Closing Bell - Closing Bell Overtime: Pivotal Point for the Rally? 1/17/23

Episode Date: January 17, 2023

The market is at a pivotal point just as earnings season is getting ready to heat up. But can recent resiliency in stocks really last? Liz Young of Sofi weighs in. Plus, top technician Jonathan Krinsky is flagging two charts that he says are going to head in opposite directions. And, Moderna reported positive news from its RSV vaccine trial. Steve Weiss – a Moderna shareholder – gives his instant reaction.

All right, Mike, thank you very much and welcome everybody to Overtime. I'm Scott Wapney. You just heard the bells. We are just getting started from post nine here at the New York Stock Exchange. In just a little bit, I'll speak to Cantor's Eric Johnston about whether he's still so negative on stocks and what would cause him to change his mind. We begin, though, with our talk of the tape. The market at a pivotal point just as earnings season gets ready to rev up. Stocks have shown some pretty impressive resiliency lately, even with today's sell-off in the Dow near 400 points. Our question, can it last? Let's ask SoFi's head of investment strategy, Liz Young, with me here at Post 9. It's nice to see you. Nice to be here. Kind of resilient lately, right? I mean, okay, this was a traveler's and a Goldman wreck in the Dow today,

but otherwise, we've held in pretty well. Your thoughts generally on where we are right now? The first two weeks of the year have been resilient. I think a lot of that is much like what we've seen for the last 12 months, where you have this relief after some of the downtrodden, what happened in December, right? We were hoping for this Santa Claus rally or year-end rally that never happened. So then we come into the year and we're like, okay, you know what? The bearishness felt overdone. Let's be optimistic.

The calendar has turned. And now here we are, the rubber's hitting the road with earnings. This is what all of us, I think, have been talking about. This is a really pivotal earnings season to find out whether or not companies can weather the storm and how long they can weather it for. I still think we're in a space where the market tends to rally on bad news. And it's expecting that that means that the

Fed will slow down, the Fed will pause, the Fed will pivot, the Fed will stop sooner than they say they will. And I think we're over indexing at this point to the Fed. It's no longer just about the Fed. You don't think the bearishness is overdone? I think there's people that have come back and gotten a little bit more optimistic. Well, they have, but I mean, is that a false sort of sense of optimism? I think on some levels, yes. Look, it's really easy after a couple weeks of a rally to say, oh, wait, did I miss something? And I've done it myself. I've been pretty bearish for the last six months or so.

On days that are really strong and you look at the tape, you have to ask yourself, is there something I'm missing? Because the price of the index never lies, right? Somebody's buying it. So you have to wonder what's going on there. I still stand by that the market happens first. We still have to work through the earnings part of this. And we're starting to work through it now. We're hearing about cost cuts. And then what happens next is the economic data actually falls materially.

And we're starting to see parts of that. But today was a perfect example. The Empire State Manufacturing Survey completely fell apart, right? It was a terrible read. And the market liked it in the pre-market, which I think is all predicated on the idea that, oh, this means the Fed will get the message. Sure. Bad news is good news. Right. The Fed will get the message. They'll slow down. They'll catapult us on the other side. So hold your thought for just a second, because speaking of earnings, United Airlines is out right now. Our Phil LeBeau following that. What can you tell us, Phil? Scott, this is a beat on the top of the bottom line and a beat by a wide margin on the bottom line. United earning $2.46 a share in the fourth quarter. The expectation was

$2.10 a share. Revenue $12.4 billion, better than expected there. And then the numbers within the numbers in the fourth quarter, look at revenue per seat mile, up 25.8 percent. That was better than the company's last guidance. Cost per seat mile in line with expectations, an increase of 11.2 percent, with an operating margin in the fourth quarter of 11.1%. But it's the guidance for the first quarter and the rest of the year. That's what's going to move shares of United. First of all, on the first quarter, earnings per share, they are expecting to earn between $0.50 and $1 a share.

For some perspective, the consensus going into today was for United to earn $0.25 a share, with revenue up 50% in the first quarter, and the company expects revenue per seat mile to grow by 25%. For the full year, United is way above the street in terms of expectations. It expects to earn between $10 and $12 a share. The consensus going into today was for the company to earn $6.54 a share this year. Revenue will be up in the high teens percentage-wise. They're not giving an exact range there. But it also expects a 9% pre-tax operating margin.

That's significant because they set that as a target a couple of years ago. They are hitting it. They said eventually we will be at an annual 9% pre-tax operating margin. That's what they're expecting this year. They see strong demand continuing throughout the year. Let me stress this. They do not see it slowing down, even if there is a recession in this country. They believe that there's a combination of strong demand and supply constraints.

