Closing Bell - Closing Bell Overtime: Shaking off the bad news 06/07/22

Episode Date: June 7, 2022

Stocks have somehow managed to remain resilient in the face of a slew of headwinds. So, what does that say for the state of the market? BMO Capital Markets’ Brian Belski gives his take. Plus, iCapital’s Anastasia Amoroso says the odds of a “soft-ish” landing are on the rise. And, is the software space just too expensive? We debate it in today’s Halftime/Overtime with Virtus Investment Partners’ Joe Terranova.

All right, Sarah, thank you very much. Welcome, everybody, to Overtime. I'm Scott Wapner. You just heard the bells. We right here are just getting started. In just a few minutes, I'll be joined by iCapitals' Anastasia Amoroso to get her latest views on the markets. Joe Terranova, Liz Young will also be here with me. We begin, though, with our talk of the tape. This market's sudden ability, it seems, to shake off bad news from earnings to economic data to that target takedown. We're wondering what it says about the state of stocks right now. Let's ask Brian Belsky. He is BMO Capital Markets Chief Investment Strategist.

He is right here at Post 9. It's good to see you. Nice to see you. Thanks for having us. It seems weird for me to use the word resilient with a fragile market. But are we on to something with that? I think we are. Good news is good news.

Good news is bad news. Which one is it? I think when we talk to clients, Scott, I think I sense that clients are getting a little bit more comfortable at these price levels. I think the market has done a great job kind of re-rating some of these higher growth stocks that kind of took out the so-called froth. But at these levels, heading into the end of the year, we've seen a bond market rally that has obviously sent the 10-year a little bit lower.

And I think more and more people confident in what the Fed's going to do the next two to three meetings. That's now behind us. Two meetings, I'll give you. Well, I mean, our economics department thinks they're going to go 50-50-50, and then we'll see. But I don't know. I think two meetings, I'm comfortable with the next two meetings, and then we'll see.

Where do we go from 50-50 to we'll see to 50-50-50, and then we'll see? We've gone another 50. Right. I think what they're looking at is their projections for inflation are probably a little bit higher. I think inflation could roll over again. But, again, let's get through the summer. But I do think Jackson Hole in August is going to be a very, very pivotal time. You know why they changed it?

Because they listened to our network. They did. They heard Brainerd tell Sarah, like, I don't know what this pause thing is in September, but I'm not ready to make that call yet. And then they heard Mester with Leisman say essentially the same thing. So the market had to catch up to where the Fed seems to actually be. You describe yourself now as, quote, bullish with a dose of reality. I mean, that's because you caved and cut your price target recently.

That's the reality check, Belsky, right? Well, I mean, you know, listen, if you kind of looked at where we were when we made the change from $5,300 to $4,800 to have a 35% move in the markets, I'm just a common sense kid from Minnesota. The chances are that we were going to get that, Scott. But a $4,800 close on the market is still a brand new high. And I think we can still get there. And something that you and I have bantered about back and forth is our $245 earnings number, which we did not change. So we do think we're going to see powerful upside earnings in things like energy. We're seeing that. Financials, health care, parts of communication services, which, oh, by the way, is now our favorite contrarian buy now. And so I think there are areas to be in the market and still maintain exposure to more of the growth at a

reasonable price. You keep saying you keep walking further out on the contrarian plank. You know what I'm saying? It's like, OK, you cut your price target down, but it's still really aggressive. You didn't cut your earnings expectations down. And, you know, self-described kid from Minnesota, then, you know, Target as well as anybody. Right. That doesn't give you pause on what's going to happen with earnings? You know why? The CEO of Target is a great leader. Brian Cornell.

And he makes great decisions, and it's almost like he's selling a stock, right? He invokes a stock loss, and he moves forward. He did the same thing when he just became CEO when they got out of Canada. They kind of cut their losses and moved on. Now, Target's a much different kind of situation than Walmart because Walmart, obviously, with a bigger percentage of sales on the grocery side, I think Target's kind of doing the right thing, coming out and talking about it. Then the market can digest the news and move forward.

Right. I mean, it's like the kitchen sink sort of thing. I get it. That's great that they did that, okay? Cornell has a long track record, so he deserves the benefit of the doubt. He admitted on the earnings call that he got it wrong. We like that, and the market respects that. Yeah, I know, but that doesn't have anything to do with earnings. No, but on the consumer discretionary side, you know, we went from an overweight to a market weight, principally because we do think there's some multiple risk there,

and especially some of the larger areas like Tesla and Amazon. But we do see the consumer remaining very resilient and smart. So the consumer heading into the summer and fall are going to continue to be smarter and smarter at what they're doing with their money, whether that's Home Depot or Lowe's. I don't think it's going to be both. It's going to be one or the other. So you also make the argument that the, as you call it, secular bull market remains intact. So this was just all a correction? It was a correction. We've been in a bear market, man. But the market was acting like a bear market, man.

