Closing Bell - Closing Bell Overtime: Stocks’ Stage Stunning Reversal 10/13/22

Episode Date: October 13, 2022

A big turnaround in stocks after the sizzling CPI report sent the markets tumbling. Can the burst keep going or will it end in disappointment? Sofi’s Liz Young and Requisite Capital’s Bryn Talkington give their forecasts. Plus, Former Twitter CEO Dick Costolo breaks down what the future of the company could look like under Elon Musk. And, Macellum’s Jonathan Duskin exclusively dives in on his firm’s latest letter to Kohl’s.

We begin, though, with our talk of the tape. The stunning reversal in stocks after that sizzling CPI report sent the markets tumbling. Can the burst keep going or will it end once again in disappointment? Let's ask Liz Young, SoFi's head of investment strategy. She's with me right here at Post 9. Welcome. Thank you. 1,300 point reversal. I mean, ginormous. Is it believable? I mean, you use the word stunning, stunning to say the least, I think. Look, you can't ignore when there are this many buyers in the market. Is it believable today? Sure. Is it durable for the next few weeks? I don't think so. And I think in the next couple days, we're going to see a revival in that downtrend because you have to think about what

really would have even been priced in today. Nothing got fundamentally better. I would almost argue things got fundamentally worse. And we've realized that we still don't have a handle on inflation. So there's nothing that really drives this from a logical perspective that would say, you know what, we're good. Let's bounce. Let's buy. And we're out of the woods. How much more than do you think stocks have to go down before the sellers are completely exhausted? I mean, there still has to be a catalyst for the buyers to come in regardless of what the sellers do. Yeah. So there's certain levels that I would watch. The most recent low that we closed at was 3585, right? I think we need to get down below that. But really, I still think that June low,

that June closing low of 3666, once you got below that, I would have expected a sell-off to go further 5% to 10%. So that takes us down 10% to 3,300. In that 3,300 to 3,400 range, that's when you're flirting with 30% down from the January highs. That starts to price in a recession. And that's when I think you can start to talk about a buy signal. I mean, we got down to $35.02 today. You wouldn't know it from looking at $36.69 as you're looking at it right now. What a move in the banks. J.P. Morgan leading the charge. I mean, at one point, Citi had a 7% intraday reversal. It's just stunning right as you get into the heart of earnings season,

which is just around the corner beginning tomorrow morning. Yeah. Well, and there's some anticipation that earnings season is going to see moves. But what we've seen in the banks in earnings in prior quarters is that as soon as they report and we hear the comments from the CEOs, they actually end up selling off for the most part. So we could end up giving some of that back. The other thing, though, that I would watch for as an investor over the next few weeks and even the next few months, is a revival of that cyclical trade. Financials have not found upside, durable upside,

and they're still priced very reasonably. They don't have much further to fall. So even if we do see a sell-off, I would expect financials to come out of that looking pretty good and looking pretty attractive. All right, we snuck in Bryn Talkington of Requisite Capital. She's a CNBC contributor and with us here on set. It's nice to see you as well. Is this believable to you? I don't know. From what I understand,

you had we hit thirty five hundred. There's some CTAs. From what I understand, we're shorting the dollar going long the S&P and then whoosh, we get a massive seven point swing today in the market. So I agree with a lot of what Liz is saying. Inflation is high, but I will say we're all understanding that this data inside of CPI, this owner equivalent rents, it's just old data. And so the Fed cannot continue to move 75 basis points every time when just a few months ago, Jay Powell told us 75 basis point moves will not be common. Well, they look pretty common now. Something will break if they keep that 75. OK, so it sounds like you've been talking to Professor Jeremy Siegel of the Wharton School like we were again on the halftime report.

He makes the case that inflation is coming down. It's just not in the data. And he echoes what he said most recently. They're doing too much. Listen, we started tightening in March. Are we supposed to see that in the core now? And he echoes what he said most recently. They're doing too much. Listen. We started tightening in March. Are we supposed to see that in the core now? No. What do you see the tightening of the monetary policy in? Just like what did you see the loosening of the monetary policy two years ago in? You see it in the housing market. you see it in the financial market, and you see it in the commodity market. All of those exploded in 2020, which showed you that inflation was definitely there and going to go in the official statistics.

