Closing Bell - Closing Bell Overtime: Recession Fears Slam Stocks 12/15/22

Episode Date: December 15, 2022

How bad could it get for your money at a time when many investors were planning for a year-end rally? Cantor Fitzgerald’s Eric Johnston gives his forecast. Plus, BTIG’s Jonathan Krinsky charts today’s sell-off. And, EMJ’s Eric Jackson breaks down the tech trade after the Nasdaq fell 3%.

Well, they're cheering down here. I don't know if it's worthy, though, given this market action. Welcome to Overtime. I'm Scott Wapner. You just heard the bells. We are just getting started from post-9 here at the New York Stock Exchange, where stocks had an absolutely miserable day. Ed Yardeni is going to join us in just a bit to try and make sense of it all, tell us what he thinks might happen next. Adobe earnings also crossing any moment now. The tech space wrecked big time today, too. We'll have that report.

The stock move, of course, that follows there. We begin, though, with our talk of the tape. How bad might it get for your money at a time when some were planning for a year-end rally? Let's ask Cantor's Eric Johnston, who was not in that camp. He made his case a couple weeks ago. Stocks had some major pain ahead. He's here with me on set at Post 9. It's good to see you again.

Good to see you, Scott. You nailed it. I don't know what else to say. I mean, 12-2, you said bearish, let's get bearish. S&P is down near 5% since then. What'd you see? So I think that the good news in the market, which has been the Fed is done or close to done, inflation's falling and China reopening is now in prices and that's now behind

us. And now where we look forward, that's that we have the reality of living with the 5% Fed funds rate, with earnings that are still far too high and need to come down, the economy that's going to continue to slow down even further than where it is now. And we're going to be living with QT, not only here in the U.S., a trillion dollars over the course of a year, but also in Europe, as we heard today. Let's go a couple of things real quick. Sure. So you say the 5% funds rate as if it's in stone. Okay. Okay. Powell's trying to chisel it.

Yes. The market says not so fast, right? Two years, not close to that yet. Yes. So there's a disconnect between the two. Why are you so convinced they'll get there? So I'm actually, I think it'll be 5%, and I'll say plus or minus 25 bips, and I don't really think it's going to matter because here's the deal,

is that the only way they're going to get to 5 or 5.25 is if we're here around 3,900 in equities and things are fine in the economy. The way that they don't get there is if equities are down at $3,700, $3,600, and the economy is starting to roll over, which is why I think it is a lose-lose right now for equities. A negative note no matter what side of the trend, which some make the case. And part of the issue is that if the market does hold in there and he gets to 5.25%,

that's just going to make the fall even greater down the line. So I think it's a lose-lose situation right now at 18 times earnings. So forget the year-end rally. They all but killed that yesterday. Is that what you think? Despite your overall negative view, that doesn't mean that we couldn't have a tactical move within it, right? Yes. I think it's very doubtful, and I'll tell you why. Because if you kind of back about a month, month and a half ago, positioning was very off sides. CTAs were still very short. Hedge fund net long exposure was very low. That has now changed.

CTAs bought their $200 billion and are now running net long. Hedge funds have brought up their net long exposure. So that positioning sort of rip due to short covering, I think is probably now off the table. And as we look forward to January and February, there's a couple different issues, which is number one, earnings season. And I do think that estimates are going to come down a fair amount. And then number two is seasonality around January and February. So I'll give you a couple statistics. People think January is typically a good month. In the last 22 years, the market has actually been down in January and February 13 of those times.

And during bear markets, it's been down 100% of the time. So if you look at 2000, 2001, 2002, 2003, 2008, 2009, 2020, 2022, January and February, all those bear markets was down each time by a significant amount. So I think we have some headwinds over the course of the next three months ahead of us. Did you expect the outlook to be as hawkish as it was seemingly yesterday? 5.1, 17 of 19, see it over 5%, whereas zero did not that long ago. It was a little bit surprising. I didn't think that Powell was going to give an inch to the doves because as soon as he does that, then all of a sudden financial conditions loosen too much. Which they already had done since the last meeting.

And he mentioned that as something that he's concerned about. And also there was a big gap between the December meeting and the next meeting. And I think that he wants to keep his doors, essentially keep the doors open on the hawkish side, where he can always reverse that, but if he cannot reverse, if he had been dovish. So, you know, in the end, I think that it was somewhat, you know, kind of somewhat in line with what I was thinking, maybe slightly more hawkish. The question, I suppose, at this point is, what's the fallout going to be from all of this? If the economy is going to go off a cliff, if there's going to be a recession? I spoke with Double

