Closing Bell - Closing Bell Overtime: Rally Out of Steam? 1/18/23

Episode Date: January 18, 2023

Stocks pulling back today – perhaps being pushed along by more fed hawks talking about higher rates for longer, even as some suggest a soft-landing looks more likely. Ritholtz Wealth Management’s Josh Brown gives his instant reaction to an ugly close on Wall Street. Plus, the number one retail analyst – Matthew Boss – gives his forecast for the sector and breaks down his top pick. And, the key themes every investor needs to watch when Netflix results hit the tape tomorrow in Overtime.

Mike, thank you very much. Welcome to Overtime, everybody. I'm Scott Walkman. You just heard the bells. We're just getting started from post-9 here at the New York Stock Exchange. In just a little bit, I'll be joined by investor Eric Jackson, who not only believes the tech bounce from the beginning of the year is real, he recently bought a new stock that just might surprise you, and we will have those details ahead. We begin, though, with our talk of the tape. Out of steam. That's how the market certainly acted today. The pullback perhaps pushed along by more Fed hawks talking about higher rates for longer. Even as some suggest, a soft landing looks more likely. For what all of that means to your money, let's welcome in Josh Brown. He is the CEO and co-founder of Ritholtz Wealth Management, a CNBC contributor. It's good to have you back right here with me at Post 9. Loving it. You have a nasty day. Yeah. Out of steam, out of gas, pushed over the edge by some Fed hawks, all the above.

What do you think? I think it's okay. Listen, I think it's okay. We've had a really big run so far. We're just digesting that run. We were on the half yesterday talking about, look, we know the data is going to get worse from here. It's going to deteriorate.

That's what you had today. Retail sales fell 1.1% in December. Negative 1% was expected. Doesn't sound like much, but that is the biggest monthly decline for all of 2022. So we finished the year in much worse shape than we were for much of the year, at least on that measure. Retail sales have now fallen three out of four months, Scott. That's notable. The Empire Manufacturing Survey was another one that got people's attention. This was the fifth worst contraction ever since they've been keeping this data. It was the weakest since March of 2009, taking out the COVID stuff. That really is a big asterisk. That's getting people's attention. That index is in contraction five out of the last six months. That print was twice as bad as what people

expected. And so what I would say is look at the 10 year, look at bond prices screaming, look at yields melting away. The market is now doing something very interesting. It's actually reacting badly to bad news. That tells you fear of the Fed is not the story this year. The story is, uh-oh, what have they done? Have they gone too far? Are they going to recognize it? That is the new paradigm we find ourselves in here in 2023. It's fear of the Fed, just in a different way. It's of over-tightening. Fear of what the Fed is already doing. It's retroactive. Not only that, but what they're still pledging to do. You hear Bullard today?

Yeah. Bullard, five and a quarter to five and a half, go 50 next meeting. Now, he doesn't have a vote, but nonetheless, his words matter, right? This is like, we're going, and we're going to stay there, and we're going to go more than you think.

Because you know why? Because you can't undo everything that you've already done. You can't allow a 10% S&P rally to reignite manufacturing and retail sales and housing. You really want to avoid having that outcome. And so what do you do? Well, you're not going to do 50 basis point rate hikes every month anymore. So the other tool you have is to just tamp down people's enthusiasm, make sure everyone knows you're going to stay vigilant,

and keep the CFOs on track to continue firing people. I hate to say it that crassly. I hate to be the person that says it out loud. That is literally the thing that the Fed needs to continue in order for that 3.5% headline unemployment rate to decline. That is the only way they can declare victory. You cannot declare victory against inflation with the labor market as tight as it still is, despite the fact that we're hearing about big companies doing big layoffs. It just isn't enough yet. And so you're going to continue to hear the hawkishness. What do you think the Fed thinks about this move we've had to start the

year in the stock market? Bitcoin up 20 percent in a week. You know, ARK stocks. It's kind of the trash is this, you know, few weeks worth of treasure, so to speak. What do you make of that? What do you think they think of that? Well, I think the Fed would not, other than Kashkari, would not publicly comment on it or offer any kind of an opinion. But I would tell you it's not what they're looking for. It would not. Look, I don't understand this whole mentality. We talked about it on the show. Like, oh, yields are backing off. Let's pivot back to buying garbage on the NASDAQ.

Like, I don't subscribe to that being the right thing to do right now. I said yesterday, stick with what's working. Dividend aristocrats, high cash flow, high quality. Even if you don't outperform over any arbitrary period of time, you're not going to look like a fool that bought the top once again. I also don't like the VIX as a teenager. I think it's a mistake for us to get more bullish on a day like yesterday. You open up, you hit like 18 and change 19. That is not where risk should be priced right now. So I think today just reverses a little bit of that.