Not enough planes, not enough flights, not just with United, but with other companies as well. As a result, they've got an unusually strong pricing environment for the entire industry. Don't forget, we're going to be having an exclusive interview with United CEO Scott Kirby. That is coming up next hour on Fast Money. You do not want to miss what he has to say about the rest of this year, guys, because this is a very, very strong forecast for the remainder of this year. Guys, back to you. Yeah, which is why shares, Phil, are moving the way they are here in overtime, up some 5%. We'll look forward to the interview with you and Mr. Kirby. Frankly, if anybody's surprised by this, you haven't been to an airport recently and you certainly haven't been on an airplane because

they're crowded and crowded. So no big surprise. The stock had run a lot, though, into the numbers on 40% over the last three months. I was wondering, even on a good number, if the stock number would show as much strength as it apparently is, at least at this moment. And it appears to be. I mean, up 6%. So we'll see where that goes. We'll look forward to Phil's interview with Scott Kirby coming up a little bit. It plays into the earnings story.

Maybe the consumer is just far more resilient than people want it to believe. And that is going to carry you into the prospects of a soft landing. The consumer is resilient as long as the labor market is tight. It is. And the labor market is one of the last things, if not the last thing, to break or show that weakness. Now, if the labor market stays tight and we don't end up in a situation where tons of people lose their jobs and it bleeds into other industries, we've seen it in tech, we're seeing it in some financials. If that doesn't happen,

then the consumer can stay resilient. But if the labor market does break, which I would expect some weakness, maybe not terrible weakness or classic recession weakness, but if it does break, which I would expect some weakness, maybe not terrible weakness or classic recession weakness. But if it does break, that's when the consumer slows down and pulls back. What I think an industry like the airlines has going for it is it's not just discretionary spending, right? It's business spending too. And to your point, we've been on airplanes. You pay twice as much as you would before, maybe three times as much for a ticket and coach, right? Then you have to pay it. You have no other choice. Businesses will continue to do that. I'm weary of the idea that demand will stay as strong. As inflation falls, that means demand is being held down somewhere. And for a lot of consumers that aren't business travelers,

that is a discretionary spend. So I don't know that it's going to stay quite as strong. What's a better tell right now on where we are, you think, with earnings? Goldman Sachs or United? I ask you that because in the morning you could say, see, I told you earnings were going to be a problem. That's what the bears would say. And then now the bulls would say, well, the airplanes are packed, right? The consumer is super strong. Look at what Scott Kirby just had to say at

United. I know two people in my head who would argue on either side of that as to why it's right to be on their position of the market. What do you think about that? I mean, I think if I really have to answer that straightforwardly, I think United is probably a better indication of where we are because it represents what the consumer is doing. The consumer is 65 to 70 percent of the economy. I like to know what the consumer is doing rather than what the consumer is saying. The Goldman story, you can compare that, too, to other banks that have reported as well. Morgan Stanley is another good example of that. Completely different reaction, completely different results.

So the Goldman story is not necessarily representative of the entire financial sector. Well, my point is United is certainly more reflective of where the consumer is in terms of their feeling about the economy, willing to spend higher prices on airfares. It underscores the resiliency that has held the economy up to the degree in which it has, why GDP forecasts are higher now than they were back then, so to speak, because things just seem a little bit better than people thought they might be. Yeah. My point here, too, is that it potentially pushes the apocalypse if one was going to come from an earnings standpoint, perhaps further down the road than we thought. Well, so I would argue not even pushes the

apocalypse, maybe prevents an apocalypse entirely. And I think we need to get out of this mindset that it has to be one or the other. Apocalypse being like, you know, tough recession versus softish landing. Right. It doesn't have to be so far on either end of the extreme. It doesn't have to be either terrible or some kind of booming economic scenario. I don't think we're going to get either of those, in fact. And I think there are going to be industries, even if we do have a recession, that survive it pretty well. And there are others that probably don't survive it as well. And honestly, tech has been one that hasn't survived this already very well.

All right. We'll pick up our conversation again in a moment. I'm going to ask you to stand by for a second once again because we've got breaking news on Moderna. Meg Terrell has the story, something that a lot of Moderna investors have been waiting for. Meg, what do you have for us here? Yeah, you're absolutely right, Scott. This is pushing Moderna beyond COVID results for its RSV vaccine using that same mRNA technology, meeting the goals of a phase three trial in adults ages 60 and older. The vaccine efficacy coming in around 84 percent in this phase three trial. And they say that they're going to submit for regulatory approval in the first half of this

year based on these results. Wall Street had been looking for 70 to 80 percent efficacy here, so surpassing that bar. Moderna also saying the vaccine was well tolerated. No safety concerns were identified. Moderna, they're up 5 percent on this news. Scott, this is going to be a very competitive space. RSV, of course, this terrible respiratory virus that we've been dealing with this winter, really a competitive area, including Pfizer, GlaxoSmithKline, which also have already reported their phase three, Moderna, J&J and Bavarian Nordic. Morgan Stanley, you can see their estimates. It's a 10 billion dollar market potentially by 2030. So a lot of these companies here working to get this