Line's Jeffrey Gundlach, as you probably know, yesterday. He says a recession is more likely. Let's listen. I think it's a better than 75% probability. There's two things that people aren't really talking about that really make a difference. No one talks about M2 anymore, or money supply, and it's growing at a super slow rate. In fact, the six-month rate is negative. And I think the year-over-year rate, the 12-month rate, which I think has less significance, but it's interesting, that's down near zero as well. So there's not a lot of liquidity out there and making liquidity more difficult, obviously, is the Fed raising rates. But no one also talks about enough quantitative tightening. Jay Powell said 95

billion a month. I mean, this is a lot. This this this hurts liquidity conditions. It hurts the economy. That's gone live. Seventy five percent chance of recession. Is that where you are? Higher, lower? So here's what I would say. I would say that there's going to be a recession in 23 or 24, right? The unemployment rate is three and a half percent. Over the course of time, it ranges from three and a half percent to 10%. Three and a half percent, by definition, you're getting close to the end of the cycle. And so I think there's I think that 75 percent chance in 2023 makes a lot of sense. And I would I would agree with that. I'd be I'd be around that level for the reasons he stated and more. But let's say that it doesn't happen in 23. It's not like we're out of the woods. The market will

then start pricing in that we're gonna have a recession in 24. And so they'll put a lower multiple on those 23 earnings because it's coming. It's just a matter of when. And we are at the end of the cycle with the unemployment rate of 3.5%, not at the beginning of the cycle. Here's what I want you to help me understand.

Help our viewers understand this because you make, as we discussed the last time, a lot of tactical calls. You can change your mind based on where conditions are. It sounds to me like you're pretty set in stone on what the outlook is, not just in the near term, but for the next year. What could change your view? If a pivot can't, if a pause can't, what can? So one thing is going to be price. So I think that anywhere around these levels, above $3,700, above $3,800, the outlook is very poor. The risk-reward and owning equities is very

poor. Once we get down to the $3,600, $3,500 area, then we have to see what the conditions are on the ground. And that's something that I'll be reassessing at that point, because price and where do we stand? One of the things that is ahead of us are these estimate revisions that everyone's talking about. And it's very hard to own a stock when you know that estimates are going to be going down. It's very hard to own equities when you know the economy is going to get worse. It's very hard to own equities when quantitative tightening is ahead of us in the U.S. and Europe. You have too many headwinds. Now, where you can do that is if the multiple is 13 times and we were at S&P 3000.

Okay, then you could say, okay, well there's valuation, there's reasons why you can argue. But at 18 times earnings, and then you add what I just said together, it's just very hard to see any upside in this market. 36 to 3800, is that, I mean, do we do a new low or? Yeah, so I think we're going to the low 3000s and where we are, whether it's 3100 or 3400, I don't know. But I think we're going to the low 3000s. And where we are, whether it's, you know, 3100 or 3400, I don't know. But I think we're going to the low 3000s. And I think it likely

occurs in the first half of the year. You know, so that's my, you know, that's my overall, overarching view. So let's expand the conversation. I think we're set up for a good debate here. CNBC contributor Stephanie Link of Hightower Advisors is with us. Erica Clower of Jenison Associates. Ladies, it's good to have you. Steph, you first, because what Eric says piques my interest in what you think about. It's hard to own equities in this kind of environment at these kinds of valuations. You have been selectively adding to stocks. I'm wondering what you make of what he said. Do you push back against it? How do you counter that?

Well, I mean, I think that, look, there's a lot of unknowns. So you have to take a longer-term approach, and that's what I'm trying to do. A lot of stocks are down much more than the S&P 500, Scott, as you know. I mean, the S&P is down, what, 17 percent year to date. And I've got stocks and stocks that I don't even own that I watch that are down 30, 40, 50, 60 percent on the year. And that's despite the fact that we just actually had a rally of about 9 percent before today from the lows. So to me, I'm just trying to look for long term opportunities, good valuations, best-in-class businesses. And I think even though that there is a lot of unknowns, I think there's a couple of things that I want to

point to, that it's not all gloom and doom. As I mentioned, the market's already down a lot and discounting a lot of bad news. There is more momentum in the economy in certain places, certainly jobs and wages and input costs and gasoline prices all coming down. Those are good things. And even the Atlanta Fed, the GDP now, Atlanta Fed today, even after the dismal retail sales number, is still looking at 2.8 percent for GDP for the fourth quarter. So I still believe that there are some opportunities. We're going to be in a choppy trading range. But I think now is the time you want to set yourself up in the portfolio for 2023 based on the prices that we've been seeing in 2022. What do you say to that?

Oh, by the way, before you answer that, Adobe is out and Frank Holland is going through that. Looks to me like we've got to jump for the stock, too, if we could take a look at that. But again, Frank Holland's going through Adobe. It's a critical time for these earnings because tech has just gotten crushed, and it did again today. We're going to hear from Frank in just a moment. But how, Eric Johnston, do you counter what Steph said? It's not like she's the only person suggesting that the environment isn't quite as bad as you and some others would suggest it is. What do you say? So right now, the market's trading at 17 and a half times earnings that I think most people agree are too high. The multiple over the last 30 years has been higher than 18 times twice.

