Closing Bell - Closing Bell Overtime: Stocks End Wild Week in the Red 10/14/22

Episode Date: October 14, 2022

Markets finished out a wild week lower … so what might next week hold for your money? Vantage Rock’s Avery Sheffield gives her forecast. Plus, Fundstrat’s Tom Lee says stocks may be bottoming. And, market expert Mike Santoli weighs in on the stunning market swings in his final Last Word of the week.

Welcome, everybody, to Overtime. I'm Scott Wapner. You just heard the bells on this Friday. We are just getting started from Post 9 here at the New York Stock Exchange. In just a little bit, I'll speak to StarTech analyst Dan Ives on all things Musk, from the latest on the Twitter deal to Tesla's earnings next week, and whether more major stock sales are coming. If you own shares, you can't afford to miss that conversation. And we begin, though, with our talk of the tape, that massive rally followed by today's reversal. And what next week might hold for your money with earnings really getting going.

Avery Sheffield is here with me at Post 9. And we're going to get to all of that in just a moment. I do want to continue with this breaking news, though. And yet another Fed official. Violations of trading rules. Our Steve Leisman is back on the news line with us. Steve, you've had a chance to go over this and think about it. What do we know at this particular time?

Atlanta Fed President Rafael Bostic Scott is revealing that he had trading violations, trades that violated the Fed's trading policies. These violations extended during the full five years of his presidency, and they were founded under the Fed's new review process, which was implemented, was adopted in February of 2022. The inspector general now is reviewing these trades. We understand there were three violations specifically. He held more than $50,000 in treasuries. He had extensive trading during the blackout periods and omitted a substantial number of transactions from the disclosures.

Now, Bostic's explanation, he regrets these trades as they were inadvertent. They were carried out, he said, by third-party financial advisors, not directed by him or his personal financial advisors. He said he did not personally direct the trades that were in violation. The Atlanta, the directed chairman of the Atlanta Federal Reserve Board of Directors, which basically runs the bank or Bostick serves at their pleasure, said they accepted his explanation and they welcome the review by the Federal Reserve Board, Inspector General Scott. Steve, I'm just going to ask you, frankly, I know they accept the explanation. Should we should we accept that he had a flawed interpretation of central bank policies? I mean,

between the blackout period of one hundred and fifty trades, the nondisclosure of trades, and then, of course, owning more than $50,000 worth in Treasury secretaries, securities, excuse me, just all seems just odd, just odd for somebody of that stature, especially in light of the scandal that we witnessed just two years ago. Well, it does seem like they're extensive. It does seem like he had a—I mean, the most charitable explanation is a major misinterpretation. A less charitable explanation, I think, Scott, would be that he did not look to the rules to understand. He thought apparently that these managed accounts that he held were somehow apart from the rules of the Federal Reserve.

So I cannot come up with an explanation. I guess I can for the first couple years or so. But it went on, and now we're just learning about this after the scandals of last year. It just seems very difficult to understand, Scott, is all I can tell you. You know, Steve, I'm not sure, obviously, and nobody is as to where this goes from here. We're just reminded, as I referenced a moment ago of the prior scandal of a couple of years ago, which cost a couple of Fed members their jobs. Plastic's not a voting member, and nobody knows how this is all going to play out, but what happens theoretically if he somehow is forced out or does resign his position as a result of all of this?

The impact on the Fed would be what? Well, the impact on the Fed would be they would find a new Atlanta Fed president. But I think the impact of this is just another knock in the reputation of the Federal Reserve. These scandals that broke did not help out their reputation, especially, Scott, I think you point out, at a time when the Fed is asking a good amount of the American people right now. I mean, Powell has used that, Chair Powell has used that phrase, pain, that needs to be accepted as the Federal Reserve fights inflation. They're trying to slow the economy. They're accepting in their policy a rise in the unemployment rate. And now on the other side of that, you have this issue of a trading, another trading scandal. And this coming, you know,

after the two that were out and those two presidents did indeed resign. And it's just it's unclear to me the extent to which a president can withstand this type of scandal. Kaplan from Dallas stepped aside. Rosengren stepped aside. It's hard for me right now, Scott, not having looked specifically at the trades and the restatement versus the prior statements to see if these are, I guess, as egregious as Kaplan or Rosengren. But there are these three violations that went on for a very long time. And it just seems like he should have been aware of these, all I can tell you, Scott. Look, am I jumping to conclusions or making too much of the fact, Steve, that Mr. Bostic held more than, as we said, $50,000 in Treasury securities? Look,

I know that there are only so many different types of things that one can invest in, but just merely the idea of somebody who holds such stature with the Federal Reserve and the influence they have on interest rate policy, even owning treasuries in the first place? Well, I think owning treasuries is not... I mean, obviously, the Federal Reserve has decided that there's a limit to the amount of treasuries that can be owned. That's their decision.