out. And of course, the ultimate goal to combine all of these protective vaccines into one shot. Moderna working on that. You're also seeing that from other companies as well. Scott. All right. All right. That's big news. Meg, thank you very much. That's Meg Terrell. By the way, don't miss Moderna CEO live from Davos tomorrow morning, 830 a.m. Eastern. That's Stefan Bancel is the Moderna CEO and he's going to join the gang and obviously talk about this news and whatever else they have in the pipeline that has investors especially excited. So let's expand our conversation now. Bring in Keith Lerner of Truist Wealth and Emily Rowland of John Hancock Investment. So, Keith, I'll go to you first. This question of earnings, right? This much-talked-about earnings apocalypse. I mean, I've got Mike Wilson out today from Morgan Stanley talking about a hall of mirrors requiring a strong view and clear vision.

Margins and earnings are likely to significantly disappoint, he says. We doubled down on that view today with more evidence to support it. Yes, there is more evidence if you look in a certain place. Others would look elsewhere and say there's no evidence. Yeah. Well, first, great to be with you, Scott. I mean, that's the magic question, right, is earnings. You know, our view is the economy is not falling off a cliff, right? You look at the employment side, the initial claims are still relatively strong.

But we do think, you know, that there is still elevated recession risk. But our call for some time has been more towards the middle to the end of this year. If you look at the yield curve and you say when the yield curve goes inverted, what's the average to recession? It's closer to July or August. So, you know, listen, I think earnings are as good as it gets right now and more likely has downside to upside. So I do think that earnings later in the year will come down. I don't know that we're going to see this first quarter because people came into this quarter extremely negative also. So I think we're still in a bit of a range here, Scott. When we were discussing with you the markets earlier this year, we said we would fade above 4,100.

We still think the risk-reward, as we're inching up that way, is becoming less favorable. Because even today, if we say earnings stay where they are, you know, you're at a 17.5 multiple above the average. And you have to take into account that interest rates are much higher than the last 10 years. So we just don't think even today that the risk-reward is that favorable, regardless, you know, if earnings stay here, more likely there's downside as we move deeper into the year. Emily, I mean, if earnings stay here, more likely there's downside as we move deeper into the year. Emily, I mean, if earnings stay where they are, people are going to make the case that the current multiple in the market is tolerable, so to speak. It's if they collapse where they suggest that the multiple needs to come down more, which means stocks need to correct themselves even more, too.

But have we just become too negative on where we are right now? Is that view still justified? Well, markets, Scott, are certainly telling you that. It's almost as if markets are pricing in this immaculate economic cycle where somehow we avoid a recession, even with central banks around the globe implementing massive tightening here. And we just think that, you know, you look at high yield bond spreads that are just above 400 basis points. That is remarkable given this environment. You look at the VIX today hitting its lowest level in a year. You look at the drawdown on global equities, which feels pretty garden variety at this point with the S&P 500 down only

15 percent. Last week, you saw, you know, cryptocurrencies and meme stocks getting in on the action. This is not the type of cross asset performance that we typically see in an environment where the leading economic indicators are deeply negative. They've been negative for five consecutive months on a year over year basis. The yield curve is incredibly inverted to the tune of 71 basis points. And you're looking at earnings estimates that are likely to come down. A typical recession season earnings decline of about 25%, and we're only down about 5% from the peak. So we think you need to be really, really thoughtful about where you find opportunities in an environment that's likely to get even trickier from here. What if, Liz, the yield curve's wrong? What if it I mean, people look at the yield curve and

suggest, well, we're definitely having a recession. Yeah. Now, obviously, you don't have a recession without an inverted yield curve, but you don't always have a recession when the yield curve is inverted. It's not a given. Correct. But it. It's not a given. But it's inverted at multiple points. And that near-term forward spread is a really big tell. The times that we've had an inverted yield curve and no recession to follow, the inversion was shallow and brief. This is not shallow nor brief at this point. And I'm completely with Emily on a lot of those points,

one of which is that you'd really have to be with your head buried in the sand, not looking at any of these indicators, not looking at the yield curve to say, we're not going to have a recession. At this point, there's so many things pointing in that direction. Now, if by some small chance we do avert one, it doesn't mean that we're headed into some sort of boom that calls for reckless multiple expansion either. So a day like today where we've been propped up by beta and tech and growth again and cyclicals sold off, don't let that lead you to believe that that's the environment that we're heading into. The Fed, even if they do pause, they're still going to keep rates high, right? So we end the hiking cycle maybe,