And what have happened to those three markets? They've gone down. When will it get into the core? Months, if not years down the line. If the Fed waits for the core to get down to 2% year over year, it'll drive the economy into a depression. A depression, right? So that's the professor that's getting picked up, by the way, in some of the mainstream non-financial press this afternoon. Comments like that resonating with people that if they go too far on the road they're currently on, bad things are going to happen on the other side. Sure. I think that's

becoming obvious to everyone except the Fed. And when you look today at the CPI report, two big numbers that jumped out to me were food was up 0.8 month over month and you had food was up 0.8 month over month as well as you as well as you had other sectors that have nothing to medical cost or 0.8 month over month. The Fed has nothing to do with those two things. I think we are going to enter this environment where inflation is going to settle around four or five percent at some time next year. We're not getting to two right now. And I think the Fed will be forced to take a pause. Otherwise, they will continue to break things like what you saw in the UK. Your worry, Liz, is that it not only sort of brings

recession closer into view, it speeds up the time frame of going into one if they remain on this path and if inflation remains. You know, look, it's undeniably hot, but Siegel's point's well taken. So how do I put all of that into context? So, first of all, it's impossible for the Fed to time this properly. If they do, it's luck at best, right? Because it takes so long for those hikes to actually bleed through into the economy. They haven't even gotten to restrictive policy yet, and they've been very clear that they want to get to restrictive policy and then leave it there for a while

because that's the way to solve the inflation problem. Unless we're already there. I don't think we are. Well, they don't think we're there. I mean, they obviously don't think we're there yet. Yeah. But again, that goes to going too far, thinking that they need to get to some level

that they in actuality don't because they're looking at the wrong thing when it comes to inflation. But it's not the wrong thing. Inflation is still high. So we have to deal with the problem at hand right now, which is that it's still high. It's still weighing on the economy. It's still weighing on profit margins. And it's going to continue to do that until we get it under control. So the definition of restrictive would be that you have the Fed funds rate above what inflation is at. Choose your version of inflation.

It doesn't even matter. We're not there, right? So we need inflation to come down and we need the Fed funds rate to continue to go up. I mean, that's a Larry Summers thing and we're not getting there. To the target. Well, I mean, if you're going to have to raise the Fed funds rate ahead of the inflation rate, good luck with all of that. Well, it's going to take a while, right? So where I think they actually would stop, and I don't think they pivot yet, but a pause is not a pivot. Where they would stop is if the

labor market really starts to show signs of stress and losing 1.1 million job openings in August, it's happening pretty quickly. Well, actually, I think the issue is that the one tool the Fed has is raising rates. That tool is not the right tool right now to bring down the type of inflation we have. We have inflation in owner equivalence rents. The Fed can't do anything to control that. And so we have a shortage, actually, of houses in America. Also, the JOLTS number is still 1.74 job openings for every unemployed. If we have a recession, it's not going to be like a typical recession.

I think, once again, things like food and medical costs, energy, the Fed has no control over that. And so that's where I think the Fed needs to stop sooner than later, because their blunt tool is not going to get the type of inflation we have today down even remotely to 2%, much less 4 or 5. Let's bring in John Mowry now, another voice, NFJ Investment Group, CIO, joining the conversation. You, according to your notes, John, and welcome to you as well, are more optimistic than the ladies are. And I was surprised to see that you are actually urging people to buy stocks now. Well, I am. A couple of things I would say. It feels like the Fed is playing stock market whack-a-mole. They have one tool. I agree they have a hammer. And they're intense on getting that CPI number down. And to me, it seems like to get defensive now is like buying hurricane insurance after the hurricane is already ongoing and hitting. S&P 500, I've heard the argument that, hey, we need to be down more, maybe 30%. Well, if you look underneath the covers of the S&P, you've got a lot of stocks down that much and

more. For example, areas that are holding the S&P higher, aerospace and defense is up year-to-date, life insurance is up year-to-date, energy is up 50, and then Apple, the biggest piece of the S&P 500, is in line with that total return. So you have some pieces of the market that are booing the S&P. Life insurance is benefiting from higher rates, obviously. Energy benefited from an exogenous shock in Europe. So all those pieces are adding to why the S&P isn't down more. If you peel back and look at what's going on in financials, industrials, technology, you're seeing record low multiples. And I'm not just talking about earnings multiples because earnings estimates should come down, but I'm talking about

price to book multiples as well. And you're seeing some of those at the lowest level since 2009. So we are optimistic. I think if you wait for a specific confirmation catalyst, you may miss it. And one point I would say about this, in Dallas, we've got these kind of ugly birds called brackles, and they sit on the wires at the intersections at this time of year. And they're squawking, they're making all this noise. Well, at a moment's notice, the entire flock will just disappear. They'll just go. And I feel like that's where we are to some degree in the market. If you try to predict the exact movement of what that catalyst is, you may miss out on a tremendous rally. And I think that we're setting the stage for that. But you don't want to be naive to the current circumstances in

which we find ourselves. I'm looking at the areas that you want to add to, and they scream economic boom, not economic contraction. Cyclicals, right? You don't like defensives. You don't like health care, which has been a leader. You like the consumer. You like industrials, REITs. Are these really the places I want to be going into what we know is going to be a more significant economic pullback? I'm not suggesting of any specific magnitude, hard recession, deep recession, this recession or that recession, but it's undeniable that we're going to continue to have a slowdown. That is true. I think the slowdown is baked in. But again, I would go back

to the fact that the defensives are egregiously priced relative to the cyclicals. And the same was true on the other side of the coin, Scott. These cyclicals were egregiously priced a year and a half ago. Semiconductors were egregious, Scott. These cyclicals were egregiously priced a year and a half ago. Semiconductors were egregious. Many of the cyclicals were part of that reopen trade, and everyone was pounding the table that you should be in those areas. And today we're at the exact opposite position where you have the widest spread between staples and semiconductors, for example. I know we joked about chocolate chips versus semiconductor chips. Those spreads have blown out.