I'm happy to have been slightly ahead of the curve. The rest of this week might end up looking like today. I don't think it's the end of the world. What we're really doing is retracing a lot of the gains that we've gotten since Jan 1. It's okay. Earnings are going to decide it. I mean, they're going to decide something. And, you know, Mike Wilson was on the network again today. Of course, Morgan Stanley says estimates are still too high.

They're going to still come down more than people think. And, oh, by the way, so are stocks. I want you to listen to what Wilson said today on CNBC. We react on the other side. I think at a minimum we're going back to the October lows, which would get your, you know, because you remember the valuations are expanded again to about 17. a half times numbers that we think are almost 20% too high. So that would argue for at least a 10% correction. If it plays out more broadly, and let's say we slip into a recession, which we don't know the answer to yet, but that would happen and that light switch or

proverbial light switch kind of goes off, it could be closer to 20%. Yeah, X energy, you have negative earnings growth pretty much across the board. We're only, at this point, no one's debating that. We're only debating the degree to which it's negative and when the swing happens, whether it's this summer or this fall. But look, we're nowhere near a recession, which means it could be very gradual. And I don't want people to be frightened when Mike Wilson says 3,200 on the S&P, because that could be something that happens eight months from now, or gradually between now and the next eight months.

I don't think he's calling for that to happen overnight. Unfortunately, it's a little bit of a grind. You take a step forward, you take two steps back, then you take another step forward to a lower high. It's so frustrating. What I would just tell people is don't count on this being the best quarter of your life. Just try to make smart decisions in the moment. The market ultimately will take care of itself.

Even the most bearish strategists out there are not looking for a wholesale collapse in earnings. Absent a recession, you're not going to get that 20 percent waterfall lower for EPS on the S&P. It just doesn't seem to be in the cards. We have some sort of a crisis. It's a different story. But nobody is really calling for that right now. So I would just say be measured. Don't get too bullish. Don't get too bearish. Play the market that's in front of you. But do you feel like people have, you know, even if it's incrementally, have started to get a little more bullish, more positive? You know, hearing more about soft, even if it's incrementally, have started to get a little more bullish, more positive. You know, hearing more about soft, even Bullard himself.

Bullard today said soft landing is the chances of that are markedly better. You know, solid. David Solomon. Everybody out in Davos had all the reasons to be negative. They're not that negative. They're, you know, some are looking for a mild recession, but it's not maybe as much gloom and doom as some might have thought. No. And when you hear somebody say the consensus call now is recession, therefore I'm a contrarian. Understand that like a survey of Wall Street strategists, the consensus that they're referring to is like 56% expect a reset. It's not as though everyone

is absolutely convinced. So there is room for the soft landing to still materialize. A lot of things would have to go right. I would argue the reopening of China is going to help with that. And I think that's why you caught a big rally this week, some signs of a thawing there. There's little things like that. But overall, earnings would be negative. We don't know what to agree. Without the actual recession, there's no reason to think there's a collapse coming. I just think the base case for a rational person would be to look at periods of time like this in history and just say a grind is a likely base case and learn how to live with that. It feels like, you know, some are perhaps making

the mistake of thinking that, you know, if we do get a soft landing, that means you're off to the races again in the stock market. Marco Kalanovic of J.P. Morgan argues today it's already priced in. That's why he says there are even more underweight equities now. They're worried about the Fed going too far. Quote, we remain cautious on risk assets, reluctant to chase the past week's rally as recession and overtightening risks remain high. We believe a lot of good news already priced in in terms of inflation, moderation, or the potential for a soft landing. What do you make of that? The Dow Jones Industrial Average is pricing in a soft landing right now.

If you actually look at performance last year for dividend-paying stocks, it was less than a 10% sell-off. The NASDAQ is pricing in something significantly worse. But then when you look at the types of companies that are in the Nasdaq, you understand the headwinds. Number one, enterprise spend. We know it's going lower. Number two, consumer demand. We know that's faltering now.

And then number three, advertising. It's a huge component for Alphabet, for Meta. These are the big earnings weights and position weights in the NASDAQ. So these headwinds, I think, are going to make it very tough for this year to think that there's some sort of shift that's going to take place that, frankly, is sustainable. Could you get a week-long rally in semis and telecom? Yeah, sure you could. Is that what we're doing here? We're trying to catch a week-long rally? Most people aren't that nimble and shouldn't attempt to be. So the easier call is to say,

all right, let's see how much earnings expectations go to the downside. Let's see if this data continues to soften. Let's get a little bit of a sense of whether or not the Fed is done, whether it's March or April. And we'll go from there. Two weeks from today, by the way, right? Two weeks from today is the Fed. It feels like it's this distant meeting in February. No, it actually begins the end of this month. Two weeks from today is game time. And you're going to get a lot of commentary right up until, and then you're going to have the press conference to digest.