but then we start the hold it high part of the cycle, which is equally painful. And to Keith's point, if we're headed for a recession in June or July, that means the market bottoms sometime between now and then. Maybe, Keith, this is why some say it's going to be a year of nothing, that David Koston, for example, Goldman Sachs says says we had the year 4000. Multiple stays where it is. That's sort of the scenario of which we're talking about, where flat feels like the new up because we didn't fall out of bed. Well, listen, there's still going to be opportunities, right? We had six moves of at least 10 percent last year. So one of our key mantras is to remain tactical this year. You look below the market surface, we see better value in the equal weighted S&P making fresh relative highs. But I do think, you know, we published a paper in mid-December

called the reverse Tepper trade. And, you know, basically what we said is either the economy is going to stay strong, which means the Fed's going to remain tight, which is not a great environment for stocks, or the economy is going to weaken and that's going to weaken corporate profits. So we do think, you know, the upside is somewhat limited. I think you have to look below the surface and then you got to be more tactical with the sectors. Just like last year, we had 100 percent spread between the best performance sector and the worst performance sector last year. I don't think it's going to be this extreme, you know, this year, but I think that's where the opportunity is going to be. Emily, do you like bonds or stocks better right now?

I think that bonds can do more heavy lifting in portfolios, especially for the first part of this year. You know, you're looking at four to five percent yield and high quality bonds. That's something that we haven't been able to say for a really long time. And even if there is some volatility in rates here, we still like that income as a very competitive option. Look, we just talked about the valuation on equities. The S&P 500 just went from 15 times forward earnings all the way back up to 17 times forward earnings. So we've seen prices up, earnings estimates come down. We usually like it when the opposite of that happens. And so we want to be really, really mindful. We think earnings estimates right now are still too elevated. Analysts are calling for about four and a half percent for 2023. But what's really notable to us is the bulk of that is actually expected to come in the back half of

the year. So modest expectations for Q1 and Q2, and then 11 and a half percent earnings growth right now being penciled in for Q4. We think that that's going to be really, really tough. If Keith's call is right, and I agree with a lot of what Liz said as well, that's going to be tough. It's expected to come from cyclical parts of the market. Again, you got to be really thoughtful. Margins are coming under pressure. Top-line revenue growth saved the day for earnings in 2022, especially for companies that had pricing power. The consumer was strong. 10% revenue growth last year. That's coming down to 3% in 2023. Margins are going to be under pressure. There's going to be a war on margins.

Companies are going to need to navigate that. Sounds a lot like what Mike Wilson is saying, which I articulated from his latest note a little bit earlier. Liz, you do like bonds. Do you like bonds better than stocks? I know you like bonds. I don't know if I ever like bonds better than stocks for any investor who's in the market longer than, let's say, six months to a year. But I do like treasuries. Absolutely. And I think that as we get through the year, whether it's heightened recession risk or the Fed actually stops hiking, you're going to see a continued demand for treasuries. The credit side of the market, I'm not quite ready for yet because, to Emily's point before, spreads just have not blown out to the proportion that I think seems rational in this environment. And if and when the equity market does pull back again, credit spreads will blow out again.

And that's when they start to be more attractive. But they're going to follow that risk spectrum. And you think it's going to pull back again? Use that word again. Does that mean like we're going back to the lows, you think? Look, these resistance levels. Is that always going to be hanging over our shoulder? Yeah, I mean, I've talked about this on the show before.

That purgatory of are we going to have a recession or not is worse than just having one and getting it over with. But these resistance levels that we see, the 4,000 resistance level that we had, we closed at, what, 39.99.09 on Friday. That is a brick on the market's head until we can answer some of these questions and until we either confirm a recession or not confirm one. Those resistance levels have proven strong, and I think that that shows, again, that this was a little bit of a bear market rally. We're still in a long-term downtrend. Okay, have proven strong. And I think that that shows again that this was a little bit of a bear market rally. We're still in a long term downtrend.

OK, until proven otherwise. Correct. Thanks, everybody. I appreciate it. Keith, Emily. Thank you, Liz. We'll see you soon. That's Liz Young here at Post 9.

Let's get to our Twitter question of the day. We want to know, are you more or less bullish than you were on January 1st? Head to at CNBC Overtime on Twitter. Please vote. We'll share those results a little bit later on in the hour. Head to at CNBC Overtime on Twitter. Please vote. We'll share those results a little bit later on in the hour. We are just getting started here in overtime. Up next, the tale of two charts.

Top technician Jonathan Krinsky says one sector on the brink of a breakout, one sector on the brink of a breakdown. He'll tell us the key levels he's watching on both. We're live from the New York Stock Exchange. OT is right back. We're back in overtime, a breakout and a breakdown.

BTIG's Jonathan Krinsky flagging two charts he says are about to head in opposite directions. He joins us now. So it's good to have you back. Let's start with number one. And this is Caterpillar, a name in which you admit today that you have been wrong on, that the strength has surprised you. So why are you coming back? Why are you doubling down on this? If you've been wrong once, why risk it twice? Yeah. So, you know, with technical analysis, there's kind of two schools of thought. There's trend and relative strength, and there's mean reversion. And generally, we're a fan of trend and relative strength, you know, stick with what's working.