Treasuries are a very liquid market, and it's hard to imagine that a single person's ownership has much effect. The question becomes to look at the trade, Scott, and see if the ones that took place during the blackout period were ones that he would have benefited from knowledge before the meetings. In general, Scott, what the Fed does during the meetings is fairly known in the markets. I don't know whether or not a person can really profit by even knowing what the Fed's going to do ahead of time, because mostly we know. I think you're right, though.

The Fed has limited the treasury holdings of Federal Reserve Bank presidents and other key members of the Federal Reserve. So to the extent that that he held them in violation, it is a puzzling question as to why he was not aware of them. And the idea that he had him in the managed account, it just seems like I don't know. It seems like a poor excuse to me. Yeah, I hear you, Steve. And I so much appreciate you coming to the phone for us here in overtime. That's our Steve Leisman helping make sense of what is breaking news. And there are likely to be more developments as the days and weeks progress. Again, Atlanta Fed President Raphael Bostic disclosing violations of financial transaction policies.

That is the headline in The Wall Street Journal now and certainly is going to be a talker, as we said. I said I have Avery Sheffield here with me from Vantage Rock, and we were going to lead with you until this story broke. And I don't need your comment necessarily on Mr. Bostick's trading per se. However, here we are questioning everything that the Fed is doing these days. And there is intense scrutiny on what their policy is. Their credibility has been called into question in terms of what their policy decisions have been. What does this make you think? Yes. Well, you know, I was at a dinner with Michelle Bowman on Wednesday.

And I think many are familiar with her remarks. And she was concerned about how that they were slow in raising rates, right, and not wanting to repeat the mistake. It kind of implied not wanting to repeat the mistake on the other side. So let's hope that they don't. There are certainly, I think the issue is that they're kind of between a rock and a hard place, right? So inflation is running quite high, over 8 percent, even poor over 6 percent. And inflation expectations continue to rise. So it really makes sense for them to raise rates because their concern is that we let inflation run too rampant.

The unemployment situation would be even worse than if they're raising rates now. Sure, but you know what one of the points I've been thinking about and hearing people talk about is that Powell is so concerned now with the credibility issue, right? They lost a good amount of it because they waited so long and were so wrong in the transitory call that they're overcompensating for the credibility while jeopardizing the broader economy and the markets as they try and fix their own credibility. They're only human. Yes. Yes. It's very tricky, you know, and I don't know that they'll get to over 5 percent,

you know, which is kind of where some people are certainly going and implying that they'll get to. I mean, what's interesting to me is like the key two factors that they impact in the economy are, I guess, three, right? It's housing, autos, durable goods, and then financial conditions in the credit markets. And, you know, housing kind of needed to slow. It's starting to slow, but you could argue maybe it wouldn't hurt too much for it to slow a little bit more. That might be net of benefit for society. Autos were going to come down kind of anyway. So, you know, maybe that's a little bit more, but there's room for that to move down. And then in credit, I mean, I think the issue is that we've had credit extended at

such low rates for so long. We've created, you know, a lot of companies that just do not have reliable business models. And at some point that flushes out, it needs to flush out. And maybe it's like better sooner rather than later. So I'm not, I am as, I'm as concerned as anyone that they could go too far too soon. I don't know that we're there yet, but I think we are, we're maybe getting closer. And I think that the race we're at right now, you know, although the, you know, unemployment is a lagging indicator, many of the negative impacts are lagging. I don't know that we're at a point right now where it's dangerous yet. You know, as we saw from the bank earnings this morning. Well, it's funny when you use the word dangerous. I mean, we you know, in the last week or so, a couple of weeks, we've been

hearing words that are dangerous, right? Financial stability, lack of liquidity. Yes. Are you worried about the kind of bond market volatility that we've seen and something breaking as people have been talking about and worrying about? I yes, I mean, I would say global bond market breaking that that that would be that would be concerning. Certainly, you know, kind of overvalued bonds in the United States, corporates, less of a systemic concern. So that is something I think the Fed is watching.

