Closing Bell - Closing Bell Overtime: Mixed Market, Crypto Recovery Fund & Shopping For Retailers 11/25/22

Episode Date: November 25, 2022

It was a mixed day on Wall Street. The Dow rallying more than 150 points while the S&P 500 and Nasdaq ending in the red, although all three major averages were higher for the week. Solus Alternative Asset Management's Dan Greenhaus says he is still bearish on the market because he thinks the Fed's rate hikes will have a more negative impact on the economy than many investors are expecting. Crossmark Global's Victoria Fernandez says she is buying on market weakness and reveals where she sees opportunities. SVB Private Chief Investment Officer Shannon Saccocia discusses the two sectors she thinks could be ready to break out. Quadratic Capital Management's Nancy Davis on why the market's inflation expectations may be overly optimistic. Neuberger Berman's John San Marco reveals the top retail stocks on his Black Friday shopping list. And Fundstrat Global Advisors' Tom Lee reacts to Binance's new crypto recovery fund and why he still recommends investors buy cryptocurrencies despite FTX's collapse.

And welcome to Overtime, everyone. I'm Sarah Eisen. In today for Scott Wapner, you heard the bells, but we are just getting started. Coming up this hour, Tom Lee joins us with his year-end playbook, plus his first comments on reports of a crypto recovery fund in the wake of the FTX bankruptcy. But we start with our talk of the tape, global economic uncertainty putting hopes for a year-end rally into question. New concerns today about the rising number of China COVID cases. And here in the U.S.,

we await some key reports next week on manufacturing and on jobs. Our plans for a year-end rally intact. Let's ask Dan Greenhouse, Solus Alternative Asset Management's chief strategist and economist. Hello. How you doing?

Welcome. Happy Black Friday. Thank you for. Hello. How are you doing? Welcome. Happy Black Friday. Thank you for having me. So, year-end rally intact, yes or no? Yeah, I mean, listen, seasonality, and everyone on CNBC has been talking about this for weeks, seasonality is an incredibly powerful tail link for markets, and I don't see any reason why rising COVID cases out of China, for instance, should derail that. Well, because then there are some serious questions about the global economy.

Sure. And I think that's more of a multi-month or multi-quarter story. I'm always fond of reminding people that even the depths of 2008 December was an up month. And so, you know, just to underscore the power of seasonality. So you're still kind of bearish long term. Yeah. I mean, listen, your lead in mentioned that next week we get the employment report and we have the ISM report. And Powell speaks Wednesday and takes questions. And Powell speaks Wednesday and takes questions. I think investors in general, institutional, where we live or retail, have to wrestle with two competing narratives right now. And the first is, is the Fed going to be able to engineer something resembling a soft landing, i.e.

inflation rates have been coming down, the economy has been slowing, they're going to slow the pace of rate hikes, and they can land that plane, so to speak? Or, if you're in the camp I'm in, you just don't believe that 500 basis points of rate hikes in a 12-month time frame or so results in only weakness in the housing market. And the U.S. economy needs to be thought of as something akin to a very large cruise ship that turns very slowly. And we're in the process of making those turns towards weakness. Do you think it's going to be an uglier economic story next year? Yeah, well, listen, ugly is subjective. I think it's hard for me to imagine that you're not going to have a higher level of jobless claims, a greater number of job potentially losses,

but certainly higher level jobless claims, lower level of employment gains, weaker manufacturing sector, ongoing weakness in the housing sector, and ultimately a consumer that bears the brunt of the bulk of those effects as you get further into next year. I just I would be careful not to say ugly because ugly implies to some people like a 2008 style recession. And it doesn't necessarily have to be that, obviously. It could be something more akin to the early 90s, which was much more manageable. So you're saying that's not in the earnings expectations or in the markets yet? Well, the earnings conversation is also a bit nuanced in the sense that on the one hand,

I've argued, and I think everybody has, that earnings expectations were too high and needed to come down. That's in the process of happening, no surprise there. But at the same time, at the risk of being a broken record on the channel, nominal earnings or a claim on nominal GDP, and the nominal GDP is doing okay, albeit going to be growing more slowly, and that should perhaps boost nominal earnings growth more than perhaps some of the more bearish forecasts expect but that said I think we should for the next couple of months for sure expect those earnings expectations to continue to decline so how are all these ideas how are you positioning the portfolio like that without getting too specific about what

we're doing for fear of upsetting regulators in my entire compliance department, I think in a sectoral sense... They're out shopping. They are definitely out shopping. That I can confirm. Listen, we've long liked energy, not as a trade, but more of a secular tailwind for reasons that have been articulated numerous times before. I think we stay there. I think on the consumer side of things, the movie theaters and the movie-going space, if you will, is an area that we continue to focus on. That's been

something that Solis has been long been involved in. So I think there's obviously, there are sectors and there are themes that you can still find attractive if you have that early 90s style slowdown, so to speak, or recession. I think the fear everybody has, obviously, is something more dramatic. And in people's defense, if you're our age, and I'm considerably older than you. Oh, no. How much older? No, by many decades.