But we never saw an official bear market because we never closed, though. But that's like hanging on some textbook thing because we went down like 19.5%. We didn't get to the exact 20. Meanwhile, like 60% to 70%, and I may even be light on that number, within the market itself was down like 30, 40, 50, in some cases 70 percent. You're light on that. It's actually higher than 70 percent. So how is that not a bear market?

Well, what's interesting, though, is like a hanging chad, right? You don't buy at the low and sell at the top. That's why you always have to look at closing prices, and that's the academic playbook. So we're going to stick with that because we've never had the bear market. But at the end of the day, we do believe that we've entered into a very increased period, given what we've seen in the unweighted versus weighted indices in terms of performance, Scott, that you absolutely positively want to be a stock picker because correlations have been so high, meaning just sell the sector. But in terms of deviations with respect to earnings and valuation, they've

really spread out. So again, that tells you, let's go back to consumer discretionary. It's either Lowe's or Home Depot. It's not both. So this pick of comm services, and I just wonder, I mean, obviously you're talking about some of the mega cap technology stocks. Microsoft has an FX issue, right? It revises its guidance lower. Not that Apple is, you know, we don't know yet, but there are concerns about earnings there. You just ignore all of that? No, those are the secular growers within tech. Within communication services, we kind of look at those names as being the quintessential barbell. So on one side, you have the mega value names like AT&T and Verizon,

and then the growthier names like Netflix and Google. Again, we have not been owners of Facebook Meta for three years. We put all of our money in terms of that side, on the growth side, in terms of Netflix and Google. So we think there's a balancing act there with many accounts, by the way, because of what happened with AT&TT not having full exposure to AT&T. So I still think the dividend growth in the side of the value side of that barbell and communication services is where you should be overweight now. But don't forget, continue to add to Google and Netflix on the volatility that we've seen. And you've seen the results lately. The stocks have done quite well. Well, after Netflix got pounded, it's gotten off the mat.

But speaking of volatility, you expect that to continue, right? You suggest that we could have multiple 2% up or down days on the S&P moving forward. So I know your bullishness is what's going to shine through and what I've highlighted in the way that I've asked you these questions. But you're not naive in your view of where you think the markets are and you think that we're still going to chop a lot. Yeah, I don't think it's straight up from here, Scott. And I think just judging by the conversations that we're having with clients, there's so much indecision. And with that, you're going to have these 2%, 3% moves in every direction. And I think until that kind of unwinds and we transition more to normalcy and more normal

markets where we're not up or down 2% or 3% every day, I think that really bodes well for stock picking, GARP, value, and being in some of the larger, more secular growth names. So we did put a bottom in? You think the bottom is in? Yes, we do. I think the bottom is in. All right.

On that note, let's broaden the conversation. Outbring in Virtus Investment Partners, chief market strategist and CNBC contributor Joe Terranova. SoFi's head of investment strategy, Liz Young. It's good to have both of you with us as well. So, Liz, you told our production team, quote, my views are in line with what Mike Wilson said yesterday. Right here in overtime, by the way. E, earnings estimates need to come down about 10 percent. S&P probably reaches back under 4000. Now, I read that and I'm like, wait a minute, because I thought Liz just told me the other day on the halftime report that we were going to have a strong second half of the year and that we could actually finish positive for the year by a few percentage points. Is that the same person?

That is the same person, Scott, but it's a sequence of events. So what we're seeing now with some of these earnings revisions and some of the economic data that's finally rolling over is this data is catching up with what the market told us was going to happen about six months ago. Earnings revisions needed to happen and they will continue to happen. I think we probably get down somewhere in the 5% to 10% downward revision camp, maybe not all the way down to 10%. But some of this bad news is going to scare the market and sentiment is a powerful thing for investors. Now, I also have been saying that I don't think the volatility lets up in June. I'm not even sure it lets up in July. We need more information. We need another CPI print. We need to have those two Fed moves.

We need a GDP number. And we're going to get all of that by the end of July. Then I think we can level out a little bit. We've got a built-in pause from the Fed in August. And maybe we go a little lighter on the hikes for the next few months of the year. And that's where there's a possibility for a little bit of an economic bounce, which would show a cyclical rally in the market. So how does our resident contrarian respond to that?