I think that there's a lot of international pressure and, you know, hopefully something there won't break. But I do agree that does seem to be the biggest risk rather than just the U.S. economy by itself. Are you feeling any better about where we are from a market standpoint? Are you still as cautious as you've been? Right. We're still actually pretty cautious while remaining, you know, increasingly optimistic in areas that we think are really have been sold off potentially too much. But in the reason we're still cautious, look, as you look at the markets as a whole and we spend our time looking at individual stocks. But I mean, we think

that inflation will go just go back to like we think the normal run rate of inflation is not going to back to two percent or zero percent, maybe three or four percent, which makes sense to have a Fed funds rate kind of maybe around where it is right now. And given that, like valuations, many companies are just too expensive. So I just thought that they have to potentially reset and they haven't fully reset yet at the same At the same time, and I feel like a broken record given all the commentary today, but areas like the banks, areas like, and this is not as much commentary today, but areas like consumer retail that have kind of been, are trading like there's already going to be a massive recession, potentially present some opportunities and interestingly,

potentially more safety, especially those that are more conservatively managed. You like the banks? Well, so I like certain banks. I like very conservatively managed banks that have, you know, sticky deposits that aren't going to flee and have really been very conservative on their credit. And I think that, you know, that there are opportunities there. And, you know, Wells Fargo is a name that we like in particular. I feel like a broken record today, but it is still a very cheap stock.

You and Kramer, right? Kramer was tweeting about it. His club owns it. He loves it. I know. But it's really not universally loved. The banks as a whole aren't universally loved. But I think you still do have to pick your names.

You probably still want to be cautious on banks that have too much international exposure. That might go well, right? Things in Russia might get better, like the global economy might be fine, but there's more risk there. Also, banks with high deposit betas where deposits are fleeing. I think that's a really risky place to be. So picking your spots. But I do think that there is some opportunity, the more conservative institutions. I mean, they have I know it's maybe a shrinking part of their business, mortgage underwriting. Yes. So if mortgage rates are soaring, doesn't that hurt that part of their business? Yes, but I mean, yeah, but it's not material compared to the rest of their business.

So, and then even their own loans, I mean, they underwrite a very low loan-to-value ratio. So, yes, I mean, we do expect that anyone who's in the mortgage business is going to be having a much slower business moving forward. No doubt about that. Let's expand the conversation now. Bring in Malcolm Etheridge of CIC Wealth. He's a CNBC contributor. Brenda Vangelo of Sandhill Global Advisors. It's good to see both of you. Malcolm, I mean, I know you've been cautious because I remember the debates that we've had with some of the guests on this program over the last many weeks. Do you think we're poised for a positive turnaround now or no? Yeah, so funny enough, Scott, I know you're used to me coming on your show and talking about why things were overheated and we had gotten way too far over our skis, probably as far back as the end of last summer.

But I will say I'm coming on today with maybe a little bit more upbeat tone than I usually would, just in the sense that, you know, investors who have their mouse hovering over that sell button, you know, should hang on and keep in mind that, you know, though all of the bankers who reported earnings today

also threw in their prediction that a recession is imminent next year. Historically speaking, we're more likely to be headed for the turnaround than we are for more pain, right? In in other words the worst is over for the stock market before it's over for the rest of the economy so you know just historically in every case since the s p was born back in the 50s the index has bottomed out an average of something like four months before uh the rest of the economy turned around before the end of a recession i

guess i should say to be technical so we're now in the midst of an earning season that's about to deliver more bad news to the markets and push prices down a little more over the next few weeks. But I believe that we're already in the midst of a recession, which means that we're probably closer to the turnaround than people really feel like right now in this moment, because stocks tend to do better sooner than we start to feel like we're coming out of an economy. I mean, out of a recession. Yeah, I hear you. Brenda, you know, we've talked of late. I feel like you're trying to be more optimistic, looking for some opportunities that are out there. Is that correct? Yeah, I think, you know, we're still in, I think, for a period of. Until we really get more confirmation that

inflation is starting to come down and we have that. A decent timeline for understanding when that is going to be finished this rate hiking cycle but that being said. I think there are opportunities that are being

presented. At the company level of certainly I think from an industry standpoint. Certain industries including financials I think we're. In beneficiaries that we're going to see. Declining trends I think we're. Beneficiary so we're going to see declining trends I think in a lot of various industries

semiconductor is obviously one of them I think everybody. Knows that story is well telegraphed. But I think within the search within various groups I think there are opportunities so one that we. Added to recently with Adobe

you know this is a stock that used to trade at a very high multiple. As a significant amount of recurring revenue really is industry standard within its end markets. Just made an acquisition that I think is causing part of the

controversy. But I think if we look back at management's track record. They've historically made great acquisitions that really include increase the total addressable market. For the company so treating it eighteen times you know that's

an opportunity. Is represented some of the ones that are out there so we, that's an opportunity that we think is representing some of the ones that are out there. So we do think there is opportunity in this market, but we have to be patient because you may not reap the benefit of buying a good opportunity immediately. It may take a couple of months. Yeah. Avery, you don't like software, right? I don't tend to like software. I wouldn't say all software companies, but most software companies are still trading at expensive valuations on non-GAAP earnings. I mean, certainly very expensive on GAAP.