I think that's true. If you're my age and Josh Brown's age, let's say, you're accustomed to 50% drops in the stock market being the, quote, norm. That's obviously being 2000 and 2008. That's obviously not the case. Recessions can be associated with stock market declines on the order of 25% or 30%. And I would remind viewers that at one point not that long ago, the S&P was down 25%. So if you have a normal recession, you could argue, I'm not sure I'm making that argument, but you could argue we already had the downturn that would be associated with it.

Yeah, now only down 16.5% off the highs for the S&P. NASDAQ's still down about 30. Let's bring in Shannon Sikosha of SVB Private and Victoria Fernandez of Crossmark into this conversation. Shannon is also a CNBC contributor. Shannon, are you as bearish as Dan on the economy? Maybe not quite as bearish, but I would say we're certainly setting up for an expected contraction in growth next year. And I think the important thing is, is really this inflection point of how much consumer demand needs to be destroyed before the Fed can sort of take its foot off the gas. But I would say there's other expectations around the dollar, as well as, you know, just kind of looking at

what are the expectations out of China? You talked about it earlier. I actually think that, you know, one of the things that we've seen over the course of the last several months is that there has been evidence that some of what the Fed was pointing to for their justification of inflation as transitory in terms of supply chain constraints, a lot of those supply chain constraints are easing through a combination of just pure easing as we move into the post-pandemic world, but also the shift from goods to services spending. And so I look at that as a catalyst to say, you know what, even if the Fed can't necessarily engineer on its own a soft landing by being able to decrease consumer demand, we're getting some easing of supply constraints on the other side. And so those two coming together and that modest improvement on both sides really is

what kind of looks for me in the second half of 2023 as engineering that perhaps shallow recession, whereas a couple of months ago, you know, I was definitely more concerned about it being something deeper. Yeah, I mean, is that Dan, is that fundamentally the the chief question around the market now is whether we can get a soft landing still? We've been asking it for months, but it does still feel like the market is pricing that in. Yeah, I listen. And yes, yes, it's down 16 percent. You're pricing something along those lines. I would just say Shannon and I are probably very close, live very close to each other on where the economy is probably going to end up. I just something I disagree with people in general. And I don't think Shannon necessarily just said this is there's so

much faith put in the Federal Reserve's ability to do this properly when history says repeatedly they can't do this properly. And that's not because it's not staffed by intelligent, well-meaning people. It's because 10 or 11 people, guys and girls in a room, probably are not going to manage a $20 trillion economy perfectly. And there's probably... Well, it's the lag, too, that there's all this, the impact of all this. See Raphael Bostic's recent speech. Yes. Long and variable lags. Long and variable lags. Victoria, weigh in here on your on your twenty twenty twenty three. I guess it's Black Friday. We start talking about the playbook for next year. That's right. And I mean, look, I think the the lag that we're talking about is going to be one of the key components that leads us into

next year. I mean, we've already done quite a significant amount of raises when it comes to the fed funds rate we're going to continue to see that I mean we do think we're going to get a fifty basis point raise in December. I actually anticipate we'll see at least one maybe two twenty five basis point raises coming

in the first part of next year and as you mentioned that lag usually takes nine to twelve months. March was our first race so we're just now getting into the effects that we're going to see. So for us that means yes earnings expectations are getting into the effects that we're going to see so for us that means yes earnings expectations are going

to come back down we're going to see growth continue to slow we're going to see that globally as a lot of the other central banks are now starting we saw the the Swiss bank raised seventy five basis points we're seeing other people do it as well so I

think there's going to be a catch up here and we're going to see that slower grow and we do think we'll see that shorter maybe that shallow recession coming into first quarter into second quarter of next year but I think the key Sarah also is that the consumer balance sheets and the corporate balance sheets are still decently strong and for us that means yeah we're not probably not going to get a complete soft landing, but we don't think it's going to be too much concern next year. And we'll be able to bump our way through that. Just have your balanced portfolio to take advantages of the ebbs and flows

that you're seeing in the market. So bottom line, given that view, Victoria, wondering how you're expressing that. Does that mean you're buying on sell-off days? Yeah, so we actually, you know, we talk about trimming on the green days and buying on the red days in the market. And I think that's how you have to look at this. We're not going to say go out there and make a huge shift to your portfolio because of a headline that you're seeing because things can change so quickly. But if we look out there and we go, okay, look, we want to have that balanced portfolio. We want to have some defensiveness to our portfolio.