Right? Earnings revisions need to come down. Our estimates need to come down by about 10%. So if you look at FY1 revisions on the 11 sections of the S&P 500 relative to FY2 numbers, they're about 15% lower already on a relative basis and absolute basis. So the current year numbers have already come down. It's really next year's numbers that we have to be worried about in terms of growth. But the numbers overall for the market have held in there better than everybody thinks. And again, when you're looking at 500 companies in the S&P 500, the

revisions are still positive. In May, they got rocked, but net-net still positive. So FY1, still better than FY2, and we're going to hold on that hat that FY2 is going to continue to improve. Okay. Joe Terranova, how do you see it? How do you see it here? I continue, Scott, to be amazed at the resiliency of the market over the last 10 days in terms of bad news and good price action. You could present the case of NVIDIA, Microsoft, and now this morning with Target's announcement,

you could say, okay, well, we already knew things were bad with Target. But when you get negative news in the market and the market does not follow through with selling, that's sending a message. Now, the message isn't that we have an all clear and it's sunny skies. I think Liz, Brian and I are in agreement. We're talking about persistent and elevated volatility being the dominant factor for 2022. But you try to identify where markets are going to go in the near term when your vision is clouded by so many headwinds, which we have right now. And for me, the resiliency of the market is sending the signal that the probability is we reach the moving averages, which sit about two and a half to three percent higher from here. And there clearly is, with that view,

the ability of positive surprises from CPI and the Federal Reserve to be the catalyst. Yeah. So, Liz, the CPI on Friday, I know it's important, so I'm not going to ask you how important it is, but how are you gaming it at this particular time? Well, look, I think we probably have seen the peak in CPI. I think we as investors, and even in the headlines, we focus on the wrong number, though. We continue to look at this year-over-year number. The Fed looks at a month-over-month number, so you really want to see a deceleration in that month-over-month piece,

and we haven't seen that yet. And I don't think we're going to see a good deceleration in that month-over-month piece, and we haven't seen that yet. And I don't think we're going to see a good deceleration in that for a couple months still, which is why I still think that this volatility is going to persist. Now, that doesn't necessarily mean that we're going to go down and stay down. And I think I also want to be really more specific about the earnings revisions. Consumer discretionary and industrials are still showing 30% earnings growth for Q3 and Q4 this year. I think those probably have to come in, especially on the heels of some of the news that we've gotten about consumer behavior. So there's still a few more things, pieces of bad news that

we're likely to get over the next 60 days or so. CPI might be one of them. Are we being blinded to the reality of where we are by this upswing and this surge that we've had back in the market? I mean, it's easy to feel great when everything looks good. Under the surface, though, there are a lot of issues. I think there are a lot of issues, and that's part of what Liz talked about, is why we downgraded industrials and became actually less cyclical in our portfolios, because the earnings power of those names really have decelerated, and from an operating performance, they're starting to weaken. But I think this kind of waylays in terms of not having a lot of news,

and Friday's a big day. So I think if you start to see that second derivative, either second derivative less positive or really start to see that first derivative turn over in terms of CPI, investors are not, I'm telling you right now, Scott, most investors are not prepared for a surprise whenever CPI begins to roll over. And when we see that, we're going to have a huge uptick. Joe's getting ready though, right? Joe, I mean, you're positioned for the market to go higher, aren't you? I am. In the near term, I believe that it will. Over the past

seven trading days, Scott, I know we're talking about elevated volatility, but we haven't over the last seven trading days had range expansion, which is a positive signal. Over the last seven days, the low for the S&P is about 4075. The high is somewhere around 4177. That's signaling some form of consolidation, which equates to stability. And therefore, markets can respond to what I believe would be the positive surprise. I'm not necessarily sure if we're going to get a negative response if there's further negative news on CPI. We already know we have stubborn inflation. The positive surprise, to Liz's point, is when we begin to see that stubborn inflation begin to come down. That's when I think markets are going to respond positively. And in fact,

I am positioned that way. I'm going to disagree with you. I think if it's a negative print, it's going to be a negative market. This whole thing is the whole story now, Joe, has become stocks can go up because inflation has peaked. You can't tell me that inflation hasn't peaked, but stocks can still go up because that's going to reintroduce a whole bunch of issues. So remember, Scott, you know me well, I think as a trader, so I'm reacting. I'm reacting to what I'm seeing in the marketplace. And as you said that, I thought to myself, can you imagine if the CPI on Friday is worse and the market doesn't go down on that news? Boy, that would be a very compelling bullish signal, wouldn't it?

I'm not saying that's going to occur, but that's a bullish signal. Of course it would be. Of course, Belsky, it would be. Absolutely. And that's been bullish signal. Of course it would be. Of course, Belsky, it would be. Absolutely. And that's been the pattern the last few days. I could be 100% wrong. 100% wrong. I can't imagine that happening.