There's a lot coming our way. I don't think anyone is served by thinking that now is the time I want to try to outsmart everybody. That week is going to be bananas, by the way, because you're going to have the Fed. We're going to have gun lock reacting to that. I think you have Apple earnings literally the same day as the Fed decision. I didn't realize that. Or thereabouts. That's going to be bananas. I might go tanning for that or something. All right. Let's broaden the conversation. Bring in Samir Samana of Wells Fargo Investment Institute, Jessica Inskip of Options Play.

Good to have everybody with us. Jessica, are you believing this alleged soft landing hype? I am cautiously optimistic about it. I think it is plausible, but it is so early to say that, especially with the page book data and the contraction that we're seeing within the economy. However, the key inflation issue is the labor supply issue, just like Josh was saying. And part of that is there are too many job openings and not enough people to fulfill those. So if we see still record low unemployment, but a decrease in job openings, that's a way or a path forward to get to equilibrium.

However, that's a very slow path forward to find some balance or equilibrium. So that's why I say it's plausible. But I would like to see that trend continue when we have to see either an influx of supply or that demand come down. Samir, I want your take on whether you agree or disagree with Mike Wilson of Morgan Stanley, who says we're going back to the October lows at a minimum. What do you think? I don't know. I mean, I think at this point, given that long rates have gone to home and that you have seen at least some progress towards people trying to get their arms around lower earnings estimates, at least from a top down standpoint, I appreciate the bottoms up. The analysts are still much too bullish. I think expectations have come down. So I think from here, could you

set lower lows? It's entirely possible. That being said, I think people should keep the destination in mind. The further you go into this year, inflation will come down. The Fed will have a rationale to pause and possibly even ease. So we are in the camp that we end up higher in kind of that 4,300 to 4,500 area. So if you see those generational-type buying levels, we would kind of, not so much back of the truck, but we would be pretty aggressive. Wow, 4,400, that's interesting. By the way, it's meta-earnings that are the same day as the Fed decision. Apple's the next day.

I think my broader point is the bananas week that is going to be had that week. And we look forward to that and having all of you, of course, here in overtime. 4,400. How are we going to get there, Samir? Feels like light year. We can't even close above 4,000. I mean, look, we were 4,300 not that long ago, really just in August, right? It hasn't even been six months as we were 4,300. And so, you know, I think you have to look at the market this year. A little bit of the opposite of what you saw last year, right? Last year, earnings grew, but the markets fell. This year, earnings will fall, but the market will rise.

And the reason is because the market's always looking about 6 to 12 months ahead. And so if you think about what normalized earnings would have been this year without the Fed having to go through this rigmarole, it would have been probably closer to $240. And next year's number probably will be somewhere in that $260, $270 area. So if you start pricing the market off of normalized earnings probably closer to 240. And next year's number probably will be somewhere in that 260, 270 area. So if you start pricing the market off of normalized earnings and you put a reasonable multiple on it, 4,300, 4,400 isn't all that heroic an assumption. Josh, earnings will fall, market will rise. You want to take that on?

I guess I'd love to hear from Jessica. Does the fact that the juicy yields in two- and ten-year treasuries, that those have now largely gone away, does that act as a tailwind for some areas of the stock market? For investors that want to be invested, maybe now you can't get that 4.5% yield on a two-year. You can't get a 4% yield on a ten-year. Do you look elsewhere? Are you looking at REITs? Are you looking at dividend stocks? How much do you think that might support stock prices? There's certainly been a correlation. We normally see an uptick in yield, and then the inverse happens with stocks. So that's certainly true. And there are certain investors that play for income and can look for dividends. I'm not

sure if I would go into real estate just yet. I think that's a bottoming process and something that would bottom first. But it's certainly something important to pay attention to. I think what, in regard to yields, the biggest headwind that I see on the horizon that has been spoken about a little bit today is really the debt ceiling and what's going to happen with that, with gridlock, where is the demand for treasuries going to come from and is that going to increase yields? That's something that I'm really watching and trying to understand relative to that. Samir, I want to test you a little bit more on this idea that we can do as well in the market as you just suggested and one of the ways you think we can get there is

through tech, right? You like tech when a lot of others don't and they think that there's been a market, you know, leadership change in this market that's not going to change back anytime soon. How do you respond to that? So, I mean, again, look, the earnings are there, right? I mean, at the end of the day, tech basically powers the entire economy now, right? We're no longer an industrial economy, we're really a tech economy. So then the question only becomes, you know, all right, what's the go-forward growth rate and do they trade at the right multiple? And you've had, you know, pretty decent D rating. And as far as the earnings growth, I becomes, you know, all right, what's the go-forward growth rate, and do they trade at the right multiple? And you've had, you know, pretty decent D rating. And as far as the earnings growth, I think, you know, there is a little bit of a, you know, kind of question mark there with respect to what does that look like going forward. But, you know, technology, especially relative to an area like consumer discretionary, we think is a really good resilient play for 2023.