So we like HMOs. We like healthcare, both in small cap and large cap sectors. We like some of the financials and looking globally, starting to look globally as the dollar starts to pare back a little bit, as other central banks raise rates and catch up with us. We think there are some tweaks you can do and some opportunities there without doing a major shift in your portfolio because look, it's going to be continued volatility

over the coming quarters and you need to be able just to do little tweaks, little trades here and there in order to accomplish your goals. I don't think it's going to be huge shifts in your portfolio that do that for you. Shannon, what about technology? I've thought of you before as someone who has bought the dips there. It's been a tough year, clearly, for technology. Is that still the strategy? I mentioned to Peter Bookvar last hour that with this recovery we've seen in the market to S&P at two and a half month highs. You haven't seen groups like consumer discretionary communication services on board. Yeah. And I would say we've been very thoughtful, Sarah, over the last couple of years. You're not wrong. We were we were historically very much overweight in technology and we've pared that back, but really over the last 18 months or so.

But more importantly, what we've done is we've diversified our exposure to technology. And I put that in quotes on purpose because it's important to understand that there is going to continue to need to be innovation and disruption. Because if you look at earnings and revenues for the last quarter, for instance, revenues grew fairly strongly. Earnings are really taking the hit because of higher prices, because of wages. And so you need to think about are there other sectors where you can express the need for innovation and disruption? It's why we still like technology, although a more diversified basket there, but also industrials and healthcare. Both sectors have a way to express that need for innovation and disruption. So I would say not limiting yourself just to the infotech sector,

communication services, but really looking outside of that and saying, we're going back to a higher cost, slower growth environment. You're going to need to be able to engineer your own growth. I don't know, Dan, if the Fed is really nearing the end of the rate hike cycle instead of the beginning, shouldn't tech be in a safer spot? Presumably, that's correct. I think the problem with all these analyses is we don't know what the economy is going to do next year. And I think, again, what makes this, not again because we haven't said it yet today, but what makes this cycle so unusual is you've had this 20% drop in stock prices, 25% top to bottom before you've had the recession. I know we had two quarters of GDP. Highly telegraphed.

It's highly, highly telegraphed. And I look at the stock market, obviously the NASDAQ down more than the S&P. And I just, I wonder, as you go into next year, let's say we're all right and there is an economic slowdown. Let's call it a recession in Q1, Q2, Q3, whatever it might be. You've already had a 25% drop in stocks. Are you going to go down again? And if you are, presumably technology is going to get swept up with everything else. And maybe we're talking about a relative value game here. But I think the problem that you run into, at least in the first

half of next year, is worrying about the economic backdrop and everything getting thrown out, the baby and the bathwater. I guess health care then, Shannon, would work in that environment relatively well, right, as a safe haven, sort of defensive place to go. I know you like it for some of the innovation properties, but if that's the kind of environment we're going to be in. Yeah, we think of just about, you know, demographic trends are really a headwind for most other sectors, right, Sarah? And health care has this secular tailwind. And you're right. It's a combination of, you know, you can buy, you know, medical instruments and be looking at just procedure volumes. And then you can buy, you know, companies that are on that cutting edge of technology. And you can do that in one sector.

But you're right, just from a defensive perspective, this is normally seen as a place to hide out. And I don't disagree with Dan. I mean, there is so much uncertainty. So I think it does come back to valuations, even within sectors, even within industries. If you can trade over the course of the next couple of weeks and you can take some names that are still down big and perhaps trade those out for relative outperformers in areas that you like, that's the type of positioning I think that makes sense coming into the end of the year. Do you follow positioning? Because for so long it was the market is the sentiment and positioning is so depressed that we're due for a rally. And it feels like it's not as depressed right now, but I'm not sure where that stands. First of all, you have to follow. I mean, if you're going to follow the market, you have to follow positioning. So the short answer there is yes. And I think a couple of weeks ago, I would have told you that for sure that was the case.

And part of the reason I and any number of other people were making the preliminary case in front of seasonality for a bounce in the market. But listen, you've got the S&P up 13 percent right now. You're coming up against the 200-day moving average on a relative strength, on a short-term relative strength index basis. You're coming up against elevated levels. The percentage of stocks trading above their 50-day moving average, all these various short-term trading indicators suggest that there's been a big shift in positioning. Now, again, you still have a month and a half left of this incredibly seasonally strong period for the market that takes you into next year. So I think the bias is still to the upside on that front. But to answer your question, yeah, I think positioning has certainly shifted from where it was a couple of weeks ago when sentiment was-

It's not as much of a bullish tailwind. No, that's right. That's right. But again, a couple of weeks ago, sentiment was really poor, but you've had a big drop in interest rates across the spectrum and the whole market has rallied except for four big stocks, but maybe call it four stocks, Amazon, Meta, Tesla, one or two others we could name. Yeah. Alphabet. Thank you. We're going to leave it there. Dan Greenhouse, Shannon Sikosha, Victoria Fernandez, great discussion. Happy holidays to all of you. We're going to leave it there. Dan Greenhouse, Shannon Sacocia, Victoria Fernandez. Great discussion. Happy holidays to all of you. We're going to turn now back to retail on this Black Friday and the company's poised to win and lose this holiday season. CNBC's Melissa Repko has that story, including Melissa, some possible inventory issues.