Then you've really got to worry. If the CPI prints higher than we think, then you've got to really worry what the bond market's telling us, right? In terms of then accelerating recession after that. So that would tell you that the bond market's got it wrong right now. And people, I think, would be freaked out. Yeah, I think so too. Liz, how should people be positioned right now? You heard Joe is positioned for low offense.

Yeah, I mean, I think you do have to be ready for that. Because I still do think that we have a cyclical bounce in the second half. It's just not going to happen in the first 30 days of the second half. So you do have to have exposure to things that would benefit from that, particularly financials, which I think have seen so many outflows that it's overdone at this point. And you'd see a nice bounce in financials. I still like health care. I like health care for the near term and the long term. I think there's some really good valuations in biotech and pharma. And you can buy bonds here. You really can. I think it's OK to go valuations in biotech and pharma. And you can buy bonds here. You really can.

I think it's okay to go back into bonds. And I know that's a pretty popular call of the moment, but it's still an okay thing to do because we're going to see these bumps along the way. How about that, this idea of going back into bonds? I mean, yes, it is popular, as Liz said, especially short duration seems to be a popular play these days where there was no alternative. Now there clearly is. I think maybe over the short term it works, but I'm really worried about this broader unwind of the 40-year bull market in bonds. I really am.

And so what does that mean for 2023 and 2024? I think we're going to have structurally higher rates relative to where we are now, but I think the near term it probably works from a price performance basis. Yeah. Joe, last word to you. Sum it up. Lead us into the next day with the kind of things you're going to be looking for, especially after what Target delivered today. We need some follow through.

I'm going to ask Liz to do that. Liz, you get the last word. Joe's microphone wanted you to have that. Yeah. Thanks, Joe's microphone wanted you to have that. Yeah, thanks, Joe's microphone. I think heading into the rest of the week, you want to watch the consumer and you want to prep for volatility ahead of this CPI print. We need more information this week. We're going to get more information next week.

Start dripping into those places that are getting beaten up. I would still wait on discretionary, wait on industrials, but you can drip into financials, tech, and health care. You guys are the best. I really enjoyed that conversation. Liz, thank you. Joe, wherever your microphone is in the shop right now, I appreciate you too. And thanks for being here on set. No, thank you so much. I like the fact you came here and sat down with me and had this conversation. That's Brian Belsky from BMO. All right. Treasury Secretary Janet Yellen on Capitol Hill today testifying before the Senate Finance Committee. Ms. Yellen said she and Fed Chair Jay Powell, quote, could have used a better word than transitory when describing inflation.

So that leads us to today's Twitter question. We want to know what word should the Fed have used to describe inflation? You can tweet us at CNBC Overtime. We'll share some of your responses. Be creative, too, later on in the show. Up next, a soft-ish landing. iCapitals' Anastasia Amoroso says that possibility is looking more and more likely. Is it too early to make that call? Brian Belsky's shaking his head no, it's not too early. Plus, we'll talk about one sector

that could benefit big time. She joins us when Overtime comes right back. All right, our next guest says the odds of a softish landing are rising and it's creating opportunity in one of this month's biggest laggards. iCapital Managing Director and Chief Investment Strategist Anastasia Amoroso is here with me at Post 9. It's good to see you here. Great to see you. All right, so the odds are rising. Kind of feel like it's a little early to make that call. Why is it not? So three things that I'm watching that I think have changed quite a bit in the last just really a few weeks.

So the first one is the growth momentum. I think there was a huge growth scare. There was a huge recession scare just a few weeks ago. But we know that growth is slowing. Everybody knows that that's the baseline. But it's slowing. It's not falling off the cliff. And if you look at the GDP projections, this year we're expecting 2.6 percent. Next year, it's 2 percent. It's not a

negative print. So I think growth is just going through the slowdown. The second thing is inflation. And Scott, I have not been ready to say this while a lot of people have been calling for the peak of inflation. But I think now we have more and more evidence that inflation might actually be peaking. I mean, you look at used car prices, for example. You look at the indications of small businesses and what they're doing with their future price increases. They're not actually saying they're going to continue to raise prices. They're not saying they're going to continue to raise wages

at the same time as they were before. So more and more, there's signs building that inflation may in fact be peaking. And I think we'll see that core number come in a little bit below. Well, that's the thing. It's a gutsy, excuse me, a gutsy, gutsy call to make it today a few days ahead of the print. Right. Yeah. My you know, maybe sit back, see what actually happens with CPI, and then we can at least have a little better read. I mean, I thought it was interesting when when both of the Fed speakers who were on the network, as I referenced earlier, Brainerd and Mester, when asked specifically about that, they were not ready to say that inflation was peaking.