So that is the consensus. The consensus is to move away from risk and move into defensive areas. And there's a high cost for that. There's an opportunity cost for being in cash, and there's a cost for overpaying for utilities, pharma, and utilities. Let's debate it. Bryn, I mean, what do you think? So I totally agree with his consumer staples and utilities are very expensive. They're turning a huge premium to the S&P.

The challenge is timing. And so I think that we still want to wait until these earnings come out on the semiconductors. Obviously, Taiwan, the semiconductor that came out today had really strong earnings, was up before the CPI came out. But I do think it's about timing. So I wouldn't be quick on an individual name, individual sector like semis, to try to get in front of that. I would still wait because we do have another two more inflation Fed meetings, and I want to see what's happened. But his point is, like, if you wait, you're too late, right?

You could say that semis, since you bring them up, have come down so much that they're, if not at the bottom, they're close enough. Like, how are you going to know when the alarm bell goes off and says, OK, today's the moment? Yeah, you won't. But this is the deal. I think this is the time to don't be a hero. And everyone has this playbook from 2009 to 2021. We had QE1, 2 and 3 and 4 and zero rates. And the Fed came in and every time and saved the day. We had these V-shaped rallies. I just think this time is different. And you just need to own different things besides, you know, trying to bottom time, bottom tick semis in this kind of market. What do you think, Liz? So I want to go back to he talked about energy a little bit. Earnings season is kicking off this week, obviously. Earnings growth year over year

would be negative if it weren't for energy. And energy is still only about 5% of the S&P. So even if those stocks go gangbusters for the rest of the year, that's not enough to prop up the entire index. We still need a lot of momentum from the rest of the index. And I don't think we're going to get it from earnings data. So I don't think there's a huge opportunity cost to sitting in cash for a little bit right now and waiting for, like I said before, the downtrend that I think is going to resume after this. I actually wrote about semiconductors today. I think that they are a decent buying opportunity once we get below $3,500. John, are you suggesting that

we should go more value over growth? It sounds that way. So what am I supposed to do, which isn't on your list? Technology, for example. Some of these big tech stocks that have been at 52-week lows nearly every day, obviously not considering today and the big bounce that some of them have had, but you get the point. Well, I would buy for big growth. I think you have speculative growth, and I think you have quality growth. I mean, you know, is Salesforce growth or value? Salesforce is now in the I mean, is Salesforce growth or value? Salesforce is now in the value index. Is Google growth or value? That's now in the value index. Facebook's in the value index. So a lot of these mature names that are typically thought of as

growth have moved into the value arena. Salesforce, as an example, Scott, is trading at the lowest price to book multiple since 2009. So you are seeing tremendous value in some of those companies that do have high levels of recurring revenue, like a sales force. So I do think that you've got to be choosy, but I think that the areas of the market that you need to be concerned about are those areas that are the most speculative. But to the extent you have high recurring revenue, stable earnings, net cash positions, high margins,

I do think that you should be waiting in. I do not think that you should wait for a magic signal. I go back to the Grackles analogy. I think that's hard to do. I mean, what was the catalyst in March of 2000 for the tech bubble bursting? Well, after the fact, everyone will go and say, well, maybe it was the Y2K build-out. But all the commentators after the fact write what the catalyst was. I think that in these scenarios where you have correlations rising and pessimisms continuing to grind higher, you should be allocating to high-quality equities that, quite frankly, can deal with multiple environments. And I guarantee you that the majority of the management teams at some of these companies I'm talking about

are not sitting around panicking around where the two-year note is. Now, if you're a speculative company that is relying on a debt refinance situation, sure, that's a problem. But it's not a problem if you're a high-quality business. Gives you an idea, Brenda, the swing you had today. Apple hit a low of 134, hit a high of 143, and closes just below that.

Right, I mean, you've got to be in it to win it. And I do agree what he's saying about you want to own companies that can be durable through multiple different cycles. Because I still believe we're in these uncharted waters. But for everyone waiting for this bell to ring to say, I'm not going to invest until we get to $3,400 or $3,200, you're going to miss it, because there are two decisions to make when you invest. Selling is easy. That second trade is always hard. And so we are fully invested. But what are we invested in? We're invested in things like covered calls, free cash flow yield with a heavy underweight to tech,

because this is just like not the time when you want to be overweight. These still higher growth tech companies. All right. So, Liz, last word goes to you on the question of tech. The Nasdaq's been beaten up so badly lately. It gets a nice rebound of two and a quarter percent today. Is that in any way a sign of something that the worst is over for tech or not? I don't think so. I think that this is a short lived bounce. I think that there's still pain to be seen in tech. But here's what I would say. Instead of using a number on the S&P of where I think it's a buy signal for something like tech or semis, think about when the economy finally breaks. Always keep in mind the formula.