Hey, Sarah. To win this season, retailers won't just need the right prices. They'll also need the right stuff. Bed Bath & Beyond struggled with this in recent years during the holidays and is showing signs of challenges again. We've reported that it has had strained relationships with key vendors like KitchenAid and Dyson, which makes it harder to get those hot products that are on shoppers' wish lists. I spoke to Dick's Sporting Goods about the importance of this, too. Chairman Ed Stack told me the retailer feels ready for the holidays because it has brand names like Nike and North Face. Big box players so far seem to be doing well on this Black Friday, too.

Walmart tops the list as the most searched retailer for Black Friday deals, according to Captify, an online research firm. Target and Kohl's round out the top three. And Amazon, notably, has fallen to fourth place after dominating Black Friday searches last year. What about activewear, Melissa? I'm wondering if that is maybe not the brightest spot it has been for years. But clearly, with people going out and dresses being more in demand, I wonder how those companies, the Nike, Lululemon, Under Armour, and others, that Kohl's that are exposed to athleisure will fare. It's hard to get a clear sense of that. I was actually surprised when I talked to Dick's Sporting Goods at Stack, like I mentioned, he said they're still seeing really strong demand. And that may be that these brands still have

enough staying power. And he mentioned, you know, some of the active wear, maybe not on the clothing side, but on the shoe side need to be replaced. You run through some of the running shoes or need to get your child some fresh cleats. So that may help, but it's hard to say how companies like Lululemon will do. And if that demand for athleisure is still strong as people, as you said, get ready for those holiday parties again. Personally, I am still buying jeans over leggings and sweatpants. It's been a while. So just just one person's anecdote there. Melissa, thank you. Thanks. Melissa Repko. That brings us to our Twitter question of the day. We want to know which company will win the holiday shopping season. Here

are your options. Amazon, Apple, Walmart or Best Buy. Head over to CNBC Overtime on Twitter to vote right now. We'll share the results later in the show. After the break, Tom Lee from Fundstrat weighs in on Binance's new plan for a crypto recovery fund and makes the case for a big run in the S&P 500 in the final weeks of the year. We are live from the New York Stock Exchange. Overtime will be back in two minutes. Crypto exchange Binance announcing it is starting a crypto recovery fund to help the crypto community, quote, emerge and grow stronger from the crypto winter. Our Kate Rooney joins us now with the details. Kate, how does this work? Hey, Sarah. So this is being described as really an emergency fund for crypto firms hit by the FTX bankruptcy. So Binance, that's the world's largest crypto exchange, initially pledged a billion dollars to the fund. Its CEO, Cheng Peng Zhao, followed up overnight saying that it would tack on another billion dollars and says other crypto players like Jump, for example, have pledged another $50 million. And in a blog

post, Binance saying that this vehicle is not an investment fund. It says that it's intended to support companies that through no fault of their own are facing significant short-term financial difficulties. The program is expected to last around six months, and Binance says that roughly 150 companies have already applied for that financial support. Important to note here, it's not going to be in U.S. dollars or cash. This is denominated in part in Binance's own stablecoin or cryptocurrency, BSUD. It also says it's flexible on the investment structure. It's accepting contributions in tokens, cash and debt. They say they expect individual situations to require

tailored solutions. So that structure may raise some questions based on everything going on with cryptocurrencies and their stability. Some irony here, though, this industry bailout role was played by Sam Bankman Freed and FTX earlier this year. His crypto company now the one going through bankruptcy and dragging a lot of the industry down with it. Bitcoin has been pretty stable today. It's down slightly, but it's lost more than 15 percent of its value in about two weeks. Sarah, back to you. The bankruptcy lawyers are busy and bankers as well.