Both were saying we need a more consistent, and consistency was the word of the day for both on those reads to actually tell that story. I think that's what you're always going to hear from the Fed. They're not going to react to one data point. They're not going to react to a couple of data points. They want to see several months worth of data. But it doesn't work like that for market participants. By the time we have complete conviction that inflation peaked and we've seen three or four months of that inflation easing, the markets will have rallies. So I think that's why you want to make some of those calls

now. And like I said, I was not prepared to do that. But you look at supply chain bottlenecks, for example, that index has peaked. It is easy now. So it's not one factor. It's several factors that are pointing in that direction. And then, Scott, the last point, the third point why, you know, I think we have a wider path to a soft-lash landing is that the Fed is seemingly now looking at both sides of the equation. It's not just about controlling inflation, but also making sure growth doesn't slow down. They know what happened in the 70s. They don't want to repeat that. I mean, growth is slowing down, right? We are taking a leap of faith in a sense in suggesting that they can control it. They can control the levers enough that you're not going to raise rates and cause a recession. And you don't think we're going to have a recession.

It is a leap of faith. And I think we worry about recession fears, but I think we may be able to put them to the side for now. The reason I say that, if they continue to press on, if they continue to hike, when consumers are already grappling with elevated prices, they're reining it in. You know, when consumers are already feeling the wealth effect, taking a bite out of their nest eggs, consumers are already pulling back. If you continue to be super aggressive about rate hikes, you are going to put the economy into recession. But I think what the Fed is doing now is they're saying it's not just going to be continuing to use those blunt tools, but let's say let's have a variety of those things work together. And that's maybe how you achieve that soft landing. As we continue to get further and further away from the May 20th bottom, you hear more and more people suggest that that was the bottom.

Do you agree with that? I think there is a chance of that. You know, it's hard to rule out a bottom, but here's... But because you sound so confident on one side of it to be able to say, yeah, we're going to have a soft landing, soft-ish landing. And by the way, I like the financials here, but you're not willing to go out on the limb and suggest that we hit the bottom? Here's the caveat that I would put to that. If the Fed does indeed pause and or at least slow down the pace of increases, I do think there's a good chance we may have seen the bottom because that's what really assures that soft landing. That's what assures that this is a mid-cycle slowdown versus the end of cycle recession. If they do that, if they don't, I think we can't rule out that bottom. But what I will say, Scott, is based on what we know today, 16 and a half times

multiple, I think is fair on the S&P. $235 on earnings is fair on the S&P. And that's interesting because that's what the level of 38, 3900 that the market's bounced off of. Not to say we're going to 4700. I'm not saying that. I think it's a range. You don't have to. Brian Belsky is. Oh, he's like 48. Don't worry. You're still below that. He's got that covered. Financials, though.

I mentioned it as one of your, that's your big pick today in terms of sector group. Yes. Why so? I have not liked cyclicals since January or February of this year. But if you think about if we are, in fact, going through a slowdown versus a recession, and the consumer, in fact, is okay, then what is the best sector for that? That is financials. But three factors in particular.

Look at net interest margin. We're going to see a big increase in net interest margin from the rate increases that are working its way through the system. We're going to see that in the second quarter. So that's one thing. The second thing is loan growth. It's actually running at 7.8%, which is strong. We're not seeing any deterioration in credit quality.

And by the way, the loan-to-deposit ratio is 55%. Pre-pandemic, it was 83%. So I think the banks have the opportunity to increase some of those loans ratios. And the last thing is, you know, capital markets have been frozen this year. IPO volumes have stalled. M&A has been really weak. But if markets unfreeze just a little bit and you have the capital markets activity that picks up, that's another boost for financials. All right. We'll leave it there. We'll continue the conversation

another time. Anastasia Amoroso, iCapital. Thanks for being here. Thanks, Scott. It's good to see you. Up next, the changing face of investing. Financial firm Tiffin is shaking up the way investors get their market advice. We'll speak to the CEO coming up next. And later, the ultimate protection play. One halftime committee member reestablishing a small position in this cybersecurity stock. We'll bring you the name. You'll see the person when Overtime returns. Welcome back to Overtime.

It's time for a CNBC News Update with Shepard Smith. Hi, Shep. Hi, Scott. From the news on CNBC, here's what's happening. The Uvalde native Matthew McConaughey brought his message on gun control to the White House briefing room today, arguing for better background checks, banning assault rifles for anyone under 21, military excluded, and national red flag laws. These are reasonable, practical, tactical regulations to our nation, states, communities, schools, and homes. Responsible gun owners are fed up with the Second Amendment

being abused and hijacked by some deranged individuals. These regulations are not a step back. They're a step forward for a civil society and the second amendment. Look, is this cure all? Hell no. But people are hurting. Families are. Parents are. Matthew McConaughey wrote an op-ed yesterday calling for responsible gun ownership.