But there comes a point when every trend gets a bit too extended, a bit too exhausted. And, you know, we think that's where Caterpillar is now. You know, for perspective, it's about 25% above its 200-day moving average. It's also about 25% above its 200-day when average. It's also about 25% above its 200-day when you look at it relative to the S&P 500. And that's really the part that concerns us. That's about as extreme as it gets over the past 20 or 30 years. So at a minimum, we think it's a poor risk-reward relative to the market. But in absolute terms, it's looking a bit vulnerable to us as well, despite the fact that,

as you mentioned, we did flag it several percentage points lower. I'd just also highlight that the name has a history of kind of getting over its skis compared to the rest of the market. In the middle of 2008, for instance, it hit an all-time high just before the broad market rolled over. And even back in the 2000-2002 bear market, in May of 2001, it hit a 52-week high just as the market was starting to roll over. So that's kind of our thoughts there. I hear you talking to that. And I'm wondering if you take this as a proxy on the overall market right now of a market that you think is overextended and it's reflected by the likes of a Caterpillar, for example, as many people start to suggest buying industrial stocks.

Yeah, I think that's a great point. Let's remember Caterpillar is in the Dow. It's one of the biggest weights in the Dow as it's a price weighted index. What's remarkable about the Dow, we just came off over the last three months, the Dow outperformed the S&P by 7.7 percent. Since World War Two, we've only seen eight other occurrences where that's happened. Seven of the last eight times, actually, the last seven times that's happened, the S&P has been down about 6 percent over the next four months. So it's it's tended to happen at inflection points. If you think about, you know, the start of new bull markets, you don't see that being led by the Dow Jones Industrial Average. You see the opposite, in fact. And the last two weeks have kind of gotten people to really change their

tune. And it's amazing if you look at how sentiment has flipped over the last two weeks. But from our perspective, all that's done is kind of reset what you had at the end of last year. So, you know, we still think this is a bear market rally. You know, we're seeing some signs with breadth improving off the bottom. Some people call it some breadth thrust, breadth surges. But, you know, it's just too little at this point for us to really change that view. All right. Fair enough. That's our breakdown. Our breakout is biotech, right? XBI. What does the chart tell you there? Yeah. So biotech's been in a very tight trading range for the last, really back to last September, if we're talking about the XBI,

which is more equal weight. Just started a breakout last week. Now in bear markets, in broad bear markets, breakouts have a tendency or a possibility of failing. But we think as long as it's XBI is above kind of 84, 85, you know, that constitutes a valid breakout. We have a higher conviction, though, that it's going to outperform and break out relative to the health care sector in general. So if you were to look at something like XBI versus XLV. We have some more conviction there, largely because, again, XBI is just starting to break out. And those defensive health care names that were so dominating the health care sector last year are starting to break down. Some of the HMOs like UnitedHealth are starting to break down. So we think there's an interesting relative

pair of stray there within health care. All right. We'll see you soon. Jonathan, thank you. That's Jonathan Krinsky. BTIG, as you can clearly see over his shoulder. Up next, the bear case for stocks. Cantor's Eric Johnston. He's back. He's sticking by his negative outlook despite a strong start to the year. We're going to press him on that call next. Plus, Moderna shares are rallying in overtime on positive news from its RSV vaccine trial. you heard Meg Terrell breaking that news right here in overtime. Shares up about 5%. We're going to get the first take from a shareholder coming up.

Overtime's right back. It's time for a CNBC News Update now with Bertha Coombs. Hi, Bertha. Hi, Scott. Here's what's happening at this hour, Massachusetts authorities have issued a warrant on murder charges against a Boston man whose wife went missing around New Year's Day. Brian Walsh had previously been charged with misleading investigators searching for his wife, Anna. Prosecutors say new details supporting the murder charge will be presented at Walsh's arraignment, which is expected to happen tomorrow. California is still dealing with new travel headaches resulting from weeks of heavy rain. Near San

Francisco, a train got stuck after getting hit by a landslide. No injuries have been reported. A highway through the same area has been closed multiple times due to landslides caused by recent storms. And in Michigan, a grocery store of sorts has opened up selling thousands of products made entirely out of discarded plastic. It's actually an art installation called the Plastic Bag Store. It's designed to draw attention to long-term impact of single-use plastics. Americans throw out an estimated 100 billion plastic bags per year. You know, here in New Jersey, Scott, they don't give you bags at all at a store anymore. So you either have to buy one there or bring your own. There are no paper options either. All right. Yep. Bertha, thank you. That's Bertha Coombs. All right. Stocks pulling back today

after getting off to a strong start to the year. My next guest has been in the bear camp for months now and is still calling for more downside ahead. Joining me now, Post 9, Eric Johnston of Cantor Fitzgerald. It's good to see you again. Thanks for being here. So you're as bearish as you've been. Yes. Undeterred. Undeterred. Yeah, there's been there's been no change. You know, I think if you see what's been going on the past couple of weeks, there's a thought that we could have a soft landing that's being priced into markets. There's been some short covering going on from hedge funds. CTAs have been buying. But I think if you play out the soft landing scenario, there's some downside to that scenario, right?