Once was after COVID when interest rates were zero and estimates had plunged, right? And then the other time was in the late 90s when the internet was literally invented and we had the internet bubble. Outside of that, it hasn't traded above 18 times in the last 30 years. So if you're owning equities, right, you need upside. I would be curious what, you know, is the multiple and what are the earnings that we should be looking at for upside, you know, for those that are bullish? Steph and Erica, I'll come to you in a second, I promise. But Steph, how do you respond? Yeah, because I'm not buying things that are at 17 and 18 times earnings. I'm buying Lamb Research at 13 times earnings. I'm buying Broadcom at 13 and a half times earnings. D.R. Horton

at 1.3 times book. Morgan Stanley, 14 times earnings. So to me, I'm buying stuff at a discount to the market. And I think that they I'm buying stuff at a discount to the market. And I think that they shouldn't be trading at a discount to the market. That's the whole point. I think you're seeing opportunities in a lot of different industries, not just a certain one or two sectors. Across every industry. I'm dying to buy General Mills next Tuesday after they report earnings. But that stock is expensive, right? It is 20 times earnings. But if it were to pull back, I like that story very much. And so I'm making my shopping list. OK, Erica, so, you know, you've got two interesting perspectives here. Which side are you more weighted towards?

Well, first, thanks for having me. And second, what I would say is our team at Jenison really takes a much more holistic view to all of this. We're looking at headwinds that are coming from things we haven't talked about yet here, such as the need to diversify your manufacturing supply chain and what that means for inflation for a lot of companies globally. That's a negative we have to deal with. We also have to deal with the persistently strong dollar, which effectively puts a price increase for our goods to sell internationally, which is also a headwind. And then third, what we are looking at from a Genesyn perspective is continued signs of COVID hangover, that people overinvested because of the ease of money supply during COVID. And we're still cycling through a lot of that purchasing. And people just don't need to

replace their personal computers, their smartphones, their televisions in their home because they bought them quite recently. So I think that the approach that we're taking at Jemison is really one of trying to understand product cycles that can do well in spite of these headwinds. Larger term trends like data center, like 5G spending, all of those are really important to understanding the opportunities that are before us at Jenison. But does any of that matter in an environment where earnings are coming down across the board and you may have a recession. So I appreciate your perspective in what you try and do. Does any of it matter if things get ugly? The answer is at Jenison, we found that if our earnings estimates are correct and we're not

having to cut the earnings estimates, then the stocks will perform. And so this kind of climate where there are the haves and the have nots is really the one that we love at Genesyn because we feel like we can really pick the winners in a very difficult climate. Stephanie mentioned Lamb Research. That's one that we've identified. NVIDIA is another company that's disrupting the entire data center business and autonomous driving market. Broadcom is another one that really is involved in not only advancing the networking infrastructure and storage business, but also looking towards supplying the most advanced RF parts for Apple. So we're really picking and choosing in what I think is going to be a continued difficult environment. Despite the fact that, you know, you could, I think, fairly say, Erica, that technology is the most at risk from a more hawkish Fed than the market can

bear. And I think we're learning that on almost a daily basis. The more hawkish they sound, the more hawkish they act, the more tough tech stocks seem to take it. 100 percent, because there are so many technology stocks that are still very expensive, treating at 10, 15, 20 times revenue. That's just not going to fly in this kind of environment. Moreover, if we look at the private equity and venture segment, which is one of the largest consumers and fastest growing consumers of technology, as that market has less liquidity, that's going to be a less active buyer of technology products in general. So really our message at Jenison, our approach at Jenison,

is to look at the companies that can do well in spite of a very difficult climate. OK, so Eric Johnston, I want to know what you think about what Steph said, right? She she agrees with you, right? I mean, she also says she's not looking for stocks that are in her mind richly or too richly priced. She's looking for ones that are bargains at 11, 12, 13 times. What's wrong with that for a longer-term investor? I mean, she's not a, you know, quick tactical in-and-out person. Sure, sure.

I mean, you know, I would argue that, you know, Morgan Stanley at 14 times, if the S&P goes from 17 to 15 times, Morgan Stanley's going to 12 times. And that there'll be correlation within, you know, within the market. And so that's one of the, you know, that's one of the issues that's been facing investors all year, is that correlation has been very high. Clearly, there are individual names for sure that you can pick and choose out there. For me, on the short side, I happen to think that cyclicals have significant downside right now. That's one of our highest conviction thoughts is being underweight, short, however you want to phrase it, industrials and financials.