The market goes first. Earnings go second. The economy goes last. When the labor market starts to show real weakness, that's when the Fed pauses. That's when things start to actually change. And that is a buy signal on growth names. We'll keep that as the last word. You guys are great. It's great to see you both here in person. Bryn Talkington, Liz Young, John Mowry, thank you so much as well. And we'll talk to you again soon. And hopefully you'll be sitting next to me one of these days as well. Let's get to our Twitter question of the day.

We want to know, in light of today's CPI report, what should the Fed do in November? Hike 75 basis points and then stop? Or hike 75 and raise again in December? You can head to at CNBC Overtime on Twitter. Cast your vote. We'll share the results later on in the show. We're trying to get the spirit of Jeremy Siegel into our poll today. So please cast your vote there. We're just getting started here in overtime. Up next, head spinning action. That's how Ed Yardeni is classifying today's wild market action. We'll find out how he's navigating these choppy trading waters after this break. And later, former Twitter CEO Dick Costolo.

He'll be here at Post 9. We're going to get his exclusive take on Elon Musk's potential future at the social media giant and his big pivot, his full price pivot. We're live from the New York Stock Exchange. Overtime's back after this. All right, welcome back. This Monday, well, take a look at the major averages here. That's recapping the big day that we had.

8.27 is the move on the Dow and a stunning reversal it was. More than 1,300 points after that big and hot CPI read. Stocks sold off. They didn't stay there, though. As you all know by now, they staged a big reversal. This Monday was supposed to be the start of the trial between Elon Musk and Twitter, but a surprising U-turn from the world's richest man has brought the two parties back to the table, and a judge has given them until the end of the month to reach a deal.

Joining us now is an exclusive interview with former Twitter CEO Dick Costolo. His first comments now since Mr. Musk's change of heart. It's good to see you. Welcome. Good to see you. I love the blue glasses. It's change of heart. It's good to see you. Welcome. Good to see you. I love the blue glasses. It's working for me. Thank you. The reaction to this stunning reversal, which it was full price. What do you think? I think it is.

It was a surprise. Oh, look, the Twitter. My guess is the Twitter folks had completed their depositions. My guess is there was nothing in there that Elon's attorneys saw that made them think, uh-oh, you know, there's nothing new in here that looks like we've got a shot in court, so might as well just go forward with the deal we proposed in the first place. When you first heard about it, your initial reaction was? I was surprised. You mean his letter?

Yeah. Yeah, I was surprised. I thought he was going to end up saying, you know, going to court and saying, look, we can't raise the debt in this environment. And, you know, the market comps are down 30 to 50 percent. And my bid's at a premium. These guys aren't going to loan me the money. I'll pay the breakup fee. But it doesn't appear to be what's happening.

And I would say further, everything I'm hearing, and it's all secondhand, it's not directly from anyone involved, is things seem to be moving forward. The lawyers that are working on the deal now are the deal lawyers, not the litigators. Well, it's the financing that still needs to fall into place. And there are still some legitimate questions as to whether it will or not. There was a story I read today from Business Insider, which quoted someone from Manhattan Ventures. Quote, we talked to other investors. Everyone's trying to get out of it. No one thinks it should be valued at $44 44 billion is what this person from Manhattan said. Well, that's not surprising. The you know, the original offer was made at a at a market high.

All the comps, you know, Facebook, sorry, Meta, you know, Snap, everybody's down. So it's it's looking like a hard road to hoe. If he does close this deal, right, for the sake of this conversation, what's he do? What's he left with? Yeah, so, I mean, the challenges are, the challenges are obvious. The challenges are the advertising market, which is Twitter's primary revenue stream, is

contracting, and it looks like it's going to continue to contract. However, I've always felt like the company needed multiple revenue streams, and we added the data revenue stream with a purchase of Gnip that's now a nine-figure revenue stream for the company. They have an opportunity to do things like, you know, the newswire, the PR newswire market is a $3 to $5 billion total market. Twitter should own that market.

You create your PDF of a news release, upload it as a Twitter card, and you have a live newswire market that you could license to everybody who wants to release their press releases on Twitter. You lose the risk of, I mean, you know, I remember back in the day, one of our Twitter earnings reports was released early because the newswires got hacked or someone accidentally released it early. All that goes away, and you're in charge of your release. That's a $3 to $5 billion TAM that they could go after.