They even have earnings. A company like Adobe absolutely has earnings, but still more expensive on non-GAAP earnings. And I'm cautious on software companies, especially those that had a real pull forward of demand from COVID. And how does that unwind as areas like advertising and all corporate budgets, IT budgets are kind of more constrained next year as people are setting their budget cycles. Is it going to be tougher? And are these stocks cheap enough to be stepping in? Certainly quality names would be names I would love to own, but I'm just still a little concerned about the valuation of even the higher quality names in the space.

Semis too, right? I mean, there's a good debate right now as to whether they're close to a bottom in that process. You got a positive call on a stock today, a Micron, and maybe you see more of that in the days ahead from those who are trying to pick a bottom. Yes, yes. And I don't have a specific view on Micron. It's a stock I've owned in the past, but I was like, I did $10 and selling it at $30 and thinking I was a genius years ago.

Certainly missed the upside there and I'm not sure what to do with it here. But I think that certainly semis are going to be needed long-term. Companies like Micron absolutely have a place. And the real question is, how strong is this inventory correction going to be? How much is pricing going to come down and how long is it going to last? But so Micron kind

of maybe more in the, I'm not sure which way, but there are still much more expensive semiconductor names that I would certainly be more cautious on. Malcolm, if you're trying to be more positive, having a bit of a longer view and thinking that, you know, look, we've come down a lot, maybe better days are ahead. Where would you look? look yeah so i'm probably in the opposite camp of of uh where you guys just were where i actually see software as one of the better places to be just because it's uh one of the easiest places to stay profitable right you don't have to worry about uh laying off staff because you've got hard goods that you have to cover and you've got inventory costs. And, you know, aside from maybe foreign exchange issues that

we're going to find out soon, as soon as big tech starts to reveal earnings to us in a couple of weeks, we'll know just how much the currency conversion matters. But I actually think software names, specifically companies that are in the cloud as one of their one of the pieces of their product mix are also places to be right. So if we think about IBM, we think about Microsoft, obviously Salesforce and then Amazon being in places that have software as a service in addition to their cloud business, to me, is what's most durable in a rising interest rate environment, where as soon as they push a new update, they're also able to raise prices

because folks are going to obviously migrate up to whatever the newest version is. Avery, let's finish by talking about a group that we generally do when you're here, Consumer. Yes. Where are you on that? Positive? We are still constructive on really beaten up names. And we did see, we're not involved, but we did see Victoria's Secret report yesterday. I mean, in absolute

terms, was it great? No. But was it, did it beat expectations? And was the stock up a fair amount yesterday and really didn't give much back today? I mean, that could be a precursor of better things to come. And look, the thing that the consumer sector has that I don't know if any other sectors have over the coming year is an inventory correction in a good way from a very bad place that looks very likely, as well as the supply chain costs coming down. So even in a weaker consumer backdrop, these companies could absolutely earn a lot more than they did today. Many of them took out, I think, long-term costs during COVID. And some of these stocks are trading at COVID lows when we thought the whole world was going to basket forever. So, yeah. So we still we still do like names in that space.

All right. Good stuff. Have a good weekend. Thank you for being here. That's Avery Sheffield, Malcolm and Brenda. Thank you. Same to you as well. Enjoy the weekend. We'll see you soon. Back here in overtime. Let's get to our Twitter question of the day. We want to know which name reporting next week could have the biggest upside surprise. Is it Snap or Netflix, J&J or Tesla? You can head to at CNBC Overtime on Twitter to vote. We'll share the results coming up

a little bit later on in the show. We are just getting started here, though, in overtime. Up next, markets closing out a volatile week in the red fund strats. Tom Lee, he's back with us. Find out what he thinks about stocks. You may think you already know. We'll see if you do. Next, we're live from the New York Stock Exchange. Overtime is back after this. We've got a news alert on the auto space. Who else but our

