's no more, you know, rising tide lifts all boats. Thematic investing is no longer in vogue. And instead, you know, you have to be a specialized sharpshooter in order to really find opportunity. Office as an overall sector is incredibly challenging. We're just beginning to see some of that stress arise. And I would bet that you see a lot more distress beginning to play out in that space. Meanwhile, in multifamily, you know, multifamily rents are incredibly attractive from an affordability perspective versus single family, given where rates are. So you have these interesting barbell effects that are only being exacerbated by the interest rate and inflationary environment. Okay. I keep hearing that multifamily and industrial are better, stronger bets right now

versus office. But we just had this news from Meta, you know, Mark Zuckerberg saying, I want people in the office again. Productivity is important. So are there pockets of recovery in office? Are you finding any opportunities out there? Yeah, absolutely. I'm in my office right now. And we've got a lot of folks here as well, too. We are seeing some recovery in office and, frankly, some stability and consistency to us. And when we're thinking about investing, it's all about quality and a flight to quality. And I do think that office assets that offer unique amenities, where you have landlords who are investing heavily, are going to be resilient. And the flip side, class B office assets, you know, older office

buildings where, you know, you might have been able to see higher rents because you were in New York or San Francisco, are seeing extreme stress and distress, even with some of the largest owners of real estate giving back the keys at this stage. And I think, again, we're just beginning to see the tip of the iceberg for those lower quality assets. But for higher quality, there's nothing like being in person. And I think those buildings will continue to outsize growth. Ryan, I want to go back to multifamily for a minute since you are heavily invested there. The rent prices that we saw in CPI this morning, we know that those numbers tend to be very outdated by the time they make it into that monthly print. What are you seeing at your properties in terms of rents?

Are prices actually starting to come down right now? Yeah, we're absolutely seeing a muted level of growth across our multifamily properties. We're not seeing declines, but we are seeing that instead of a 5, 6, 7 percent type annual year over year rent growth, we're closer to 2 to 3 percent. And we're seeing, you know, 25 to 50 basis points of decline really every quarter over the last few quarters in terms of growth. And our view is multifamily is an incredibly defensive asset class. I don't think we'll start seeing any declines. But I do think that, you know, the days of, you know, double-digit type growth projections are over. Okay. Ryan Williams, founder and executive chairman of Cadre. Thanks for joining us and giving us that insight.

Thank you. Well, it was a rally for the major averages today with the S&P finishing the day up 1.7%. We'll see what tomorrow brings. Indeed. And that's where we'll leave it. That does it for Overtime. Fast money begins now.