You think Twitter is better or worse with him as the owner, from the seat you used to sit in? I'll tell you. I know you have an opinion on that. I'll give you my honest answer. I'm not trying to be equivocal. The guy's created three world-changing companies. You could say he started PayPal as well,

and he's solved major engineering problems at Tesla and SpaceX. world-changing companies you could say you know we've been to the start paypal as well uh... and uh... he's solved major engineering problems at test land spacex but what is not in put is not an engineering problem putters up how we behave in society and how we're gonna treat each other in society and how we're gonna deal with conversation problem look at that kanye west

plot dust up this week is was it illegal for him to say what he said no is it obviously illegal for him to say what he said? No. Is it obviously horrible for him to say what he said? Yes. So, Elon's instincts, which he said earlier, I think maybe earlier this week or end of last week, to, look, we should just follow the letter of the law in the countries in which we operate, and anything outside of that letter, you know, gets to stay up on the platform.

Okay, well, that means Kanye's stuff stays up on the platform, and if that's the kind of global town square you want to run, you have to deal with the consequences of that. Would you have left it on the platform if you were running it? No, I think it was an obviously easy thing to take down. It was obviously horrible at inciting people to violence. So there are, I'm going to read you some headlines. The Economist, will Elon Musk own Twitter end up as a quote, quote unquote, deal from hell?

Musk appeasement of Putin and China stokes fears of new Twitter policies. That's from WAPO, the Washington Post. I mean, your reaction to when you hear those kinds of headlines, it goes to the question of whether you think it's better or worse that he has this property. I think, you know, I'm quoting Fred Wilson, one of the early investors in Twitter from Union Square Ventures. I think it's a bad idea for one person to own Twitter. I actually like it.

Contrary to disagreeing with Jack Dorsey and others here, I actually like it as a public company and having as much of it as possible out in the open with a public board and everything that that entails. Because you're alluding now to these messages that came out. Jack Dorsey, obviously one of the founders, he said Twitter's, quote, unquote, original sin was becoming a company in the first place and should have instead been an open source protocol. When Dorsey says something like that, your reaction is? I just disagree with him.

I mean, if you're a protocol, there are lots of, you know, there's, this is a long conversation. I just disagree with him. I think he's, I think that's wrong. But I mean, his point is. It is a company. You need money to finance Twitter. And Twitter as a protocol isn't going to get, just isn't going to have been financed the way it was. And it's hard to say whether it would have gotten as far as it did.

Let me ask you this. Now, I don't know. You're not going to like this. But I mean, to what degree? Seriously, to what degree? I was thinking about, you know, the whole fact there are a lot of people who say Twitter is going to be worse off with Musk. Some say it's going to be better off. The fact that we're even having this conversation, to what degree to Twitter's former leaders, leadership, you included, have to bear some responsibility for the fact that we're even

here in the first place. If Twitter's business was thriving and the stock was shooting higher, we wouldn't be sitting here having this conversation. It's funny that this always seems to come up about Twitter. I remember, so, you know, when I was running Twitter, we took Twitter from $0 in revenue to $2.25 billion in revenue in six years. Faster than almost any other technology company except Amazon, Google, and Facebook. That's a successful run. And by the way, when I took over as CEO, the website still crashed all the time. We famously had a brand associated with the site not working.

So we were always sort of second fiddle to Facebook and got compared to Facebook. And, you know, you get beat up when you're not as big as the 800-pound gorilla. But what about the idea that this is no longer a fast-growing business? I mean, there's a reason why the stock price is where it is. Of course.

There's a reason why people say $44 billion is ridiculous to begin with. Why is that? And can it be fixed? Yeah, it can be fixed. We'll go back to what we just talked about earlier. There are multiple revenue lines Twitter could be pursuing beside simply the advertising business that I would have preferred to have been pursuing by now. The data business, which we started, that's doing quite well and healthy and growing, I could think again you could disrupt the entire PR industry and take that whole market for yourselves and that's a winner. It could be a winner take all market for Twitter. And then you know we had bought this company Crashlytics that we turned into a mobile development

platform far in advance of lots of the other mobile development platforms and you could have a whole SaaS enterprise business line there if they had kept that business that is selling it to google what about the person who is ultimately going to lead this company forward i'm not talking about musk busy's got a lot of day jobs who's the right person to lead this company and into the future at and i know you as much as you care about that the product as i know you do dot uh... if it's not product the current c e o

yeah who is it it's got to be someone who's got a thick skin, you know, because no matter what you decide when you're running Twitter, at least half the people agree with you. Sometimes everybody, at least half the people disagree with you. Sometimes everybody disagrees with you. And you have to just be able to, you know, make decisions, understand that a bunch of people are going to beat you up for them and move on to the next decision and not constantly, you know, flip, and move on to the next decision. And not constantly, you know, flip-flop and be wishy-washy about the decision you made. And you're going to know that some of them are going to be wrong, but that's the way

it goes, and move on. Is there going to be an exodus of talent? I mean, there's already been turnover, obviously, but if this closes with Musk as the owner, is there going to be a large exodus, people who are there? Well, I think, you know, the bad news is because he's going to have, what, I think it's 10 to 12 billion of debt, the debt service on that is going to be extraordinary. And with the ad market contracting, you don't have the free cash flow to pay it off. So he's going to have to have some sort of reduction in force.