Phil LeBeau here with those details. Hi, Phil. Scott, the trial of Trevor Milton has finished with a verdict. He was charged with two counts of securities fraud, two counts of wire fraud. So a total of four charges he was on trial for in New York. He has been found guilty on three of the four charges. One securities fraud charge he was found guilty of. The other he was found not guilty of and then convicted on the two counts of wire fraud. Potentially, he could spend up to 25 years in federal prison, but we don't have a date yet in terms of sentencing. So, again, Trevor Milton, the founder and one time CEO of Nikola, who was dismissed once it became clear that they did not have a lot of the goods that he said they had when he was the CEO,

guilty of one count of securities fraud and two counts of wire fraud. Scott, back to you. Phil, quickly, I mean, this stems from what is a now infamous video, correct, of this product that they said was in a stage of development, I suppose. The Nicola Trey. It wasn't. Can you shed some light and details on what we're talking about? Sure.

Yeah, long story short, when he was in charge of Nikola, he said, we're going to be building basically an electric semi-truck. And he had an event where he said, this is a fully functioning truck. We don't want you to touch some of the dials inside because we're still working on things.

Those statements, along with what was shown later on, a video of that truck where it appeared to be going on its own down the road, a highway. And it turned out that it was actually a case where they had dragged it up to the top of a mountain or a mountainside in Utah. And then it was pure gravity as it was going down the road that was captured on film. Those are at the heart of the allegations from the federal government basically saying, look, he pumped this story up and made everyone believe that Nikola had products that really were not in development or not at the stage where they were alleged to be, according to Trevor Milton. So that's it in a nutshell.

And remember, when he first came on the scene, he said, we're going to have this, we're going to have the electric pickup truck, the Badger. Federal government said, no, the Badger was nothing more than sketches and drawings. It really wasn't a product there. So then you had them, you know, this all unraveled once he struck the deal with General Motors. People started asking questions. Hindenburg Research came out with a very critical report. And that was the one right after that report came out is when Nikola dismissed him as CEO of the company. By the way, Nikola itself settled with the SEC and the federal government regarding the allegations

surrounding this entire case. Yep. All right, Phil, I appreciate it very much. Thank you, Phil LeBeau, with the latest on that case. Stocks posting a historic rally yesterday after another hotter than expected inflation report reversing today. My next guest says it's one of the few reasons to believe stocks are bottoming, talking about yesterday's comeback. Joining us now, Fundstrat's Tom Lee. It's good to see you, as always. So why do you think that was such a significant moment? And if it was, why did we give a lot of it or at least, let's say, half of it back today? Hi, Scott. It's good to see you. I think there were two things that were important in terms of reactions yesterday.

The first is it was an ugly CPI report, really one that nobody could find good in, and the market opened down but closed higher. So that's a market reaction. important reaction yesterday was there was a lot of Fed talk into that CPI report, how Fed officials were saying that they were going to stay the course regardless of what was going to be printed. And even the Fed speak after the hot CPI report has kind of reiterated that, including Bullard's comments today. So I think it's not a Fed pivot, but it's interesting that the Fed, in the face of a pretty hot CPI report, isn't talking about higher terminal rates, but instead kind of realized it's been the right call to kind of rush to get towards that 4% to 4.5% and then pause there. And I think that's incrementally constructive for markets because it's going to provide visibility in terms of the rate path.

You know, I listened to you presumably say how bullish you are or this is positive. But your own technician, Mark Newton, who is a frequent guest on this program, while he's constructive, he's only constructive to a point before you get a turnaround and you go back to perhaps the lows. He says, and I quote, and I want your reaction to it, because I'm always trying to square where you and he are on the markets. He says, quote, Bounces will likely prove short-lived and might not exceed 3850 before a pullback back down to lows gets underway. Any breach of 3450 argues for a flush to 3250 to 3200, which is not an immediate base case, but a realistic projection on further weakness. Now, are you guys on the same page or not?

Mark and I talk frequently. We have a huddle and we spend a lot of time in each other's offices talking about markets. Mark's view does reflect how poorly technicals are. I mean, price is the arbiter and the market's been in an ugly downtrend, which is what Mark's speaking to. But price can change if fundamentals change. And I think between now and year end, as much as investors are glum and pessimistic, there are things that present themselves as things that can change how price reacts. I mean, I think foremost, I think there's still a growing gap between what is apparent in terms of inflationary leading indicators, whether it's commodities, job openings, home price, market rent for new properties and how it shows up in the hard data now granted the fed is not trusting forecasts so they rely on the hard