Kate Rooney. Kate, thank you. Let's bring in Tom Lee, Fundstrat's head of research, for more on what this means for the crypto market and how he sees stocks heading into year end. Tom, I don't know, fool me once, this is exactly what Sam Bankman-Fried tried to do, including the use of his own token. It is, Sarah, but if you look at an industry like crypto that's self-regulated, it is important to create essentially some sort of functioning central bank activity that can conduct operations when there is stress. So I don't think the FTX model was flawed. It's just FTX itself was not capable of actually playing that role. I mean, in crypto, there's still a lot of companies with good balance sheets, those especially that built their business around

Bitcoin. So I think this is sort of a smart move. I don't know if it's going to be sufficient to have Binance only behind it. You know, I think it would be helpful to see others kick in some large capital, actually. Yeah, if there are others big enough and have enough capital to do that at this point. So, Tom, has any of this altered your view on crypto? I know you're a longtime Bitcoin bull, but the blow up of FTX, the continued pressure on Bitcoin, has it changed your mind at all? I mean, it's been a horrific year for crypto. You know, it's been I mean, nobody's made a horrific year for crypto. You know, it's been, I mean, nobody's made money in crypto in 2022, but it's not that different from 2018.

If we look back at that crypto winter, when Bitcoin went from, you know, $17,000 to, you know, something like $1,200 or so, that was the time when some of the best projects were created. So I think that this is an important moment for the industry. I think it is cleaning a lot of and cleansing a lot of bad players. And I think it's important. But do I think crypto is dead? No, I think there's a lot of people throwing gasoline in a crowded theater and yelling

fire. And it's just going to be important for those who really like what decentralization and what Bitcoin are doing. I mean, they need to have the staying power. But yeah, 2022, it's been terrible. But are you still telling people to buy Bitcoin? Yes. We first read about Bitcoin in 2017, and we recommended people put 1% of their funds into

Bitcoin. At the time, Bitcoin was under $1,000. That holding today would be 40% of their portfolio without rebalance. So does Bitcoin still make sense for someone who wants to sort of have some sort of ballast? Yes. I think Bitcoin, is it going to have another terrible year next year? I think if there's more fraud, yes. But if this was like the moment of financial stress, what we're going to see emerge from this is companies that emerged out of the GFC. You know, the ascendancy of banks like JP Morgan really came out of 08. And I think the mistake people

made in the GFC was to say banks were untouchable. And I think that's what's happening with crypto now. Tom, what about the rest of the stock market at this point? You've pretty much maintained a bullish stance heading into the year end, which is seasonally good. But are you a buyer now after the recovery we've seen that has sent the Dow now to close at its highest level since April 21st? Yeah, I mean, I think the viewers have to appreciate that the potential for stocks to rally today is the best it's been in all of 2022. You know, there was a June false Fed pivot rally that failed, but today it's very different. You know, I think inflation is significantly weakening both on like leading indicators

and now hard CPI is showing softer inflation readings. That means the Fed may not have to be as aggressive as the Fed believes it has to be and a consensus does. That's quite good for equity risk premia for multiples to expand. And then from a positioning perspective, as much as people say to people have turned bullish in two weeks, that doesn't even at all foot with any of our conversations we've had with clients in the past two weeks. People are pretty bearish and think, look, this is a rally that'll fail the 200 days. So no one even wants to touch stocks here. I think that's why we could rally to 4,400 or better. What about the recession? That's the other bearish point. Dan Greenhouse said the Fed,

that Fed history shows us that the Fed does break something. And history shows that there's a bigger impact than just on the housing market. And that's not fully reflected in the market. Yeah. You know, J.P. Morgan's economists had a funny comment. They said that expansions don't die of old age. They get murdered by the Fed. I think that's the fear that's out there. But I think that this economy has been incredibly resilient. It's taken a huge amount of Fed hikes. There's still not a lot of actual leverage in households or corporates, but there is excess savings and there's pent-up demand. So I'd probably be in the minority camp that I think we're still setting up for a soft landing, but that means that's not true if the Fed goes to 6% or 7%. But I think that in our view,

we're looking at the two-year, and that's telling us the Fed's a lot closer being done than most people expect. Tom Lee, appreciate you joining us today. Happy holidays from Funstrat. Happy Thanksgiving. Happy Thanksgiving. Next week, by the way, is CNBC Pro Week. Some of the biggest names in stock picking, including Tom Lee himself, Kathy Wood. Lee Cooperman will be taking your questions online.

You can go to CNBC.com slash pro slash talks to sign up. Up next, cashing in on the consumer, Newburger Berman's John San Marco has the top retail stocks that investors should have on their shopping list. That's right after this break. Overtime, we'll be right back. Welcome back to Overtime. Time now for CNBC News Update with Julia Boorstin. Julia, hi. Sarah, here's your CNBC News Update at this hour. Airlines expecting to receive new jets from Airbus next year may have to wait longer than planned.