And then to Josh's point from earlier, you know, you do have good earnings growth from energy. It seems like oil prices have gone. We do think we're in a bull market for commodities going forward. The reopening in China will only help. The fact that Europe dies of recession will only help. So we think some of these other areas are coming on strong. When you look at the start of 2022, growth made up almost 60% of the benchmark. At the end of the year, closer to 45%. So you are starting to recompose the benchmark. And eventually, the year, closer to 45%. So you are starting to recompose the benchmark, and eventually some of these cyclicals will take over. Tech multiples, obviously, Josh, have re-rated significantly. The question is, have they re-rated

enough to meet the slowing growth rate, revenue growth slowing almost across the board for all of the mega cap tech companies? So I don't personally, I would like if that were true. I feel, unfortunately, the largest technology companies had a five-year period where they were literally invincible. And now there are holes. Every one of those stories has a hole in it. We could talk about Alphabet and some of the out-of-control spending that's going to have to change. Meta, obvious problems. Now Apple, potentially, some issues.

And when you think about how important those stocks have been, not just because of their weighting in the averages, but the earnings growth coming from that area, if you're not going to get it or you're getting a lessening version, is energy big enough to pick up the slack? And for me, the answer is no. Maybe that could change over the course of years. But right now, I feel like those stocks at a minimum have to market perform. And maybe they will. But it's hard to be bearish on them and be bullish on what we're going to get out of the S&P this year. It's just, they're still, despite the market cap declines,

they're still too big and there are still too many questions surrounding their business models, competitive threats, geopolitical stuff, regulatory stuff. It seems like for the first time in half a decade, there are some real chinks in the armor. Jessica, do you believe that too? Do you believe that tech still has some pain

ahead of it down the road? I think it's a great time to be a stock picker. I completely agree technology is integrated into our everyday lives and that's only going to increase. I think that technology has done really, really well because we were in a low interest rate environment. They're growth companies. They thrive off of innovation, which requires capital. If it's more expensive for us to borrow, it's more expensive for those companies to borrow. However, technology solves a lot of the issues that we're facing in those macro headwinds. Therefore, it has to be integrated. Like I've been talking about so many times is automation.

We heard that earlier today from Walmart. They said they're making a huge investment as far as automation is concerned and cybersecurity and things of that nature. We heard that from previous calls as well. How are we tackling our labor supply issue? And the answer is automation. So technology absolutely is going to have a tailwind based on some of those macro headwinds that we're experiencing right now. So I do think there's absolutely opportunity for room and growth. They'll protect their profit margins. That's that we're experiencing right now. So I do think there's absolutely opportunity for room and growth. They'll protect their profit margins. That's why we're seeing most of the layoffs there. And they'll focus their product in the right spot, looking for earnings to validate

that thesis. But I do think there is absolutely growth opportunity because there has to be. Samir, what about this idea that some are putting forward that outside the U.S. is better than in? You know, we would agree with that. We're sharpening our pencils. And, you know, look, I think what the Bank of Japan did, I think what China has done with respect to how quickly they've reopened, I think those are both worth paying attention to. And we think they have legs. I wouldn't chase, you know, international markets here.

We think that the dollar is oversold. We think developed markets especially are a little bit overbought. But in the coming weeks and months, I mean, we'll be looking for opportunities to try and kind of reposition there because, again, I mean, they are surprising to the upside. And I think it's worth acknowledging. Tackle that before I let you go. I would just say pull back the lens a little bit further. Yes, there's been outperformance from international versus U.S., but that's just in the form last year for the most part of losing less money. You maybe had one quarter of notable performance. These markets have been underperforming U.S. stocks for almost 15 straight years. So they have room to run if they're going to run. I don't think we need to be overly tactical and say,

oh, let's not chase. Like if you believe and you want to be invested in cheap stocks, high dividends, non-correlated returns, you should buy international developed stocks right now. They have underperformed to such a substantial degree that they could beat the U.S. stock market for three years and they still wouldn't even come close to catching up. So I like that. I like that space. I like that idea. All right. We will leave it there. I know, Josh, we'll see you back in a little bit for halftime overtime. Jessica and Samir, thank you so much. We'll see both of you again soon. I'm sure of that.