And I think this is it's one of the great opportunities heading into a weaker economy. Steph, here we go. I'll give you the last word. But I mean, this is what purely makes a market, right? Such diverging views on the same spaces. Someone who's so negative and short, the places that you like, industrials, you've been talking about them as a positive place to be, financials, which you just mentioned. I'll give you the last word to counter all of that. I am overweight energy by a mile, as you know, materials, industrials, and to a lesser extent, financials. I'm a little bit more choosy there. But I do think all these sectors have actually held up relatively better than the

overall market this year. I think there are structural changes in energy where we're not seeing the production growth that we used to see, and they're using their free cash to buy back stock and pay dividends. On materials, I think they have significant pricing power. I just added to Clefs the other day, as you know, and they actually announced another price increase this week after a price increase in two months ago. So they've got pricing power. Input costs are coming down, and that's going to help. So sure, will demand come down as well? Yeah. But I think the margin side of the story for those two sectors will hold up remarkably well. And the same goes for industrials. And they benefit from the government stimulus plan that they just passed earlier this

year. So they're seeing that demand is very strong. And if you listen to Union Pacific CEO, he said demand was extremely strong in steel and in cement. Weak in housing, we know that. So I think you're going to have to be a stock picker and find the companies that have good end markets and good pricing power. We're going to leave it there. I said you had the last word and I meant it. Erica, thank you. Stephanie Ling, you as well. And of course, Eric, I appreciate it very much. We'll see you soon. Adobe earnings, I did mention they're out. Stocks moving. Last check, it was higher. Frank Holland has the numbers and more on that move. Frank? Well, here there's Scott. Shares of Adobe climbing 5% higher as investors digest this report.

Revenues were in line. EPS was a B. Profit was 10 cents above estimates. Adobe makes about 70% of revenues from its digital media business. So a really key metric for both demand and customer retention is digital media AAR. That slightly beat estimates. On the report, in the release, some very optimistic talk from CEO Shantanayu Narayan. He talked about the next decade of growth. The CFO said the company wants to capture the massive opportunities in 2023 and beyond. Foreign guidance was mixed. Revenue was a bit soft, but the top range of EPS guidance was above estimates. Again, shares moving 5% higher. Back over to you. All right. Good stuff, Frank. Thank you, Frank Holland. Don't miss Adobe CEO, by the way,

on Tech Check. That's tomorrow, 11 a.m. Eastern time. Let's get to our Twitter question of the day. We want to know which of these sectors will be the best performer next year. Energy, health care, tech or staples? You can head to at CNBC overtime on Twitter to cast your vote. We'll share those results a little later on in the hour. We are just getting started, though, here in overtime. Up next, charting the sell off top technician Jonathan Krinsky gives his take on today's big drop. If he sees any hope for a year end rally, overtime's right back. All right, we're back in overtime. Stocks selling off sharply today. Just 10 trading days left now in 2022. Is there any hope for a year end rally? Let's ask BTIG chief market technician

Jonathan Krinsky joins us now on the news line. All right, Mr. Technician, you have said the setup was pretty negative after yesterday, after the Fed, and now this follow through today, which was downright ugly. What do you say now? Yeah, you know, it's really a confirmation of kind of what we've been thinking is largely the counter trend rally after October lows was largely over and that the seasonally strong December period that a lot of people were citing and looking for was a much different setup this year because as you recall we've been highlighting when S&P is down 15 percent or more through the end of November the average December returns back to 1929 have actually been negative 2.16 percent so it's a much different setup this year we think it's kind of following that the more bear market style playbook as opposed to the typical um seasonal strength

that you see in november which is really sorry in december which is really just a function of um the fact that markets more often than not are up and it's just a continuation of that momentum so different setup yeah different setup seasonality is up against a pretty big wall, clearly. So what what would have to happen in your mind for a year end rally to materialize something unforeseen and dramatic? Yeah, I mean, I think the issue is, you know, you're running running out of out of shot clock here, right? You said 10 days left and the catalyst, the upside catalyst in our view was this week. So could you get a little bit of balance or consolidation? Sure. But I think there's an equally, if not better, chance of a continuation to the downside. Again, I'd say a

couple, two key areas stood out for us the last couple of days. On the sector level, industrials, they were the best performing sector off the October lows. And they put in a bit of a false breakout on the last couple of days and have really broken to the downside. And then semiconductors, if you take it a step below sector level, at the industry group level, semis were the best performing industry group off the October lows. And similarly, they tried to break out above uh... the two-and-a-day consolidation and kind of failed so now again we think we the opportunity for a rally was probably this week and uh... it doesn't look like it's you know at least in a big way to materialize so what levels then if we're not going up

uh... do we need to watch going down yeah i mean short-term uh... the fifty-day on the S&P is around 3860. I don't know that that's going to be a huge support area, but certainly there will be some people watching it. And then it kind of gets messy. There was just a lot of choppy trading action between the lows at 3500 and kind of 3800 level. But from our perspective, it's not so much any one given level.