Industry sources tell Reuters that the jet maker has been racing to meet deadlines for 2022 deliveries in the face of supply chain and labor issues. And that may mean that 2023 delivery dates have to be pushed back. The average household spent $433 more per month on goods and services in October than it did a year earlier. That's according to a Moody's analysis of October inflation data. Moody's says even though inflation has been coming down, the typical household is still feeling the squeeze from higher consumer prices. The race between incumbent Democratic Senator Raphael Warnock and Republican challenger

Herschel Walker is too close to call heading into next month's Georgia runoff. But there's one area where Warnock has a decided advantage. New federal election commission filings show Warnock's campaign with about $29 million in cash on hand. That's almost three times as much as Walker. The Georgia runoff vote is scheduled to take place on December 6th. Back to you. Julia, thank you. Julia Boorstin. Retail stocks outperforming this week with the ETF that tracks the sector on pace for back-to-back monthly gains for the first time since mid-2021. Joining me now, Neuberger Berman's John San Marco. He runs the firm's next generation connected consumer

portfolio. John, it's good to see you. Just off that stat that Julia just brought us from Moody's analytics that the American household is spending $433 more this month on goods and services because of inflation. How's that going to impact holiday spending? Yeah, thanks, Sarah. Great to see you. Inflation is definitely putting a crunch on the consumer's budget. And so we think there's some consumer cohorts, the higher income cohort, that's positioned to do particularly well and keep categories like the luxury category chugging along. But we think the middle end and the low end consumers just under a tremendous amount of stress and having to make very hard

choices and prioritize needs over wants. So that favors companies like TJX that offer great value or Walmart that selling stuff folks absolutely need. I'm looking at your top holdings. You also have Home Depot in here, which I don't know. That gets caught up in the whole mortgage rate shock that we've seen and some of the other problems. DraftKings is in here as well. So it's not all necessarily fitting in with that theme. Talk us through some of those picks. Yeah, it's not all defensive. We think that the biggest

opportunity we see in the idea behind the Next Generation Connected Consumer Fund, it's a multi-decade runway. So we certainly think over the course of years, if we get exposure to the right areas that these up-and-coming generations, Gen Y and Gen Z, that they favor, areas that they're going to continue to spend more on. We think over multi-years this can generate really attractive risk-adjusted returns. Home Depot is a name that fits in great. Home improvement, for starters, is a bit more resilient than the broader housing complex, but Home Depot also just does a phenomenal job

capturing new homeowners who are just entering into the category. Got it. So that's a longer term play. Back to what's happening now, John, you say you like luxury and that it holds up in this environment. What stocks are your favorite in that space? Sure. So, Montclair is the luxury goods brand that we own. We do a ton of work, analyze a ton of data around how consumers view the brand and the scarcity and the value of the brand. And all of that work really checks out off the charts that this is a beloved brand that has a lot of pricing power. They have a clientele that's in a better position to deal with elevated gas prices and elevated food prices and still have some budget left over for discretionary spending. So we think you're a great consumer there. Farfetch is another one that's a super controversial name where

results have disappointed in 2022, but we feel like the worst might be behind us there. And Farfetch is the leading online luxury destination. It's positioned really well as the category moves online to generate a ton of growth in the years ahead and see great dramatic improvement in their profitability as well. I was going to ask about profitability for the entire sector because all we hear about is that it's going to be more promotional, higher inventories, supply chain is thawing. So we're going to see promos and we're already starting to see some deep discounts. And a lot of them started early. So, John, how do you worry about about the sector maintaining profitability? Absolutely, that's a great question. I think discounts are already

running a little bit hotter today as we sit here today. I suspect by the time we get to the end of holiday season, if consumers continue to kind of wait around and purchase closer to need, I think promotions will be running white hot. So in the categories where there's way too much supply out there, like big ticket and certain home-related categories, we would expect margins to remain under a tremendous amount of pressure. But as we look out through next year, there's some cost inflation that will start to roll off, particularly freight. And the inventory outlook should be much better for next year. So we think we could have a bounce back in margins once we get through this holiday season.

Who's got the best pricing? Who's in the better position? Is it the luxury players who still have the pricing power in this environment? We sort of view the world, we view our portfolio kind of on a barbell continuum. And so the luxury good names, I don't want to say they're immune from all the consumer distress today, but they're relatively insulated. So that's a good place to be. We also think there are retailers that actually could benefit from consumer distress. I mean, we own Dollar Tree in the portfolio. We own Walmart in the portfolio. TJX is a name I flagged earlier. These are places where when the consumer's trying to stretch the dollar a little bit further, they can do so in a dollar store or at a Walmart. So we think both ends of the continuum will generate some winners.

TJX, I think, closed at a record high. John, thank you very much for joining me. Appreciate it. From Neuberger Berman, John San Marco. We're going to get some of the names of some stocks that could be non-traditional Black Friday winners next, plus Quadratics' Nancy Davis on why the market's inflation expectations may be overly optimistic and what it could mean for your portfolio.