data but that gap is still growing and the second is there's a lot of geopolitical risks around oil and energy prices and so much of the inflation in the surgeon the change in expectations have hinged on oil which means if we have any resolution on either the war front I'll or on oil supply mean I think it's been kinda interesting that OPEC announced a pretty big production cut and oil has barely increased I think that just tells you that as much as energy is still a wild card and investors are worried about it, I don't know if it's as much an upside skew as people think. But those two represent pretty big potential game changers for how people view market direction. I understand,

but I still have a hard time. It's almost like the play caller and the quarterback are not on the same page. Right. Bounces will likely prove short lived. That's from your chief technician. Do you disagree with that? Again, Scott, it's just it's time frames. I wouldn't say I'm disagreeing with Mark, but. But, Tom, he says he says that he basically says we're going to go back to the lows before a pullback back down to the lows gets underway. Just to be clear, that's if you read the complete note, that's not true. He actually lays out different paths. But the path that's being read there is one of the directions.

So I would just say it is actually a lot more balanced than what you're describing. Oh, I'm just quoting. Bounces will likely prove short-lived and might not exceed 3850 before a pullback back down to lows gets underway. I mean, it's in the same note that talks about S&P potentially a path towards 4300 as well. So again, I'm just saying that within that same note, there are multiple paths, but you're just highlighting one of the paths. I want you to react to another comment that I saw from Stephen Geiger. He's a fixed income analyst at Nomura, and he looks at that reversal yesterday to which you suggest it was bullish. He says, and I quote, yesterday was incredibly bearish in my view, even though most think bullish.

That massive reversal took out tons of hedges. Puts were closed. Bears were purged. Opens the door for a much bigger decline in the immediate term. What's your reaction to that, Tom? Scott, I mean, that's that's a trading comment. And, you know, how markets trade in the next day or two or a couple weeks I wouldn't disagree with those points but to me again I think that there are potential fundamental positive catalysts between now and your end and so I know that there's price and momentum is negative but it doesn't mean that that's going to necessarily govern what markets do the rest of the year it's the same reason people can overlay charts of today

versus 2008 and sort of treat that as canon and that's the direction markets are going. But of course, that's not the only overlay one can do. So Scott, I'd say there's positioning and then there's technicals, but then there's also fundamentals and macro. So as much as investors are betting that it's only going to be technicals or positioning that matter, there are other factors that can drive markets. Tom, look, I've asked you a bunch of those questions regarding you and Mark, and I know you frankly, you sound exasperated with me, but there are a lot of our viewers who are exasperated with you. And the fact that you have such a lofty price target, despite what seems to be blaring in front of all of us, that there's no way to reach some of those

lofty levels because of the significant issues that are in front of us. I'll give you the last word. I'm happy to do that. But how do you square that? Because when we have you on and you continue to make these bullish cases in the face of short-lived reversals that seem to be nothing more than bear market bounces it leaves some people questioning whether they should listen to the advice or not uh that's fair scott i mean the markets endured a lot of damage in the past month uh you know it's going to be difficult because it there is a time window here between now and your end but at the same time let's say that uh our targets are unrealistic which it is i also think it's also unrealistic for investors to say that markets go straight down so you know it's been tough it's been a tough year unfortunately you know i kind of wish markets were performing better

but we're in a tough situation with inflation and that's been a pretty tough monster to slay. Yeah, understood. Tom, I appreciate it. I appreciate you coming on and having the conversation. I always do. It's Tom Lee, Fundstrat, joining us. We'll talk to you next time. It's time for a CNBC News update with Kate Rooney. Hi, Kate. Hi, Scott. Here's what's happening. The nightmare of every community. That's how North Carolina's governor is describing a shooting spree by a 15-year-old boy that left five people dead and two injured. Officials now say the suspect was captured after a long standoff with police

in Raleigh. That suspect is hospitalized in serious condition. Authorities have not released any information on his background, possible motives, or how he sustained those injuries. Prosecutors in the case of Florida school shooter Nicholas Cruz are back in court. They're calling for an investigation after a juror said she felt threatened by another juror during deliberations and ended with a life sentence for Cruz. And St. Louis Cardinals pitching legend Bruce Sutter has died. Sutter is a Hall of Famer with a Cy Young reward. He also helped the Cardinals win the World Series back in 1982.

And Sutter popularized the split-finger fastball. He was also a pioneer relief pitcher. He was 69 years old. And tonight, trying to make sense of another teen, allegedly going on a shooting spree, and getting ready for fireworks at tonight's Georgia Senate debate between Herschel Walker and Raphael Warnick. That's right after Jim Cramer, 7 p.m. Eastern, CNBC. Scott, back to you. All right, Kate, thank you, Kate Rooney. We have a news alert in the media space. Big one, Alex Sherman on the CNBC News line with those details. Alex, what do we know?