It's kind of a weight of the evidence approach and I think the biggest change of the last couple weeks has been the breakdown in the correlation between bonds and stocks we know that most of this year you know bonds and stocks were pretty highly correlated over the last couple weeks that shifted and I think that's because the market is shifting its focus from inflation and the Fed narrative to potentially the economy narrative. And you notice that today with bond yield down big and stocks down big. So that's that's really I was going to ask you going in. Sorry. Sorry to interrupt you. Lastly, though, I was going to I was literally going to ask you

that at that moment when you were saying that. So if yields keep falling, it's no longer a positive for stocks is what you're suggesting. It becomes more of a negative because of worries about recession. Yeah, I think that's right. We've been kind of highlighting three and a half percent level in the 10 year yield. You know, we actually thought that it would hold, but we thought that if it didn't, it would be because of those fears and therefore probably more of a risk off sign. I think that's what you're starting to see, you know, the last couple of weeks. Jonathan, we'll leave it there. I appreciate your time very much. That's Jonathan Krinsky, BTIG's chief market technician.

Coming up, are recession fears overblown? Ed Yardeni says the case for a soft landing is still intact. We'll press him on that call next. We're back. It's time for a CNBC News Update with Steve Kovach. Hey, Steve. Hey there, Scott. Yeah, here's your CNBC News Update at this hour. The Pentagon is sharply increasing the number of Ukrainian soldiers that trains. The target is about 500 per month, nearly twice current levels. The training will include instruction in advanced tactics and weapon systems. The National Archives has released nearly 13,000 documents with new information related to John F. Kennedy's assassination. President Biden had set today as the deadline for the publication.

Today's release includes new information on Lee Harvey Oswald's communication with the Soviets prior to Kennedy's assassination. And a new study says Parkinson's disease cases may be severely undercounted. New Parkinson's diagnosis may be 50 percent higher than current estimates. Researchers analyze insurance claims and population growth figures to come up with the higher case numbers, which could help increase funding and care for disabling disease. Scott, I'll send it back to you. All right, Steve, appreciate that very much. That's Steve Kovacs. Stocks falling hard in today's session as recession fears hit Wall Street. But despite the Fed signaling higher

rates for longer, our next guest says a soft landing is still in the cards. Joining me now, Ed Yardeni, president of Yardeni Research. You know, Ed, you've been making this case for a while, and I'm wondering if it's becoming harder to have conviction on, given what Jay Powell said yesterday. I think it's a reasonable concern, given what Powell said and also given today's data, particularly retail sales. We sold off very hard on the retail sales number. But you know, the Atlanta Fed did revise down their GDP tracking model for the fourth quarter from over 3% to 2.8%. But what's fascinating is they didn't cut the growth rate and consumer spending all that much. They cut it, I think, from 3.7% to 3.4%. I think it's because a lot of the weakness in retail sales was in pricing.

You know, consumers had a buying binge in the past couple of years. And now inventories have piled up and companies have had to discount their inventory. So I think that's a good story in terms of inflation coming down. And I think they are selling the merchandise. And so I think the unit sales are going to be pretty good. Housing, we've got some real weakness in single family, but multifamily is doing extremely well. Stephanie Links and others on your show have pointed out that there's a tremendous amount of fiscal stimulus in the pipeline, much more so than we've ever had in the economy. Usually, stimulus comes late in a recession, early in a

recovery. We've never had this kind of stimulus in front of what everybody fears is going to be a terrible recession. Yeah. Let me ask you this. Was the Fed more hawkish in its outlook yesterday than you expected? Yes and no. I guess the optimists in me hope that they would give a little bit more weight to the fact that it certainly looks like the CPI inflation rate peaked in June and continue to moderate right through November. That's a big deal, in my opinion. I think it's going to continue to moderate. But I think because the Fed was so late to the game in raising interest rates, now they may

be a little bit overdoing it. But look, I think the economy is going to prove to be remarkably resilient. I think it can handle 5, 5.25% on the Fed funds rate. I am kind of challenged in that view by what's going on in the fixed income markets, because as you know, we're down to like 4.2 percent on the two years. So that's signaling the rates will drop next year, whereas Powell is saying he's going to keep it at 5, 5.25 percent through the end of next year. Even if they do pause or pivot, as perhaps the bond market may be suggesting they ultimately will. Isn't that a negative? Isn't that they would do that because they'd be forced to by the fact that the economy is actually starting to tip over? And I would, you know, challenge you on the notion

somewhat that, you know, the economy, in your words, I believe, as you put it, can handle five to five and a quarter percent on the Fed funds rate. Do you really believe that and how? I do, because, you know, when you look at past business cycles, recessions were really caused by the Fed tightening, which is what's happening now. And the yield curve would invert, which is what is happening now. But what's different this time is we've had financial crises that haven't morphed into an economy-wide credit crunch, which in the past is really what caused recessions. So I need to see more signs that the credit system really is challenged. And it looks pretty strong.