He's now in Washington to lobby lawmakers and talk to the president. Tonight, the latest on primaries in seven states today, a possible insider attack on a U.S. base in Syria and a shipwreck worth billions on the news. Right after Jim Cramer, 7 Eastern CNBC. Scott, back to you. All right. We'll see you then. Shep Smith, thank you so much. Well, what if you could have your own digital mentor to help navigate the many ups and downs in today's markets? Well, today, the financial firm Tiffin is rolling out a new product it says can do just that. It's called Magnify Mentor and operates using artificial intelligence. Vinay Nair is the company's founder and CEO. He's here with me live at Postnight. It's good to see you. This sounds pretty interesting. Now, your Magnify platform has been around for a while. It works

kind of like I could type in which actively managed funds have the best returns, and it's going to spit out the results for me pretty quickly, right? So how does this mentor platform differ from that? So, Scott, great to be here. Great to see you again. We started Magnify really to simplify investing, make it accessible, and to introduce more intelligence into investing. So the search you talk about was the first step. And today we've crossed 100 million such searches. Now, Mentor adds an additional dimension to it, which takes intelligence and you can access intelligence

in addition to search results. What kind of questions will it answer? I mean, this is, as I portrayed this in the intro to the segment, it's like having a digital mentor. I mean, we're talking about algorithms, artificial intelligence. What kind of questions will it answer for me? Yeah, think of it as your Alexa or Siri or Google Assistant went to investment school and came out to answer your questions. The type of questions you can answer ranges from simple questions, how did the market do, how did technology do today, to something more intelligent such as, tell me about inflation, how does inflation affect my portfolio, why is inflation a problem, what is driving inflation? So today if you go to Magnify, you could answer those questions through mentor. I feel like in some respects, you know, I understand what you're saying about likening it to, let's say, algorithms the way Amazon or Netflix, they, you know, they tailor choices to what they know you like. But when it comes to

finance, things can be a lot more nuanced, a lot more difficult to understand. They can change a lot based on the current environment. So how does it deal with that? And that's the fin in fintech. You know, often we talk about this. If you were simply doing AI-aided decision-making, which is now pervasive, it's in all aspects of our life, Spotify, Netflix, you have algos helping you come up with suggestions, recommendations. If you simply took those algos and transported it without the finance and the investment know-how, you would be in a pretty dangerous place, and which is where we believe Tiffin brings the fin and the tech together. Now, I don't want to sort of say, I mean, it's kind of a loaded word saying that this gives

advice. It doesn't necessarily give advice, does it? Would you use that word? I wouldn't. It really is a decision support system. So think of it as there's lots of data out there, but data doesn't mean intelligence. Data is raw material. Someone needs to process it. Someone needs to put it into rules and tell you this is the predictive signal from that data. Exclude the noise. That's what Mentor does for you. You then have to use your judgment to act on that predictive signal. There's also some who would say, you know, now is an interesting time for all of this, that, you know, high touch advice, if you want to use that word again, that actively managed funds are going to be back in

vogue and they're going to do well right now because the markets are so volatile. How are you thinking about those types of issues? Scott, that's a very astute observation. What we are finding on our platform with the searches is people are searching more and more for returns, for active terms, which was not the case four months ago. So clearly there's more interest in return-sensitive investments. And in addition to that, I think there's also a very interesting time from an innovation viewpoint. What has happened in the world of AI the last one year, we believe you're on the threshold of really a leap in business and client interactions, including investments. Do you know where the demographics skew of the people who are searching now on Magnify in terms of age?

I ask you that because I'm just sort of thinking about the state of the retail investor, the number of new investors who came into the market during the pandemic and what this recent bout of severe volatility has done to them. It's still early days for us, but of the 100,000-odd registered users we have today, the demographic is more in the 30- to 50-year-old demographic. So it's not the Robin Hood demographic, if you will. It's really folks who are thinking about investing more longer term and thinking about investing as a means to financial wellness and financial freedom, not just entertainment, if you will. Yeah, I appreciate it. I appreciate

you being here. Thanks so much. All right. Vinay Nair, again, he is the founder and the CEO of Tiffin. Up next, the top energy play for your portfolio when money manager sees even more gains ahead for one big oil company. We reveal it in our two-minute drill. But first, the biggest movers in the OT. Christina Parts and Novelos is back and she's tracking the action as always. What's on deck? Well, I've got one retailer warning consumer confidence among the 65 plus age group is waning and that could impact sales. Well, I've got one retailer warning consumer confidence among the 65 plus age group is waning and that could impact sales. Well, another big company just hit an all time high today. Big clue, energy like you talked about, Scott. I'll have those names and more after this