Let's get to our Twitter question of the day. We want to know which Fang name will do the best this earnings season. Will it be Meta, Amazon, Netflix, or Alphabet? And by the way, Netflix is tomorrow. We're going to get you ahead of that coming up, too, before we get out of here. Head to at CNBC Overtime on Twitter. Cast your vote. We'll share the results later on in the hour, which we're just getting things started here in overtime. Up next, EMJ's Eric Jackson is with us. He recently made a new move in his portfolio. The surprising name he is betting

on now, he reveals it next. We're live from the New York Stock Exchange. OT is right back. We're back in overtime. The Nasdaq finishing lower for its first down day in the last eight. Bit of a strong start to the year for tech with the Nasdaq up nearly 5%. Does that recent rally have more room to run? Let's ask Eric Jackson of EMJ Capital back with us. Good to see you. Welcome back. How are you, Scott? I'm good, thanks. more room to run let's ask eric jackson of emj capital back with us good to see you welcome back how are you scott i'm good thanks you believe in this tech bounce i do i think this is a different

kind of bounce compared to last june uh there's a few things that are different first couple of weeks of the year we've seen a broader base rally than we saw back in june uh the the biggest difference though is that inflation is falling now. Back then, it was still going up and had yet to really crest. So we have that going for us. We have a weakening dollar that's going to be a tailwind for a lot of tech companies this year. We have interest rates that are now 10 years, I think, back to September levels, and it's moving lower. That's going to be supportive of tech, whereas obviously it was a headwind last year. So I think there's a bunch of ways where this thing could be a rally that lasts for the majority of

the year, not just a few weeks or a few months. I mean, it feels like there's been a pronounced leadership change, doesn't there? And why would that reverse itself now at a time where everyone, as Josh Brown was just suggesting in the conversation we were just having, every one of those companies in terms of mega cap has issues of one shape or form or another, right? Not to mention the fact that almost every single one of them has revenue growth slowing. That's true. I would characterize it differently. I would say the majority of tech stocks, meaning like the mid-sized and smaller cap tech names, have been in a bear market, Scott, for two years, almost two years now. It's really since mid-Feb 2021. And it's really just that the big tech names really got taken to the woodshed just in the second half of last year.

So their time, you know, in the Hurt Locker came and they've gone through it and remains to be seen whether they are going to have a little bit more pain for longer. But the rest of the tech names and a lot of the smaller growth year names, I think finally they've gone through such a such a multiple re-rating. In some cases, their stocks are down 70, 80 percent that I think you have to start to nibble. And those are the names that have rallied 30 percent in the first couple of weeks of the year. Yeah, well, there's been, you know, as look, Mike Santoli has has termed it, you know, the most bombed out names. I get it. But, you know, others would suggest that, OK, so the quote unquote garbage names are the ones that have jumped a lot to start the year. But that's the least believable part of this whole tech rally.

Well, I mean, we're going to talk about a name that I like. And, you know, as you were saying on the last segment, one man's trash is another man's treasure. I mean, I love Coinbase. And I bought, started buying Coinbase in kind of mid-December. And it was sort of the poster child for a bombed out tech name. People are throwing their hands up, didn't want to own crypto. But take a step back and look. And it's one of these names that I think was down for 2022, something, you know, 80 plus percent. But you look at this name, one of its biggest competitors just imploded a few months ago. The on-chain data that I've seen shows that this name, you know, was the primary beneficiary of that lost market share from FTX. About 30 plus percent came over to Coinbase.

And yet nobody, you know, didn't help the stock at all. It just was in a free fall for the last couple of months of the year. They've got well over 100 million verified users now. I think they're going to announce when they announce Q4, they're over 110 million. They're still growing users. And they are the dominant name. They're not just in the U.S. They're international play. And we've seen in this trash rally, if you want to call it that, Scott, I mean, crypto's entire market cap is up 25 percent in the first couple of weeks of this year. And so we'll see if that's sustainable or not. But one thing's for sure, if there is a little bit of a sustainability to the crypto rally, Coinbase is going to be the biggest beneficiary of that.

They were a profitable company even before, you know, in early 2020. And they've done a big couple of rounds of job cuts. They will be profitable again if they get a little bit of help from crypto and rallies and the names like Bitcoin and Ethereum, they have a much bigger user base today than they did a couple of years ago. Their top line revenue could go monstrously high again, as it did in 2021. And that's just not priced in. This thing has a lower multiple than Schwab. Yet Schwab's top line is flat. This thing could be double its size in a couple of years from now. What makes you believe, though, that

the early year Bitcoin jump is anything close to sustainable? I mean, especially if the market reverses. I mean, Bitcoin feels like it's once again correlated directly to the Nasdaq, right? Nasdaq has a jump to start the year. It's the outperformer. You know, no shock that Bitcoin's up 20% in a week. You know, it's at 21,000. What makes you believe that that's sustainable in any way? Well, it's, time will tell, obviously.