In that scenario, the Fed is unlikely to cut rates. The 10-year yield as a result will probably need to rise. And that won't get rid of this concern that a recession is coming. Because ultimately, this market goes in cycles. The economy goes in cycles. The unemployment rate is 3.5%. We are, by definition, at the top approximately of the cycle. And so if the recession doesn't come in 23, the market's then going to think, OK, maybe it's coming on 24. So I think you're number one. That'll create a lower multiple that the market would put on numbers. And then also earnings estimates I don't think would rise in that scenario. But to be clear, we don't think we're going to have a

soft landing. OK, but I understand that is a possibility. And if that happens, I still don't think stock prices will go up. And I actually happens, I still don't think stock prices will go up. And I actually think there's still downside. What happens if the economy is just far stronger than you have anticipated and that just doesn't enable your scenario to play out? And the economy is much stronger than anybody anticipated. And you can look at any chart or historical metric that you want and say, well, when this happens, it always means a recession. When the Fed does this, this happens. But it never and can't take into account where we started this whole thing. Sure. So I would. That's not that outlandish.

That's not that's not that outlandish. The one thing that I would say is I would say a couple things is, number one, the rate market disagrees with that premise. The three-month 10-year is inverted by 118 basis points. No question. With a 10-year at 3.5%, the Fed going to 5, the rate market is saying they're going to need to cut over 200 basis points in the next two years. That's only going to happen. That's not going to happen if the S&P is at 4,000, the unemployment rate is at 3.5%. So the rate market does think that things are going to get materially worse. There's no question about it. And the second thing that

I would say. It doesn't mean it happens every time. That's true. That's true. But if you look at the past sell-offs that we've seen in the market, they've all started with a very low unemployment rate. So February of 2020, that was a 50-year low unemployment rate. 2007, that was a six-year low unemployment rate. 2007, that was a six-year low unemployment rate. In the bubble of 2000, everything felt great in February of 2000. We were at a 30-year low unemployment rate. Things felt great. And then obviously we know things completely fell apart. So in the beginning of these things, things always, people, there's a sense of complacency that goes on where maybe we can get through this. And, and, but, but the reality is, is that it always feels this way in the beginning. And like I said,

we go in, we go in cycles. And I think over time, if you sold a three and a half to 4% unemployment rate and you bought a 10% unemployment rate, you would do very well. And right now we are towards the end of the cycle. And whether it's a cycle ending in 23 or 24, it's probably on its last legs. Okay. What if you're right? What if everything you said makes perfect sense to everybody who's listening, but you're tactically wrong? That it just takes longer to much, much longer to play out than you thought. And you miss a whole lot of upside in the market before the you know what allegedly hits the fan in the second half of the year that most people said tough first half, Fed done. Maybe they signal they might cut. Stock market has a good second half of the year,

saves the day. What happens if it's reversed? So if I'm wrong, I think wrong will be the market going sideways. I think and it taking longer than I think to sell off. Because I think there's actually, as we look at the economy, I actually think the second half of the economy was going to be worse than the first half. And the reason why is because we still do have an unemployment rate of 3.5%. There are still excess savings. The consumer is still, at the moment, strong, although they're whittling through their savings and they're increasing their credit usage. So I think it will be pushed towards the back half of the year. However, stocks are a discounting mechanism, as we know. And so I do think the sell-off is going to come

in the first half. But I think where I would be potentially wrong with that, it would take longer than I think, rather than the market going to 43, 44, 4500 in the meantime. But see, as a tactical person, when do you cut bait on the line and say, you know what? I think I'm wrong tactically in the near term, and I don't want to cost my clients, our clients, an opportunity. How does that all play into the way you think? Because you can be a short-term guy, right? That's what tactical is. You can change your mind if the facts change. Yes. If the facts suggest that the market is actually not going to be as bad as you once thought for now. What do you do? So, you know, I think I can see from a price perspective where due to positioning and due to sentiment and broadly that we could get a little bit of a rally. But this is a case where we're so far against what I think against the ceiling

that it's going to be very hard for me to paint a scenario where the market's going at $4,300, $4,400, and I'm saying I'm wrong, I missed something. I just don't see that scenario happening. Could we go to $4,100, $4,150? Sure, absolutely, of course. But that won't cause you to change your mind. That will be a short-term positioning-led bounce, and that would not cause me to change my opinion. We're at 4,150 on the S&P.