break. We are tracking the biggest movers in the OT. Christina Partsanovalos is here with that. Christina? Well, we're seeing shares of high-frequency trading and market-making firm Virtue Financial moving in the OT right now up over 2%. On reports, the firm, along with Citadel Securities, is forming a crypto plan with Fidelity. So you can see shares are moving right now. Switching gears, e-signature leader DocuSign is seeing its shares move higher in the OT as well. There's no specific catalyst for today, but investors might be piling in out of earnings,

which is out on Thursday after the bell. And although it was one of the leaders on the Nasdaq 100 today, the stock has pretty much gotten clobbered in the past 12 months, falling 63%. You can see DocuSign up over 4% in the OT. And then you've got American restaurant chain Cracker Barrel that fell almost 6% today after missing on earnings and revenue. The CEO is blaming high gas prices that disrupted spring break travel patterns, resulting in lower visits to the restaurants.

And the company also believes consumer confidence will be lower, especially amongst those that are age 65 plus. And we have one last closer with you. Diamondback Energy hit an all-time high today since its IPO back in October 2012. That stock moving higher along with energy prices and some upgrades for names across that sector. I was going to end with a joke saying that, Scott, you wouldn't be in that 65-plus category, so no one has to worry, but I had Diamondback Energy. I forgot about that stock.

So my insult to you failed. Oh, darn. Darn. I would have handled it all right. I would have handled it all right. Maybe. We'll see. We'll see next time. Christina, thank you. Thanks. All right. Save it for next time. Christina Parts in love with us.

Up next, betting on software. What halftime committee member just opened a new position in a cybersecurity name? We break it down in today's Halftime Overtime. But first, a message from CNBC segment producer Brandon Gomez as CNBC celebrates pride. Change requires persistence. After I came out to friends, I knew my family had to be next. At first, my mother was confused. Struggling with her religious beliefs, she even told me if I had a child, they wouldn't be her grandchild. It was hard to keep coming back to these conversations,

but I did. And with time, she started to embrace my truth. It may not always be the case, but the way people react at first is not what they'll always believe. Change is possible. In today's Halftime Overtime, software stocks. Is it time to get back into names like Salesforce? Two of our Halftime Investment Committee members weighed in a little bit earlier. There's a strong runway ahead for a lot of these software names, and CRM is the one that I think is poised for continued growth. I obviously like the recovery that it's had. It's a smaller position for me because it's an expensive stock, but I have to note it's starting to grow into its multiple. It performs very well, so I'm going to stick with it, but I have a hard time adding to it at this price. Salesforce has performed really well since its earnings. Back with us now is Joe Terranova. He's Virtus Investments Partners chief investment, chief

market strategist and a CNBC contributor. What do you think of software stocks here, Joe? Have valuations come down enough? Well, multiples have contracted nearly 50 percent since January. And if you go back, Scott, to 2008, 2009, it was the same circumstance where software stocks, once you got the multiple contraction and you had earnings that were disappointing that's in fact when software stocks bottomed and we're seeing that now if you observe a lot of the software stocks and one of the etfs i would advise the viewers to look at is igv it's got a lot of the top names i'm going to mention like adobe and intuit in it but these stocks bottomed on May 12th. They didn't wait around for the May 20th decline that we saw overall in the S&P. So I like the profitable businesses like a Salesforce, like an Intuit, ServiceNow. These are names that, yes, I think you could begin to nibble on

positions. You want to avoid some of the emerging software companies where there's non-profitability, focus on profitability. But to me, software bottomed ahead of the S&P, and that's telling you that a lot of the negativity is now priced in. I mean, you like the cyber part of this particularly, right? You bought Palo Alto, personally, I think. And then your JOTI ETF has Fortinet in it, which I think is the Linkster's, Stephanie Link's favorite name. Talk about your being, you know, in favor of that part of this space. Well, obviously, cyber has a tailwind behind it over the last 18 months. Jyoti has owned Fortinet since inception, November of 2020.