But, you know, when something's down like 90%, whether it's a stock or it's a crypto asset, I heard someone say, when something's down 90%, it's either going to go bankrupt or it's time to pile in and get behind this name because it's been oversold. And so I just think Bitcoin's not going away. Bitcoin and crypto as an asset class isn't going bankrupt entirely. There are going to be winners and losers, just like there will be in the world of stocks. You want to put your money behind the names that you have most conviction in and you think are going to see it through to the other side. And we'll have to see. But I just think enough pain

has been inflicted in some of these crypto projects. There's still interest. There's still activity in some of them that, you know, I think you'd be foolish not to sniff around, look at some of these names and decide, you know, which are the highest quality ones you want to get behind. I see you still think that Tesla is your favorite large cap tech tech quotes, I guess. Name. Why? I just think the thing that people are missing is like the Twitter, the Twitter stuff is a sideshow. You know, eventually people are going to forget about this or Twitter is going to do, and people will just stop talking about it and stop associating it with Tesla. I think the biggest thing that Tesla has going for it is that if you believe the majority of the sell-side analysts who cover this stock, this name is going to have record deliveries this year.

I think, ultimately, that's what's going to drive the stock. I think people, once they kind of adjust to this re-rating and, you know, the big sell-off that the name had, especially into the end of last year, they're going to say this stock, you know, there's demand out there for these cars. You know, they dropped the prices in China. And I saw a couple of reports from China over the weekend that demand immediately sprung back and they're going to fulfill those, you know, those deliveries there. So I just think as long as they keep growing their deliveries, just like as long as Netflix was growing its paid subscriptions, there's going to be people interested in this name. And I think they're going to flood back to Tesla when they realize that

there is a lot of sustainability here. There are a lot of advantages that they have that these other car companies that supposedly are going to come out with EVs this year are just getting started on their kind of life cycle with. All right, we'll leave it there. We'll catch up with you again soon, Eric. Thanks so much for the time. That's Eric Jackson joining us once again. It's time for a CNBC News Update now with Julia Borsten. Hi, Julia. Hey, Scott, Here's what's happening at this hour. New Mexico prosecutors will announce tomorrow whether they will press criminal charges in connection with a shooting death during the filming of the movie Rust in 2021. Cinematographer Helena Hutchins was killed and director Joel Sousa was injured when a gun held by Alec Baldwin accidentally fired a live bullet.

The Church of England has decided not to let its clergy marry same-sex couples. Proposals developed by top bishops confirm the church's position that a marriage is between a man and a woman. The proposals would allow same-sex couples to have a service following civil marriage, but clergy members would not be required to perform them. Sometimes timing isn't everything. A new study finds intermittent fasting does not promote long-term weight loss. Researchers at Johns Hopkins tracked the eating habits of more than 500 people over six years. Limiting food intake to specific time periods was not found to affect a person's weight. Instead, the best predictor of weight change was a person's caloric intake. Back over to you, Scott. All right. Thank you, Julia.

That's Julia Boorstin. Up next, shopping for opportunity. Retail sales falling for the second straight month, but number one retail analyst Matthew Boss, he still sees some serious upside for a few key names. We'll get his top picks next. We're back in overtime. Retail sales falling for the second straight month, posting the biggest decline in a year today. But retail stocks still outperforming the broader market in 2023. Let's bring in J.P. Morgan's Matthew Boss. He's the number one retailing and department stores analyst, according to Institutional Investor. Good to have you back with us. So what was your take on that week retail number today? Look, Scott, this holiday season and nothing new for retail continued to be a roller coaster. As a whole, holiday actually met our expectations up mid-single digits. November started out softer with some of the lapping up against earlier demand a year ago. Black Friday was

pretty off the charts. You then had a pretty deep lull in early December, and I think that's what showed up in today's report. But that weekend of Christmas, probably the best in a decade by our check. So I think in the end, retailers got to where they needed to be. That said, promotions were deep. But I do think that retailers cleared through inventory to exit the year heading into 2023 in a cleaner overall position. The last CPI suggested that apparel prices were up. And I'm wondering how that how is that possible for the very reason that you just suggested that it seemed like inventory everywhere was piling up from the shelf to the ceiling. So there was a there was a big dichotomy, I would say, between

excess inventory in the marketplace that was heavily marked down relative to full price, meaning on the luxury side, there were no real deals to be had. On some of the full price innovation from some of the core, stronger brands out there, you saw some very, very strong full price selling. So it was a very stark winners versus losers. You know, look, one of the things that we're focused on was the lull in December. And again, I think that was a big part of today's report in that those first three weeks of December, look, some companies out there have cited concern around self-purchasing. That's why we're taking a more selective stance into 2023. I think it's going to be a tale of two halves. You're going to lap up against some stronger economic activity in the front half of last year. Raw materials are still elevated.