I'm not writing something that says Eric Johnson's back and he has a new call on stocks. Definitely not. All right. We're going to keep that. Okay. All right. Appreciate you being here. Absolutely. All right. That's Ken to keep that. OK. All right. Appreciate you being here. Absolutely. All right. That's Ken Johnson joining us here at Post 9. Up next, Goldman's

profit plunge, the lender posting a massive earnings miss. It's the worst in a decade. So what should investors do with that stock now? We debated in today's halftime overtime next. In today's halftime overtime, Goldman smacked shares finishing their worst day in nearly a year after that bank posted its largest earnings miss in a decade but according to serity partners jim labenthal investors should wait to hit that sell button so this is a bad quarter in a bad environment and a bad a bad sort of rumor mill for the ceo You can't ignore that. He's got to fix it right now. But it's not something that damages, just one quarter doesn't damage the overall franchise value.

All right, Steve Weiss owns Goldman Sachs. He joins us now. Do you agree with Jim Labenthal? I mean, Jim Cramer said today, this was, I'm paraphrasing, but it's like terrible, like nothing, nothing to like. Well, look, I don't think it's just Goldman. I had reduced my position, but it's still a position I have. I still think management is phenomenal. It's a bad environment for them and for other banks. You know, mortgage sales is more of a pure wealth play. Granted, they have banking, a lot of similar businesses. But this is

the worst miss I recall them making, them having in a long time. But they've got in front of it. They announced another round of layoffs. So they sort of signaled if there's one thing that Goldman does, it gives great corporate advice to their clients. And guess what? They do it to themselves as well. So I didn't buy more today. If the environment were different, I would have been. It was just a run of the mill miss. But I'm still negative on the environment, which means I'm negative on the underwriting environment, which impacts their margins in their business. So I'd wait to buy more.

But I'm not hitting the parachute here and getting out at all. And look, Kramer's right. I mean, it was a great quarter, but so what? That's in the bag now. So if you look out, I don't know if it's six months or nine months, I'm confident that I'll be happy I own this. Well, I mean, if you believe that that Solomon is going to do whatever he has to do, at least when it comes to what he can control. Right. You mentioned the environment itself, but, you know, you can control some expenses in areas, et cetera. We'll see if he has the ability to do that in which, you know, Labenthal suggested he's got, you know, the clock's ticking. He's got a quarter to figure it out. Well, I think it's more than a quarter. Look, you know, you can overreact

and say, OK, cut more heads, cut expenses, et cetera. But you got to take the long term approach when you're building a business and businesses are cyclical. So you can't just say, OK, we're going to grow again. Let's fire everybody now and then we'll restaff and get in front of the cycle. No, now's the time you build relationships with the CEOs and you enhance the relationships that you have and you're ready for when things turn. So unless you have a crystal ball and say, hey, they're going to turn tomorrow, you take the prudent conservative path, which is, I believe, what they're doing, and then you're ready to go. You know, all guns, you know, you know, blasting one turns.

Solomon's going to be on in the morning, by the way. So you're going to hear directly from from David Solomon from out in Davos. Let me get you on Moderna real quick before I there's the promo there. Seven forty five a.m. Let me get you on Moderna before I let you go, because this RSV data was something that you had been looking forward to. We spoke about it very recently on Halftime Report. You made Moderna one of your Stock Summit picks, and you mentioned this event upcoming. These are good results. Market seems to like it. Give me your read here. Yeah, so I just spoke to Stefan Bonsal, who's the CEO of Moderna. He's in

Davos, so kind of to give me the time. These are great results. If you take a look there at their COVID vaccine, the top COVID vaccine of anybody else, including Pfizer. The RSV, there are a couple of other drug companies they're working on. They've got the best results. So people have to realize, as I keep saying, this is a technology company. You've digitized, or at least Moderna has, treatment for individuals. Unlike pharma companies traditionally, they're not reinventing or trying

to start it from ground zero for new vaccines, new therapeutics. This is the technology that they have to use, which is why it will be the most valuable life science company in the world as well in their way. So they bought vouchers ahead of time before the results came out so they can fast track the approval. That's what they're going to do. I bought more stock as soon as the results hit the tape. And I'm just looking forward to the ride tomorrow and going forward. There's more to come. Again, you can replicate this.