It's probably pretty significant. Like I would imagine, and I'm, you know, this is bad news for people, but it's probably something like 20, 25%. Wow, you're talking about significant cost cuts as a result of all of that you're talking about. Just if you do the math, I'm not being a jerk to people at the company. I, you know, I love all of them. But if you do the math,

you're not going to be able to make the debt and debt service work with the size of the team they have. And then the challenge is you can't cut your way to growth. So what do you do? It's a hard problem. We'll see where it goes from here. I appreciate your time so very much. Happy. So what do you do? It's a hard problem. We'll see where it goes from here. I appreciate your time so very much.

Happy to do it. All right. That's Dick Costolo. He, of course, the former Twitter CEO here, exclusive in overtime. It's time for a CNBC News Update with Shepard Smith. Hey, Shep. Fascinating conversation. Thank you, Scott.

From the news on CNBC, here's what's happening. Former President Trump subpoenaed this afternoon by the January 6th Committee for documents and testimony under oath related to the Capitol insurrection. The committee chairman, Benny Thompson, saying Mr. Trump is required to answer for his actions. The committee's vote unanimous nine nothing. And it came at the end of what was thought to be the last public hearing before the committee issues a final report. The committee also played never-before-seen footage of congressional leaders pleading for help, some from local, state, federal officials, all on January the 6th. It presented new evidence that they contend shows former President Trump had a plan to declare victory on Election Day regardless of whether he won. No response yet from Mr. Trump. Tonight, complete

coverage of today's hearings, including that new video, plus parents of the Parkland massacre react to the shooter getting life in prison instead of the death penalty. And we'll talk inflation with Andrew Ross Sorkin about the wild ride on Wall Street today on the news right after Jim Cramer, 7 Eastern CNBC. Scott, back to you. All right, Shep, good stuff. Thank you very much. That's Shepard Smith. Up next, a head-spinning day for the markets. Stocks seeing a stunning reversal following today's red-hot CPI report. Ed Yardeni joins us with how he is trading those big swings, what he's forecasting now. Overtime's right back.

All right, we're back in overtime. Stocks staging a massive comeback in today's session. The Dow ending over 800 points higher on the day after being down by more than 500. My next guest is calling it a head spinning rally. He's right. He says shorting the market on red hot inflation just got a lot riskier. It's Ed Yardeni, president of Yardeni Research. It's good to have you back. What an incredible day. What do you what do you make of it? Well, I went to CVS and I got myself a neck brace.

So I got a neck brace just in case we have... Pass one over here, would you? It's wild stuff, that's for sure. But look, to me, it feels as though, you know, everybody's waiting for capitulation. And it seems to me that

after this bear market we've been in since January 3rd, a lot of people have sold. A lot of people have already panicked. I think it's too late to panic. Obviously, it felt like the right thing to do this morning, but by the afternoon, that was not the case. I think that increasingly the market may be coming to the conclusion that we're not going to have a hard landing. We're going to have a soft landing. We're actually in a recession right now. It's just what I call a rolling recession hitting different sectors at different times. And that could continue through

year end into next year. And after today's number, I'm kind of wondering whether we also have rolling inflation. We know that inflation was a huge problem in durable goods pricing, and that's moderated dramatically. We know that energy prices went straight up. And then since the summer, they've come down, though recently OPEC's cut back production. And yet that really hasn't pushed oil prices up dramatically. So I think that now everybody knows that the problem isn't services. Everybody knows that the rent components of the CPI are flawed indexes. And everybody knows that a more reasonable inflation number is the consumption deflator, which is showing a lower inflation rate.

I mean, it would be presumptuous, wouldn't it, for the market to think that this is or moving higher today, thinking a soft landing over a hard landing? Really? I mean, given what the Fed is suggesting that it's going to do. And look, some say that these numbers over the last couple of days would suggest that the Fed is right. Kashkari and Mester and others are right. And everybody else saying that they should stop or they're doing too much. Don't know what they're talking about. Sure. Yeah. Well, maybe I'm personalizing my own forecast and saying the market agrees with that. That's not a very smart thing to do. I agree with you. But, you know, the problem in our business is we're always asked to come up with

why the market's doing what it's doing today. And for all we know, it's a bunch of computer programs running this thing wild. And we're trying to come up with some rational, reasonable explanations for why all these things are happening. But I do think that the market should have sold off as it did in the morning on the CPI and kept going. But we've had several CPIs that turned out to be hotter than expected, where we did sell off sharply. And I think the market may just be concluding that this is a known problem and it's not going to go away overnight. It's going to take some time, but it's not going to be

of the nature that creates a hard landing. I think the Fed is going to raise the Fed funds rate 75 basis points. Everybody thinks that. But I think we are also getting closer to where the Fed wants to be. And I think that's so it's not going to take the Fed actually lowering interest rates. It's just going to take a perception that the Fed has gotten to that restrictive level that they just want to hang out in and let and let that do the job of bringing inflation down without necessarily causing a hard landing. I feel like we're going to be, starting tomorrow morning, we're going to be reminded of the tough environment we're in. You get the numbers, which aren't so much important as the guidance and the commentary from CEOs, which you just know is not going to be great.