Freight is still elevated. So retailers and the consumer picture in the front half of 23, I think is going to be is going to be rough, is going to be a pretty rough ride. Back half of the year, I think, is where there's potential opportunity on the horizon. You seem to be, you know, reading through the noise of this retail sales report, suggesting that the holiday quarter was better, or at least you feel better about it than the numbers would maybe suggest. But then how do you square that with what Lulu did and Macy's, right, when they were explicit about warning or lowering their numbers relative to the holiday quarter? Yeah, so there's not a single company from an overall top line relative to initial expectations

for the fourth quarter that really came in below. So some met, some were lower end, some were higher end. But as a whole, I think this holiday season, retailers are breathing a sigh of relief. And again, I think it was really driven by that gifting behavior, that seasonal behavior. I think the concern is the self-purchasing and that between Black Friday and that week right into Christmas, we definitely saw a pause in the consumer. You saw a similar pause in the consumer in midsummer. And so I think as we move to 2023, we're taking a much more selective stance. I think it's value and convenience, which would be more the off-pricers, the consumer looking for a deal, looking for value. And I think it's best in class brands, the Nikes of the world, Tapestry, Capri. So I think

self-help in 2023 is going to be one of the drivers that you need, because especially in the front half of the year, I think you're going to hear companies and retailers talk about a tale of two halves and the opportunity being more back end loaded. All right, Matt, I appreciate it. We'll see you soon. That's Matthew Boss, JP Morgan, again, top rated retail department store analyst, according to Institutional Investor. Let's stay with retail. CNBC.com breaking a story just moments ago on Bed Bath & Beyond. There have been discussions now with prospective buyers and lenders as it works to keep its business afloat during a likely bankruptcy filing, that according to people familiar with that matter. Earlier this month, Bed Bath & Beyond warned it may need to file for bankruptcy after its during a likely bankruptcy filing. That, according to people familiar with that matter.

Earlier this month, Bed Bath & Beyond warned it may need to file for bankruptcy after its turnaround plans failed to substantially boost sales. You can read that full exclusive story on these unfolding details. Go to CNBC.com right now. Check that out. We'll keep our eyes on that stock as well through overtime. Up next, the setup into Netflix. That company reporting results tomorrow right here in overtime. Josh Brown is back with us. He'll tell us what he will be watching when those numbers hit the tape. We're back right after this.

In today's halftime overtime, the countdown to Netflix. The company set to report quarterly earnings tomorrow right here in overtime. But with the stock surging more than 30 percent over the past three months, should investors brace for some downside when those numbers hit? Josh Brown is back with us. All right. So let's get some things on the table. You were in the stock.

Yes. Had this huge jump. Yes. You just sold it because we talked about it the other day, whatever day that was. You sold it recently ahead of the number. What do you expect here? Now I'm kind of feeling like maybe I should be in it. I'm a sucker for this idea that surprises typically follow in the direction the stock is already going. And it's not impossible for

Netflix to have a really good earnings report. It's an analyst at UBS covering the stock, talking about the possibility of a re-acceleration in subscriber growth. So in the third quarter, the company added 2.4 million subs and UBS, for example, is looking for four and a half million. Yeah, that's the number. Yeah. They gave you, I mean, they guided to that number too, so. Yeah, listen, I think that is the kind of sentiment that might already be in the stock. So I felt good letting it go. You have to understand, I bought it because I thought it was way overdone to the downside. The stock is now up 100% off its low. This is one of the biggest bouncers in the entire market. You also have to keep in mind the history here. This is a company that had five straight negative reactions to earnings starting in 2020 through

that first quarter of 21. And then they really blew up through that first quarter of 21. And then they really blew up through that first quarter of 21. They really, though, blew up in Q1's report, which was the spring of 22. That's when the stock went down 35 percent a day, the worst day for Netflix ever. But look at what's gone on since then. They've put together two back-back upside surprise quarters. After one of them, the stock popped 13%. After the other one, the stock popped 7%. Very respectable. And in the meanwhile, this is one of the cheapest moments, valuation-wise, for Netflix that really we've ever seen. The stock is trading at half its five-year average enterprise value to EBITDA.

And it's very, very far below its 10-year. So I think it's cheap for Netflix. I think expectations have been suitably restrained given the last couple of years history that I just laid out. And there is the potential for that upside surprise. Technically, the stock looks fantastic. So, okay. So you got issues, right? You got slowing revenue growth, right? Dramatically slowing revenue growth. In the stock. You've got no sub-guidance anymore, right? So you've got to figure out how the street's going to react to the fact you're not going to get sub-guidance anymore. Yes, I'm happy about that.

And the analysts suggest that the ad-supported tier is off to a slow start. Let me give you the other side of the ad-supported tier. What that will do, maybe not accelerate the sub-numbers and be a big top-line driver, but that could end up reducing churn. And anything that you can do as a SaaS business, as a subscription business, to reduce churn is net positive. So in other words— Even if they go from premium, like just from some top level down to ad supported, as long as you keep them in the house, I think that's going to be the new focus for the company.