Yeah, so that's breaking news from the Wall Street Journal, and they should know on this one. The news is that Rupert Murdoch is exploring reuniting Fox and News Corp. Of course, News Corp., the owner of the Wall Street Journal. There's no particular timeline here, and according to the Journal, the deal could still fall apart. But it's an interesting combination, because these two companies used to be together. And in fact,

back in 2013, the two split apart, Fox going in one direction, News Corp going in the other, two different publicly traded companies. Of course, since then, the bulk of the Fox assets have been sold to Disney. That happened a few years ago. Fox is now the Fox News station, Fox Cable News station, and other assets. It has a market capitalization of about $17 billion. News Corp, about $9 billion. So at this point, a lightly traded volume. News Corp up about 3 percent. Fox about 1 percent. So not a huge bump, but Murdoch, 91 years old, potentially putting those two companies back together. Interesting indeed. Alex, thank you. Alex Sherman joining us on the news line. Up next, trimming Tesla. One analyst cutting its price target on the EV stock only a few days before the company's earnings report.

We debate that call and break down what to watch from Tesla earnings with top analyst Dan Ives. Overtime's back after this. Tesla, one of the biggest losers in the S&P today, down nearly 6 percent. The company reporting third quarter results next week. And our next guest calls it a, quote, fork in the road for Elon Musk and Tesla. Joining us now, Dan Ives, managing director of equity research for Wedbush Securities. Good to see you again. Why the fork in the road? It's really I mean, they just came off a 3-2 delivery miss.

And this is all about 4-2 guidance. Can they guide to strength specifically in China? That's why it's a fork in the road. Is it a logistics issue or demand issue? That's going to be the bull bear debate. We believe it's more logistics rather than demand. And that continues to be strong. But debate. We believe it's more logistics rather than demand. And that continues to be strong. But that's why this is, I think, one of the most important earnings from Musk and Tesla probably in the last few years. So whatever the issue is, are they going to be able to increase their units as much as the street currently expects or they have told the street in

the past? Yeah, we believe they still could guide toward 50% growth for the year, be about 475K type number for Q4. I think demand looks strong, specifically in Europe as well as in China. But look, for the first time in a few years, backs against the wall. I mean, they've had some stumbles. We could say some it's logistics, but obviously in a macro like this, there's going to be, I would say, guilty until proven innocent in terms of the demand. And for Musk, you know, when you add up, you know, Twitter and everything else, I mean,

it's just been a combined headwinds for Tesla. And that's why the stock just continues to trade lower. You worry that he's going to have to sell more shares to help fund the Twitter deal? Well, I look, I do worry. I mean, you talked, you had a great interview with Costello, you know, in turn talking about the Twitter deal. I think the worry is some of the financing falls through and he's going to have to sell more. And I think that has really been the albatross on Tesla

in terms of it's the combo, it's the delivery missed, and the worry that some of that financing could ultimately fall apart and musk ultimately is really going to be the one that's going to have to make it up how would he do in terms of selling more tesla stock and i think that's front and center in terms of what's really been overhang i know but none of that ever forces you to change anything on the stock i mean you got to outperform and you still got 360 right you call it an albatross albatross. You say it's an overhang. You say this, that, and the other thing, but nothing ever changes the price target. Yeah. And Scott, it's a great point. And my view is just the Twitter situation, I think it's a contained overhang that ultimately in the next week or two, we continue to believe

that Musk will ultimately own Twitter by October 28th. And in terms of ultimate view on Tesla, in terms of where I view it in 2023, if they could do two million plus deliveries, given the profitability and given the margins, I believe this is a stock that is in the mid 300s. And that's why we don't change our price target knee jerk just in a white knuckle market. Yeah. All right, Dan, I appreciate it as always. Dan Ives, Wedbush joining us there. We'll talk to you again soon. Have a good weekend.