And don't forget, you can catch us on the go by following the Closing Bell podcast on your favorite podcast app. Overtime, we'll be right back. Black Friday shopping has certainly moved beyond the traditional malls. Our Seema Modi is at an Apple store. Julia Boorstin is reporting on the social media shopping surge. Seema, what are you seeing at Apple right now? You know, Sarah, when someone tells you you can't have something, you know what it's like?

You feel like you want it even more. That sort of sums up how Apple users are feeling right now. By the way, this flagship store behind me just sold out of the iPhone 14 Pro Max, which has all the bells and whistles online. Roughly 38 days, that's how long it will take to get your hand on this device. The longest wait in six years, according to channel checks from Morgan Stanley. And that is certainly frustrating customers. It's really crowded and I just came here to try to buy an iPhone 14 Pro but they are all sold out. Are you frustrated?

Yeah, kind of. So I was hoping to buy the new iPhone 14 with the awesome camera but unfortunately I think it's hard to find. I live in Delaware, we couldn't even get them a few months ago, but apparently, I don't know if we can even get them here. I haven't even gone in yet, but that's my goal. And you heard right there, a number of international tourists came to New York. They were hoping to get their hands on the iPhone, but going away, empty-handled, handed,

excuse me. Now, in total, 8 million iPhones are expected to be sold this holiday weekend, down from the 10 million sold during last year. That's according to Wedbush Securities. Analyst Dan Ives says lockdowns and protests in China will further incentivize Apple to diversify its supply chain. However, Evercore ISI does not see extended wait times pushing consumers to leave the Apple ecosystem. He thinks the customer will stick around. While the Pro and Max models are hard to come by, a few customers we spoke to had no issue just buying the basic iPhone 14,

some even going for the iPhone 13, which is cheaper right now, and you can get a $50 gift card provided by Apple. Sarah? No, Dan Ives with us last hour said 98% of people stay inside the Apple ecosystem. This will be a test, I guess, if they can't get their iPhones in time for the holidays. Seema Modi. Seema, thank you. Let's get to Julia now with how Julia, Meta, Snap and YouTube are cashing in on Black Friday. Well, Sarah, Meta, Snap and YouTube, we know they're all struggling with an advertising contraction. So now they see social shopping as a key opportunity to lock in e-commerce advertisers and ultimately down the line diversify their revenue streams. Now 34 percent of shoppers say they plan to do holiday shopping on social media this year. That's up from 28 percent last year and just 26 percent in 2020 according to a survey by Deloitte. Now that is projected to drive social commerce sales to $958 billion this year, up from $732 billion last year.

Meta, they're taking a new approach, offering advertisers more AI-driven tools to help them create shopping ads. They say these tools drive a 32% higher return on investment in those ads. Meanwhile, Snap continues to focus on augmented reality. It's showcasing a new AI-driven AR shopping tool that uses a bot to ask Snapchatters questions about the person they're shopping for. Then with voice-based machine learning, they come up with custom gift ideas, which they show in AR. Meanwhile, YouTube, they're expanding the shopping capabilities in Shorts. That's the short-form video TikTok rival. Now, YouTube, they're expanding the shopping capabilities in shorts. That's the short form video TikTok rival. Now, Meta and Snap, they're not taking a cut of commerce right

now. They are investing in these tools to drive both advertiser and consumer engagement. YouTube is going to be taking a percentage of creators affiliate sales. Sarah. Julia Borson. Julia, thank you. We do have some sad news to share this afternoon. Charles Koppelman has died, a well-known figure in the entertainment industry and a guest on CNBC many times. Koppelman most recently ran CAK Entertainment. Early in his career, he co-founded SBK Entertainment and served as chief executive of EMI North America.

Koppelman also held the position of chairman of Steve Madden, also of Martha Stewart Living Omnimedia. Our thoughts are with his family today. Charles Koppelman was 82 years old. We are wrapping up a busy week on Wall Street. Christina Partsenevelis here with our rapid recap. Christina. I love the enthusiasm, Sarah.

It was a shorter holiday week, but that doesn't mean there wasn't a lot of action. All three indices ended the week higher, led by the Dow. But keep in mind, volume was low because people right now may be on vacation. The Dow actually did hit a seven month high and is now only down 5.5 percent for 2022. So no longer the worst year since 2008. But the S&P 500, which I care about more because it's more representative of the market, would actually have to hit 4,469 points. So just about 423 points away from today's close to no longer be the worst year since 2008. So all sectors closed higher, led by utilities, materials and financials. Energy was the weakest sector, but still positive because oil was down about 4 percent this week on news that EU diplomats have been talking about price caps around 65 to 70 dollars a barrel.