We also own Intuit that's got a little bit of a touch there with cyber as well. Personally, I purchased Palo Alto. Now, let me be clear here, full disclosure. I was stopped out of Palo Alto on May 9th once it broke below the 200-day moving average. That actually kind of helped me out a little bit because you saw further declines there over the next 10 days. What has happened in the last two days, Palo Alto has recaptured the 200-day moving average. I'm now seeing a technical perspective that is now reversing to a more bullish one. So I want to follow along with that because I know the fundamentals for this company

are very strong. It's a well-diversified cyber platform. Free cash flow generation is present. 40% billings growth. The last quarter, the execution was fantastic. So I like Palo Alto here in a sub industry of the overall software sector that I think is in favor, and that's being cybersecurity. The next big test, of course, for this space comes next week, Joe. Oracle, right? It's the last of the big name headliner companies that's going to really report right in the wheelhouse here. And Oracle is a name that I would look to own on any decline. It clearly identifies with the type of fundamental metrics that you want to own in this environment, the strong free cash flow generation, the profitability, the capital allocation strategy. That's a great name

to put on your list. If you get the opportunity to buy it on a pullback, I would suggest doing so. All right, Joe Terranova, appreciate it once again. We'll talk to you again soon. Up next, we are weighing recession risks. Stocks have been on a roller coaster ride this year, but are stormier skies really ahead? We discussed that in our two minute drill and coming up at the top of the hour on Fast Money, the big warning from Target and what it could mean for the broader market. Overtime is back right after this. Last call. Weigh in on our Twitter question of the day. Earlier today, Treasury Secretary Janet Yellen said she and Fed Chair Jay Powell, quote, could have used a better word than transitory, end quote, when describing inflation. So we want to know what word should they have used to describe inflation.

Tweet us at CNBC Overtime. You only have a few minutes left. We're going to share some of your responses just after the break. And up next, we have our two-minute drill. Welcome back to Overtime. To the results now of our Twitter question. And we asked you, after Treasury Secretary Janet Yellen said she and Fed Chair Jay Powell, quote, could have used a better word than transitory to describe inflation, what would you use? Many of you said permanent or persistent.

Persistence. Pretty good. Permanent. I hope not. One of you said corrosive. OK. Another stubbornly unpredictable. Fair. Another said resilient like the markets now like that, too. Thank you very much for your responses, by the way. It is time now for our two minute drill. And joining us now is Courtney Garcia, the senior wealth advisor at Payne Capital Management. Courtney, welcome back. I don't know what word you would use to describe inflation rather than transitory, but do you want to take a stab at our poll while I have you? And I'm sorry to put you on the spot, but I'm curious. Yeah, I hated the word transitory the whole time they were using that. But yeah,

exactly the opposite. I would have said it was persistent. It was coming. It was, yeah, anything but transitory. OK, and hopefully not permanent, right? We hope. Let's talk stock picks. Let's talk stock picks.

Your first one is Chevron, right? So it plays right into one of the hot spots of the market that you think can remain that way? Very much so. And I know there's been such a run up in the energy companies right now and the oil prices specifically. But I just want to stress here, I don't think that's over. I don't think it's something that can't be played. So oil prices right now are about one hundred nineteen dollars a barrel. But there's a lot of call that could get up to as much as one hundred fifty dollars a barrel. Everything going on with Russia and Ukraine demand isn't even fully open yet in China,

which is only going to exacerbate the supply demand issues. And that's only going to stand to benefit your oil companies. Chevron has a really strong balance sheet, really good cash flow. There's a lot of money that they're expected to put back into the company, give back to shareholders through repurchases. And I think it's a really good way you can play this. Looking at PXD, which is Pioneer Natural Resources. And the other thing I'm looking at as I ask you this question is natural gas sitting north of nine dollars, as we've been talking about for the last few days. Up again today, it's nine thirty four. There are some who suggest we're going double digits. Is that the PXD play? That's exactly right.

Yeah. I mean, with energy and natural gas, a lot of these prices are expected to only go up here, especially in the near term. And this goes back to your question about was inflation transitory. Clearly, inflation is here right now. And I think that's arguably one of our biggest risks over the next several months. So both of these, whether you're looking at Pioneer or you're looking at Chevron, these are really good hedges in your portfolio so that if inflation does persist, you're able to take advantage of that. The other thing, the last one is you're betting on Buffett, right? Berkshire Hathaway. Yep.

Yeah, he has a lot of those old school names, but he's been investing in your financials, your energy companies. It's a really good way of getting a well-diversified portfolio that has a lot of cash on his balance sheet. They have a lot of cash coming in, which I am really not of the mindset that we're at an impending recession. But this is one of those plays that even if you're wrong and a recession does in fact come, this is one of those that really can weather through that,

especially because of all the cash they have, that they can reinvest back into the markets as they're down. And quickly, since we started on inflation, let's end there. CPI this Friday, how big is it in your mind to where you think stocks go from here? And again, about 15 seconds. I think that's easily going to be the biggest thing the markets are focused on this week. I think what they want to see is that inflation is at a peak. It's coming down. But again, I want to stress, I don't think that means it's going away. So I think those numbers are going to be important to watch. Courtney Garcia, thank you so much. We'll talk to you again soon. I will see you right back here on this desk tomorrow. Fastest now.