It looks like it can handle 5%, 5 and a quarter percent on the Fed funds rate without a problem. We had a cryptocurrency meltdown, and we still do. We had a lot of these speculative stocks meltdown. I would say the bond market bubble is an example of the extent to which the market and the economy have been able to handle this kind of stress really remarkably well. One more point, Scott, and that is it'd be very unusual to have a recession when the labor market is this tight. I'll admit that the unemployment rate usually is at a record low or a cyclical low before

recessions, but we've never seen a scenario where the economy has got such a very strong, hot labor market. How do you get a recession out of that? I think the consumers are seeing their wages finally going up faster than prices. I think the payroll employment remains strong. I think the consumers will continue to spend. They're just pivoting to services. Because it's a lagging indicator, as you well know. And the more leading indicators are more negative than the job market would suggest the economy is. that in February of this year, the index of leading economic indicators peaked,

and it's been falling right through November. And that is a concern because it has an awfully good record of anticipating recessions. But I think what's missing, as I said, is the financial system is in much better shape this time around, and I don't think it's going to trip up the economy. We'll leave it there. I appreciate the back and forth and the conversation, Ed, very much. That's Ed Yardeni, Yardeni Research. Up next, some rare green arrows in today's sell-off. Believe it or not, there were some.

The homebuilder's holding up despite recent weakness. But with the Fed signaling even more rate hikes are ahead, is there bigger pain coming for the housing trade? We'll discuss with former Pulte Group director, Bill Pulte Group director Bill Pulte next. Housing stocks, they actually did well today as interest rates fell, but the sector is still, as you know, under severe pressure due to Fed tightening and concerns about the overall economy. Joining us now is Bill Pulte. He's the CEO of Pulte Capital, a former director at Pulte Group.

His grandfather founded Pulte Homes. Welcome. It's good to see you. It's been a while. Great to see you, Scott. So you do, not just because you're, you know, your namesake company, have a good idea of what's happening in housing. What's your read on what we see? Despite the stocks doing well today in a down tape, it's ugly out there. It is, and I think it's going to be a tough road to hoe.

I think it depends on what part of the market you're in, which geography you're in. If you're in the Southeast, for example, you're doing better. If you're in the first time home buyer, you're doing better. Pulte homes, for example, is big in the move up. I think that's going to be pretty tough. I mean, people are not going to want to leave their 3% mortgage rates to go into these higher interest rate environments with these high priced move up homes. So I think it's a tough road to hoe ahead. What's a mortgage rate number that, you know, when it got to, you're like, oh, we've got problems. When it went up about two to three hundred basis points, you start to say, OK, this is really affecting the monthly payments that the average person has to pay. And I think you start to see it in traffic. Then you really see it in traffic. Then it flows

through to cancellations. Then you see it in orders. And I think you've kind of seen that all flow through the system. I mean, Lenard just posted today and their orders are down, you know, materially. How much more do you think prices have to fall? Well, I think it's not so much about prices falling. Unfortunately, we still have this kind of inventory issue in the country. And a lot of it, in my opinion, has to do actually with zoning more than it does inventory. I mean, a lot of these local municipalities do not want to build a lot of these subdivisions and stuff. So I think prices are going to stay pretty stable on a relative basis. Even if we have a recession, because it seems like that would almost be an extraordinarily heavy lift for prices not to

come down more if the economy weakens even further. I think they could come down. It just depends what's the quantum, right? So if you have a very bad recession, absolutely. But if you have a moderate recession, you have still high inflation. We have seen prices, by the way, in the cost of goods sold going into homes come down, lumber, et cetera. Yeah. Are you think there's going to be a recession or no? I do. I do. But just a shallow one? I think a shallow one. I think there's just so much money out there. I think that as it pertains to housing, for example, if they can get interest rates under control, you know, people need to buy homes in this country, period. Yeah. I mean, we have seen rates obviously come down as, you know, overall rates have come down.

Let's pivot to another story. This battle you have going with the company itself and the chief. Not really the company. Well, it's the chief operating officer. But by virtue of that, the company is sort of involved. Can you shed some light on what are rather wild accusations that you have levied against the chief operating officer of Pulte? Well, it's wild for us as people to look at it and say, could somebody be really doing this? But we've been tracking it for many, many months. This has been going on for years. This guy's the number two now in the

company. He's running this bot campaign, as far as we can tell. OK, and we've got pretty good forensic proof on this, which is going to be proven out in the suit. I'm hoping Pulte Homes does the right thing. OK, this isn't about the company in terms of I don't think that they're behind these bot attacks. I mean, you know, I could be proven wrong because the COO is very close to the CEO, Ryan Marshall. But I'm hoping that's not the case. So I hope they do the right thing. So you have sued the chief operating officer. In his individual capacity, yes. Of Pulte and accused him of waging a Twitter bot campaign against you? Incessantly against my grandfather, the founder of Pulte Homes, and me, as well as other members of the Pulte family. You know, I care very much about Pulte Homes, and this type of nonsense should not be going on in a Fortune

500 company, especially an executive of a Fortune 500 company. So, you know, if I have to do what I had to do, you know, in 2016, we turned around the company with Elliott Management. If I have to make a statement that says this is the type of conduct that's not appropriate for an executive, I hope the board does the right thing. They've hired a law firm. I don't think that the law firm, I think the law firm's conflicted. It's King and Spalding, and they're very close with management. We need a new law firm. It needs to be investigated.