Look, keep in mind, everybody now is focused on profits. Everybody now is focused on cash flows. The sub growth story is great. I don't think it's going to be the biggest determinant of whether or not Netflix at $335 a share or $325 a share is a buy. I think the focus is going to continue to be, is the company earning more money than I thought they would? Is the company finding new ways to reduce churn? Is the company finding new ways to capitalize on its already enormous audience size? So I feel good about it going in.

I don't currently own it. And if they beat it up over some stupid metric, I might even end up buying it back again. OK, you give us a holler tomorrow in overtime. I know you'll be watching. If you do do that, you let us know. Absolutely. We'll hear from you again. That's Josh Brown. Thanks again for sticking around. All right. That's the reform broker right here. Downtown Josh Brown, whatever you want to call him. Coming up, we're tracking some big stock moves in overtime. Kate Rooney is standing by with that. Hi, Kate. Hey, Scott. Yeah, we've got some earnings movers on deck for today. One infrastructure company is seeing a boost in demand and a big

executive change and a couple of industrial and financial firms under pressure as well. We'll have that coming up after the break when closing bell overtime returns. We're tracking the biggest movers in overtime now. Kate Rooney standing by with that. Hi, Kate. Hey there, Scott. We are indeed. Let's start with our first mover here.

Overtime mover, that is energy infrastructure company Kinder Morgan. Fourth quarter earnings per share grew 7% year over year. The CEO saying increased attention to energy security in 2022 boosted demand. And the board also authorized a $1 billion increase in share buybacks. Kinder Morgan also saying CEO Steve Keen is stepping down effective August 1st. Kim Dang, meanwhile, the current president, will be his successor. Discover Financial shares also under some serious pressure after hours. It looks like down more than 6%. That's despite fourth quarter results that topped Wall Street estimates. One possible reason, it's customers may be falling behind in payments. The 30-plus day

delinquency rate for credit card loans was 2.53%, up quarter over quarter and year over year. Finally, we have industrial adhesive maker HB Fuller. The stock tumbling right now after missing analyst estimates for both revenue and earnings. Pricing was up 11%, but the company said that could not offset the combined effects from weaker demand and higher raw material costs. Gross margins also down year over year. Scott. All right, Kate, thank you.

Kate Rooney. All right, still ahead. Santoli's last word. Twitter poll. We're back right after this. Twitter question. We asked which Fang names will do best during this earnings season. Most of you saying Alphabet. That's kind of interesting. I had Amazon. Wow. All right. Up next, Santoli's last. Why is an apple on that list? Anybody know? I don't either. Back right after this. All right. Santoli's here with his last word. I was reminded through this little air piece here that apple

was not an original fang. That's right. I had forgotten. There's modified versions of Fang. Sometimes we throw Microsoft in there, but no, original Fang, Facebook, Amazon, Netflix. Okay. We learn something new every day. Yep. All right. What do we make of what happened today? Seems like there's been a turn in the sense that we're no longer rallying on disinflationary news, right? That's one of the takeaways from today, right? We got great PPI number. There have been times when the market was able to rally on weak economic numbers if it came with the promise of lower inflation. Feels like the market is sort of just making that as an assumption, that inflation's on the downswing. The Fed's just not really willing to acknowledge it yet. So we're caught in between.

I don't think anything was really broken today in terms of trend. Actually, if you look at some of the underperformers, it was even some of the defensive stuff. Walmart was down today. UNH was the biggest drag on the Dow. So it didn't necessarily say people are throwing in the towel on a better than feared economic outcome. But clearly there's pressure on that view. Like if Bullard would have come out and said, you know what, the data is really starting to weaken. Yeah. I think maybe it's we're getting close to the end. You would have had a different market reaction. He did not say that. In fact, he said, you know, 50. Right. He threw out 50. He likes to throw out those. Well, you've pointed out he's not a voter

this time. He kind of defines one edge of of the Fed. Now, I do think that the consensus is very tight right now on the Fed, which is we're not going to give an inch. The actual reported headline and core numbers have to be better for us to pull away. Now, 5 percent is not far away in terms of the Fed funds rate. Right. It's another 50 basis point. All of a sudden, the upper ends at 5 percent. Maybe we get there. Maybe we stay there for five minutes and maybe the market can absorb it if, in fact, you have clarity, because one thing that's helped the market in the last few months is bond volatility has really come down as soon as the market got clarity, at least of what it thinks is clarity, on where rates are going to

settle. All right. The first FANG earnings report tomorrow. Netflix. Yeah, Netflix. The stock's been running, too. So we'll see how it goes. I'll see you then. All right. Does it for us. Fast Money begins right now.