It's not like going out and trying to find a cure for one disease and then you got to go back and start from the beginning. No, the groundwork is late. And let's not forget, forget their cancer vaccine. Also, that had great results and their partner was working that. So, look, this is working out great. All right. Investor analysis, name dropping Weiss. I'm doing it all. You've covered it all. I'm also picking the Giants this weekend, too. So, OK, I'm sure you're picking both teams like you usually do. So you're covered either way. Weiss, we'll talk to you soon. I'll actually finalize that. I'll finalize my pick probably on Monday. After the game? Yeah,

I'm sure you will after the game. All right. Coming up, we're tracking some big stock moves in overtime. Steve Kovac is standing by with that, game. All right, coming up, we're tracking some big stock moves in overtime. Steve Kovac is standing by with that. Steve? Hey there, Scott. Also picking the Giants. But look, I got another earnings mover for you. A household name in online brokerage, plus several stocks moving in reaction to that promising United Airlines report,

and a major bank just appointed a new board member. We'll have all that when Closing Bell Overtime returns after this. We're tracking the biggest movers in overtime. Steve Kovach with us today for that. Steve? Hey there, Scott. Yeah, Interactive Brokers Group shares rising about a percent in the OT here after reporting earnings for the fourth quarter last year. The electronic broker firm beating revenue expectations at $958 million and a solid beat on EPS at $1.30. Interactive brokers also reporting an increase in commission revenue by 3% to $331 million. Now, several airline stocks also rising after United's beat on earnings earlier in the OT. Several airline stocks rising, including shares of Southwest, Delta, and JetBlue, are each up around half a percent.

And American Airlines is up nearly 2 percent. That airline already increased its profit and sales forecast for the fourth quarter ahead of its earnings report on January 26th. And now the big story here, though, Scott, of course, demand is really up for travel, even as fares go up. And finally, let's go over to JPMorgan Chase. It has a new board member, Alicia Bowler Davis, the CEO of Alto Pharmacy, will join the board starting March 20th of this year. Before she was CEO of Alto Davis, she was an executive at Amazon in its customer fulfillment division and a member of the legendary S-Team. That's the team that reports directly to then-CEO Jeff Bezos. Shares are up about 5% on the year, Scott.

All right, Steve, thank you. Thanks. Steve Kovac up next. It's Santoli's last word. And coming up at the top of the hour, more on United's results. CEO Scott Kirby joins the Fast Money team. OT is back after this. Last call to weigh in on our Twitter question. We want to know, are you feeling more or less bullish than you were on January 1st? Head to at CNBC overtime to vote. We'll bring

you those results plus Santoli's last word next. To the results of our Twitter question, we asked, do you feel more or less bullish than you did on January 1st? The majority of you saying more bullish. All right. Fifty eight percent. Mike Santoli here with his last word. So look, you do have this better tone, it feels. Yes. Up against the Eric Johnston's of the world who said nothing's changed. That's right. We're still going to fall out of bed. It's just a matter of when, not if. Yeah, it's it's been a noisy couple of weeks. And I say that because it's tough to separate out things like just the revival of some, you know, completely washed out growth stocks, people looking at the meme stocks moving again and things like that and saying,

oh, we're up to our old tricks again. Bitcoin's over 20,000 again. That's the bad stuff. We just don't know if that's really reflective of the overall investor stance right now, which I still think is pretty defensive. And I don't think we're going to have resolution one way or the other on the Eric Johnson, the macro is saying that a recession is likely and the best case scenario is we muddle through and stocks are not cheap. I see that. And there is also another kind of line of thinking, which is that we're in this particular phase where you have this January thaw. It's only coincidental it's in January, but it would be the case where you say, OK, the Fed's almost done, but the economy hasn't

fallen apart yet. And you can look back to other cycles and say there was this moment where you were able to kind of wish yourself into a position that says maybe it's going to be fine and maybe the Fed has done it. You have started to write about that and think more seriously, I think, about the idea of whether we're about to leave that bear market in the dust. Right. Now, there's a couple of things. One is the momentum signals and some of the things that people try to read to say, OK, the market is telling us that it's accelerating out of a low. And this is the way it tends to go is lots of stocks participating, cyclical leadership. You know, the bond market, if nothing else, saying the Fed's just about done and that should clear the way. It doesn't really tell you about how the macro is going to go.

And I was interested to hear Eric talk about, you know, in 07, people thought that the Fed was going to make it happen and unemployment was low. And in 2020, the thing is, we went down 27 percent this time. We're not at the highs of the of the market. And so you're right. We've already had the pain. You've had some pain, if not all that we're destined for. You've had a lot of it. And I think that's what makes it tricky right now, because we did not rally into the Fed starting to tighten in March. We actually rolled over before that. And so this cycle hasn't really fit the script perfectly up to this point. Let's see if earnings prove to be the pain reliever. Yeah.

Or if at least, you know, I'm almost encouraged that he had bad reactions to Goldman Sachs and Mohawk Industries and Travelers today. Morgan rallies on it. But that's what you want to see. United is emblematic of, as the Bulls would say, see, the economy is much stronger and the consumer is that people are giving it credit for. All you really want from earnings season is we're not so far wide of the mark with the consensus. And company by company, you react in kind. In other words, it's not necessarily a macro story anymore. It's, you know, companies kind of plus or minus 5% on the day of.

That's okay. That's not a macro meltdown. It's a healthy debate. All right, that's Mike Santoli with his last word. I'll see all of you tomorrow. Fast Money's now.