Jamie Dimon giving you a precursor of that the other day. Right. Well, Jamie Dimon has been talking about a hurricane coming and now he's more specific about it, saying that we're going to have a recession in six to nine months. So who am I to say we're not going to have a recession? I mean, the guy runs one of the world's largest bank. He's got all this loan data that he knows about. So he certainly knows mortgage demand has come down because of high interest rates. He knows that auto loan demand is coming down. On the other hand, he knows that C&I loans are very strong, but some of that's related to unintended inventory buildings. So there are signs that are very typical of a recession. And we would be in a recession now, but the auto industry does not lay off the kind of workers that they used to. The housing and auto industries aren't as important in the economy as services. And the service economy

is doing very well. And that's where we have our inflation right now. But a lot of that in services is in rent. And we know from the Zillow indexes that rent inflation went up a lot through early this year, up to 17 percent. And now it's come down to 12 percent. It's coming down pretty rapidly. So I do think the market is looking at the fine data and concluding that maybe this is not going to be as terrible in an economic environment as feared. We're going to find out. All right. Ed, thank you as always. Ed Yardeni, President Yardeni Research, joining us once again in overtime. Up next, calling out Kohl's again. The retailer is under fire once again in overtime. Up next, calling out Kohl's again. The retailer is under fire once

again from activist Masellum. CEO Jonathan Duskin will be here right on Post 9, right at the desk exclusively following the release of his firm's latest letter. It's pushing for major changes at that company. We're back after this. Welcome back. The retailer Kohl's is once again under activist investor fire from the very same person who settled a fight with the company last year mckellum's john duskin is looking for more board seats after sending a new letter to the company today threatening a proxy fight mr duskin with me here exclusively at post nine welcome it's good to see you you're like the gift that keeps on giving for somebody who follows activist investors but But I got to tell you, I mean, for Kohl's, you're probably like a gnat at this point. Why are you back again? This is like, what,

the third time? This would be the third time. And thanks again for having me on. I'm providing a lot of entertainment and hours of coverage for you. Look, this is a company that we think has tremendous value. This was once a darling of the retail space. We think this is a company that we think has tremendous value. This was once a darling of the retail space. We think this is a company that with the right board configuration, with the right resources on the board, the right oversight, this can be a darling of retail. Once again, there's tremendous turnaround opportunity at this company. And despite running two campaigns now, business has just gotten worse and the performance has gotten worse. The stock underperformance has gotten worse. You know, if you rewind the tape

to the first campaign we ran and identified all the things that we pointed out then, there's still the problems now and they've gotten worse and they haven't, they've gone unaddressed. And I think with board change, you know, there's a couple directors that we think are real obstacles with real board change. We think this could be a great company. You don't think, I'm sorry, you don't think the three board seats that you got already is quote unquote real board change. We think this could be a great company. You don't think, I'm sorry, you don't think the three board seats that you got already is quote unquote real board change? Well, we got two, two of our directors and we think they are, you know, incredible directors. Tom Kingsbury, you know, is somebody that I think was very valuable.

But it's hard to be two directors out of 11 or 12 that are on the board right now. And, you know, I think they were sidelined. And I think if they were really having an impact, the business would look a lot different than it does today. So I don't think there's been enough change. You know, there's a lot of questionary tales of incremental change that doesn't go far enough to really change the tide. And I think there's a lot of obstacles of the long-tenured directors that they're not providing effective oversight. Kohl's today is calling your efforts, quote, unproductive and a distraction.

And they point to the fact that the current board was just reelected some five months ago, not very long ago. And I guess I would add in a question to you, do you think it's fair to go after a retailer in the current environment, given what is going on for all retailers with inflation and the slowdown and questions about the consumer and on and on and on? Yeah, I appreciate the question. You know, there's a couple elements of that to address. You know, first, everything to us is always about relative performance, right? It's not the fact that they're struggling in a hard economy.