And, you know, Pulte's a great brand, and our family is a great family, but he's accusing family members of mine. So it's very personal of crimes, you know, all kinds of crazy stuff. This should not be going on in a Fortune 500 company. So you tweeted this gentleman's name is Brandon Jones. I'm suing the hell out of Mr. Brandon Jones. He brings scandal to Pulte homes by running Twitter bots to smear me. The Pulte family undisclosed tweets about Pulte Homes by running Twitter bots to smear me, the Pulte family, undisclosed tweets about Pulte stock. And we have evidence of attacks against some of you. This ends today.

The company itself says, and this was a statement to CNBC just a few moments ago, quote, we have no comment on the litigation against the company executive. Separately, we're conducting an independent investigation to determine the facts and whether there has been a violation of our company policies. As I said, they're sort of wild accusations, obviously, against an executive of a public company. I agree. Do you have evidence? I have proof. These are just accusations and they're potentially damaging, if not embarrassing ones at that. They are embarrassing. And, you know, one of the things that they do is they this gentleman allegedly is attacking my followers for not being able to afford a Pulte home.

Okay. I mean, this is a sitting COO and this is all, this law come out, but you can't be doing that kind of stuff. That's crazy. Again, allegations. Well, let's get, let's keep it at at the allegation level because that's pretty much what it is at this point. Correct? Well, we have forensic evidence. And again, you know, I got to be careful because it's ongoing litigation. We have forensic evidence that points that tie certain things to his email, that tie certain things to other profiles that he's done. We sent a notice to the board and believe it or not, the bots started deleting things. OK, so there's going to be a lot of stuff that's going to come out.

I think we feel very, very strongly about it. You know me. I mean, you know, if we say something, we're going to stand behind it. And we wouldn't have taken this step if we couldn't get it to stop. We'll see where the litigation goes. I appreciate you being here. Thanks, Scott. All right.

That's Bill Pulte joining us. Coming up, we're tracking some big stock moves in overtime. Christina Partsenevelis is standing by with that. Christina? Yeah, we've got more executives fleeing Credit Suisse and one food stock on the move after reaffirming its full year guidance. Lots more details coming up right after this short break. All right, welcome back. We have a news alert on Sam Bankman Freed.

Kate Rooney has some new details. Kate? Hey, Scott. So we just got a new filing out from the bankruptcy court in Delaware about FTX here. It looks like they're preparing to list four assets for auction. The first one is LedgerX. This is their derivatives platform, an FTX subsidiary, another Japanese subsidiary they're looking to list, a European subsidiary, and then an API platform also owned by FTX. The latest in the bankruptcy hearing. We're supposed to also get a hearing tomorrow and get a little bit more detail on this, but looking to raise some cash, it looks like John Ray, the current CEO, has talked about trying to offload some of the assets. We know FTX was quite acquisitive,

and Sam Bankman-Fried was doing a lot of M&A in his time as CEO. We've also got a headline here, Scott, from Reuters. Former FTX CEO Sam Bankman-Fried has made a new bail application before the Bahamas Supreme Court. That, again, is from Reuters. We reached out to Bankman-Fried's lawyers as well as the Supreme Court there. No comment, but he is being held in a correctional facility, we know, in Nassau. His lawyers appear to be fighting the extradition to the U.S. He also, he was denied bail because he was a flight risk, but we're reaching on that, Scott. We'll let you know if we hear anything on that. Back to you.

All right. I appreciate that. Yep. Kate Rooney, thank you so much for that. We are tracking the biggest movers, as we said, in overtime as well today. Christina Partsenevelos is here with that. Christina? Krispy Kreme held an investor day today, and we're learning in overtime that the food retailer is reaffirming its full year 2022 guidance while forecasting a 2023 revenue growth of low double digits. Management believes, though, that Insomnia Cookies, which they partnered with back in 2018, actually, still has massive opportunity to expand. The stock is down just under 1% lower right now in the OT. Let's move on to shares of United States Steel moving higher after posting Q4 EPS guidance, earnings per share, of course, of 58 to 63 cents a share.