So that depressed prices so far this week. And then Disney, the best performer on the Dow after Bob Iger took over the company as CEO for a second time. You have Chinese e-commerce platform JD.com down almost 12 percent this week. The worst on the Nasdaq 100, Pinduoduo, not too far behind, over 6 percent lower on the week as well. Chinese technology has pretty much had a really rough week. We've talked about it a lot with Eunice Young on our network today. But Beijing has pretty much come to a halt because of record COVID cases and lockdowns. And I want to look ahead to the week we have going on next week, and that's several cloud companies that are going to be reporting their earnings like CrowdStrike,

Workday and Snowflake. Sarah, back over to you. Christina, thank you. Christina Partanelos. Still ahead, navigating the market volatility with the S&P 500 still down more than 15 percent this year. Nancy Davis of Quadratic Capital shares her top strategies that investors can use to protect their portfolios in 2023. Overtime, back after a quick break. We are back in overtime. Treasury yields ticking a bit higher today before pulling back slightly. Our next guest says she sees inflation-linked treasuries as a value opportunity for investors right now. Joining us now is Nancy Davis of Quadratic Capital Management. Why, Nancy, do investors need exposure to inflation-linked treasuries? Well, they're not in most passive indices. So even if you have an active manager,

they're mostly benchmarked to core fixed income using the ag index. And the ag has no inflation protected bonds. And it's only short volatility because a third of the index is residential mortgages. So I think having inflation protected bonds is just a key diversifier, especially for those people who are nearing retirement or who are in retirement because they will not benefit from wage inflation. They just have a higher cost of living and then they tend to have more fixed income in their portfolios. So I think inflation protection is just one of those things that all investors I think should be considering as part of their liquid bond portfolio. So on the bond portfolio, Nancy, a lot of people think we've seen the highs in yields with the Fed now hinting at smaller interest rate increases and potentially slowing sooner rather than later. Do you agree? You know, it's definitely unprecedented time. You know, it's crazy to think going into, you know, the last in June 2020, the Fed was not even thinking about thinking about raising rates.

And Jay Powell said he wouldn't be hiking until 23. And look what happened in 2022. We've had one of the tightest hiking periods ever in the history of financial markets. The market is expecting another 50 base point increase this year. And then we have another 25 basis points priced in for 23. But I think if the Fed can use their balance sheet more and potentially stop hiking policy rates, that could really be a sigh of relief for financial conditions and investors and market and help with the consumer sentiment, which is really at very low lows.

Well, the other part of financial conditions that gets factored in in a big way is the dollar, which has come off of its highs. Do you think we've seen the highs there? You know, it's tough to say because it's all a interest rate differential. You know, the Bank of Japan has continued their QE purchases. They've been very dovish. They have not been hiking policy rates. So you've seen a big appreciation of the dollar relative to some other currencies like the euro and the yen. And I think the big question for U.S. consumers is that who owns our debt?

It's the Fed, number one. Then you have China and Japan. And I think the thing we really have to be concerned about is if there's going to be more term premium priced in as more of these foreign investors reevaluate their Treasury and U.S. debt holdings in light of the stronger dollar. Nancy, we appreciate it. Thank you for joining us here on Overtime with the iVol ETF. Nancy Davis from Quadratic. Just a few minutes left to vote in our Twitter question. We asked today, as a reminder, which company will win the holiday shopping season? Apple, Amazon, Walmart or Best Buy? You can still head over to CNBC Overtime on Twitter right now to vote.

We'll share the results after a quick break. It was mostly a down day on Wall Street. The S&P 500 ending little change. The pressure really came in technology. You see that in the Nasdaq comp, which closed the day down half a percent. The Dow fared better and actually closed at a seven and a half month high, up 152 points on the day. Actually, on the week, it was a positive week overall for the market with the S&P 500 gaining a little more than one percent. Small caps also closing the day a little bit higher. Let's get the results of our Twitter question. We asked you which company will win the holiday shopping season? Looks like a majority of you said 50%.

Amazon, half the vote there. Apple gets only 12%. Walmart, number two, up to 30% or so. Still voters coming in. And Best Buy, which was actually the best performing stock of the week, only 6% of the vote. It had good earnings earlier this week.

It is Kids Day here at the New York Stock good earnings earlier this week it is kids day here at the New York Stock Exchange and I have two special kids here with me Samuel and Harrison my own kids which is very exciting because we haven't had a kids day here at the New York Stock Exchange in a few years before you were born we're asking all the kids today what what you what presents you want for the holidays? Money. Money? Money. Very good. That's a New York Stock Exchange. I want a convertible. You want a convertible? Very into cars and very into the Rangers. They always ask me why I'm never talking to them on TV when they watch at home. Now I'm talking to you on TV. Isn't that exciting? Kids first day day on Closing Bell Overtime.

It's on my side. Yeah, it's on opposite sides for the TV. That's going to do it here for Overtime. Have a good weekend. Have the holidays. Shark Tank is going to begin right now.