It's the fact that they're underperforming their direct peers, peers that they themselves chose, Macy's, Nordstrom's, Dillard's. They're losing market share, right? So Macy's, the peer group sales are up, their sales are down. Their earnings are down 50% compared to 2019. None of those other companies have earnings negative to 2019. They're all up versus 2019. Inventory problems, the credit was downgraded to junk. So they have some real fundamental problems that transcend what's going on in the economy. Yes, it hasn't been a great first half for retail, but nobody's had the negative declines and the destruction of value that Kohl's has had. And I do want to address some of the other things

they said. I don't think there's ever been an activist campaign where they didn't claim it was a distraction. Right. I think that's true of any campaign I've ever witnessed and been a part of. And I just point out, you know, we tried to work privately with them for a long time. We spent most of 2021 silent after we settled in 2021. After the AGM this year, we really haven't said anything. We contacted contacted them in August to try to reach a constructive settlement. That was before very bad Q2 results and before the debt downgrade. And they're just unwilling and unwilling to acknowledge they need help on the board.

And we're not a distraction. We're not making customers not go into the stores. We're not driving the inventory up 48 percent, SG&A up 10 percent. We're not doing those things. So I don't, it's commonplace to say it's a distraction, but I don't really believe that's what's hurting us. Do you wish you would have sold the stock within the last year? Within the last year, it was like 60 bucks. Yeah.

And now here it is below 30. It's very disappointing. You know, they promised, you know, and I do want to address that point about, you know, they say they just won the vote. They really won that vote under false pretenses. If you remember what was going on at the time, you know, we were worried that they were going to miss the first quarter, that they were going to have to lower guidance. We were worried about the sale process. We thought it was a flawed process and it was more for show to check the box they were going through the process. And it turned out to be that and worse, right?

As soon as the vote was over, they lowered guidance. They announced two major departures. And then they terminated the sale process shortly thereafter. And, you know, shareholders, I think, you know, voted how they voted with the information they had. But I think they were misled. And I think now you look back and you say, God, that was really unfortunate. And if we'd known then what we know today, I think that would have gone differently. So, yes, I wish we'd sold the stock.

But honestly, I think the stock has even more upside from those levels, and we see tremendous upside from the stock. So, yeah, it hurts that it's down here where it is today, but this is a company that should be doing substantially better and generating far more value for shareholders. I appreciate you walking over and spending time with us here in overtime. It's great to see you. Yep, you as well.

Thanks for the time. Yeah, that's John Duskin, McKellum Capital Management. Thank you. Thank you for correcting me on that as well. Up next, we're all over the biggest movers in overtime. Christina Partsinello standing by with that. Christina? We have a gene therapy program for a brain disorder

that's seeing signs of success. I'll tell you the company behind that program and reports of more job cuts at Beyond Meat. Details next. We're tracking the biggest movers in overtime. Christina Partsenevelos here as always with that. Hey, Christina. Hi, let's start with Beyond Meat shares.

Look at that, up 1.4% after Bloomberg report warns of another round of job cuts. This after the plant-based meat producer cut 40 jobs just this past August. Blame either rising inflation for pushing consumers to cheaper proteins, or the fact that fake meat isn't resonating as much with our palates. Bridge Biopharma moving, let's see, it was about 11% higher. It's coming down now. Wow, quite a reversal. Now down 1.6%. This after announcing positive results from a gene therapy program that focuses on the cannabinoid disease. This is a neurological disorder that degenerates the brain. Bridge Bio focuses on the commercial stage for drugs and data from the first three participants so far are showing improvement. So quite a movement just in the OT. Scott. All right, Christina, thank you. That's Christina Partsenevelos. Up next,

Santoli's last word. We get his take on today's big market swing just ahead. To the results now of our Twitter question, we asked in light of today's CPI, what should the Fed do in November? The result's pretty close. Fifty four percent of you saying hike 75 and then stop. Up next. Yeah, it is pretty close. Santoli, his last words next. Mike Santoli's last word is on. Yes, my word for today is going to be maybe. So maybe today's reversal was of some significance.

It's very rare. I mean, you had this, not just the span from low to high, but we took in over three days of losses before it. So you got back a lot. It sort of held where it kind of had to. And the way I would say it is you don't have to make that determination in advance that this is the low of any sort. To get the S&P below 3,500, you probably need something extra in terms of adverse surprises beyond what we've been dealing with. Made that case before.

And you have these really big stocks that you don't actually have to pay up even pre-pandemic prices for. JP Morgan, Disney, Nike, they're down on a three-year basis. Doesn't mean they're cheap. It doesn't mean they can't go lower. But it tells you that risk has been coming out of the system, even if it's not all the way out. If somebody says to you, and I'm sure you're going to be asked this between now and bedtime, why the market reversed today? It really did just get stretched so tight to a certain point where you had this cluster of focus and attention and just people prepared to buy for reversal because it had gone far enough that thirty five hundred level on the S&P and all the rest of it. So I don't think there's a why in terms of the story. People didn't change their

minds about the economy today. They thought the market had gotten to a point where it was enough for the moment. I'm going to be real interested, and I know you will too, earnings. Yeah. What the commentary is going to be after Diamond the other day. I think there's an element of pre-relief here, that we're going to be able to focus on earnings, expectations have been beaten down low enough, and you have stock-by-stock action and not just macro drama. I'll see you tomorrow.