Up next, a bad bet. Casino stocks feeling big-time pain this week, but could there be some solid upside ahead? We'll debate that in today's Halftime Overtime. In today's Halftime Overtime, all bets are off. The casino stocks tumbling over the last few days with names like

Wynn Resorts, Las Vegas Sands and others falling nearly 20 percent this week alone. Joining us now, Joe Terranova, Virtus Chief Market strategist for his take here. These are two of the worst stocks winning LVS in the S&P this week. All Macau all the time. time well that that was the the engine of growth over the past two decades and that's exactly what the casinos needed so if you look at las vegas sands and if you look at win relative to where they came into the pandemic go back and look at these stocks the december of 2019 uh they're cut in half and in the case of of when the stock is is down from 150 so it is about macau and remember scott the revenue in macau was nearly three billion dollars for casino revenue coming into 2020 nevada casino casino revenue was a billion dollars right now nevada casino revenue

billion dollars macau can't even get out of the gate. Well, I mean, Vegas is crushing it. Right. As Contessa Brewer with us on halftime said today, she just got back from the big conference out there and it's blazing. Right. And everyone's scratching their heads out there because without question, casinos were the first domestic based businesses to make the return after the pandemic. And you saw the traffic accelerate significantly. And it was really the thesis that the roaring 20s were going to emerge. Well, you know what? The roaring 20s didn't really emerge. And for casinos, it's very similar to banks, if you think about it for a second.

It's almost like the banks were saying, we need rising yields. We need rising yields and then our stock price will appreciate. Well, you got the rising yields. Bank prices didn't go up. And I think the same thing is happening. You had the traffic. You had the growth in domestic casino revenue. And the stock price didn't correlate with that.

And now what's happening? Now you're seeing the economic contraction. You're beginning to see traffic decline. If you look in August, auto traffic from California into Vegas down seven and a half percent over the last two months. Nevada gambling revenue is basically flat. So that contraction is beginning to happen. And guess what, Scott? Casinos are not recession-proof. Go back to 1990, 2001, 2008. In each one of those scenarios, casino revenue declined during recessions. Obvi. All right.

Don't write the roaring 20s off just yet, Joe. It's early. It's only 2022. Have a good weekend. We'll see you soon. We're hopeful. Joe Terranova. All right.

Yes, we are. All right. Up next, we're wrapping up a wild week for stocks. Christina Partsenevelos is standing by with our rapid recap. Hi, Christina. Hi. Well, we've got U.S. Chinese policies and inflation concerns weighing on technology stocks and a rough week for commodities. Silver having its worst week in over two years. I'll have all the details next. Back in overtime, it was a wild week for stocks. Big swings. Christina Partinovalos is here with our rapid recap. Hi, Christina.

Well, Scott, stocks closed at session lows. Like you said, after a rollercoaster week of trading, the Dow, the only index 10 positive on the week for the second week in a row. 3,500 points is a key source of support on the S&P 500. Trading fell below it at some point each day this week and actually closed, you can see, 3583 today. The 10-year Treasury climbing above 4%. Investors reacting to higher inflation expectations and that hit tech stocks. The Nasdaq was the biggest laggard, down about 3% this week. Mega cap tech names like Apple, Microsoft, Amazon, Fang, whatever you want to call it, they all retreated. And chip makers dealing with the fallout to new U.S. export rules against China. This could amount to the biggest shift in U.S.

policy towards shipping technology to China since the 1990s. So it's having a trickle effect across all tech. And lastly, commodities. WTI crude had its worst week since August 5th. Natural gas posted eight straight weeks of losses for the first time since 2001, gold worst week since May and silver worst week since September 2020. TGIF, Scott. Yeah, exactly. All right. We'll see you next week, Christina. Thank you. Up next, Mike Santoli is back with his last word of the week. Find out what he'll be watching as we make the turn. We'll get back right after this. Let's get the results now of our Twitter question of the day. We asked which name reporting next week could have the biggest upside surprise. Nearly 43 percent of you said Tesla. We'll be right back. All right. Last word of the week with Mike Santoli. It's been a week.

It's only a percent and a half decline in the S&P is actually the surprising part. You know, we're still in the same dynamic where the bear case is right in front of us. It's all the stuff that's the immediate inputs, right? It's the slowdown. It's the 4 percent yield. It's what the dollar is doing. It's what the Fed wants to push against, which is financial conditions being looser. What's bullish, if there's anything, it's just the broad atmospheric conditions. It's how far we've come in a short period of time, the ridiculously low number of days we've actually been up over the last, you know, six months, eight months and all those things. So I don't know how it plays out. It's interesting to see if thirty five hundred in the S&P means anything, because that's where we had a springboard move off of yesterday morning. 3502 is where we got down to, right?

Actually, below it, I think it traded to 3490-ish. I mean, not that you want to be too precise about these things. Well, no. We'll see if we have to be. You would never want to do that. No, exactly. All right, good stuff. Won't be it for me.

Enjoy the weekend. We'll see you next weekend. I'll see all of you as well.