That's higher than the fact set estimates. Management says they're on track to deliver their second best financial year with the CEO saying, quote, December commercial demand in the United States is better and scrap prices have begun to increase this month. You can see the stock up 3 percent in extended hours at the moment. And then last but not least, shares of Credit Suisse moving slightly higher, three tenths or I should say six tenths of a percent right now on a Wall Street Journal report that the bank has lost two managing directors only weeks after losing another executive from the private fund group. The bank has struggled as of late. They had announced cuts back in October, and you can see it went up a little bit higher than they announced cuts in China, I should say, in November.

And so we saw a little bit of an increase. And they're planning on raising billings to recover from previous losses. The stock, slightly higher in the OT. Scott? All right, we'll keep following that story, too. Thank you very much. Thanks.

We will see you soon. All right, up next, we have much more on today's tech wreck. The Nasdaq dropping three percent. Top tech money manager Eric Jackson. He tells us how he's navigating the sell off the stock he's buying. We'll do it next. Right to the results of our Twitter question, we asked what will be the best performing sector in 2023? Tech is your winner. Interesting. One tech stock has been getting crushed lately. Tesla hit a 52 week low today, now down some 52 percent in the past year. Shares finishing the day higher despite the broad market weakness. Tesla CEO Elon Musk has been a seller of that stock.

Our next guest, though, bought more yesterday, in fact. Eric Jackson, he's the founder and president of EMJ Capital. He joins us now on the phone, as you see there. Why did you buy more? Well, Tuesday, Scott, was the biggest volume day trading Tesla stock of the entire year. They traded 175 million shares. Even when the CPI was up in the morning and everything was up within the first half hour, Tesla was one of the first stocks to go negative. Didn't make sense. It's not been trading with the market for the last few days. I thought something was up. There was some big seller out there.

It ended up being Elon. And, you know, now the selling is done, at least for the short term. And typically those are those are good opportunities to buy. How do you know it's done for the short term? Right. I mean, when you say the selling was was Elon, you could have you said that before, you know, you could have said that before and before and before again. How do you know this is it? Well, we don't know. I mean, we for the very short term, for the next month, I think he's done selling. But he's dumped almost $4 billion worth of stock now. He's sold $39 billion since November of 2021. You know, he bought Twitter for $44 billion.

So I can't predict the future, but I think he's unloaded enough stock that I think he should be OK. And for the short term, at least, I don't think there's going to be any more need for him to sell. And with the amount of selling that's gone on this year, I think it's a nice entry for Tesla. Are you any more than a short term holder of these shares? You've said the words short term several times already in this short time that we've been speaking. Are you a long-termer or a short-timer? Well, in this market, nobody's been rewarded this year for being a long-timer. And so I think you got to take everything with a grain of salt and with the macro conditions. But I have said with

you before that I believe going into next year that Tesla and Apple are the two big cap tech stocks that I believe in the most for next year. So assuming the macro doesn't fall out of bed, I would love to remain a long timer with Tesla. Wow, that's it's amazing that you think that Tesla and Apple are the two to bank on. So then I'll I'll go a step further than assuming that you may be in it for longer than maybe I originally anticipated until you answered that question. Do you don't have any great concerns that other, you know, larger shareholders, for example, have expressed about his attention being diverted towards Twitter more so than Tesla? And that's in part why the stock has suffered so greatly.

Despite the fact that I love Twitter, most of America, in fact, the vast majority of America, is not on Twitter and is not paying attention to any of Elon's tweets. SpaceX is more than just Elon. Tesla is more than just Elon. You have to have, obviously, great engineers working at both companies to make it work.

I just think this is short-term noise. The recent criticisms of him, that's going to be forgotten. Tesla is still a great car company that a lot of people are still going to want to buy going into 2023. So I think this is short-term noise. Let me ask you about tech more broadly before I let you go. Certainly seems to be the most at risk. It has been to higher rates and a much more aggressive Fed, a hire for longer scenario, if you will. Isn't that a problem going into the new year? It's a problem for sure. In 2022, it's been a huge problem for tech. I am optimistic, like the polls that you mentioned right off the top, that the fact that tech has taken such a beating this year probably sets it up as a, you know, contra indicator for one that's going to do

the best in 2023. But, you know, I'm in the Jeremy Siegel camp. I mean, I think the Fed's totally off base with their direction. They're overtightening. It's going to hurt in the long term. But eventually they're going to realize that, that we're going to reverse, and tech, like, just like they were the first into this mess, they're going to be the first out of it. Whether that is deemed to be a positive for the market, I suppose we shall see. Eric, I appreciate your time very much. Be well. We'll talk to you soon. That's Eric Jackson of EMJ joining us there with an interesting call,

not only buying Tesla in the last couple of days, but thinking that Tesla and Apple are going to be the leaders for tech next year. I'll see you all tomorrow. Have a great evening. Does it for us here in overtime. Fast money begins right now.